South Africa’s export growth forecast could be constrained by world growth, which the World Bank is expecting to slow to 2.9% this year and 2.8% in 2020.
This anticipated slowdown will affect South Africa’s fortunes adversely if the trading focus continues to be with our traditional markets, such as China, Germany and the US.
The headlines for the past decade have been “Africa Rising” and being “open for business”.
The fastest growing economies in the world are in Africa – Kenya, Uganda, Rwanda, Ghana and Ethiopia.
Thus the urgency of growing our intra-Africa trade should be on the strategic radar of every South African leader and company, including small businesses.
Small businesses are not going to be the engines of economic growth and job creation if the thinking is that they need to be strong and get most of their sales and income from the home country before venturing beyond.
As Teddy Daka, CEO of Etion, a digital technology solutions provider, said in a Wisdom Personified Conversations with me last month: “We are not getting the level of support we need to get locally. It is almost that you have to make it outside for you to make it internally.
“[In] our cybersecurity business, just as an example, 95% of our income is from international not local. Maybe it is Afro-phobia.”
It is welcome that the budget speech allocated R481.6 million to the Small Enterprise Development Agency to expand the small business incubation programme.
However, it is critical to not apply one-size-fits-all in providing support to small businesses.
It is always said the major barrier and need for small businesses is funding.
This year my company Busara Leadership Partners is 10 years in business.
Getting funding has not been my biggest challenge or need as a strategic advisory firm.
The three major challenges which I have heard other small business owners mention: Having a strong pipeline of business to ensure a healthy and stable cash flow; getting paid timeously, if at all; and having the required capability (track record) and capacity (size) to scale the business beyond the survival stage.
The South African market offers diverse and complex challenges to small businesses which will prevent the achievement of the National Development Plan’s goal of creating 90% of the jobs by 2030.
A day before the budget speech last month, I was exposed to a glimpse of hope for some small businesses and a truly customised incubation programme run by Pick n Pay, headed by Suzanne Ackerman-Berman, the director of Transformation.
What makes small business successful is not just the funding. Every sector has its own nuances.
Suppliers are the lifeblood of a retail business. It is a complex and competitive environment that requires high quality and reliable supply chains that meet the relevant regulatory standards.
To be successful at being a supplier, there is a lot of hand-holding that is necessary to get you to the level of having your product on their shelves.
I met Peter Nyathi, from Tropical Mushrooms, one of the small business owners at the Health Innovation workshop that was being held, who now supplies Pick n Pay.
I asked Ackerman-Berman whether it still holds true that, what we were told in negotiation and accounting classes at business school, Pick n Pay is a tough negotiator with its suppliers and pays in 60 to 65 days.
“When it comes to our small businesses, we have various arrangements, which range from seven to 14 days because we understand the pressures they operate under and the importance of cash flow.”
Today Pick n Pay has a turnover of R81.6 billion, 85 000 employees, operates in Namibia, Botswana, Zambia, Swaziland, Lesotho and has a 49% share in TM Supermarkets in Zimbabwe.
“Dare we forget that it started as four stores in 1967. The minister said we are at a crossroad. We could go either to heaven, or the other way.”
Not decreasing unemployment from 27.5% is definitely going the other way.
South Africa needs to do right by small business for the country to regain its economic competitiveness in the world, let alone on the continent.
Msomi is CEO of Busara Leadership Partners