Durban - While there was a decrease in the number of small, medium and micro enterprises (SMMEs) in KwaZulu-Natal last year when compared with 2008, the number of black-owned SMMEs has grown nationally.
This is according to a study released by the Bureau of Economic Research, which was commissioned by the Small Enterprise Development Agency.
The 2008 statistics were based on a report by the Trade and Industry Department on the country’s SMME sector. The study found that the number of SMMEs in KZN declined by 11% from 2008 to 2015. Most of the losses were in the formal business sector as 27 615 businesses were no longer in operation last year.
The reasons for the decline included a lack of infrastructure and access to finance, too much red tape in government, high levels of crime and a volatile economic climate. “Lack of access to finance and poor profitability are at the top of the list of reasons why small businesses close shop,” the study says.
Durban-based economist Bonke Dumisa said while there was an overall decline in the number of SMMEs in KZN, there was growth, notably in Gauteng and Limpopo. The number of SMMEs owned by Africans and Indians had grown nationally and in some provinces.
Nationally, the number of SMMEs owned and operated by Indians increased by 47% between 2008 and 2015, while black-owned SMMEs increased by 5%. There were a number of reasons for the declines in SMMEs in KZN, particularly the effect of the global economic meltdown on South Africa.
Job displacement
Dumisa said that the reason for the continued growth of SMMEs owned by the African and Indian race groups could be speculatively attributed to including the job displacement factor. “Those who got retrenched from formal sector jobs simply... set themselves up in the SMME sector.
“It is easier to set up SMMEs in most formerly black areas, because most people simply start trading without even trying to get any formal business licence and authorities either find it difficult or are less enthusiastic to enforce business regulations.”
Earlier this year, University of KwaZulu-Natal honorary research fellow in development studies Glen Robbins told The Mercury that the business environment in the eThekwini municipality needed attention and more support for the informal economy.
THE MERCURY
