Amazing statistics about local businesses
Almost a decade on from the start of the global financial crisis, South African businesses are still facing a number of challenges. Here are some astounding figures about the state of South African small and medium businesses.
South Africa’s failing to increase the number of small businesses
In 2008, South Africa was home to 2.18m small, medium and micro enterprises (SMMEs), with 666,500 formal SMMEs (meaning that they are registered with government and subject to company tax), 1.4m informal SMMEs, and 95,000 SMMEs in agriculture and households services (classified as ‘Other’), according to the Bureau for Economic Research’s 2016 SMME research note.
In 2016, the total number of SMMEs was 2.25m, only 3% more than were present in 2008. Formal SMMEs numbered 667,400, informal SMMEs numbered 1.49m, and there were 86,000 ‘Other’ SMMEs. Limpopo and Gauteng experienced the largest growth in SMMEs between 2008 and 2016, at 34% and 14%, while the Northern Cape and Free State experienced the largest declines in SMMEs, at -31% and -16% respectively.
But the importance of small businesses to the economy is increasing rapidly
Despite the difficult environment for small businesses, their operations have become even more crucial to the good health of South Africa’s economy. In 2010, SMME’s total contribution to the South African GDP was 33% of total; in 2015, this share had increased to 42% of South Africa’s GDP, according the Bureau for Economic Research.
South Africans think highly of entrepreneurs, but don’t want to be them
The Global Entrepreneurship Monitor’s 2016 report on South African entrepreneurial environment catalogues statistics on perceptions towards entrepreneurship. Drawing on a dataset going back to 2001, they show a remarkable increase of positive perceptions towards entrepreneurs. In 2001, only 19.7% of South African adults perceived good opportunities for entrepreneurial activity in their area, which rose to 40.9% of adults in 2015. In 2003, only 48% of South African adults perceived entrepreneurship as a good career choice, rising to 73.8% in 2015. The increase in status was not met with an increase in those wishing to achieve that status however. In 2003, 12.2% of South African adults had entrepreneurial intentions – that is, they planned to start their own enterprise within 3 years. In 2015, this share had decreased to 10.9%. These figures are in stark contrast to the African continent as a whole – 39.3% of adults in Africa, as a whole, had entrepreneurial intentions.
Most South African small businesses are feeling throttled by red tape
The Small Business Project’s SME Growth Index 2015 reported that South African firms face an extraordinary regulatory burden, inhibiting the ability of small businesses to grow and face the myriad challenges of entrepreneurship. In 2015, 75% of those surveyed reported that the burden of red tape had increased in the course of the year, with 40% of firms citing this as a top factor for impeding the growth of their business. There is a tragic irony here: government is looking to small business to drive economic growth, but it is government that is the greatest inhibitor of growth in small business.