Finding ways of developing South Africa’s small and medium-sized enterprise (SME) sector was an important factor in its “inward look” in search of sustainable solutions for the country’s economy, Human Settlements Minister Tokyo Sexwale said Wednesday.

At the 2012 Enterprise Development Conference, hosted by Anglo American in partnership with the Department of Trade and Industry, he stated that South Africa’s economic growth, albeit slow, was still mainly driven by government expenditure, as private sector investment was ailing in the wake of struggling global markets, with matters worsened by the recent downgrade of the country’s credit rating.

“This is not the situation we saw ourselves in so many years after ’94; we need to work hard to correct this. It puts a damper on our economic recovery, as the cost of capital and that of servicing our national debt has increased,” Sexwale warned.

He said developing the country’s small business sector would contribute largely to its economic recovery, as SMEs were “indisputably recognised as engines of growth”.

Sexwale noted that the National Development Plan (NDP) stated that most of the additional 11-million jobs it aimed to create by 2030, would be in the domestic-orientated activities and services sector, with about 90% of jobs to be created in small and expanding firms.

However, to ensure progress, the SME sector had to overcome its challenge of skills development. “It is important to recognise that human capital development is the alpha and omega, without it, enterprises cannot exist.”

He pointed out that skills development was particularly important at managerial level.

“Many failed enterprises are traceable to a lack of skilled managers with the competency to plan, to direct, to understand their own enterprise’s competitive edge, as well as risk management.”

Sexwale stated that managers also needed to have a clear understanding of the environment they were operating in, politically, as well as in terms of labour relations.

“Good management of labour relations is important, otherwise ‘Marikanas’ are always around the corner; the current situation in South Africa with the wildcat strikes is threatening our hard-won collective bargaining system.”

Meanwhile, Sexwale said SME owners could uncover endless business opportunities by reading government documentation.

“Many business persons do not pay sufficient attention, or none at all, to reading and understanding basic government policies and documentation [such as the NDP, as well as budget speeches and votes]. Yet, therein lie major financial business opportunities going into almost a trillion rands,” he stated.

Sexwale concluded by saying that SMEs had to set their sights on becoming globally competitive, citing companies such as Apple and Microsoft, which also came from humble beginnings.

“At what stages do we grow into the major league? Answers to these questions are important if an impression is not to be left that black will forever remain small,” he stated.