TIPS - Janet Wilhelm - Results from #260

This is TIPS’s third publication on the State of Small Business in South Africa which is a periodic special edition of our Real Economy Bulletin. The series provides baseline data on the number of small businesses and their contribution to the economy, as well as their distribution by industry and location, ownership by race, gender and age, investment and profitability.

The bulletin first looks at the number of small business, both formal and informal, and the rate of growth. The figures show how the legacy of apartheid has left the country lagging behind other upper middle-income countries, which is a core factor behind very low employment levels.

The next section looks at value added, assets and profitability. Small formal businesses directly generate a third of value added in South Africa. Informal enterprise adds around 5%, but with very low profitability and access to resources.

In terms of the production structure, around a fifth of formal small businesses provide professional services, ranging from education and healthcare to engineering, legal advice and creative work. A quarter are in retail and hospitality. In the informal sector, retail trade accounts for close to half of all businesses, including street traders.

The bulletin also analyses education levels, race and gender, the numbers of young people becoming business owners, and the geographic distribution of small business. The share of black entrepreneurs in small business climbed from 40% in the early 2000s to 60% in 2019. The pandemic hit them disproportionately hard, but by the end of 2022 their share in small business ownership had returned to pre-pandemic levels. Black people have consistently owned around 95% of informal enterprises.

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Published in The State of Small Business in South Africa

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13 March 2023

TIPS Imports localisation and supply chain disruption study - Second Quarter 2022

The Import Localisation and Supply Chain Disruption study is a quarterly report that seeks to identify goods from the list of imports identified in the Import Tracker report that South Africa could possibly viably manufacture. Each quarter focuses on five manufactured items from the list of imports in the corresponding quarter's Import Tracker report. The five products in this report are:

Product 1: Sugar confectionery not containing cocoa, including white chocolate

Product 2: Microwave ovens

Product 3: Paper and paperboard, surface-coloured, surface-decorated or printed, coated, impregnated: OtherBrakes and servo-brakes and their parts, n.e.s.: Other

Product 4: Compressors for refrigerating equipment

Import Tracker - Second Quarter 2022

Published in Imports Localisation

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10 March 2023

The Real Economy Bulletin - Fourth Quarter 2022

Main Bulletin: The Real Economy Bulletin - Fourth Quarter 2022

In this edition

GDP growth: The economy shrank by 1.3% in the fourth quarter of 2022. Arguably that very poor outcome actually showed surprising resilience, given extraordinarily heavy loadshedding combined with falling export prices. Manufacturing contracted by just under 1%, but agriculture and mining both fell by 3%. Since the pandemic, quarterly GDP growth has turned markedly volatile. Read more.

Employment: Despite the decline in the GDP, total employment climbed by almost 160 000 in the fourth quarter of 2022, for a net gain of 900 000 compared to the same quarter in 2020. Still, the economy remained 500 000 jobs short of its pre-pandemic total. Most of the job losses affected clerical and skilled production workers, while highly qualified people gained over 2019. Manufacturing saw a second quarter of modest growth, although not enough to catch up with its pre-pandemic levels. Read more.

International trade: The trade surplus narrowed by 85% in the fourth quarter of 2022, mostly because of an 11% fall in the value of mineral exports. The main reason was a decline in international prices, notably for iron ore and platinum, compared to the fourth quarter of 2021. Outside of coal, the commodity price spike following the Russian invasion of Ukraine proved short-lived. Read more.

Investment: Investment this quarter increased by 1.3% relative to the third quarter of 2022, nudging the investment rate up to 14.7% of the GDP – still well below the level normally considered adequate for sustained rapid growth. Government investment climbed 2.5% (offset by the fall in government consumption, which mainly covers social services and grants) and private investment 1.5%. State-owned companies, however, cut their capital spending by 2.3%. In 2022, total investment in manufacturing was down by a third compared to 2019. Read more.

Foreign direct investment projects: The TIPS Foreign Direct Investment Tracker monitors FDI projects quarterly, using published investment information. Seventeen projects were added to the Tracker this quarter. The pledged investment value recorded for the quarter came to R9.8 billion from nine projects. The other projects did not report investment values. A total of 19 pre-existing projects were updated in the Tracker, largely related to the Renewable Independent Power Producer Procurement Programme. Read more.

Briefing Note: The 2023/4 budget and industrial policy - by Neva Makgetla. The recent 2023/4 national budget mainly takes forward the rather austere strategies adopted in 2022/23. To analyse the impact on inclusive industrialisation, this note looks at three aspects: the overall fiscal approach; broad support for industrialisation; and the allocation to the dtic. Read the Briefing Note online: The 2023/4 budget and industrial policy.

Briefing Note: Loadshedding and the economy - by Rapula Diale and Neva Makgetla. Over the past decade, loadshedding has increasingly affected the economy, due to an aging and poorly maintained national electricity system. According to the Reserve Bank, six to 12 hours of loadshedding costs the economy between R204 million and R899 million. Despite these enormous costs, loadshedding increased dramatically through the first quarter of 2023, and the national grid seems unlikely to recover any time soon. Read the Briefing Note online: Loadshedding and the economy.

Briefing Note: The small business REB - by Neva Makgetla and Lesego Moshikaro. TIPS is publishing the latest edition of its special REB on the State of Small Business, dedicated to an analysis of the available data on small business. This Briefing Note highlights some key findings. Read the Briefing Note online: The small business REB.

Published in Quarterly Bulletin

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