Every large business once started out as a small business


This doesn’t mean that all small businesses will grow into big ones, far from it, but it gives an indication why it’s important to support and nurture today’s SMEs.

In SA, the success of these businesses may determine the speed and extent of our post-pandemic recovery. After all, SMEs make up 98% of all businesses in SA, employ between 50% and 60% of the national workforce, and account for 25% of job growth in the private sector, according to a 2020 report by McKinsey & Co. On top of creating employment and skills, SMEs secure livelihoods and uplift communities. They attract investment and drive economic growth. Some are at the cutting edge of technology; agile and quick; and contribute significantly to SA’s innovation base.

However, the challenging global economic conditions – combined with the local impact of the pandemic, unstable electricity supply, deteriorating infrastructure and last year’s unrest – have been difficult for businesses of all sizes, with the smaller ones disproportionally affected. In response, SA needs all hands on deck. It’s not enough for government to declare the need to strengthen the SME sector; the private sector also has to continue playing its role in enterprise development and improving the entrepreneurial ecosystem, along with pro-active support from civil society and other key actors.

This is where the JSE has a solid track record, having implemented a series of initiatives to enable the growth and scaling of small and medium-sized businesses.

For nearly two decades, the JSE’s AltX has served as a springboard for smaller companies wanting to list on the exchange’s Main Board. The AltX makes listing easier for SMEs and offers them the opportunity to raise capital while growing and gaining exposure.

The AltX also actively helps raise investor awareness for the potential that these SMEs hold. Notable SA companies, such as Capitec Bank and private-education group Curro, are among the impressive alumni that have graduated from the AltX to the Main Board.

Whereas traditionally, scaling an SME involved a listing, the JSE is opening alternative routes for companies in order to facilitate their growth – such as the JSE Enterprise Acceleration programme. Incidentally, participation in this initiative could result in a listing, although it’s not the primary objective.

The new Enterprise Acceleration programme offers medium-sized companies the opportunity to scale up through growing market share, accessing funding and improving their competitiveness in local and international markets. The participants work with a broad range of both local and global mentors to augment their business models and propel themselves into being large enterprises.

In 2016, the JSE started its Black Stockbroker programme as part of its commitment to the transformation of SA’s capital markets. This enterprise-development programme provides cash disbursements to black brokers on a quarterly basis, which are used to sustainably grow their businesses and human capital.

Last year saw the launch of JSE Private Placements, a new digital marketplace using next-generation fintech to streamline private funding. It enables companies looking to raise debt of R1 million and above, or equity of R20 million and above, to pitch to a base of investors without having to search, while private equity investors are able to select investments from a pool of qualifying projects.

Accessing capital is one of the key constraints for SMEs globally, and with the pandemic further increasing the demand for funding, the JSE has been instrumental in coming up with new solutions to this challenge. It is absolutely crucial to create supportive conditions that enable small and medium-sized businesses to grow to their full potential.

SA needs the employment, skills and economic activity that come with SME development, because when small businesses thrive, the entire nation benefits.

Vuyo Lee
Director of Marketing and Corporate Affairs