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Small businesses play a key role in South Africa’s economic recovery

A number of large companies have had to file for business rescue due to pressures from the Covid-19 pandemic which has allowed small businesses to enter the fray and increased their influence. Picture: Tracey Adams/African News Agency (ANA)

A number of large companies have had to file for business rescue due to pressures from the Covid-19 pandemic which has allowed small businesses to enter the fray and increased their influence. Picture: Tracey Adams/African News Agency (ANA)

Published Dec 31, 2020

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Cape Town - The ailing fortunes in the construction industry, exacerbated by the Covid-19 pandemic, have forced a number of large companies to file for business rescue.

This comes as small businesses have entered the fray and increased their influence.

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This trend was picked up by the latest data from the 2019 Annual Financial Statistics (AFS) survey released by Stats SA which said: “With fewer large players generating turnover, small businesses have filled the gap.”

A site agent for GVK-SiyaZama, Liphu January, said that in the construction sector, SMMEs face specific challenges: “This is why it is vital that they get the necessary experience, exposure and assistance from the bigger construction companies in order for their businesses to grow.

“There is a great opportunity for this when bigger construction companies are building within a community and can therefore also help build up the community in the area,” said January.

Trevor Gosling, co-founder and chief executive of business lending facility Lulalend, said: “The role that SMMEs play cannot be underestimated. Investing in and helping to grow these companies makes sense for our country.

“Not only do they contribute significantly to South Africa’s GDP and job creation, but even more importantly they are critical to driving more inclusive economic growth. For example, studies have shown that nearly 40% of SMMEs are owned by women,’’ said Gosling.

ANC MPL and leader of the opposition Cameron Dugmore said: “The township economy model, as championed by the Gauteng provincial government, remains the best way to go in ensuring the economic empowerment of our people in their communities.

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ANC MPL and leader of the opposition Cameron Dugmore. | Tracey Adams African News Agency (ANA)

“Economic confidence can only be built through diversification in sectors, especially the green and ocean economies, diversification in ownership and diversification in the sizes of our enterprises, especially through encouraging SMMEs.”

During the 2019/2020 financial year, the provincial department of economic opportunities and tourism spent R4.5 million on the construction of trading spaces for informal traders and SMMEs including the establishment of container parks in the Cape Agulhas and Witzenberg Municipalities as well as the construction of commercial properties in the Laingsburg Municipality.

Finance standing committee chairperson Deidré Baartman said: “The committee will conduct an oversight visit of the initiative in February next year.”

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