Sbp Sme Growth Index1

HEADLINE REPORT OF SBP’S SME GROWTH INDEX™

PRIMING THE SOIL

SMALL BUSINESS IN SOUTH AFRICA

NOVEMBER 2011

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INTRODUCTION

Agriculture, the process of raising life from the soil, provides an insight applicable to all economic endeavours: all things being equal, the quality of inputs will be reflected in the quality of outputs. The fertility of the soil, the weather, the availability of water, and the quality of the seed will all determine how bountiful the crop will be. A difficult environment is likely to produce disappointing yields. However, experience demonstrates that, while many of these conditions are beyond the farmer’s control, a poor environment need not be a fatal constraint. Skill, perseverance, understanding of the environment, and the application of technology in the form of irrigation, fertilisation and choice of crop can produce remarkable results, even where the soil is not promising. Application of the agricultural metaphor to the national economy sees South Africa looking dry and dusty at present. Optimism about the future in the wake of the political transition has given way to open concerns about failure. Fundamental to this has been the failure to match the political transition with an equivalent economic transition, to lift the millions of poor people out of poverty and to ensure a sustainable economic stake for all. GDP growth is far short of the 7 percent level required to support job creation on a meaningful scale. At least a quarter of the population is unemployed (the number rises to nearly 40 percent if those who have given up looking...