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Why SMMEs are so Important in South Africa, but Need Work

Why SMMEs are so Important in South Africa, but Need Work

by | Sep 28, 2019 | ,

by Alex Kinmont

The National Development Plan is government’s answer to South Africa’s social and economic crises. The Plan aims to eliminate poverty by the year 2030 “by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.”

Small, Medium and Micro Enterprises (SMMEs) are a major component of this plan. Global trends show SMMEs as forming the vast majority of formal businesses, and employing between 60 and 70% of the population. Where South Africa’s SMMEs form 98,5% of enterprises, they only employ less than 30% of the population.

South Africa’s unemployment rate has most recently been recorded at 29%, the highest it’s been since 2008.

So how do we better use the globally-recognised potential of SMMEs to improve our employment?

The first step is to better understand South African SMMEs in terms of current statistics.

Truthfully, we know very little about Small, Medium and Micro Enterprises in South Africa. Our reports on SMMEs differ drastically:

The Small Enterprise Development Agency (SEDA) is an agency within the government’s Small Business Development department and their 2018 report stated an estimate of between 2.3 and 2.5 million SMMEs in South Africa.

A year later, the Small Business Institute, a non-profit organisation and member of Business Unity South Africa (BUSA), estimated only 250 000 SMMEs.

Either South Africa lost over 2 million SMMEs in a year, or the numbers were wrong.

Regardless of which institute has the right estimate, it is enough to show how little South Africa knows about its small businesses.

If we don’t even know basic statistics about our SMMEs, how can we hope to be effective in nurturing them enough to employ more of the population?

Over half of South Africa’s unemployed are youth. With their unemployment rate sitting at 40%, it is just about double the rate of adults.

Why are our youth unemployed? Education specialist Nick Spaull believes the problem to be lying in primary school education where the reading and mathematics levels are far below 50%. If we are not giving our youth a decent foundation in basic skills, how can we expect them to cope in any working environment?

Part of the National Development Plan focuses on the younger generation, taking on a “youth lens”. Some of its objectives include open access to two years of early childhood development, boosting teacher training, literacy and mathematics levels above 50% and overall improvement of the school system.

The first step towards improving the lives of South Africans is to improve their education, giving them a stronger foundation from which to search for jobs. From here, we need to improve job opportunity, something which SMMEs have significant potential for.

Half of South Africa’s small enterprises fail within two years of starting up, due to lack of finance and “the inability and inexperience of their owners,” says the former Head of Small Enterprises at Standard Bank, Ravi Govender.

South African government and large corporates need to invest in small businesses, focusing on training and mentoring. If small enterprises are failing because of a lack of finance and guidance, then there is hope if those in positions of power take a stand.

If we concentrate on training and funding small businesses, then these businesses can fulfill their potential in providing jobs.

Where our SMMEs are currently employing only 30% of people, if we meet the global standard in terms of our SMMEs then these small business will double their job creation, making way for a rise in employment.

As ambitious as the NDP may be, SMMEs in South Africa have the potential to change our economic landscape. We need to understand them better. If we use our positions of influence to fund and train our country’s small businesses, then our SMMEs will succeed, thus employing more people, reducing the unemployment rate and providing a future for our youth.

For more information on our New Venture qualification, read here.

B-BBEE: Is Your Strategy Transactional or Transformational?

B-BBEE: Is Your Strategy Transactional or Transformational?

by | Jul 26, 2019 | ,

by Anusha Mariemuthu

Are you shifting paradigms, changing behaviour, and making valuable long-term strategic contributions to the economy or are you just transacting on your scorecard on an operational level to achieve the required points in your organisation?

Is your organisation a good corporate citizen who continuously contributes towards South Africa’s progress as a country, economically and socially through empowering communities, small businesses, individuals and creating jobs?

Companies must understand that economic transformation is a national economic priority, and that B-BBEE (Broad-based Black Economic Empowerment) is every South African corporates’ responsibility.

