Changing mindsets needed to revive economy

Entrepreneurship has long been considered one of the strongest growth factors for SA’s economy.

Already contributing a substantial part of the country’s GDP, small and medium-sized enterprises (SMMEs) — whether they employ five or 200 people as defined by the National Small Business Act of SA — are considered the backbone of the economy.

While the focus of the recently concluded national budget was not essentially pitched towards SMMEs, the department of small business development was allocated R2.1bn over the medium term to support about 120,000 competitive small businesses.

In addition, government allocated R313.7m for the establishment of micro, small and medium enterprise hubs to support business expansion.

In the Eastern Cape, we have entities and incubators that assist SMMEs in various ways and during the March 25 provincial budget speech, the department of economic development, environmental affairs & tourism was allocated R1.8bn in the 2025/26 financial year to coordinate business support and other economic development initiatives, working together with its entities.

An additional budget of R89m in 2025/26 was allocated to the Eastern Cape Development Corporation to recapitalise some of its key business support programmes.

Yet many SMMEs have a high failure rate, particularly in the first two years of starting their businesses, and this is where a more conducive business environment could make a difference in the survival of young and established struggling businesses.

A conducive or enabling business environment would include SMME-friendly policies, laws and regulations which offer a protected, supportive and compliant approach to job creation and economic growth.

This could have a real and measurable counter-effect on the prevalence of poverty and inequality in the country, in particular in the Eastern Cape.

Changing this mindset requires a collaborative effort — including teaching youth in tertiary and secondary educational institutions that their dream in life should not only be about getting a well-paying job, but also starting their own business and flourishing in it.

While the youth are being educated through tertiary studies and internships, many remain unemployed.

What if they could instead be trained and geared to become the employers of tomorrow?

Not only are they then able to sustain themselves, but they could also create employment opportunities for others.

Another shift in thinking about entrepreneurship involves regulation. Since a plethora of public and private organisations and different levels of government are in the “business” of small businesses, it would mean that working in silo’s should become a thing of the past.

The mind shift, of course also includes the law, which should not be considered an unchanging and inflexible system but a tool that could contribute to economic growth and entrepreneurship.

The Code of Good Practice on Dismissal is a good recent example of this, where small businesses’ contexts and the environment in which they operate were taken into consideration by the law.

Laws, regulatory procedures and compliance involving SMMEs need not be onerous and complicated, and should not be a stumbling block in setting up and growing entrepreneurs of the future.

Some laws affecting SMMEs include business registration and structure, as well as compliance with labour, tax and other laws in the regions and industries where they operate.

These laws in particular can seem complicated and overwhelming to entrepreneurs, and this is where they need to look to industry networks, of which the Nelson Mandela Bay Business Chamber is an excellent example, as well as government programmes for guidance.

It is also important for SMMEs to empower themselves by staying informed about changes in legislation.

Additionally, there is significant financial and other support offered to SMMEs through seed funding and entrepreneurship incubators.

Entrepreneurs are not always aware of these opportunities or may think they do not qualify in terms of the criteria set out by the organisations.

The support, however, is out there in terms of incentives, knowledge and mentorship programmes and is much needed when entrepreneurs start out on this journey.

Starting a business not only creates employment for the entrepreneur; it creates jobs for employees and potentially can meaningfully contribute to the economy by making use of goods and services of other companies.

While entrepreneurs need to have resilience and agility in heaps and bounds, they also need to be courageous and creative in the types of products and services they bring to the market.

This will lead to a more vibrant economy, one that is not over-reliant on big business to create jobs, and an economy where the youth are actively engaged as part of the workforce.

• Dr Luvuyo Bono qualified with a Doctorate in Labour Law (LLD) at Nelson Mandela University in 2023, where he also holds the title of adjunct professor of law. He was admitted as an advocate of the High Court in 2000 and has contributed to key labour law legislation in SA in his career. He is the board chairperson of the Coega Development Corporation, and writes in his personal capacity.

The Herald