New business development

Absa backs small business growth

18 November 2010

Recognising the importance of small businesses for South Africa's economic growth, Banking group Absa has launched a Growth Enterprise Programme offering non-financial services and mentoring to its small business customers.

According to Absa, nearly 12-million South Africans rely directly on small businesses for their livelihood. Absa Small Business head Nico Jacobs said there had been a 40% increase in small business entrepreneurial activity in the country over the past 12 years.

"Small businesses have moved from employing 18% of the South African employable population in 1998 to more than 60% today," Jacobs said in a statement last week. "However, in comparison, our emerging market counterparts are much higher, with India at 95% and China at 99%."

Little or no access to support

He said that small business owners were expected to drive the economy, creating jobs for themselves and others, yet they enjoyed little or no access to the support and education needed to help them sustain and grow their businesses.

The country faced the challenge of creating employment through entrepreneurship in the face of a small business failure rate as high as 63% in the first two years of trading, Jacobs said.

The reasons, in general, why businesses failed include lack of vision, poor management, as well as the lack of structure and infrastructure. Entrepreneurs had a certain set of skills, but lacked the funds to employ the other skill sets to run a successful business.

Financial know-how

However, lack of financial know-how was the single biggest reason – though this did not stop new entrepreneurs from entering the market.

Absa Small Business had undertaken several initiatives to tackle this issue. "One such project is the Enterprise Growth Programme that Absa Small Business launched recently," Jacobs said.

"The classroom-based mentoring programme was launched in May this year, and it is currently piloted within key Absa Enterprise Development Centres across KwaZulu-Natal, Western Cape, Limpopo and Gauteng."

Absa's programme was geared to help people develop their entrepreneurial thinking, while teaching them how to implement their business plan effectively and to understand the various aspects of a business and how they all tied in together.

"Any intervention by formal banking institutions such as Absa to provide financial expertise, products or services to the small business sector must be able to meet individual business' needs and expectations," Jacobs said. "This sector is a diverse one, with widely differing financial requirements, and a 'one size fits all' approach will not work."

SAinfo reporter