ABSTRACT

The small, medium and micro-enterprise economy (SMME) is at the heart of contemporary economic progress and employment development across sub-Saharan Africa (SSA). According to several observers, SMMEs account for as much as 95 per cent of all firms in the SSA economy and are responsible for at least 80 per cent of the region’s employment (Rogerson, 2001; Fjose et al., 2010; IFC, 2016). By 2020, it is estimated that 122 million new jobs will be required in Africa in order to absorb a growing workforce and to address unemployment. In view of the sclerosis of the large enterprise sector in terms of employment creation, the majority of these jobs are expected to be contributed by SMMEs (McKinsey Global Institute, 2012). The growth potential of Africa’s SMME economy is, however, hindered by several factors. Among the key blockages to its expansion are lack of access to finance and new market opportunities, chronic electricity shortages and a weakly developed business environment in which SMMEs are hampered by complex regulations, red tape, corruption, and often the lack of public sector support. It is not surprising therefore that the SMME economy in Africa exhibits high death rates in particular among newly established enterprises in their early and most vulnerable stages of existence (Page and Söderbom, 2015).