Sunday, May 24, 2009

SMEs in South Africa - a big market on our doorstep

While the European and USA markets to the north are of obvious and necessary interest to our technology industries, our manufacturing industries would do well to view the trends within the retail sector.

Our retailers are entering the African markets to the north, and finding it lucrative. As South Africans, we have an edge on the bulk of our African bretheren from the point of view of skills and experience in retail and manufacturing.

In respect of overseas competitors, we also have the advantage of shorter distances and hopefully lower costs as a result.

So let us attempt to build a series of lucrative markets in Africa for our manufacturers. They need to study these markets and see what the opportunities are. Global players are seeng the market opportunities in Africa so why not us?

Hopefully the new minister at the DTI, who apparently supports this view in general, will raise the profile of these opportunities and provide the funding and support to help SMEs enter these markets, and perhaps even to develop new industries to service these markets.

Heres hoping.

Sunday, May 17, 2009

SMEs in South Africa - a big opportunity

Last week we looked at one of the biggest obstacles to SME development in South Africa. This week we look at some of the big opportunities available to SMEs in South Africa.

One of these opportunities are the government funded activities such as marketing assistance. The government funds many interventions which have been shown to be of enormous financial benefit to the SME. To get a handle on these, go to the DTI website at and spend some time reviewing all the opportunities available to you for accessing government funding to help your business. You have to work at this as government itself markets these amazing opportunities very poorly.

Another opportunity is the broad base of useful information and research available from South African universities, South African Department of Statistics, SARS and the DTI. Look at their websites and the university libraries to identify information useful to you and your business. Remember that knowledge is power, and therefore you need to gain as much useful and current information as is possible. Look particularly through dissertations prepared at the local university as it is normally research based upon local businesses.

Sunday, May 10, 2009

SMEs in South Africa - a big challenge

SMEs in South Africa - a big challenge. One of the biggest threats to SME development in South Africa is the BBBEE legislation. Why do I say this, especially as I believe the BBBEE legislation to be generally fair and reasonably well thought out?

As a consultant operating in this arena, I am aware that the bulk of businesses are actively attempting to comply with the BBBEE legislation. However, the efforts of the business community in this regard are being destroyed by the South African Government, the same people who created the legislation in the first place. How?

By not forcing government departments at national, provincial and local government level to comply with their own legislation. Government has not changed the legislation that applies to their own procurement activities (Public Preferential Procurement Framework Act PPPFA)to reflect the BBBEE requirements which they legislated into place, and we are now 3 years down the road.

This has allowed insignificant people with their own personal agendas to create their own policies in each department at every level. The nett result is a system that is unfair and directly in contravention of the spirit and the law related to BBBEE.

The South African Government created a tool to try and re-align the economy so as to remove previous racial biases, but their failure to complete the job properly is an indictment of their lack of true commitment to economic development through the use of SMEs.

I am aware of many businesses who have spent large sums of money in complying with the BBBEE legislation, and have made a significant difference in the community as intended, and yet they remain excluded from business opportunities purely on the basis of their race. This not only applies to White entrepreneurs but also to Indian and Coloured entrepreneurs.

The Government must either accept that their lack of action will soon lead to businesses refusing to comply as the system is not applied correctly and fairly, with a major loss to the communities they operate in as a result, or they must fully implement their legislation. Failure to do so will continue to create opportunities for corruption as is so often the case right now, with incompetent and over-priced suppliers often getting the business. This is resulting in massive overspending on purchases by government which is in turn contributing to ongoing inflation and lack of delivery by government, as budgets run short. Many White and Indian businessmen now only go to compulsory tender meetings to meet the Black business people who will get the business. When the tender is issued they then get the business at the same profit margins as they would normally make, except that the order is channeled through a Black business. These Black individual are merely adding a level of intermediary costs and not adding any value. So no development is occurring. Emails are often received from black individuals offering to sell their orders. They are in effect making themselves to be no more than a front, in direct contravention of government's intent.

If the South African Government is serious about economic development, all things must be created equal. Right now being Black is enough to get the business. Other race groups may have skills, better pricing, and be established businesses with large staff numbers (often Black), and they invest heavily in skills, socio-economic and enterprise development among other things, and yet they do not get the business. This cannot lead to economic development and growth, and can only lead to where we generally are, in a pool of corruption that destroys our economy as another layer of cost is added with no value add and no organisational development.

Our fragile economy needs to ensure Black entrepreneurial activity, and the BBBEE legislation was intended to do just that. However, the failure of Government to implement this thoroughly and as planned, has and will continue to result in tenders being given to friends, family and bribers, because it can safely be written off as BEE.

It will be interesting to see what the new Jacob Zuma government does, considering his statement that he wants to see BBBEE grow in the SME sector and no longer in the corporate sector.

ALL South Africans want to see the country prosper and are fully aware that it requires everyone to prosper. We need BBBEE to work properly so we can all benefit.

Sunday, May 3, 2009

SMEs in South Africa - the purpose

SMEs in South Africa as a blog is intended to alert SMEs to the macro issues in South Africa which are impacting, or going to impact on their businesses.

SMEs too often become mired in the micro detail of running their businesses, and lose sight of the "bigger picture".

This blog will help SMEs to find out what is happening that will impact on their businesses without having to spend a lot of time looking for information and then trying to understand the impact of what they have found.

Interestingly, they will also find anomalies that exist, which will help them to be a little wiser and more careful in their dealings with big business and government. At times these entities find themselves with conflicting imperatives, and often the SME cannot understand why certain decisions are made.

Then there are the global trends in SME creation, numbers and behaviour. These too will be visited on a regular basis, and their impact on SMEs in South Africa identified.

This will be a weekly blog.