Black-owned Small and Medium Enterprises (SMEs) that take part in Enterprise and Supplier Development (ESD) programmes are capable of making a significant and measurable contribution to economic growth, job creation and transformation, a 10-year study of leading small business accelerator Property Point has revealed.
The Development Impact Report by StratEcon Research found that the businesses on the two-year Property Point accelerator programme had recorded a cumulative contribution of ZAR1.6 billion to the GDP since 2008. It also found that the businesses created 2244 direct and indirect jobs full-time jobs and reported average revenue growth of 39%.
The research commissioned as part of Property Point’s 10th anniversary, indicated that over the past 10 years, for eachZA R1 invested in the programme, the Property Point businesses benefitted by ZAR14.20 as a result of contracts and tenders awarded.
Speaking at the launch of the report on 31 July 2019, Shawn Theunissen, Founder and Head of Property Point says the fundamental take away from the report was that enterprise and supplier development could be a catalyst for sustainable businesses, economic transformation and growth.
“Investments into entrepreneurs are worth it and the benefit-cost ratio of ZAR14,20: R1 categorically proves it. South Africa needs more programmes like these. Imagine what this value means in the current negative macro-economic environment hungry for growth,” he says.
“This data will be encouraging to government, which in the face of stagnant economic growth and high unemployment, has pinned its hopes on small businesses to create up to two million jobs over the next 10 years.
Stratecon project lead, Professor Barry Standish, said the data proved that the programme contributed significantly to both individual firms and the economy over the past 10 years.
“Our analysis started by assessing whether there is a statistical difference between the financial performance of firms on the programme and those who were not, and we found that firms on the programme have far greater success.”
He says further analysis indicated that no other external factors such as GDP growth were responsible for the success of the programme.
“National GDP grew in total by 14% between 2009 and 2018. Tender and contract value for businesses on the programme grew by more than 1500% over that same period. This means the programme boosted productivity well in excess of national economic growth,” said Prof Standish.
2018 Macroeconomic Benefits
According to the report, the programme’s total direct contribution to GDP was R156.9m in 2018 up from just R1m in 2008. The indirect contribution to GDP in 2018 was R363m bringing the total contribution to GDP in the final year under review to R520m.
In 2018, the programme also contributed ZAR59 million to all forms of taxes and ZAR220 million to household income. To date, the cumulative contribution to taxes is ZAR179 million and ZAR662 million to household income.
Theunissen said the programme was successful because it focussed on eliminating the unconscious biases that exists when corporates consider black SMEs.
“Our fundamental aim is to make the businesses on our programme more productive and we do this by focussing on risk mitigation; reputation development and building client relationships,” he said.
The launch of the Development Impact Report was held at Workshop 17 in Sandton which is one of seven uniquely built co-working premises in Gauteng and the Western Cape. The co-working spaces create an eco-system for people and businesses to connect and collaborate.