SA’s SMEs alive and competitive

Small and medium enterprises (SMEs) in South Africa (SA) are alive and well, and regard themselves as being highly competitive. This is one of the key findings of SME Survey 2004, a project that researched the role played by government, ICT and financial services in small and medium business in SA.

Conducted with the backing of Hewlett-Packard Co. (HP) and Standard Bank Group, the research involved interviews with 2,919 SME decision-makers.

A startling 86 per cent of the SMEs surveyed regarded themselves as being somewhat competitive or very competitive. A further 12 per cent believed themselves to be neither competitive nor uncompetitive. This left a mere two per cent of SMEs who believed that they were not competitive.

“This bears out all the assumptions that have been made in recent years about SMEs being the new driving force in the local economy,” says Thierry Boulanger, HP SA’s solutions partner organization manager, heading up the SME, corporate and enterprise managed partners division.

However, few of the businesses give the government’s SME initiatives credit for their competitiveness. Less than 1 in 10 of the respondents rated government efforts to promote small business as effective.

“Given the enormous resources that government is putting into SME development, this reflects poor communication rather than poor strategy,” says Arthur Goldstuck, MD of World Wide Worx, and principal researcher for SME Survey 2004.

This is borne out by the findings, which show that no less than 70 per cent of respondents gave government a poor rating for the way in which it communicates these efforts.

At the heart of the survey, SMEs were asked to rate the impact of various government initiatives, from SME and business support programs to legislation and regulation, on the ability of companies to survive or grow. SMEs were reasonably positive on legislation, with 41 per cent of respondents positive on the impact of legislation in general, and only 21 per cent negative.

“SMEs understand that a strong legislative foundation is needed to provide a healthy business environment,” says Spiro Georgopoulos, director of business banking at Standard Bank.

The same proportion, 41 per cent of respondents, was positive on the impact of import/export legislation, but with 33 per cent negative. Impact of skills development programs (30 per cent positive) and impact of BEE (28 per cent positive) also scored reasonably, but had more negative respondents than positive.

“The extent of neutral respondents, around a quarter to a third on most issues, indicates the opportunity for government to use communications to change perceptions,” says Georgopoulos.

The lowest ratings were given for the impact of general government incentives for SMEs, with a mere 12 per cent positive, while impact of SME support structures received an 18 per cent positive rating, impact of preferential procurement 23 per cent positive, and impact of export incentives 25 per cent positive. A high proportion of respondents, 41 per cent of the total, reported a BEE component to their business.

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Jim Love, Chief Content Officer, IT World Canada

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