A company’s transformation initiatives at a high level needs to focus on the below broad areas

  • Ownership : Ensuring that equity are made available to black communities and assisting them access financing/ funding to fund their equity.
  • Skills Development : Empowerment through education and creating opportunities for previously disadvantaged employees and youth, through accelerated skills development programmes (learnerships, apprenticeships, internships, bursaries and employment opportunities).
  • Employment Equity: Employees must be afforded the opportunity to advance their knowledge, skills and abilities in order to be promoted. This process should be linked back to Talent Management and Succession Planning and not tokenism. Employment Equity and your employees should be viewed an integral element of a company’s overall transformation strategy for the removal of the economic legacies of structural inequality. 
  • Procurement : Procuring goods and services from South African black-owned enterprises, who are EME’s and QSEs while working with them to develop their businesses.
  • Responsible sourcing: According to the International Chamber of Commerce is “a voluntary commitment by companies to take into account social and environmental considerations when managing their relationships with suppliers”.
  • Small business Development and Communities : I​nvesting in communities, in black entrepreneurs and in projects that support small business growth and development thereby stimulating economic growth

So how do we start doing this?

Before you even begin this journey, chose a good change management model , like ADKAR to enable your business transformation to take place.

The first step is to establish a B-BBEE related Organisational Transformation Strategy, that is aligned to your business Strategy. Talk to business through their Profit and Loss (P and L) and show them how transformation makes good business sense.  Below is a high level view of how this journey in your business should look like. Create a road map for a  successful Transformation journey , by showing people how to make this transition as  a company together.

  • Shared Vision: Within your company, co-create and establish a Shared Vision for an organisational transformation related to B-BBEE.
  • Establish leadership over the process and ensure ownership, responsibility and accountability is in place so that your people can make this happen.
  • Knowledge  is powerful and an enabler: Create capacity in the Leadership and support functions by sharing information and ensuring that they acquire the required level of knowledge and skills to be able to implement the organisational transformation vision (Use Change management programmes, like ADKAR to achieve this).
  • Ensure Ownership is shared by key individuals in strategic positions across the business by ensuring that they have B-BBEE related Key Performance Indicators (KPIs) and that these individuals cascade responsibility into their respective areas in order to ensure accountability can be held.
  • Good Governance: Align all related operational governance which will empower and enable all related business managers to support the implement the organisational transformation process. Create an effective monitoring, measurement and reporting structure to ensure accurate visibility is achieved and maintained allowing for effective performance management over the process, show progress on the B-BBEE objectives and to manage the associated risk.
  • Ensure the transformed organisation is maintained through periodic assessments of the levels of compliance with the Compliance Framework and the progress of the company’s B-BBEE Score.

Lastly, keep your people informed (through townhalls, performance reviews, newsletters), get feedback and tell them how this journey is proceeding. This will keep them engaged and energised to make it a success.  Make B-BBEE Transformation part of your company DNA.

More importantly, keep the passion.

Anusha Mariemuthu is a passionate, seasoned Transformation and Human Resources professional with a myriad of experience that spans across all pillars of the scorecard. For more information on our B-BBEE consultancy services, contact us here.

What Notre Dame Tells Us About Global Wealth

What Notre Dame Tells Us About Global Wealth

by | Jul 24, 2019 | ,

by Alex Kinmont

A Universal Basic Income (UBI) is a guaranteed amount of money given to every person regardless of whether they have a job or not. As a form of social security, this could help alleviate poverty and improve quality of life.

The idea of unconditional cash payments is a recent one, brought about as a response to the rise of technology and the fear that machines will take our jobs. Many highly successful entrepreneurs, such as Elon Musk and Mark Zuckerburg, have discussed the idea of a UBI as a potentially necessary answer to the growing problem of poverty and the risks of machines replacing low-skilled jobs.

There is no set definition for a UBI. How much money, to who, from who and how often are undefined. As a new idea not formally implemented, these are all still things which can be debated.

Getting money without working, of course, is controversial.

At first, a UBI sounds impossible. Who would bother working if they got given free money each month? And how could a government afford it? In the context of South Africa in particular, we can hardly afford to provide running water and service delivery, let alone cash payouts.

So, here comes the first hurdle. Where would the money come from?

When Notre Dame burnt down on the 15th April this year, nearly R14 billion was donated by the world’s elite within days of the disaster, enough to feed over 2 million South Africans for an entire year.

The fire at Notre Dame did more than just burn an historical monument. It served as striking evidence that there is more than enough money out there to drastically, if not fully, close the wealth gap and feed millions. Wealth is simply held by too few.

So what if the world’s 1% were made to pay the UBI bill?

via GIPHY

There is something to be said about the idea of a maximum income allowance, after which a person has to donate their excess to welfare. Imagine if the world cared as much about people who are starving as they did about a building?

70 year old Bernard Arnault, whose family owns LVMH (a.k.a. Louis Vuitton), gave $226 million to Notre Dame. That’s over R3 billion from one family donated in a day.

