While small businesses are the unsung heroes of South Africa’s economy, their contribution to national development is undeniable. Creating an enabling environment for entrepreneurship is therefore not only good for the economy, but also necessary for building a fairer and more prosperous economy.
Let’s examine some of the most significant contributions small businesses are making to the state of South Africa and why the country needs them:
The Cornerstones Of South Africa’s Economy
The most discussed benefit of small businesses is their contribution to GDP. A recent report by the International Finance Corporation (IFC) estimates that small businesses account for up to 34% of total GDP. Small businesses are often cited as the engines of the South African economy, providing much-needed economic stimulus. A factor that experts predict will become more important over the next decade.
Small Businesses & Job Creation
It is estimated that South African small businesses employ 50% to 60% of the workforce. With the country’s record-high unemployment rate, it’s evident that small businesses play a crucial role in job creation. By enabling millions of South Africans to support their families, small businesses also help alleviate poverty.
Community Building & Service Delivery
Think of the archetype of a friendly butcher, the corner spaza shop, the local barber, or the tutoring class next door. These stories build and nurture communities. Local small businesses are landmarks in the country’s socioeconomic landscape as they provide much-needed services and sustain consumer spending in local towns and cities. They are therefore also engines of social cohesion, bringing people together, building support networks and bridging the gap between businesses and consumers.
Financial Inclusion – A National Imperative
In a country where inequality is among the worst in the world, the call for financial inclusion has grown louder in recent years. This has been driven by industry leaders, private sector players and civil society, who have stressed the urgent need to build an equitable society. Entrepreneurship has the ability to transform more South Africans into economically active citizens, broaden the tax base, foster skills development and secure the financial future of more people.