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South Africa's SMEs buoyant

By Arthur Goldstuck

Small and medium enterprises in South Africa are alive, well and regard themselves as highly competitive.

This is one of the key findings of SME Survey 2004, a project that researched the role played by government, information technology and financial services in small and medium business in South Africa. Conducted with the backing of Hewlett-Packard and Standard Bank, the research involved interviews with 2919 SME business decision makers.

A startling 86% of the SMEs surveyed regarded themselves as somewhat competitive or very competitive. A further 12% believed themselves to be neither competitive nor uncompetitive. This left a mere 2% of SMEs who believed 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 South African economy,” says Thierry Boulanger, Hewlett-Packard South Africa’s Solutions Partner Organisation manager heading up the SMB, 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 Government is putting into SME development, this reflects poor communication rather than poor strategy. This is borne out by the findings, which show that no less than 70% 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 programmes to legislation and regulation, on the ability of companies to survive or grow. SMEs were reasonably positive on legislation, with 41% of respondents positive on the impact of legislation in general, and only 21% 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% of respondents, was positive on the impact of import/export legislation, but with 33% negative. Impact of skills development programmes (30% positive) and impact of BEE (28% 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% positive, while impact of SME support structures received an 18% positive rating, impact of preferential procurement 23% positive, and impact of export incentives 25% positive.

A high proportion of respondents, 41% of the total, reported a BEE component to their business.

About SME Survey 2004
SME Survey 2004, an annual research project on the factors influencing small, medium and micro enterprises in South Africa, this year focused on the role of government, information technology and financial services on SMEs. The project was backed by Hewlett-Packard and Standard Bank, and included interviews with 2919 SME decision-makers during March and April 2004. The research was led by Arthur Goldstuck, MD of World Wide Worx, call centre research services were provided by Netsurit, and strategic marketing and project management services provided by Debbie Whittaker of Coolcumba Communications and Celeste Whitaker of Fizz Marketing. The survey is a project of SME Survey (Pty) Ltd.

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The Big Change is a business strategy blog and newsletter published by Arthur Goldstuck, managing director of World Wide Worx, a leading technology research organisation based in Johannesburg, South Africa.

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