Should people really be allowed to have more money than they can possibly spend?

So what is to be said then, of the argument that no one is going to want to work if their bills are not dependent on it?

Those against a UBI say it will let people be lazy and be enormously expensive. They argue it would crash our economy. Without reason to work, will anyone work? This is a valid point especially when one considers less attractive jobs, such as those which involve strenuous physical labour.

At the same time, a UBI could provide the platform needed for millions of people to think further and follow their entrepreneurial dreams. Will this opportunity for innovation and future work outweigh the cost of those who decide to work? Who knows what could come of that freedom?

Those for UBI say it will allow people to focus more on their well-being and fight their way out of poverty, as well as having a safety net to allow for taking chances in innovation and business. Mark Zuckerburg said himself that he was able to risk focusing all his attention and investments on Facebook because of the financial stability he had from his father.

via GIPHY

Will a UBI let people stop working and crash the economy? Or will it cultivate innovation?

Perhaps instead of calling it a UBI we should call it improved social welfare. The specifics around a UBI need to be carefully determined and will differ by region and country. This will influence whether a UBI collapses the workforce or inspires it. Free money to everyone, including the wealthy, is likely unrealistic. But what about better distribution of wealth to those under the poverty line, who have been unable to find a job?

The result would be the same sized workforce but a better standard of living for the unemployed.

The burning of Notre Dame proves that a UBI is possible if we just learn to share. So is it reasonable to demand that the ultra-wealthy pay the bill?

Jobs outlook bleak in 2016

by | Mar 9, 2016 |

Posted by IT-Online

need a job sign on cardboard

 

The prospects for job-seekers over the next few months look bleak. According to the Manpower Employment Outlook Survey, opportunities for job seekers will be strongest in the Electricity, Gas & Water Supply and Finance, Insurance, Real Estate & Business Services sectors in 2016.

They will be weakest within the Agriculture, Hunting, Forestry & Fishing and Wholesale & Retail Trade sectors.
Employers in KwaZulu-Natal report the strongest hiring intentions for the second quarter of the year, while employers within the Free State report the weakest hiring intentions.

Overall, employers report conservative hiring plans for the April-June time frame, with 13% forecasting an increase in staffing levels, 8% expecting a decrease and 77% anticipating no change. Once the data is adjusted to allow for seasonal variation, the Outlook stands at +5%. Hiring prospects are unchanged when compared with 1Q 2016, but decline by six percentage points year-over-year.

Lyndy van den Barselaar, MD of Manpower SA, provides some insights: “The weak global position of the rand has had a negative impact on many South African businesses, across sectors. Increased operating and import costs, paired with the rising costs of necessities and the falling price of commodities, means that many businesses do not have the budget to hire new talent in the coming quarter. This trend is seen globally for the second quarter of 2016.”

Staffing levels are forecast to grow in all five regions during 2Q 2016, however. Employers in KwaZulu Natal report the strongest hiring prospects with a Net Employment Outlook of +9%. Some payroll gains are anticipated in both Eastern Cape and Gauteng, where Outlooks stand at +6% and +5%, respectively. Western Cape employers expect a modest hiring pace, reporting an Outlook of +4%, while the Outlook for Free State stands at +1%.

“KwaZulu-Natal is South Africa’s second largest economy, and is home to two of the country’s largest and busiest ports. The current increase in the number of imports into South Africa is contributing to the growth in the province,” Van den Barselaar comments.

When compared with the previous quarter, employers report weaker hiring prospects in three of the five regions, with the most noteworthy declines of four and two percentage points reported for Free State and Gauteng, respectively. Meanwhile, the Outlook for Eastern Cape strengthens by six percentage points.

Year-over-year, hiring plans weaken in all five regions. A considerable decline of nine percentage points is reported in Western Cape, while Outlooks are six and four percentage points weaker in Gauteng and Kwazulu Natal, respectively. In both Eastern Cape and Free State, employers report decreases of three percentage points.

Workforce gains are anticipated in eight of the 10 industry sectors during the next three months. The strongest labor market is expected by Electricity, Gas & Water Supply sector employers who report a Net Employment Outlook of +13%. Elsewhere, employers report cautiously optimistic hiring plans in the Finance, Insurance, Real Estate & Business Services sector and the Restaurants & Hotels sector, with Outlooks standing at +10% and +9%, respectively. Some hiring opportunities are also forecast in the Construction sector, with an Outlook of +8%, and in the Mining & Quarrying sector, where employers report an Outlook of +6%. Meanwhile, flat labor markets are expected in both the Agriculture, Hunting, Forestry & Fishing sector and the Wholesale & Retail Trade sector, with Outlooks of 0%.

