South Africa lagging on small-business front
The legacy of apartheid has caused South Africa to lag behind other upper-middle-income countries in terms of small business, which is a core factor behind very low employment levels.
The country faces unusually deep inequality, largely because of its limited small business community. This results in far fewer people earning livelihoods from their own businesses than in other upper-middle-income countries, and income from productive assets and financial savings is even more unequal than wages and salaries.
These were points made by speakers during nonprofit economic research unit Trade and Industrial Policy Strategies’ (TIPS’) development dialogue on small business in the economy.
TIPS economist Lesego Moshikaro outlined some of the key takeaways from the new Small Business edition of the Real Economy Bulletin published recently by TIPS.
This provides baseline data on the number of small businesses and their contribution to the economy, as well as their distribution by industry and location; ownership by race, gender and age; investment; and profitability.
Moshikaro noted that the number of formal small businesses in South Africa reached 710 000 in 2022. There has been an increase, from 590 000 in 2010, to 680 000 in 2019, and a recovery from a decline during the Covid-19 pandemic.
In other upper-middle-income countries, small business owners constitute over 20% of the working-age population. By contrast, and of concern, is that in South Africa this is just 6%, Moshikaro pointed out.
She noted that TIPS estimates that formal small businesses directly generate a third of value added in South Africa, while informal enterprise add about 5%.
Moshikaro highlighted that, in 2020, formal small firms held at least a quarter of total business assets. Generally, they were both more labour-intensive and more profitable than their large counterparts, she said.
Further, formal small businesses generated 30% of total employment, 32% of all waged employment, including informal and domestic work, and half of waged work in the formal private sector.
In terms of education, she said close to half of formal business owners have post-matric qualification of some kind, compared with a seventh of their waged employees.
In terms of race, Moshikaro said black people have consistently owned about 95% of informal enterprises.
From a gender perspective, she noted that women own around a quarter of formal small businesses; however, half of these are white-owned businesses.
In the informal sector, the proportion of women entrepreneurs declined steadily from 45% in 2010 to 35% in 2022.
Moshikaro also touched on the age factor, noting that, in 2022, 4% of young people aged 15 to 34 were business owners, which equated to 15% of all employed youth.
From a geographical point of view, in 2019, the five largest metros held a third of the national population and around 60% of all formal small businesses.
The historical labour-sending regions held only 5% of formal business, although they have a quarter of the national population, Moshikaro outlined.
Comments
The
content
you are trying to access is only available to subscribers.
If you are already a subscriber, you can Login Here.
If you are not a subscriber, you can subscribe now, by selecting one of the below options.
For more information or assistance, please contact us at subscriptions@creamermedia.co.za.
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation