Small businesses in South Africa have unlimited potential for job creation and growth, as well as upward mobility and development, as small and medium-sized enterprises (SMEs) provide an estimated 60% of all employment opportunities in the country.
As policymakers, businesspeople and civil society need to take action to work towards an economic recovery, small business entrepreneurship should be at the center of public discourse as one of the key ways to solve South Africa’s most pressing economic and social challenges, says David Morobe, Executive General Manager of Impact Investing at Business Partners Limited.
He says that after seeing small business confidence steadily decline as SMEs struggled to weather the challenges of the pandemic years, a recent Business Partners Limited SME Confidence Index has found that this is changing.
“We are encouraged by the fact that small businesses have a 77% confidence level that current economic conditions are conducive to business growth, the highest in a decade. This is a positive sign that the sector is rebounding after two years of instability and is of particular importance for job creation now given the country’s ongoing unemployment crisis.”
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Donors must continue to support SMEs in creating jobs
A report by Finfind in partnership with the South African SME Fund puts the total number of SMEs in the country at around 3 million, including both the informal and formal sectors. According to the report, the average number of employees per SME varies between 12 and 27, with most full-time positions being offered by medium-sized companies with an average annual turnover of R10 million.
For Morobe, creating the number of jobs needed to bring down the unemployment rate is an ambitious task, but one that can be achieved through steadfast collaboration between the public and private sectors and other stakeholders supporting South Africa’s entrepreneurs.
“Fortunately, industry trends at home and abroad are widening the landscape of opportunity and offering entrepreneurs the opportunity to explore uncharted territory. As financiers, we must continue to provide SMEs with the support they need to boost their growth and sustainability.”
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Cloud technology can revolutionize the small business sector
The increasing development and application of technologies such as cloud computing has the potential to revolutionize the industry. According to the 2022 State of South Africa Small Business Report by accounting technology company Xero, half of businesses are now using cloud technology, with 30% saying it has helped them grow their customer base and 28% saying cloud technology is achieving success has a direct impact on the efficiency of their business operations.
Cloud technology offers SMEs reach and enormous growth potential, says Morobe. “SMEs will continue to grow as new and emerging entrepreneurs adopt the remote work trend and digital nomad approach to work. Cloud technology dramatically lowers the cost of doing business, which could free up capital for human resources, innovation and other business opportunities.”
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The rise of social entrepreneurship, job creation
The worlds of business and social activism are merging on a global scale to form the foundation of a whole new kind of entrepreneurship, the kind that values profitability as much as it prioritizes aspects like community development, social justice and charitable goals.
“Social entrepreneurship is growing rapidly in South Africa and we have seen some exemplary organizations developing around issues such as education, access to public services, environmental protection and climate change.”
The rise of social entrepreneurship also offers a range of opportunities, says Morobe. “At the conceptual level, entrepreneurship can be summed up as problem solving, and in South Africa, with its fair share of unique socio-economic challenges, these problems are opportunities in disguise for entrepreneurial individuals.”
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New trends in customer experience
Another trend driving innovation in the industry is the evolution of customer experience (CX). In the face of fierce competition in the market, SMBs are increasingly using optimized customer service experiences as a differentiator and basis of their value proposition.
“Some of the most important developments in customer experience are the use of chatbots, personalization, customer engagement across channels, data management and security. As the customer experience in South Africa evolves, there will be more job opportunities for CX professionals at all levels, from call centers and customer service representatives to community managers and product support executives.”
Morobe says technology, as the primary driver of these trends, will continue to provide entrepreneurs with the opportunities they need to build successful ventures in new and unexplored industries, as well as finding innovative ways to thrive in existing and challenging industries.
“Combined with government efforts to increase infrastructure development, attract foreign investment and encourage training programs, the SME sector can help create jobs for millions of South Africans.”