Definition Of Sme In South Africa

The small business sector in south africa is a critical part of the national economy with the government s national development plan 2030 ndp 2030 looking to smes to be major sources of.

Definition of sme in south africa. The sme is not only seen as an employment creator but this sector also acts. The quantitative definition of smes in south africa is expressed in table 1. A comprehensive definition of an sme in south africa is therefore an enterprise with one or more of the following characteristics. This paper serves to present a snapshot of the current profile of smmes in south africa as well as the key inhibitors of growth for smmes.

In south africa it is estimated that 90 of all formal businesses are small medium or micro enterprises rwigema and karungu 1999. Minister of small business development lindiwe zulu has published a new government gazette amending the definitions of micro small and medium enterprises in south africa. Some researchers have estimated that in south africa small and medium sized enterprises make up 91 of formalised businesses provide employment to about 60 of the labour force and total economic output accounts for roughly 34 of gdp. According to von broembsen.

The businesses account for almost 90 of businesses in both leading and developing economies through job. Small and medium enterprises sems are notably the engines that drive economic development. Fewer than 200 employees annual turnover of less than r64 million capital assets of less than r10 million direct managerial involvement by owners. Smes can be broken down into employers and own account workers.

Small medium and micro enterprises smmes have been identified as a key component to advancing inclusive growth and development in south africa. Africa rogerson 2004. However despite the noted contributions of new smes their failure rate in south africa is one of the highest in the world. Of south africa 2003.

An employer is an sme that employs 1 or more people to do their job and an own account worker is an individual who is the sole owner of the business and doesn t hire others. Very small enterprises have disappeared entirely as have asset value ceilings. Small and medium enterprises sme s have been identified as productive drivers of inclusive economic growth and development in south africa and around the world. About 75 of new smes in south africa do not become established firms.