SMEs adapting to new challenges

SME Research

Are small to medium enterprises coping with power cuts and the prospect of erratic supply for the next half-decade? What about crime? Is South Africa’s infrastructure failing the SME?

These are among the crucial questions SME Survey 2008 raises as it gauges the competitiveness and profitability of small to medium enterprises which are frequently seen as the engine room of growth in South Africa. Sponsored by Standard Bank and Fujitsu Siemens Computers, the survey is in its 6th year and measures sentiment, confidence and the factors that contribute to the competitiveness of an SME.

Arthur Goldstuck, principal researcher for SME Survey, notes that the economic landscape in South Africa has changed dramatically in just six months. “From a buoyant economic climate and abundant availability of credit, from a relatively reliable and stable power supply and the assurance that the water from the tap is arguably the best in the world, companies today find themselves challenged in ways they had never expected,” he says.

“In examining the infrastructure challenges which business must cope with, we are referring to the physical environment in which the SME operates. This includes roads, electricity, traffic lights and congestion, transport costs and more. That environment is changing in front of our eyes and is having an impact on how the SME is likely to perform,” says Goldstuck.

SME Survey 2008 will strongly focus on the impact of infrastructure problems created partly by load shedding and by the lack of planning in key infrastructural areas, Goldstuck continues.

“We will look at the ability of the SME to deal with these new rules of doing business. Questions that must be asked include the impact that load shedding has had on profitability and competitiveness. Methods of coping with these problems, such as the purchase of generators, laptops and 3G connectivity, will also be explored,” says Goldstuck.

Among the new rules of doing business is the issue of coping with crime. “Everyone is aware that our crime levels are incredibly high. In the midst of this, there is a perception that crime against businesses is faceless. It is not. The business owners are people, and crime has a material impact on them and their ability to run a competitive and profitable operation,” Goldstuck says.

According to Scott Gilmour, Head of Customer Strategy for Personal and Business Banking at Standard Bank, small business are impacted by infrastructure challenges.

“However it would be incorrect to imply that the current economic environment is placing significant stress on all small and medium-sized businesses. Consumer-dependent businesses are more susceptible in the current economic environment as consumer spending comes under pressure, but in general it is reassuring to see that businesses have been holding up fairly well,” says Gilmour.

“Participation in research initiatives such as the SME Survey helps Standard Bank better understand the changing needs of small businesses as they adapt to infrastructure challenges. This increased understanding assists us in developing relevant solutions and disseminating value-added business and banking information that support our business clients,” adds Gilmour.

Danny de Beer, business development director at Fujitsu Siemens Computers says: “The questions which this year’s survey asks are hard-hitting, but there is no question that business, big and small, has been hard hit by changing circumstances,” says Danny de Beer, business development director at Fujitsu Siemens Computers. “The SME has to deal with a new set of challenges that arguably threaten their ability to survive and prosper. Knowing how these issues are affecting business, and how they are coping, is essential.”

Goldstuck notes that many of the issues raised by the SME Survey have been addressed which is rewarding. The research and its findings can have an influence. “We do ask questions that evaluate how well government is serving the SME. It is reassuring to see the restructuring of and rethinking behind many government support programmes.”

About Standard Bank

The Standard Bank Group, which has been part of the fabric of South Africa for the past 145 years, is Africa’s largest bank with a network in 18 African countries and 20 countries outside of Africa including the key financial centres of Europe, the United States and Asia.

The Standard Bank Group is the largest South African banking group ranked by assets and earnings. The group had total assets of over R1,098 billion (approximately US$156 billion) at 30 June 2007 and employed more than 42 000 people worldwide. Standard Bank’s market capitalisation at 22 October 2007 was R145 billion (approximately US$21 billion).

In addition to its banking operations, Standard Bank enjoys a strategic interest in the insurance industry through control of Liberty Group, one of Africa’s leading life offices and financial services groups.

Outside of Africa the Group has a particular focus on emerging markets, providing corporate and investment banking services including debt, treasury, trade finance, structured finance and project finance services. This international expansion has been achieved through a combination of organic growth and acquisitions. In April this year, Standard Bank finalised its acquisition of BankBoston Argentina, enabling it to further extend its footprint in the South American market. In August this year, Standard Bank acquired controlling interest in IBTC Chartered Bank, giving it a significant presence in the Nigerian market.

Standard Bank has developed a good understanding of what is required in terms of the Financial Sector Charter. Standard Bank achieved an overall charter score of 92,31 points (out of 100) as at 31 December 2006, an “A” rating.

About Fujitsu Siemens Computers

Fujitsu Siemens Computers is the leading European IT provider with a strategic focus on next-generation Mobility and Dynamic Data Center products, services and solutions. With a portfolio of exceptional depth, our offering extends from handhelds through desktops to enterprise-class IT infrastructure solutions. Fujitsu Siemens Computers has a presence in all key markets across Europe, the Middle East and Africa. Leveraging the strengths, innovation and global reach of our joint shareholders, Fujitsu Limited and Siemens AG, we make sure we meet the needs of customers: large corporations, small and medium enterprises and private users. The company is a member of the United Nations Global Compact initiative.

For more information on Fujitsu Siemens Computers

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