A tale of SMMEs
The lack of reliable and comprehensive baseline data makes it hard to estimate the size and quantify the effects the SMME sector has on the economy. The battle to stay open has begun and its “survival of the one who has access to funds”.
StatsSA conducted a survey in April looking at the impact of Covid-19, where they received responses from over 2000 businesses. 47.9 percent of businesses said that they had to close or pause operations temporarily, while 8.6 percent closed down permanently. 38 percent indicated they faced decreased access to financial resources and 29 percent said they would not survive another month without some sort of turnover.
Small businesses being offered some sort of relief from either the government or the private sector, this has however proven not to be sufficient with consumer spending adversely affected. We tend to talk about small businesses like they are not part of the wider economy, but the lock down has shown how a big blow to small businesses can cripple the economy.
There is a huge gap between informal traders and what we call small businesses. The missing-middle is usually businesses that are registered but do not fully comply and are therefore underfunded. Despite the pro-women narrative, research conducted by the Centre for Development and Enterprise shows that these businesses are majority-owned by females and 85 percent of them do not receive any government grant.
Covid-19 has had an adverse effect on small businesses and the fact that SMME baseline data is not easily accessible to assist governments and institutions looking to support these businesses poses a huge risk. Creating a healthy and functioning ecosystem could help BDSPs design their programmes to address the issues facing this sector.
C4G has identified this as a gap in the market and our platform looks to contribute towards creating this ecosystem to assist BDSPs in making data-driven strategic decisions in their programming.
There is a need for data analysis and visualisation in the SMME sector because it is important to measure performance in order to benchmark it. Learning is a big part of growth, and the SMME sector is in need of such growth. A well-functioning SMME sector will increase the spending on local resources because SMMEs depend on them. SMMEs can adapt more rapidly than larger organisations to changing preferences and trends so creating an ecosystem will foster innovation which contribute immensely to the economy.
The SA government needs to implement major reform in their policies for small businesses if they are to play a major role in transforming the economy. Solving this problem begins with identifying who it affects and then working with them to solve it.