By: Anna Majavu
While large corporations can make social problems worse with their “bad business practices”, SMMEs are often at the forefront of creating jobs and “fostering social and political justice” in South Africa. Trisha Ramsuraj of the Durban University of Technology’s Department of Information and Corporate Management researched how SMMES were “now driving economic growth and solving social issues in a setting where big businesses and governments appear to be doing very little”.
She found that they had a big impact on stimulating economic growth because of their capacity to promote local development. Also, because many retrenched workers from big companies started entrepreneurial projects after losing their jobs, they helped boost the sector. However, small businesses were still being denied assistance by big corporations which made It difficult for them to survive. “The hostile anti-black entrepreneur mindset from the apartheid era is still present in corporate South Africa since few enterprises are fulfilling their transformation equity objectives,” she wrote.
Corporations often saw SMMEs as enterprises with a high failure rate in which investment would be risky, ignoring the fact that they hired many unskilled workers who were shunned by big businesses, benefiting the economy. A “few major businesses dominate the competitive landscape and build significant entry barriers, preventing SMMEs from expanding”. “As a result, SMMEs are compelled to work in less protected sectors including commerce, business services, and retail,” Ramsuraj found.
She also found that in South Africa and on the rest of the continent, the presence of large multinational corporations “without the active involvement of small businesses is one of the main causes of the continent’s poverty, unemployment, and slow economic progress”. “Bad business practices and big corporate activities not only make social problems worse, but also indicate they lack the motivation to promote socioeconomic growth,” said Ramsuraj.
Many SMMEs were initially established during apartheid in the informal sector and were seen marginal to the economy – this situation still existed in practice today, she said. Because of this, the “whole small company economy needs an incubation strategy in order to develop and mature into a sustainable sector”. She also recommended that the government stop viewing SMMEs as businesses that would never grow into anything more than survivalist enterprises.
“Today’s entrepreneurs are small business owners who do not wish to remain small and have a growth orientation in their operations”, she wrote, adding that SMMEs themselves were good spaces for entrepreneurs to try out different business practices and build up the experience to grow their enterprises.