South Africa faces numerous economic and social challenges. High rates of unemployment, poverty and inequality threaten economic growth and social cohesion. Promoting the development of small, medium and micro businesses is one solution to the current employment crisis. Yet, lack of infrastructure and access to basic services remains an important barrier to their development.

SMMEs - TACKLING SOUTH AFRICA’S EMPLOYMENT CHALLENGES


Small, Medium and Micro Enterprises (SMMEs) are seen as key drivers of growth and job creation on the global level.

In more developed countries, where small businesses represent roughly 70-90% of the business landscape, this sector may employ up to 80% of the total workforce. In South Africa, however, this potential is yet to be fully realised. While small enterprises may comprise up to 98% of registered businesses in South Africa, they only contributed around 49.4% to the country’s GDP in 2014, and only employed roughly 63.7% of its total workforce.

In order to tackle the myriad economic challenges faced by South Africa, the national government has committed to writing a new economic story where SMME’s play a central role in “attacking poverty” and expanding a “robust, entrepreneurial and innovative economy”. For this reason, the National Development Plan (NDP) set the following goals for the small business sector to be achieved by 2030:


Enhance economic growth through SMMEs as assessed through an increased contribution by the sector to the GDP.

Create 90% of South Africa’s 11 million needed jobs by 2030 through the SMME sector, and so contribute to reducing the unemployment rate to 6%.

Reduce the cost of regulatory compliance and promote ease of doing business for SMMEs; and ensure policy coherence through partnerships among key societal players, business and government.


While the government focuses on investing resources and time into facilitating SMME development through incubation and a more conducive policy and regulatory environment, difficulties around access to infrastructure, utilities and transport remain key constraints.

BASIC INFRASTRUCTURE CONSTRAINS SUSTAINABLE SMME DEVELOPMENT


Over 70% of SMMEs in South Africa fold within the first 5–7 years of inception. The factors that contribute are broad and include lack of appropriate technology, inadequate access to finance, labour laws, and low levels of technical and entrepreneurial skills. The need for infrastructure as a support mechanism for formal and informal business growth however, cannot be overemphasised.

In South Africa, poor transportation infrastructure and lack of public services such as electricity, water, sanitation and telecommunications place massive constraints of SMME development. The power blackouts, which started in 2008, are indicative of the constraints placed on businesses when key services fail.

For South Africa to achieve its NDP goals, and create an environment conducive to SMME development and growth, investment in new infrastructure projects needs to proceed alongside effective and efficient maintenance of existing aging infrastructure. The situation illustrates the dire need for Asset Lifecycle Management solutions on national, provincial and municipal levels of government. Such projects represent holistic approaches to effectively planning, managing and maintaining infrastructure assets over their entire life span through informed decision-making and project control.

On a macro level, South Africa’s energy crisis equates to massive losses in revenue. According to the National Energy Regulator of South Africa, during 23 days of load shedding in 2008, the SA economy lost an estimated R50bn – the equivalent of R2.17bn per day. According to energy expert Chris Yelland, controlled blackouts in 2014 had a “serious negative economic impact”, with load shedding having the following negative fiscal consequences:


Stage 1 load shedding cost the economy R20 billion per month

Stage 2 load shedding cost the economy R40 billion per month

Stage 3 load shedding cost the economy R80 billion per month


In 2019, businesses in South Africa are again struggling to operate amid rolling blackouts that affect their operations for up to five hours at a time. Bakeries, supermarkets and restaurants have to throw away food, while service providers such as printers and hairdressers are unable to satisfy their clients’ needs. When unable to afford alternative sources of energy, such as generators, business owners fail to mitigate revenue losses, which in turn affect their ability to pay employees, As noted by one concerned entrepreneur: “[T]his is a ridiculous situation, we’ve got staff to pay – if the business goes under then staff lose their jobs.”

INFRASTRUCTURE MANAGEMENT BUILDS A SUPPORTIVE ENVIRONMENT


Power stations, like other infrastructure components, require routine maintenance and regular upgrades to meet consistent and growing demand. Infrastructure projects may be implemented regularly but investment is not always directed at addressing the real challenges the economy and its infrastructure landscape faces.

In the case of South Africa’s energy crisis, Eskom’s failure to maintain its existing infrastructure assets has led to the current state of affairs. The power utility has admitted that it reduced its expenditure on maintenance by at least 50% over the past five years due to financial constraints. Eskom’s Andrew Etzinger noted: “Money was prioritised completely to the construction of the new power plants, we are now paying the price for that whereby we are seeing unreliability of our older power stations.”

For South Africa to achieve its NDP goals, and create an environment conducive to SMME development and growth, investment in new infrastructure projects needs to proceed alongside effective and efficient maintenance of existing aging infrastructure. The situation illustrates the dire need for Asset Lifecycle Management solutions on national, provincial and municipal levels of government. Such projects represent holistic approaches to effectively planning, managing and maintaining infrastructure assets over their entire life span through informed decision-making and project control.

IMQS develops software products that utilise the power of information, accumulated and made available via technology, to empower managers and technicians to make informed decisions in managing assets holistically. Our digital Financial Asset Register is the cornerstone of such a solution, centralising asset information, both financial and engineering, needed to better prioritise work and allocate budget. Our Project Control System is specifically designed to offer project managers a full view of their capital infrastructure projects, while the Maintenance Management Module offers comprehensive support to managers and technicians in their everyday operational needs.

Well-managed infrastructure can form the base of an environment where SMMEs can thrive and achieve their true potential, and IMQS is wholeheartedly committed to helping engineer this future. Comprehensive Asset Lifecycle Management is not just a concept that describes our software suite, it is a goal we commit ourselves to and the driving force behind our innovation.