The success of SMMEs is key to the economic turnaround and growth in South Africa, and to succeed, they need the support of large corporates. The value of integrating SMMEs into the supply chain or large corporates goes beyond just box-ticking, and can offer real value when done properly, creating more jobs and prosperity in both the formal and informal sectors. 

According to the Johannesburg Business School, SMMEs are the cornerstone of most economies and they account for about half of global Gross Domestic Product (GDP) and 60%-70% of employment. SMMEs also make up about two-thirds of the African continent’s formally employed workforce. In South Africa, it is estimated that the small business sector provides employment to roughly 47% of the workforce and generates about 20% of the country’s annual GDP.

Why the need to go digital? 

Now that you know how important SMMEs are to our country, understanding how important their success is easier. In the enablement space, we are seeing digitalisation playing an increasingly more significant role that corporates can’t ignore any longer. They need to not only digitalise their own solutions, but also provide digital technologies to support SMMEs. Today in South Africa, almost all businesses have allocated some kind of budget towards technology. 

Research from global small business platform, Xero, shows that there has been a significant move by South African small businesses towards adopting new technology, with 97% reported to have invested in new technologies in 2019. The research also shows that 53% of businesses have discovered that new technology adoption has led to large increases in their profitability.

By digitalising their own businesses and providing tech support and resources to SMMEs, large corporates are making it easier for those SMMEs to integrate into their supply chains effectively. 

Potential Challenges

One of the biggest challenges that commonly arises when it comes to SMME integration into the corporate supply chain comes from large organisations generally working in silos, which results in a lack of collaboration among divisions. To deal with this, corporates should look at their social, environmental and corporate governance practices and align these to the needs of SMMEs. 

In a world where digitalisation has enabled everything to be customised, large corporates need to stop thinking that standard solutions are the only ones available, and look beyond what they are currently doing so that they can actually support SMMEs through supply chain development.