DSBD- Longitudinal Study on SMMEs and Co-Operatives in South Africa
The Department of Small Business Development (DSBD) appointed Mthente to conduct a longitudinal study on Small, Micro and Medium Enterprises (SMMEs) and co-operatives in South Africa. The study will run from 2021 to 2024 and is the first study of its kind conducted by the DSBD. The aim of this study is to gather consistent data on SMMEs and co-operatives so as to assess the impact of government support programmes aimed at SMMEs and co-operatives, to uncover the inhibitors and opportunities to growth for the small business sector in the country, and to assess the performance of the sector in the economy with a particular focus on the impact of COVID-19. Most importantly, the study is intended to create a longitudinal profile of the sector through consistent measurement of key variables such as turnover, employment and growth.
SMMEs and co-operatives play a vital role in the South African economy and form an important part of the strategic goals captured in the National Development Plan (NDP). The small business sector is ascribed a critical role in combating poverty and inequality in the country, with the NDP stating the goal that 90% of new jobs in the country will be created by SMMEs in the country by 2030. In 2020, SMMEs and co-operatives contributed an estimated 47% to South African GDP and 57% to employment in the country.
Historically, SMMEs in South Africa have struggled with access to markets and finance, finding skilled staff, regulatory burdens, and low skills levels, among other things. While these challenges have continued to plague SMMEs, COVID-19 has introduced new challenges for the sector. These include finding premises and equipment, paying utility bills and marketing their businesses. It is important to note that, while the challenges faced by South African SMMEs are similar to those found elsewhere in the world, these challenges have persisted over the last decade, with little reported headway being made.
This study used a mixed-methodology approach which included benchmarking case studies, surveys with SMMEs and co-operatives, expert interviews and a detailed literature review. The study looked at a profile of SMME owners, a description of the sector, the contribution of SMMEs to the economy, the impact of government support on the sector, and the challenges and opportunities faced by SMMEs and co-operatives in the country.
The study showed that, while SMMEs have shown incredible resilience during COVID-19, the sector is still under-performing in terms of the NDP goals set out for it. Furthermore, SMMEs remain in survival mode, and have not yet moved to future-looking strategies for ensuring their enterprises can survive in a post-COVID and post-recovery world. The informal sector remains an area of significant opportunity for the country, with these enterprises not yet being leveraged to their full potential. Furthermore, there remain significant inequalities in the support and performance of SMMEs and co-operatives, with low awareness of government programmes being a significant contributing factor to the lack of development in the sector.
