studies launched on small and medium business growth.
South African SMEs (small and medium enterprises) are
estimated to represent 90% of formal businesses, provide employment to about
60% of the labour force and contribute approximately 34% of the country’s GDP.
In an effort to further grow this sector and boost a struggling economy,
leading global financial services firm, J.P. Morgan has been supporting a
number of companies to conduct in-depth research into the SME sector. The
research aims to establish the impact of SME-development projects, what the challenges
are and where the opportunities lie within this vital sector.
The companies supported by J.P. Morgan include
Catalyst for Growth, Gordon Institute of Business Science (GIBS)
Entrepreneurship Development Academy, Green Building Council South Africa (GBCSA)
and Tshimologong Digital Innovation Precinct.
At a launch, held on Thursday 11 October 2018, the
four companies shared findings on how small and medium business can bolster
growth in future-oriented industries such as IT and the green economy, as well
as a general look at the role and success of current business incubation.
“At the heart of all four research studies is a
burgeoning optimism regarding the potential of both the IT and green economy
sectors. The joblessness of a large majority in South Africa is a growing
concern and prompted these partners to focus more heavily on future-orientated
industries. There is a definite opportunity for the country to leapfrog based
on experiences of other countries in these sectors,” says Sifiso Ndwandwe, executive
director, Catalyst for Growth.
”Our research presents an analytical overview of the
role of business development support in terms of SME performance and
sustainability. We identified several key findings within the business development
ecosystem. In particular, the increased support required for women and youth
entrepreneurship; the role of business incubation within SMEs and advancing
SMEs’ contribution to the national agenda.”
Lesley Williams, CEO of Tshimologong, said that in
conjunction with Endeavor, a non-profit organisation that supports high-growth
entrepreneurs across the world, the current state of the community of software
entrepreneurs was researched, as well as where opportunities exist to further
grow this community: “A key driver was to identify how to assist this sector to
generate jobs and contribute further economic value. Of particular importance
was finding ways to assist medium-sized businesses to transition to larger
The research found
that through digital innovation hubs, such as Tshimologong Digital Innovation
Precinct, support for early-stage start-up companies does exist. Later-stage
support is more limited and reliant on involvement from venture investors.
Williams says that the role of digitisation has the potential to catapult small
and medium businesses forward, but that they need assistance at every level:
“Johannesburg has fewer technology-focused businesses than Lagos and Nairobi,
but is more productive in relative terms. Yet the local community is not seen
as cohesive or one that communicates successfully. This is especially prevalent
within successful entrepreneurs, where very little is shared across an
Research conducted by The Green Building Council South
Africa (GBCSA) looked to uncover the challenges and barriers to SMEs entering
the green economy. Dorah Modise, GBCSA, CEO said: “We
have conducted research and developed a capacity building programme to enable
SMEs to better understand and implement green building and sustainability
practices in their business. The strategy is to assist start-ups to enter the
green economy and overcome the barriers to entry of this market. One area we
are addressing is the knowledge gap for SMEs, assisting them to identify and
meet clients’ green requirements.”
Dr Kerrin Myres,
senior lecturer at GIBS, says that the development of a greener economy is
recognised globally as imperative. The Institute conducted research into the green economy, looking to
better understand how to develop this sector: “We knew that SMEs lacked green
skills and this impacted the development of these strategies within these
businesses. GIBS identified a need to stimulate the growth of sustainable small
enterprises, especially for young entrepreneurs, who remain the demographic
least likely to be employed in mainstream economy.”
The collective research across
the four organisations can be accessed here:
The J.P Morgan - J.P. Morgan is committed to fostering
more inclusive economic growth by supporting small businesses to grow in the
communities where we live and work. J.P. Morgan’s social investments are
Catalyst for Growth – a study on the role of business
development service interventions in the performance of incubated SMEs in the
South African entrepreneurial ecosystem.
GIBS Entrepreneurship Development Academy –
Longitudinal research on key growth factors for green entrepreneurs in Gauteng.
Green Building Council South Africa – A front-line
account of the barriers to breaking into the green building industry.
Tshimologong Digital Innovation Precinct –
Johannesburg’s leading digital innovation hub that aims to provide incubation
to small technology businesses in Johannesburg.