South Africa needs over 49,000 scalable Small and Medium Enterprises (SMEs), growing at a rate of 20% per annum, to create 11 million jobs by 2030 to meet the National Development Plan (NDP) target.
This is is according to the Endeavor jobs calculator, a global tool developed by the International Labour Organisation (ILO), National Statistics Agencies and Endeavor Insights, which takes into account the different factors that are essential for job creation.
The country would need as many as 8.2 million small and micro-enterprises to create the same number of jobs. In general, a micro-enterprise is considered a small business employing 10 people or less.
According to Stats SA’s employment data for 2014, labour market conditions in South Africa improved following the economic crisis, with the total number of employed persons increasing between 2008 and 2014 – from 14.6 million to 15.1 million.
However, the number of unemployed persons also increased – from 4.3 million to 5.1 million – resulting in an increase in the unemployment rate from 22.5% in 2008 to 25.1% in 2014.
Government’s New Growth Path is targeting 5 million new jobs by 2020, while it also aims to reduce the unemployment rate from 27% in 2011 to 6% by 2030 by creating 11 million new jobs.
The South African Labour market report, published by Solidarity Research Institute, puts broad unemployment at 35.8% in SA, while the official unemployment rate is at around 25%.
Standard Bank estimates that about half of South Africa’s GDP is produced by small business, and that about 70% of private employment is provided through firms with fewer than 50 employees.
Mike Vacy-Lyle, CEO of FNB Business, said: “South Africa has reserved large sums of funds to boost business development; therefore, we need to take a realistic approach to ensure that such an investment yields the desired results.
“It is important to note that calling for more investment in scalable SMEs does not mean that micro-enterprises should be neglected, those businesses will still need to be developed, over a longer lead time.”
FNB Business has partnered with Endeavor SA to introduce the FNB Business Innovation Awards.