Johannesburg – The Small Business Institute this week released the results of a few research projects it had embarked on that point to government’s failure in growing the sector.
The research demonstrates that – during the three eras of the Growth, Employment and Redistribution; the Accelerated and Shared Growth Initiative for South Africa; and the National Development Plan – policies aimed at advancing the primary sectors of agriculture and mining failed throughout the two-decade period for these industries.
The institute’s study also pointed to three general recommendations for government consideration.
The government was urged to strive for transparent, evidence- based policymaking; to lighten the heavy hand of regulation that shifts from necessary rules to red tape; and to sort out infrastructure.
The institute’s CEO, John Dludlu, said records show a countrywide total decline of all secondary industries, especially manufacturing, construction and energy production.
“As a country, we also need to embrace failure as a feature of growth, admit it and learn from it. We hope this work will encourage leaders to concede that it’s time to re-evaluate ideologically driven ideas and explore more practical and growth-orientated approaches,” said Dludlu.
“More concerning, the data show that small businesses are disappearing at an alarming rate in South Africa, this was the case even prior to Covid-19. New business entry into the category is not sufficient to offset the exit of established businesses over the entire period our research investigated.”
According to a report by McKinsey, small businesses are the lifeblood of South Africa’s economy, and also the most at risk. Small and medium enterprises across South Africa represent more than 98% of businesses, employ between 50% and 60% of the country’s workforce across all sectors, and are responsible for a quarter of job growth in the private sector.
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