South African Business 2019 edition

OVERVIEW
Development finance and
SMME support
Prompt payment is vital for small businesses.
SECTOR INSIGHT
SAB aims to create 10 000
jobs by 2022.
Portia Mngomezulu, the founder and managing director of
Portia M, told the host of a radio business show in 2018 that
one of the most important factors in allowing her to scale up
her skin products business was the willingness of Pick n Pay
to pay her within seven days.
The entrepreneur was named in 2018 as Pick n Pay’s Small Supplier
of the Year and her sales topped R10-million. From an initial investment
of R200, she now employs 27 full-time staff and her range of products
is available in four African countries outside South Africa.
One of biggest problems faced by small, medium and microenterprises
(SMMEs) is cash flow. Most government departments have
rules about procurement which are biased in favour of purchasing
from SMMEs or co-operatives. However, for many South African
entrepreneurs, the inability or unwillingness of government to pay
within 30 days presents a major risk to sustainability. The Enterprise
and Supplier Development (ESD) Programme of Pick n Pay addresses
and goes a step further with the seven-day rule.
Public procurement from township enterprises from provincial and
municipal governments in Gauteng, the province where more than half
of the country’s SMMEs are located,
increased in 2017 to R17-billion, up
from just R600-million in 2014. This
expenditure has allowed many
township businesses to enter the
formal economy and for them to
become more sustainable. The City
of Johannesburg runs seven SMME
hubs where office space, Wifi and
advice and training are available for
small business operators.
All South African retailers
have ESD programmes which
typically create or support small
businesses along their supply
chain. A small community in rural
Mpumalanga is remote and
difficult to get to, but 13 farmers
at Elukwatini Farm sell tomatoes
to Woolworths. According to a
Business Day report, Woolworths
works through Technoserve (an
NPO) and Qutom (a large supplier)
for produce to be collected.
De Beers Venetia Mine in
northern Limpopo has chosen
the transport of its workers as an
area for business creation. Two
small bus businesses servicing
its labour-sending areas have
been created with a wide range
of ownership and with potential
to expand.
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