Article written by Janice Johnston (Chief Executive Officer of Edge Growth Ventures)
It has been mentioned often that SMEs are the single most powerful source of job creation and upliftment, especially here in South Africa where high unemployment is a reality. It just makes so much sense to grow a more robust SME sector in South Africa, bringing with it a myriad of benefits for our people and our economy. Sadly, without help, most small businesses fail within the first two years.
Stronger collaboration is needed between corporate South Africa and SMEs to unlock greater sustainable growth, and our experience at Edge Growth over the last 18 years has shown us the value of innovation to enhance the resilience and performance within this sector. Never before have the following factors been more important to unlock growth constraints towards a more inclusive and sustainable economic landscape.
Digital transformation
Businesses with a strong adoption of technology integration and business process optimisation will be best placed to improve operations, margins and customer value, including augmenting cloud computing, improving data analytic capabilities, and leveraging artificial intelligence (AI). The resultant benefits of such initiatives can enhance efficiencies, streamline operations, and increase cost-effective access to new markets and customer segments. There is no doubt that digital transformation is a necessity for sustainable growth within the SME sector.
Energy sufficiency
While load-shedding has eased this year, this challenge over the last decade, has throttled growth prospects for many SMEs in particular, through cost and time overruns, operating limitations and loss of customers. It is therefore critical for SMEs to know what kind of solutions exist to become more energy sufficient – including Renewable Energy (RE) solutions, reducing energy usage along with efficiency saving measures and technology. Proactive use of funding options available for renewable energy can become a key differentiator for SMEs.
Sustainability
Many SMEs might view sustainability as only applicable to larger companies, given the perceived administrative and financial costs. The truth is that SMEs that integrate sustainability into their core business strategies can benefit from lower operational costs and cost of capital, reduced business risk and new opportunities with a growing customer base that values sustainability and increased trust with stakeholders. Adopting sustainable practices can make a real difference to align with global environmental goals, including waste reduction, renewable energy use, and sourcing eco-friendly materials.
Township economy
The South African township economy is a vibrant and dynamic sector and presents an opportunity for SMEs to expand to new customers, to broaden market diversification and to deliver additional product needs. Given South Africa’s untenable levels of inequality, this sector has significant potential for job creation and economic development, contributing to the growth of local economies and improving livelihoods.
Skills development
With SMEs being such large job creators, making up 60-70% of the jobs that are available in South Africa, SMEs have the ability to drive skills development and capacity building. Due to their smaller size, the learning environment in SMEs tends to be more hands-on and collaborative, facilitating knowledge sharing and skill enhancement. Investing in skills development also enables SMEs to stay competitive in the market, with upskilled employees better equipped to innovate, adapt to market changes, and contribute to the company’s growth.
Remaining agile and innovative within a more enabling environment is how SMEs will be better equipped to thrive – driving economic growth, job creation, and social development.
Edge Growth Ventures is a proud Partner of the NSBC