HOW SME'S IN SOUTH AFRICA CAN CONTRIBUTE TO ECONOMIC GROWTH RECOVERY AND DEVELOPMENT
Small to medium enterprises (SMEs) make up the largest number of firms in the private sector. They are known to comprise up to 90% of all registered firms in the economy including the informal sector (Jeppesen & Kothuis & Ngoc Tran, 2012). According to Falkena et al. (2001), the total economic output from SMEs amounts to 50% of gross domestic product (GPD). This sector also employs 60% of the total labour force. SMEs are critical providers of employment and contribute to large industrial output. SMEs also play an important role in developing countries as they contribute to socio-political stability. Additional positive aspects of SMEs include their decrease in the unemployment rate, reduction in crime as well as a government expenditure (security and legal services). SMEs are also a means to redistribute the ownership of assets thus, in terms of South Africa, improving on black economic empowerment.
With reference to Mahembe (2011), SMEs are the first step towards industrializing an economy as they play an important role in its development. Their contribution toward job creation and development socially is essential in economic growth. SMEs are said to employ up to 22% of the population in developing countries. Table 1 below show the contribution that SMEs have on the South African economy.
Table 1: Contribution of SA's SMEs to the economy
% Survivorlist Micro(0) Micro(1-4) Very small Small Medium Large
No. of firms 19.6 31.3 19.8 20.5 6.8 1.3 0.7
Employment 2.2 3.5 6.5 13 15.7 13 46.1
GDP 5.8 13.9 15 65.2
Source: Falkena et al. (2001)
A study conducted in 2010 by Abor and Quartey (2010) discovered that within South Africa, 91% o...
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Small businesses success is dependent on the perceptions they create within their communities. A business trying to get established in their market depends on their local economy for support in order to get their name out there. If a business is not operating ethically or showing social responsibility to their community, they close those doors to the support they need in order to grow. Small businesses can have the greatest impact on a community by creating jobs and providing good and services for customers in smaller markets that larger corporations are often not interested in serving (Ferrell & Hartline, 2011).
Small and medium enterprises (SMEs) or small and medium-sized businesses (SMBs) are companies whose personnel numbers fall below certain limits. The abbreviation “SME” is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO).Small enterprises outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors.
In Malaysia, business sizes can be divided into two big groups, which are small medium enterprises (SME) and large companies. There are various definitions of SME that are widely used in Malaysia. Although different organisations have different ways of defining SME, most of them usually include annual income generated, number of full-time employees and/ or total fund available. A widely used definition of SME is by the Small and Medium Industries Development Corpo...
Bureau of African Affairs. (2011). Background Note: South Africa. Retrieved March 28, 2011, from http://www.state.gov/r/pa/ei/bgn/2898.html
SMEs is abbreviation of the small and medium enterprises meanwhile the collectively called of small enterprises and mediums enterprises, it occupies a number of more than 95 percent of enterprises in the whole word. In Singapore, the percent of SMEs is reach up to 99 percent of the companies, it represent and epitome most of the companies in Singapore. The definition of SMEs in Singapore in term of their numbers of employees and annual sales turnovers, business turnover are not more than $1oo million or the number of employees is less than 200. They hire the seven out of ten employees in labor and also make contribution in the nearly a half of Singapore GDP.
Small, medium enterprises (SMEs) are largest types business in the world, making up an estimated 99.7% of business. According to the Federation of Small Businesses (FSB) there are nearly five million existing businesses in the UK as of 2013. SMEs are a key contributor towards economic growth in terms of creating more employment, stimulating innovation and promoting social unity. SMEs are responsible for 47% of private sector employment, yet despite such global present there is still no agreed definition of a SME (Storey 1994). Bolton (1971) attempted to define them through a statistical and economic analysis. Classifications which are based on criteria, such as number of employees or annual turnover, however, do not remain consistent across borders. Given their size, smaller companies tend to be more intent on survival rather than expansion and profit maximisation. Smaller sized firms have always felt that the current reporting framework for IFRS is tailored more for the needs of larger companies and that the heavy cost burden it imposes upon them may not be entirely justified. In response to these concerns, the IASB subsequently issued the IFRS for Small and Medium-sized Entities (IFRS for SMEs) in July 2009. This standard offers an alternative framework which can be adopted by entities in place of the already extant full set of IFRSs or local national requirement standards.(Holt 2010) This essay will critically evaluate the impact of the IFRS for SME’s and whether or not it stands as the most suitable framework available for SMEs to use.
The preponderance of vast number of small scale industries in Nigeria suggest that the situation offers substantial opportunity for the intensive development and improvement of this sector, with appropriate injections of technology, improved management, efficient marketing techniques and so forth (Echu, 2002). The contributions of small industries to development are generally acknowledged.
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Shaw, E. (1997), “The real networks of small firms”, in Deakins, D., Jennings, P. and Mason, C, (Eds), Small Firms: Entrepreneurship in the Nineties, Paul Chapman Publishing, London.
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