Author(s): Ricardo M. Peters, Abongile Zwane, Johann van Der Spuy
Autonomous free market systems cannot succeed and flourish if most individuals within a country remain stranded in abject poverty…tackling poverty and deprivation must then be the priority of a democratic government – as in the case of South Africa. The small, medium and micro enterprises (SMME) segment in South Africa, (and in many other emerging and established economies) is a critical part of the general economy. Since 1995, the South African government has recognised this sector as a means of realizing its goals of enhancing job creation prospects, diminishing poverty, and establishing a more equitable distribution of wealth. South Africa is typified as the country with the most unequal distribution of wealth in the world. According to Statistics South Africa (2019), turnover in terms of size of the business showed that SMMEs were accountable for producing R2,3 trillion (or 22%) of the R10,5 trillion turnover in South Africa. Further, it was stated that medium sized businesses accounted for the smallest percentage (10%) while large businesses accounted for the largest percentage - over two-thirds (68%) of total turnover. This gives credibility to the belief that the SMME sector can contribute more overwhelmingly towards developing the country in terms of contributing toward reducing poverty, inequality and boosting job creation opportunities. Thus, creating an environment in which goals as envisioned by the National Development Plan (NDP, 2030)/Millennium Development Goals are achieved. The NDP envisioned that by 2030 SMMEs will contribute 60-80% to GDP intensification and generate 90% of the 11-million new jobs in South Africa. But, despite these ambitions, South Africa continues to have one of the highest unemployment rates in the world, with a 2022 Q4 unemployment rate of 32.7%. This is an official definition of unemployment, with a wider definition of unemployment putting the figure at beyond 40% of the total population. The current economic trend in South Africa indicates a dire situation unfolding, some arguing the situation worsening since the dawn of democracy – and characterised in the main by - jobless minimal growth. More than 28 years since the dawn of a new democracy in South Africa and the SMME sector has not as projected made a meaningful contribution toward reducing poverty, inequality, and unemployment – and the goals as set forth in the National Development Plan will not be achieved by far. In fact, there is rising testimony as indicated by the high level of unemployment which gives rise to other social ills - the extent to which SMMEs have been utilized to increase employment and reduce, poverty and inequality in South Africa has been to say the very least, disappointing (DPRU, 2018). If the SMME sector is able to contribute and make a meaningful contribution toward changing the socio-economic conditions of the country and the role of government is to create an enabling environment for SMME’s to reach their potential - the objective of this study was to analyse the success to date (if any) of government’s national strategy and its institutions tasked with creating an enabling environment for the SMME sector to grow has had to date. This is premised on the fact, if the SMME sector grows satisfactorily in terms of turnover and labour growth it would be better positioned to attract more persons into employment in the country and in this method contribute toward tackling the social ills confronting South Africa. The study employed a survey research design methodology in which mixed methods were used. Empirical data was collected from 1000 respondents located in the Western Cape Province of South Africa and conveniently available to answer the research questions. The study only focused on established SMMEs That were in existence for 7 years or more. The findings of the research established that the governments support structures put in place to assist SMME growth has to date still not been as effective as anticipated and is in fact not on track to achieving the goals envisioned in the NDP (2030).