A DEARTH of skills was a bigger threat to the survival of small businesses than a lack of funding, the Small Enterprise Finance Agency (Sefa) heard at a roundtable on Friday.
Sefa was told small and medium-sized enterprises (SMEs) were struggling to survive because they could not find the right skills to operate profitably for long periods.
SMEs have been pinpointed by the National Development Plan as the area of business in which the most jobs can be created. South Africa’s official unemployment rate at the end of last year was 24.9%.
The suggestion that skills were the biggest challenge to SMEs was made by University of Pretoria professor Jurie van Vuuren.
The roundtable was co-hosted by Sefa’s parent entity, the Industrial Development Corporation.
Sefa, launched in April 2012, was formed from a merger of the South African Micro-Finance Apex Fund, financier Khula and the IDC’s small business activities.
“We need to develop skills to create businesses here because right now South Africa is not an entrepreneurial nation. South Africans prefer real jobs,” Prof van Vuuren said.
The roundtable heard tenders were not helping small businesses. Companies that won work from tenders often missed out on natural growth steps, suddenly becoming mature companies, and then failed.
Various small business commentators have recently expressed concern that South Africa is not developing an entrepreneurial culture compared with other developing markets such as Brazil and Israel.
Jon Foster-Pedley, dean of Henley Business School South Africa, said earlier this year in an interview with BDlive that people who attained business qualifications often pursued careers at large corporations as opposed to starting enterprises.
Part of the reason for the bias was that graduates were concerned they would not be able to find jobs later if their businesses did not excel and they entered the corporate world well into their 30s.
Sefa said on Friday that it wanted to approve R815m in funding for 15,129 SMEs for the 2013-14 financial year, up from R560m in 2012-13. That would fund an estimated 18,311 jobs.
For the 2014-15 year, Sefa wanted to approve R1bn for 18,832 SMEs, rising to R1.3bn for 22,792 SMEs in 2015-16.
SAP, a German software company, said in a separate interview on Friday that the best way to get SMEs to save cash in South Africa was for them to use low-cost products — including cloud-based software.
Cloud computing enabled companies to use files and software over the internet, as opposed to having to buy systems and pay high fees for technicians to install them.
SAP global head Jim Snabe said he recognised that funding small businesses was difficult in tight economic times.