Strong, sustainable economic growth and a thriving national economy are generally regarded as the only panacea to the daunting challenges faced by South Africa today.
These challenges include a non-negotiable need to rescue virtually all state-owned enterprises from the jaws of bankruptcy, claw back financial and other resources from the grip of crippling corruption popularly referred to as “State Capture”, and resume the pursuit of the dream of a better life for all that was created at the dawn of the “Rainbow Nation” a quarter century ago.
It is widely acknowledged that small to medium-sized enterprises (SMEs) should be regarded as the lifeblood of the South African economy and a key to overcoming these and many other problems facing the country.
To this end there is no shortage of promises from politicians of all persuasions linked to unqualified support for the SME sector and the belief that it should be set up as an important vehicle to address the challenges of job creation as a means of overcoming an unemployment rate of more than 25%, with the ability to offer equitable distribution of income, particularly to previous disadvantaged communities in South Africa.
For those caught up in the euphoria of the role SMEs could potentially play in establishing South Africa as an economic powerhouse in the global economy and the future of the country’s socio-economic stability, and how the IT sector can contribute to or benefit from this theoretically exciting approach (this month’s cover story), a few words of caution.
Firstly, the IT sector needs to qualify and understand SMEs as a target market.
The definition of what constitutes a SME in this country encompasses a very broad range of activities and organisations.
Small businesses can range from survivalist self-employed persons from the poorest of poor communities to formally-registered entities that can be directly compared to the most successful small- and medium-sized enterprises found in any developed economy anywhere in the world.
According to official estimates, roughly 2.2-million SME entities are active in South Africa – both formal and informal. Just less than half (0.944-million) are concentrated in an informal sector referred to as “domestic trade”. This is understood to include activities such as street trading, spaza shops and shabeens as well as community and social services such as cleaning services etc.
Secondly, once the target market is understood and defined, all players in the IT sector need to define and develop solutions that are specially tailored to helping their customers and prospects in this sector succeed.
In some instances, particularly in the informal sector of the SME market, the demand from customers may start out as being very little more than the provision of basic personal computing and connectivity devices such as smart phones, tablets and entry-level peripherals and application management systems that enable them to service their customers more efficiently and manage their own businesses effectively.
Just as importantly, the requirement in this sector will be for an extremely high level of support, including the education and mentoring of customers to enable them to learn and grow and move towards becoming a successful part of the formal economy thereby creating more jobs on the back of sustainable wealth generation.
In the formal sector of the SME market, business opportunities for players the IT channel are extremely exciting, particularly if the right political environment is created and sustained in support of the country’s future economic growth.
The nature of technology and its ever-changing landscape makes IT a perfect partner for small or medium-sized companies with entrepreneurial flair and flexibility to achieve dynamic growth on the back of IT-inspired innovation and the exploitation of disruptive technologies in order to carve out a niche for themselves in today’s digital economy.
On a slightly cynical note, some leading edge technologies such as artificial intelligence and IOT applications derived from the successful deployment of AI, will work against an objective to create jobs. However, the ability to generate mind-boggling taxable profits from working smarter should never be a deterrent.
Whatever the opportunity may be for the IT channel, it should not be forgotten that the SME sector as well as the entire South African economy is totally dependent on the political will of the government of the day to create the ideal environment for success.
The government’s major role is the provision of a stable and predictable environment for stable and sustainable economic activity. This is achieved through the enactment of appropriate laws, the provision of education and social services, the protection of personal safety and public order, and the total eradication of state and privately-sponsored corruption.
Given some startling revelations associated with various commissions of enquiry currently underway, we can only wait and see what lies ahead for the IT channel and the future of SMEs in South Africa.