Role of SMMEs surges: Small business has increased its influence

Johannesburg – Data from Statistics SA has brought to the fore the importance of small, medium and micro enterprises (SMMEs) for the country’s economy, with smaller players in the construction industry doing the heavy lifting.

The recently released data from the 2019 Annual Financial Statistics survey show the growing role that small businesses play in the formal business sector. The survey shows businesses in South Africa generated R10.5-trillion in total turnover in the 2019 financial year, and that small businesses accounted for R2.3-trillion of this.

“Small businesses have, without much fanfare, slowly taken over more of the turnover pie. In 2013, small business generated 16% of total turnover in the formal business sector, expanding to 22% in 2019. The contribution of large business waned over the same period, from 75% to 68%,” a report from the stats agency said. “Small business has increased its influence in construction and business services.” The data further revealed that with the construction industry on its knees and fewer large players generating turnover, SMMEs have filled the gap.

“In terms of growth, small construction companies have tripled the amount of turnover generated, from R53-billion in 2013 to R163-billion in 2019 [a rise of R110-billion]. In stark contrast, large construction companies increased turnover by only R17-billion over the same period.”

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Old Mutual’s Arthur Karas said: “Increased demand and construction profits soared ahead of the 2010 World Cup. However, we find ourselves now with declining profits and fewer listed players, which forces existing companies to try to compete for a piece of a smaller pie.”

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