A STUDY of emerging firms has revealed that in the second quarter of this year only 12% of businesses that existed in 1994 were still in business.

The research also showed that only 6% of the country's working adults ran their own businesses.

The Small, Medium and Micro Enterprises (SMMEs) Index, launched by Absa in Rosebank, Johannesburg, found that 2.1% of the entrepreneurs had employed other people.

The study showed that out of 1.9 million businesses, 270,000 had employed at least five people, when discounting the owners.

This points to the country's inferior entrepreneurship culture.

Absa head of enterprise development Sisa Ntshona said the government and the private sector had serious roles to play in cultivating entrepreneurship.

"The government should inculcate the entrepreneurship culture at primary, high and tertiary school level because our standard of education is extremely poor," Ntshona said.

"If pupils leave school without being able to do basics in arithmetic, it will be tough for them to run a financially sustainable company."

Turning to the private sector, Ntshona said big business should consider setting aside a certain percentage of its total procurement budget for SMMEs.

"When big business procure goods and services from JSE-listed companies, they make someone who is sitting in another country richer," Ntshona said.

"However, when the big companies buy from local SMMEs, this money goes towards developing the local economy and job-creation."

Economist Mike Schussler, who conducted the research on behalf of Absa, said the government should consider freeing up regulation to protect SMMEs.

"The government must free-up regulation in favour of SMMEs, while perhaps having a different set of rules for big business as they can afford to pay for services that SMMEs can't," Schussler said.

"The state could do this by, for instance, relaxing labour laws."