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SMEs are engines of positive social change

by Tia

Having commemorated Mandela Day this July, it’s time to spotlight the role of SMEs in driving positive social change.

Nelson Mandela was history’s ultimate champion for the underdog, suggests Trevor Gosling, founder and CEO of SME services provider Lula.

“SMEs are the overlooked champions, carrying the can of SA’s economy. If the great man were with us today, he would no doubt be proud to see what SA’s SMEs have achieved.”

“SA is not the world’s most SME-friendly environment. Governmental support has been lacking, and we urgently need to build a more conducive regulatory framework,” Gosling explains.

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

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

Nevertheless, the sector has demonstrated remarkable resilience, and has bounced back, testifying to the grit and ingenuity of SA’s entrepreneurs.

During his speech at the recent opening of Parliament, President Cyril Ramaphosa emphasised the need for greater support for SMEs, especially in the informal sector, and within underserved regions of SA.

“We are convinced that small businesses and the informal sector hold the greatest potential for inclusive growth and job creation … We will pay particular attention to supporting small- and medium-sized enterprises in townships and rural areas,” the President said.

Gosling says Lula recognises SMEs’ profound contributions to the country.

SMEs are the backbone of our economy. They currently contribute 40% to the national GDP, and employ 60% of the private sector workforce. The National Development Plan projects that by 2030, 90% of new jobs will be created by SMEs.

Often it is SMEs and not large national or multinational companies, who do the legwork of bringing innovations that improve quality of life on the ground, and boost communities.

Gosling elaborates: “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. SMEs can make faster decisions, offering a first-mover advantage in emerging markets. This agility allows them to rapidly adopt solutions that drive positive social change, from eco-friendly practices to community-focused initiatives.”

“Lula, itself an innovative SME, was a first-to-market disruptor in SA’s business credit space. Our digital-first offerings have been a game-changer, giving SMEs a business credit option that is both speedier and more flexible than credit from traditional banks. It’s also much safer, cheaper and more reliable than unlicenced, unauthorised B2B ‘loan shark’ or ‘mashonisa’ lender alternatives,” he says.

SMEs have a distinct advantage over larger corporations. Their agility allows for quick decision-making and rapid innovation. SMEs are uniquely aligned with their communities, and well-poised to craft business solutions tailored to hyper-local needs, Gosling says.

“There are several internal and external factors that can amplify the impact of SMEs. Local directories help us find and support SMEs in our communities,” Gosling says.

“Better state support is crucial, including financial backing, streamlined regulatory frameworks, and the renewal of campaigns like Local is Lekker, to boost pride in local products and services. Training and skills development programmes are also an important part of the support that SMEs need.”

“There are also some ways that entrepreneurs and business leaders can better support their SMEs from the inside,” he continues.

“Firstly, implement just labour practices, including fair wages and transparent policies, which boost employee loyalty and productivity. Secondly, prioritising employee wellbeing through simple steps like hybrid working or mental health support, which can significantly improve morale and productivity. The third is a commitment to conflict resolution, where clear communication channels and regular feedback sessions prevent issues from escalating, creating a positive work environment for everyone.”

“Easier access to business capital and credit is vital for SME success too. SMEs need to maintain cash flow to maximise their impact and success. Lula offers accessible, digital business capital, with a same-day turnaround time, as well as banking and financial tools to help you make the most of your business credit, manage cash flow, and achieve the business outcomes and growth that you want to see,” Gosling adds.

“Support for SMEs as a lever for social justice and positive change has a multiplier effect: Thriving SMEs are our primary engines for job creation, community development, and innovation. It’s an investment in South Africa’s future.”

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