What is an SMME?

Published: 01-MAR-04

The African business graveyard is littered with corpses of small and medium scale businesses that would have survived if anyone took notice. Governments, bankers, policy makers, even the World Bank institutions all agree that small businesses are the engine of growth in any economy.

The key to unlock this vast potential wealth of Africa and create sustainable prosperity is however missing. The men and women in designer suits who regularly boast at conferences about their programmes for small business are mere imposters. If they had workable clues on how to assist small businesses, we would not be writing this editorial.

It would seem that there is no concrete and reliable definition of what African Small Medium and Micro Enterprises (SMMEs) are. Current definitions primarily address this lack of definition by addressing what SMMEs are not, making the definitions over dependent on contrasts.

The understanding of what SMMEs are is pretty much comparative jargon. SMMEs are obviously not trillion dollars worth of corporate multinationals. They do not have complex and specialist audited annual turnover spread sheets. Definition by references to the number of employees and total business assets also adds to confusion, of what, in laymen's terms, comprises a small business.

But whatever definition one accepts, the truth is no one is truly interested or knows how to assist African small business. Without a blueprint on how to assist the African entrepreneur, the chances of greater success in this critical sector are small, at best. So who will bail the cat? Clearly the various organisations already interested in this area must first of all accept defeat. They should as a matter or urgency re-channel the millions of dollars misspent every year to identify key sectors on the continent where genuine assistance can be applied to assisting the myriads of bankable business ideas that are begging for financial and other support. Policy makers must practice what they preach. Our cover story on the subject on page addresses some of the critical issues facing the SMME sector. Business in Africa magazine welcomes comments from small business operators on the difficulties they encounter in accessing assistance.

South Africa's Limpopo Province was once characterised by a R1 billion rand provincial debt, non-existent macro- and microeconomic strategies, institutional fragmentation and backlogs in service delivery. Limpopo has now emerged as a major contender in the South African economy. Limpopo's Vision 2020 asserts that the province aims to be a leading contributor to the economy by 2020, with Integrated Infrastructural Development Plans (IIDPs) and Spatial Development Initiatives (SDIs) focusing on the province's key economic pillars: agriculture, tourism, and mining.

Special focus is also on how telecommunications technologies are changing the face of business in South Africa and Nigeria. Continental cellular giants Vodacom, MTN and Econet Wireless Nigeria, are moving with great strides to bridge the African digital divide. Specific impacts are being felt in legal, consulting, human capital development, marketing communications, satellite and construction engineering. Nigeria's steadily growing cellular empire has investors marvelling and re-looking at the country's business credentials as a potential economic powerhouse. Corruption and infrastructural shortfalls, however, make Nigeria's telecom transformation a bittersweet success, as power, agriculture, health and education sectors remain underdeveloped.

South Africa's cellular market, on the other hand, is expected to reach R46 billion by 2005. Not bad for such a nascent democracy. This is one of the reasons why the global community sees South Africa as a regional economic superpower. The development of telecommunications infrastructure in South Africa signals the interdependence of technology and integration of regional economies in Africa. It would, however, be editorially criminal to suggest that South Africa presents only a rosy picture. On a "smaller" scale, many of the huddles that undermine business growth in Africa are also present in South Africa. There is greater urgency than ever for Africans to build on the growth areas in order to harvest the investment needed to fight poverty.

Nthikeng Mohlele

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