While Covid-19 put the brakes on the economy, the post-pandemic recovery has almost been stymied by the ongoing Russian war on Ukraine and the impending fears of a US recession, contributing negatively to economies around the world. Through the most challenging hurdles, however, the franchise sector in South Africa has remained steadfast in its goals to grow the economy and create jobs. This sector, which employs an estimated 350 000, is a rock on which the economy is built.
Statistics from the Franchise Association of South Africa (Fasa) estimate that the country’s franchise industry contributes around 15% (R721 billion) to gross domestic product (GDP). This figure is the total market value of all finished goods and services produced in the country during a specific period.
Statistics South Africa (Stats SA) revealed that more than 1 000 small businesses shut down in the first six months of 2021. Likewise, the Small Business Institute noted that as many as 70% of small businesses in South Africa failed in the first five years.
Therefore, considering the sector’s strength during tough times, there is evidence that investing in a franchise is one way that entrepreneurs can remain sustainable, get assistance from their franchisor, and ride out any storm.
South Africa’s challenges are many, notwithstanding the uncertainty and loss of business brought about by load-shedding. However, with the pandemic having eased amid fears of another variant being forecast by the Department of Health for the end of October, businesses are looking towards speeding up growth opportunities so that they can increase their financial strength.
This takes on greater significance if you consider that in the post-pandemic phase, Stats SA’s Quarterly Labour Force Survey – Q1 2021 showed that the official unemployment rate was 32.6% in the first quarter. Fasa labelled unemployment the most significant concern among youth (15- to 34-age bracket). It took it a step further, working with partners to transform the industry by working with stakeholders to create franchise opportunities in and around townships in South Africa. Introducing the franchise business model and franchise manager occupational training in and around townships aims to empower and inspire youth to take up franchise opportunities. Such initiatives must be supported because they serve the dual purpose of helping to grow the economy and create jobs.
The government has called on the fuel industry to meet significant transformation objectives in the next five years to ensure essential compliance with the Fuel Liquid Charter and a sustainable enterprise.
Like most other countries, South Africa’s fuel industry is of strategic importance to ensure energy security and economic growth. According to the South African Petroleum Industry Association, the fuel subsector contributes about 8% to the country’s GDP, which is approximately R300bn in production output. There are about 5 000 petrol stations across all brands, creating over 700 000 direct and indirect job opportunities that make up 5% of total formal employment in South Africa. Sustained business growth is crucial for expanding any economy, but this growth shouldn’t come at a high cost. By understanding business growth trends that focus on more than increasing the bottom lines, businesses can look ahead with confidence, mainly if backed by a money expert committed to doing good.
As a bank, we have identified four key trends dominating and accelerating business growth in South Africa. Without a doubt, the most important – and a legal imperative – is transformation.
Another critical imperative meant to stimulate growth is understanding that climate resilience speaks to what businesses are doing to contribute to sustaining the environment while ensuring the growth of the economy.
While sustainability is essentially about preserving the environment and the responsible use of natural resources, it is also about the upliftment of society. Understanding that this should not negatively impact franchisors and franchisees, but rather help drive business growth positively.
Without a doubt, it has been seen that companies making their mark in the Fourth Industrial Revolution will be those that understand the drivers of value, such as data, artificial intelligence, machine learning, digitisation and e-commerce. Embracing digital tools must be done in a way that ensures that clients continue to enjoy a great experience and receive expert advice whenever they need it.