“Owing to the continuing droughts, water shortages and rising cost of electricity, South African citizens continue to look into alternate sources of electricity and ways in which to conserve water. This is most definitely a contributing factor to the growth in the utilities sector, as businesses within the sector continue to work on and develop new and innovative products and ideas and expand into new areas of the country,” says Van den Barselaar.

“The continuously rising cost of doing business and living, paired with the falling Rand and commodity prices mean that more businesses and individuals are seeking the assistance and advice of those businesses operating in the Finance, Insurance, Real Estate & Business Services sector.”

Compared with the previous quarter, hiring intentions weaken in six of the 10 industry sectors. Agriculture, Hunting, Forestry & Fishing sector employers report the most noteworthy decline of eight percentage points, while Outlooks are six and five percentage points weaker in the Transport, Storage & Communication sector and the Public & Social sector, respectively. However, Outlooks also strengthen in four sectors. A considerable increase of 17 percentage points is reported by Construction sector employers, while the Outlook for the Mining & Quarrying sector is 10 percentage points stronger.

Year-over-year, Outlooks also decline in six of the 10 industry sectors. The most notable declines of 17 and 14 percentage points are reported by employers in the Agriculture, Hunting, Forestry & Fishing sector and the Transport, Storage & Communication sector, respectively. Considerably weaker hiring prospects are also reported by employers in the Manufacturing sector, with a decline of 13 percentage points, and in the Wholesale & Retail Trade sector, where the Outlook is 11 percentage points weaker.

Elsewhere, hiring prospects improve in three sectors. A considerable improvement of 12 percentage points is reported for the Mining & Quarrying sector while the Restaurants & Hotels sector Outlook is five percentage points stronger.
“As South Africa’s Mining & Quarrying sector continues to focus on more sustainable and responsible methods, this creates opportunities for new employment within the sector, especially for those consultants who specialise in sustainability and environmental conservation,” notes van den Barselaar.

Participating employers are categorized into one of four organisation sizes: micro businesses have less than 10 employees; small businesses have 10-49 employees; medium businesses have 50-249 employees; and large businesses have 250 or more employees.
Payroll gains are expected by employers in three of the four organisation size categories during 2Q 2016.

Large employers forecast the strongest hiring pace with a Net Employment Outlook of +13%, while Outlooks stand at +7% and +4% in the medium- and small-size categories, respectively. Meanwhile, micro employers anticipate flat hiring activity with an Outlook of 0%. Quarter-over-quarter, large employers report a decline of 5 percentage points, while hiring prospects for medium- and small-size employers remain relatively stable. Micro employers report no quarter-over-quarter change.

When compared with 2Q 2015, hiring prospects weaken in all four organization size categories. Large employers report a considerable decrease of 11 percentage points while the Outlook for medium employers is seven percentage points weaker. Elsewhere, Outlooks decline by six and two percentage points for micro- and small-size employers, respectively.

“The continuously evolving modern business environment calls for organisations across all sectors to have strong plans and policies in place, in order to ensure success even in difficult economic conditions. It remains important that national and provincial government continues to work alongside the public and private sectors, to ensure that effective policies are put into place to ensure that jobs are being created and current employees are continuously being upskilled and adequately trained for operating in the evolving business landscape,” says Van den Barselaar.

Across the globe, second-quarter hiring confidence is strongest in India, Japan, Taiwan, Colombia and Guatemala, while the weakest hiring prospects are reported in Brazil, France and Italy.

The study reveals that job gains are expected in 39 of 42 countries and territories during the April-June time frame. However, despite little indication of labor market contraction, hiring intentions in most countries and territories continue to remain modest. In fact, some key labor markets, such as Germany, France and Italy, are clearly struggling to gain traction amid the current economic uncertainty. Faced with the slowdown in China and ongoing turmoil in commodity markets, most employers across the globe appear to be taking the measured approach of adding staff only when needed.

Article sourced: IT-Online

 

Put on overalls and grow rich

Put on overalls and grow rich

by | Jan 20, 2016 |

Written by: Zingisa Mkhuma

Johannesburg – Matriculants who want to walk straight into jobs after completing their higher education should switch the image of success in their minds from suits to overalls.

