By Tebogo Mokwena
SMMEs will struggle to cope this year as they have a number of challenges they must deal with, including rolling blackouts, according to PricewaterhouseCoopers (PwC) senior economist Christie Viljoen. SMMEs are also underperforming in contributing to economic growth and employment. Viljoen, who was interviewed by Vutivi News on the outlook for SMMEs in 2023, said challenges included load-shedding, weak consumer confidence, and expectations of slower economic and spending growth.
“While large corporates have been able to invest in alternative energy sources like solar power and diesel generators, most SMMEs do not have the funding available to invest in backup power systems,” he said. “SMMEs form an integral part of the value chain within the services sector and are important for diverse services like food supplies, transport and safety.” When asked if small businesses in the country had the capacity to drive economic change like other SMMEs around the world, Viljoen said there were many reasons that reduced their contribution to economic growth. “Globally, SMMEs are the drivers of job creation. However, in South Africa, small enterprises are challenged by a long list of factors including the cost and reliability of electricity supply, crime, general economic uncertainty and a lack of access to finance, amongst other challenges.”
He also said that small businesses needed entrepreneurship skills and other core business skills. “Many SMMEs start out as an individual with a specific knowledge of a product, market or geography, who then supplies a good or service linked to this,” Viljoen explained. “However, most of these people – some are artists or engineers or lawyers – do not have the financial and other skills to run a business. “As such, SMMEs are in need of upskilling with regards to financial literacy, for example, which will also support them in accessing finance.” A goal in South Africa’s National Development Plan is that 90% of jobs must be created by small and medium enterprises by 2030. However, these businesses continue to face various obstacles despite the country having a dedicated Department of Small Business Development.