The number of SMMEs in South Africa (SA) declined by 11% (or 290 000) year-on-year (y-o-y) from 2.65 million to 2.36 million in 202Q3. Of this contraction, 232 000 occurred in 2020Q2. A further 58 000 SMMEs closed for business in 2020Q3, despite the general economic rebound during the third quarter.
Of all jobs lost in the economy, 90% were lost in the SMME sector. Including owners, SMME employment contracted by 1,5 million in the year 2020Q3.
Government should invest in small businesses because they contribute to local economies by bringing growth and innovation to the community in which the business is established. This can be done by giving them the amount of money, equipment or anything they need in their businesses. Small businesses also help stimulate economic growth by providing employment opportunities to people who may not be employable by larger corporations. They tend to attract talent who invent new products or implement new solutions for existing ideas.
Small businesses are estimated to employ about 70 per cent of the world’s workforce and contribute around half of the world’s GDP. In less developed countries, small businesses are typically even more important to employment in the community.
Local businesses help support the tax base through business taxes and through the wages provided to employees. The possibility of workforce expansion and economic growth prompts municipalities, counties, states and the federal government to offer various forms of assistance, such as grants, research opportunities, beneficial legislation and worker training programs.
