Ravi Naidoo, the CEO of the Youth Employment Service, underlined the importance of Small and Medium sized Enterprises (SMEs), which contribute up to 40% towards the country’s gross domestic product (GDP), in job creation.
According to the Small Business Institute (SBI), the number of SMEs providing formal employment is just over 250,000 businesses. It further shows that formal SMEs which got most businesses, only provide 28% of jobs.
Naidoo noted that the SBI had found that internationally, the figure was closer to 60% or 70, and said: “We need to strengthen our SME sector as a crucial part of creating more jobs and combating unemployment.
According to the National Planning Commission, SMEs have the potential to create 90% of the new jobs in South Africa, which has a critically high rate of unemployment especially among the youth.
“We want to do what we can to help SMEs to place youth in their businesses, which will, in turn, expose these young people to entrepreneurship with all its possibilities, and the SME sector more broadly, as well as giving SMEs a boost to their Human Resources,” the YES CEO said.
During the recent department of Small Business Development budget vote, minister Stella Ndabeni pledged to prioritise and expand access for financing for small and medium-sized enterprises (SMMEs) in the country, as money was one of the key constraints for small businesses and cooperatives.
Ndabeni said her department had developed an SMME and Co-operatives Funding Policy, which sought to expand access to financing and early stage investment. “This policy will be a game changer as it also proposes an establishment Fund of Funds, which we are currently designing. The fund will de-risk and leverage investment from the private sector and institutional investors for start-ups amongst other things.
“We will also prioritise the development of a Startup Policy and legislation as required. This will be done in collaboration with relevant departments.”
The minister added that the department would continue to build on the work undertaken in the previous administration, “to invest more in under-served SMMEs and co-operatives.”
“Sefa (Small Enterprise Finance Agency) disbursed R2 billion funding facilities against a target of R2.18 billion to 80 040 SMMEs and co-operatives which led to 98 378 jobs,” Ndabeni said.
She said the department which has a budget of R2.437 billion, would be focussing on five areas related to market access and localisation, which had proven to be barriers for SMMEs in this administration.
“We want to assure all members and society that even though we are young and still developing, we are up to the tasks that lie before us”.
Saturday Star