This is also confirmed by the Centre for Development Enterprise (CDE), which notes gaps in SA’s funding of small businesses. Factors such as exclusionary eligibility for funding qualification criteria, lack of accurate information, and time lags between application and disbursement of funding, all together contribute to the vulnerabilities of small business.
There are too many onerous requirements to qualify for funding, especially for small businesses. This is not only time consuming but also discouraging to new small and medium entrepreneurs. Government and the private sector must work to improve the ease of accessing funding. This can be done through simplifying the financing eligibility criteria on established small businesses, processes and information on funding requirements, and having faster turnaround times for applications.
The common feature to successful fast-growing economies, including African economies such as Kenya, Ethiopia and Rwanda, has been the greater support and encouragement of SMEs. Small businesses have been the ones championing innovation and job creation, which has spurred on economic growth in those economies.
The IFP stands in support of all efforts aimed at addressing access to funding and reduction of red tape.
Given SA’s pressing need to create a more inclusive, fair, labour-absorbing economy, we must invest in small businesses as part of our economic recovery strategy.
The time for looking towards big business to drive the economy and create jobs has passed. We have looming unemployment and a poverty challenge.
If our economy is to stand a chance at recovery, policy action must be directed at supporting small businesses so they can bring about the higher levels of innovation and generate jobs.
The success of our economic recovery will depend on more effort being placed on creating a small and medium enterprise-friendly environment. This will encourage more citizens to be creators of their wealth and employment instead of perpetually depending on the state to provide. What most entrepreneurs need is a hand up rather than a handout.
• Dhlamini is a member of the Gauteng legislature and chairperson of IFP Gauteng