What Are SMEs?
Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation “SME” is used by international organizations such as the World Bank, the European Union, the United Nations, and the World Trade Organization (WTO).
In any given national economy, SMEs sometimes outnumber large companies by a wide margin and also employ many more people.
Developing countries tend to have a larger share of small and medium-sized enterprises. SMEs are also responsible for driving innovation and competition in many economic sectors. Although they create more new jobs than large firms, SMEs also suffer the majority of job destruction/contraction.
How Many SMEs Are There In South Africa?
2.6 million micro
Of the estimated 2.6 million micro, small, and medium enterprises (SMEs) in South Africa, about 37% are considered formal.
Small formal businesses generated 30% of total employment, 32% of all waged jobs, including informal and domestic work, and half of the waged work in the formal private sector according to the report.
Their conditions of employment for both employers and waged workers lagged only slightly behind those in larger companies, far exceeding the norm for waged employees and own-account workers in informal and domestic work. Informal businesses, on the other hand, typically provided low incomes and comparatively insecure jobs.
How Do You Classify SMEs In South Africa?
A comprehensive definition of an SME in South Africa is, therefore, an enterprise with one or more of the following characteristics:
- Fewer than 200 employees,
- Annual turnover of less than R64 million,
- Capital assets of less than R10 million,
- Direct managerial involvement by owners.
What Is The Market Share Of SMEs In South Africa?
SMEs are the lifeblood of South Africa’s economy and also the most at risk. SMEs across South Africa represent more than 98 percent of businesses, employ between 50 and 60 percent of the country’s workforce across all sectors, and are responsible for a quarter of job growth in the private sector.