As government introduces new legislation to further support small, medium and micro-sized enterprises (SMMEs), recently released data from the 2019 Annual Financial Statistics (AFS) survey shows the growing role that small businesses play in the formal business sector.
The National Small Enterprise Amendment Bill 2020, gazetted recently, outlines the establishment of an ombud service that will provide legal support to SMMEs.1 The Small Enterprise Ombud Service will handle complaints, resolve disputes and enforce contracts in the sector.
The support of SMMEs recognises the sector as an important driver of economic growth. Data on turnover from the AFS survey show that small businesses in particular have made inroads in South Africa’s formal businesses sector.
Small businesses generate just over one-fifth of total turnover
Industries in the South African formal business sector, and included in the AFS survey, generated R10,5 trillion in total turnover in the 2019 financial year. Turnover includes money received from the sales of goods and/or from services rendered, as well as from the leasing or hiring of transport equipment, machinery, equipment, land, buildings and mineral rights.
A breakdown of turnover by business size shows that small businesses were responsible for generating R2,3 trillion (or 22%) of the R10,5 trillion. Medium sized businesses contributed the smallest portion (10%) while large businesses accounted for the biggest chunk, just over two-thirds (68%) of total turnover (click on the image to enlarge).
Our objectives with this course include:
- Providing the background to the opportunities for new SMME's.
- Provide mentoring to establish businesses and increase the chance of success.
- Provide leadership and access to the government assistance program.
- To connect potential SMME's to a network of specialists.
- To include the SMME's in the new digital world.
- To provide a network of opportunities within South Africa.
- To provide leadership in establishing long term wealth.
Small business has increased its influence in construction and business services
In the first quarter of 2020, the industry registered its seventh consecutive quarter of economic decline. This was on the back of lower infrastructural investment, weak economic growth, and rising costs. With fewer large players generating turnover, small businesses have filled the gap. In 2013, small companies accounted for 17% of total turnover in the construction industry, rising to 34% in 2019. Large companies contributed almost two-thirds to total construction turnover in 2013, falling to just over 40% in 2019.
In terms of growth, small construction companies have tripled the amount of turnover generated, from R53 billion in 2013 to R163 billion in 2019 (a rise of R110 billion). In stark contrast, large construction companies increased turnover by only R17 billion over the same period, from R187 billion to R203 billion. Small business contribution to total turnover in the business services industry increased from 29% to 42% over the six-year period, also eating away at the dominance of large players.
Small business has been flexing its muscles
Small businesses have, without much fanfare, slowly taken over more of the turnover pie. In 2013, small business generated 16% of total turnover in the formal business sector, expanding to 22% in 2019. The contribution of large business waned over the same period, from 75% to 68%.
From 2013 to 2019, the formal business sector as a whole increased turnover from R7,0 trillion to R10,5 trillion, representing an average annual growth rate of 7,0%. Medium business increased turnover by 8,4% per year, and large business by 5,4%.
Small business leads the pack, recording an increase of 12,3% per year over the same period.
World bank report
Economic profile: South Africa
The following profile provides the baseline to:
- Understand the South African Economy.
- To start your own business with linked access to key connections.
- A thorough research study supported by local knowledge and assistance.
- Lectures 11
- Quizzes 0
- Duration 50 hours
- Skill level All levels
- Language English
- Students 0
- Certificate No
- Assessments Yes