As the class of 2015 enrol for higher education and training, a top recruitment firm has suggested they consult the national skills shortage list.

They would learn from this that they would have to acquire technical skills if they did not want to join the 25 percent of South Africans who were unemployed.

“Matriculants today should be looking at the engineering and artisan sectors, specifically millwrights, welders, petrol and diesel mechanics, plumbers, electricians and the like,” said Angela Dick, the chief executive of recruitment company Transman.

Read: ‘Half a million opportunities for matrics’

Eighteen of the top 31 scarce skills in the country were in this sector.

Dick debunked the perception that technical careers were lowly, with meagre earnings in comparison with office jobs.

“These are highly paid, respected professionals who will always be able to earn good money, whether as an employee or as an employer,” she said.

The Department of Higher Education and Training announced this week that more than 500 000 study opportunities were available.

“In 2016, our universities will provide access to 212 472 new entrants,” Higher Education Minister Blade Nzimande said.

While many will enrol for courses at institutions, taking advantage of the variety of offerings, the country will not need some of the skills they will attain in the next three to four years.

They will become unemployable graduates, and will need to acquire other skills or take up jobs in the informal economy, despite their degrees or diplomas. What is certain is that by 2030 the country will require at least 30 000 qualified artisans a year, as envisaged in the National Development Plan.

This is why the government has adopted artisanship programmes at public technical and vocational education and training colleges.

Positions for trade-tested artisans are some of the most difficult to fill as there are few candidates in the market, according to recruiters.

“It is critical to note that to be accepted into an artisan programme, matriculants must have completed mathematics and science, with a minimum mark of 50 percent in each of these subjects,” Nzimande said.

“Artisan work has become much more technologically advanced and requires a higher skill level.”

For matriculants who want to become qualified artisans, but do not have mathematics and science, bridging courses are being offered at technical and vocational education and training colleges.

However, pupils in lower grades intending to find their spot in the sun after their studies need to prioritise maths and science as these are also prerequisites for scarce skills in other fields, such as information technology (IT).

Dick said there were “huge opportunities” in IT, but finding the right candidates was difficult. Parents and students needed to keep abreast of the country’s developmental plans, as these pointed to the kind of skills essential for growth.

“With infrastructure development being a big part of the government’s plans, specifically to meet the country’s economic growth plans, structural, civil and building engineers are in the greatest demand, along with artisans in the construction environment.”

Students have acknowledged they did not take such factors into account in making their career choices.

But film and television student Tebatso Molapo, 19, said she was interested only in pursuing her passion.

She said she was not worried about finding a job at the end of her studies as she intended to establishing her own business.

Molapo said she and her peers were not aware of the national scarce skills list, nor did technical skills such as plumbing, agriculture and mechanics appeal to them.

Read: ‘Matric certificate not good enough’

“My peers never consider what skills are required. They look at how much they will be getting paid and what their parents think proper jobs are.”

Molapo confirmed Dick’s view that the government was not doing enough to make the youth aware of the opportunities. She said there was a need to urgently focus on meeting the national education and skills requirements.

The SA economy’s most-needed skills (published May 18, 2015):

Forestry technician

Agricultural engineer/scientist

Sheep shearer

Architect

Construction project manager

Land surveyor/quantity surveyor

Urban and regional planner

Actuaries and risk assessors

External auditor

Financial investment adviser

Engineers and technologists, including earth and life sciences

Geologists

Air conditioning and mechanical services, plumbers

Artisans in all fields (electricians, mechanics, boilermakers, toolmakers, welders, fitters and turners)

Mechatronics technician

Metal fabricator

Archaeological/palaeontological specialist

Bio-economist/biochemist/bio-informatician

Food scientists

Laboratory technologists and technicians

Polymer scientist

Seismologist

Soil scientist

Toxicology scientist

Water resource scientist

Health professions and related clinical sciences (including veterinarian and retail pharmacist)

Construction safety, health, environment and quality agent, manager, officer

Astronomer

Foreign language speakers for specialist language support and technical or sales support (German, Swiss German, Flemish, Greek, Swedish, Danish, Italian, Dutch, Spanish, Mandarin and French)

Business analyst/quality analyst

Academics and researchers in various fields (space science and technology; calibration and imaging of radio interferometer data; pulsar research; green computing-extreme performance at minor energy cost; antenna design).

Sunday Independent

Article sourced: IOL