Ricochet News

The growth of small businesses is critical to the country’s macro-economic challenges

May 19, 2016
The growth of small businesses is critical to the country’s macro-economic challenges

The importance of small businesses has been a central theme in discussions of the national and international economic recovery. It has been argued that small businesses create jobs for local communities and play a pivotal role in enhancing community's quality of life.

According to the Banking Association South Africa (BASA) small, macro and medium enterprises (SMMEs) have been identified as productive drivers of inclusive economic growth and development in South Africa. SMMEs around provide employment to about 60% of the labour force, and the total economic output accounts for roughly 34% of Gross Domestic Product (GDP), said BASA.

Recent reports attributed to the Minister for Small Business Development Ms Lindiwe Zulu have outlined a proposed review of government expenditure on SMME’s with the aim of developing interventions that could assist small, macro and medium enterprises (SMMEs) to expand and become sustainable.

As a leading catalyst for championing of socio-economic growth, Coega Development Corporation (CDC) is conscious of the role played by small business sector in terms of job creation, but more importantly its contribution to economic development in the province and country at large.

Due to their size, small businesses tend to be creative and implement innovative ideas that benefit communities and ensure business growth and sustainability.

The CDC has implemented various projects to boost small businesses in the Nelson Mandela Bay Metro (NMBM). As such the CDC’s approach to small business development has seen the organisation engineer a Unique Operational Model (UOM) which has led to a number of game changers in project implementation by SMME’s in the construction industry.

The implementation of the UOM over a period of time has led to the success of the model and established some key and critical principles underpinning its operation such as:

  •  Identification of work packages – this eliminates the dependency of the SMME on the main contractor in as far as the work that needs to be implemented on the project.
  •  Onsite monitoring and mentorship – this ensures the SMME is provided with a mentor to guide, train and develop them throughout the project. Translating to the effective implementation of the project.
  • Payment of SMME’s on time – payment delays negatively affect the cash flow position of SMME’s. The CDC has ensured that all work undertaken by SMME’s must be paid within a reasonable timeframe.
  • Access to Finance – as startup capital and cash flow is critical to the growth and sustainability of SMMEs. Through Small Business Finance and Support (SBFS), CDC has been providing capital in the form of micro- finance to the construction industry, targeting small businesses. SBFS provide financial assistance to contractors contracted to the CDC for materials, wages and equipment.

In addition, recently the CDC has implemented an R86-million Multi-User Facility in zone 3 which has created 197 jobs during construction and R19,6 million spent on SMME’s.


Lastly, SMME’s as microcosm of the global economy, play a critical role in ensuring economic transformation through the job creation and the inclusion of marginalised communities in the greater economy.