Small businesses are vital for business recovery

By Zandile Njamela Mampone, Supplier Inclusion and Sustainability Lead at Accenture, Africa

Small to medium-sized enterprises (SMEs) are the lifeblood of the South African economy. Their survival is critical to economic recovery post COVID-19. According to Statistics South Africa’s Annual Financial Statistics 2019 survey, SMEs contribute 32% of the country’s R10,5 trillion total turnover of the formal business sector, which is a significant increase from 25% in the 2013 survey. In the same six-year period from 2013 to 2019, SMEs increased their turnover by 8,4% versus a 5.4% turnover increase seen from large business.

The COVID-19 global pandemic has disrupted our entire existence - privately, socially and economically. Big, small and mediumsized businesses are feeling the impact of the pandemic. It needs to be recogised, however, that SMEs are more vulnerable to the prevailing uncertainty as the world adapts to a new way of doing business.

Big business is able to adapt more rapidly and at scale in response to the changing business environment for its survival. On the other hand, SMEs often have more limited resources, hampering quick business adjustments in response to times of crisis. Government and private large business need to be mindful of the position SMEs find themselves in. It is the entire value chain’s responsibility to support SMEs towards a higher small business survival rate post the pandemic.

Supporting SMEs is vital for economic recovery in South Africa

Government has responded with various financial and other support structures to help SMEs navigate the impact of COVID-19. Although these public measures are welcome, the private sector must also take up its responsibility to support small and medium suppliers in the value chain for positive long-term business impact and survival. Zandile Njamela Mampone, Supplier Inclusion and Sustainability Lead at Accenture, Africa

While access to capital is always a significant barrier to SME growth, solving the challenges that face small businesses and hamper their growth, requires more than a funding boost. SMEs often face other prolific challenges that impede their ability to reach their potential and deliver a meaningful business contribution.

SMEs require access to initiatives that make them self-sustainable and ensure their longterm success. A lack of access to commercial opportunities often constrains SME growth and is an area where larger, private entities can make a significant difference in the business future of an SME.

Create initiatives that are focus on shared value

Shared value harnesses an organisation’s policies and system to enhance its competitive edge while increasing its social impact in the communities it operates in. Similarly, SME support and growth programmes need to address the organisation’s commercial objective and should be supported by policies and practices that enable them to remain sustainable. It is critical for an organisation to support and grow its small- and- medium-size suppliers through commercial opportunities. Such suppliers then become more effective as businesses and, in turn, contribute positively to the society they operate in by combatting unemployment, low education and widespread poverty.

By partnering with SMEs through comprehensive shared-value targeted programmes, SME businesses gain valuable experience. The skills and knowledge transfer adds value while access to established business networks feeds their business pipeline. SMEs, in turn, grow their sustainable revenue streams as they become part of the procurement pipeline of larger businesses. As more corporates become more inclusive and willing to broaden access to business opportunities, SMEs will flourish and play their rightful role in an empowered economy.

SMEs grow their sustainable revenue streams as they become part of the procurement pipeline of larger businesses.