‘SMEs need greater government support’

South Africa’s small and medium enterprises still operate with no proper guidelines from government despite claims that this market sector is one of the most important for the economy. According to Mark Austin, general manager of Logistical Management Services (LMS), the lack of SME support from government often makes for operational difficulty. “Transport SMEs especially receive very little support via financial institutions and their internal enterprise development divisions flounder due to a lack of direction. LMS is trying to give new direction by giving financial support through enterprise development,” he said. For Austin it comes down to many courier and freight companies avoiding the small owner-driver and third party companies. “They do this for a variety of reasons,” he said. “It is however one of our aims to ensure that the negative image of owner-driver services is changed and people see them in a positive light and realise that they can add value and make a difference.” According to James Austin, LMS CEO, it comes down to overcoming the two main challenges facing SMMEs in South Africa – securing finance and administrative support services. “Government has continuously stated that SMEs hold the key to unemployment,” he told FTW. “Road transport is key to the southern African economy. Rubber wheels must roll to keep the commercial companies in touch with their customers. LMS foresees SME owner-drivers as one of the solutions, but financial institutions are loth to finance owner-drivers due to their lack of business acumen and most importantly lack of business administration knowledge. Therefore the financial institutions see this business sector as high risk, and if finance is available, higher than normal interest rates are charged as well as extended payment terms.” He says enterprise development departments in financial institutions are seeking guarantees but this in turn further increases interest and makes access to funds for SMEs in this sector almost impossible.