How to support SA’s SMEs: Lula CEO tips big business, government

Emphasis has been put on the significant role small and medium-sized enterprises (SMEs) play in South Africa’s gross domestic product (GDP).

However, it is believed that more still needs to be done to enable SMEs to play a bigger role, as they do have the potential.

Trevor Gosling, founder and CEO of SME services provider Lula says SA is not the world’s most SME-friendly environment. He says little support has been offered from the government.

“The COVID pandemic years made one thing very clear: SA’s SMEs don’t have a lot of support,” says Gosling.

SMEs’ role in SA economy

He says SMEs contribute 40% to the country’s GDP and employ at least 60% of the private sector workforce. It has been projected in the National Development Plan that by 2030 SME will provide 90% of new jobs.  

President Cyril Ramaphosa has also acknowledged during his opening of Parliament (OPA) that there is a need for greater support for small businesses in the country, especially in the informal sector, and within underserved regions. The government aims to give support to small businesses and rural areas as they hold potential.

“In some countries, governmental monetary aid and grants to sustain their SME sectors amounted to billions, whereas in SA it was a fraction,” adds Gosling.

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SMEs bring innovations

He emphasises that small businesses are usually the ones that bring innovations that improve the quality of life and boost communities. “SMEs and entrepreneurs are key drivers of the green and digital transitions and are regularly delivering on new tech-driven solutions to everyday problems into our communities.”

More support from government will enable small businesses to continue to thrive in innovations. Gosling says the required support includes financial backing, streamlined regulatory frameworks, and the renewal of campaigns such as the Local is Lekker campaign.

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Tips on ways business leaders can support SMEs

Gosling says as much as government support is needed for small businesses, there are other ways in which entrepreneurs and business leaders can offer better support for their SMEs.

The first tip is the implementation of labour practices. He explains this to include fair wages and transparent policies, which he says, will boost employee loyalty and productivity.

Another tip for business leaders is to prioritise employee wellbeing. “This can be done through simple steps like hybrid working or mental health support, which can significantly improve morale and productivity.”

In addition, he says business leaders must have a commitment to conflict resolution. “This is where clear communication channels and regular feedback sessions prevent issues from escalating, creating a positive work environment for everyone.”