How It Works

How It Works.

One Great Idea: Crowd Funding

The South African National Development Plan, in agreement with a number of notable business researches lists small business as the driver of growth in any economy. This is borne out by the number of successful small business in developed economies where it is said to be the main driver of employment.

It is a common feature across countries to make available large amounts of money in an effort to try and facilitate the growth of SMMEs. Disconcerting though is the fact that limited systematic research or data are available informing the various policies in support of SMMEs, especially in developing countries. Moreover, empirical evidence concerning the relationship between the size of firms and growth has been mixed. Recent work on this topic by Haltiwanger, Jarmin and Miranda suggests that so-called “start-ups” and surviving young businesses are most critical for job creation and contribute disproportionately to overall employment growth. It is found from this study that was carried out across 99 developing economies between 2006 and 2010 that small- and medium-sized enterprises are the largest contributors to employment across countries but that SMMEs contribute more to employment in low-income countries than in higher-income countries. Across countries, firms that are both small and that have been in existence for more than 10 years employing between 5 and 99 employees have the largest proportional share of total employment compared with other size-age groupings. Small and mature firms do not only employ the largest number of people, but they also create the most new jobs, across country income groups.
While SMMEs are found to create more jobs, their contribution to productivity growth is found to be less than that of larger firms. Growth and increases in productivity amongst SMMEs require that policy should be focussed on the likely obstacles faced by SMMEs that range from a lack of access to finance, the need for business training and literacy programs as well as addressing other constraints such as taxation, regulations and corruption.

Francois Groepe: The role of business in the National Development Plan (NDP), to deal with the threefold challenge of unemployment, poverty and inequality by 2030
Address by Mr Francois Groepe, Deputy Governor of the South African Reserve Bank, at the
Afrikaanse Handelsinstituut (AHI) National Congress, Kruger National Park,
19 October 2012.

Clearly if the South African economy is to prosper, this important sector of our economy needs stimulation and support, amidst many different challenges, especially at start up. As often stated one of the biggest challenge faced by entrepreneurs starting small business is finance and expert support.