In this new report, ACTION EIGHT: Let the private sector drive small business development, CDE proposes a bold initiative to empower private sector support for small firms and let markets shape the future of entrepreneurship in South Africa.

From 2010 to 2019 the SME sector expanded at the unimpressive rate of 1.6 per cent annum, before being devastated by Covid. During the height of the Covid pandemic, many more South African small businesses shut their doors (13.9 per cent) than the global average (6.5 per cent).

Between 2018 and 2021 the state transferred an average of R5.8-billion per year to small businesses but we do not know who received these funds, what recipients did with them or what impact they had.

CDE proposes that over a three-year period, R9-billion is transferred to private players to create a more dynamic and successful small business sector. The funds should be disbursed on the basis of transparent, competitive tenders, with winning firms committing to high levels of performance and transparency.

To create a better environment in which small businesses can flourish we need to take away the Minister of Employment and Labour’s power to extend collective bargaining wage and benefit structures to small firms which simply cannot afford them.

Report by the Centre for Development and Enterprise