SA needs SMMEs to rebuild economy
December 9, 2020
Co-founder and CEO of Lulalend, Trevor Gosling
Small, Medium and Micro Enterprises (SMMEs) have a vital role in rebuilding South Africa’s economy that has been severely affected by the Covid-19 crisis.
According to data from the World Bank, SMMEs represent about 90% of businesses and more than 50% of employment globally. In emerging economies, like South Africa, it showed that formal SMMEs contribute up to 40% of national income.
Adding the informal economy to this statistic, this amount goes up even higher.
Apart from income, research from the Organisation for Economic Co-operation and Development (OECD) puts the contribution of total employment by SMMEs between 45 and 50%.
In President Cyril Ramaphosa’s address to Parliament on October 15 regarding South Africa’s Economic Reconstruction and Recovery Plan, he highlighted the importance of SMMEs in rebuilding the country’s economy.
Central to his plan is the goal of reindustrialising the economy by focusing on growing the approximately 3.5 million small businesses.
Co-founder and CEO of Lulalend, Trevor Gosling said he believes the role that SMMEs play cannot be underestimated.
“Investing in and helping to grow these companies makes sense for our country. Not only do they contribute significantly to South Africa’s GDP and job creation, but even more importantly they are critical to driving more inclusive economic growth.
“For example, studies have shown nearly 40% of SMMEs are owned by women.’’
SMMEs also act as a cushion against recessions by adapting faster to changing market conditions, according to Gosling.
“Leaner, smaller companies are versatile enough to execute ideas faster than larger companies. This works to their advantage, allowing them to contribute substantially to the development of various sectors such as manufacturing, retail, and ICT services,” he added.
Lulalend is a South African-based company that empowers small businesses across the country with the funds they need to grow.
Head of retail products at Absa Regional Operations (ARO) Fehmida Motara, last week said that the role of financial institutions in contributing to the regeneration of SMMEs sector will be of particular importance as the African continent is now in the rebuilding period after the Covid-19.
She said the ability of governments, financial institutions, businesses large and small, entrepreneurs and civil society to find new and innovative methods to stimulate growth in the SMME sector will determine how successfully Africa emerges from the pandemic.
Every industry and sector across the continent has needed to relook and reimagine the way it operates following the devastating economic impact of the global health crisis, according to Motara.
Since the move down to alert level one of the lockdown regulations in SA, Gosling said Lulalend has seen growth-related funding applications increase in each of these sectors by 41% in manufacturing, 30% in retail and 35% ICT.
He said that two of its clients understood the need to reengineer their operating models to meet the demands for products used to help combat the Covid-19 pandemic.
– African News Agency (ANA); Editing by Devereaux Morkel