The JSE is committed to encouraging the development of SMEs in SA. These entities are a vital part of the economy and have the potential to stimulate employment and spark economic expansion.

We want to create more opportunities for SA companies to thrive, create jobs and help grow the SA economy. By committing to enterprise development, the JSE is able to assist SMEs to become financially and operationally sustainable in the longer term. SMEs have propelled growth and reduced unemployment in many countries across the world. According to the World Bank, most formal jobs in emerging markets are with SMEs, which create four out of five positions.

The Global Entrepreneurship Monitor says the number of SMEs in SA has increased by only 3% from 2.18 million in 2008 to 2.25 million in 2015. The Bureau for Economic Research reports that about 660 000 of these are in the formal sector, with nearly 1.5 million in the informal sector. One of the challenges that the Department of Trade and Industry has identified is that many SMMEs battle to survive beyond their early phases, lasting for an average of 3.5 years. Access to finance and markets, tight labour laws and skills shortages have been cited as some of the obstacles.

Stock exchanges have an important role to play in providing enterprises with access to the capital markets. Many of the largest companies on the JSE, which have been listed for decades, started out small many years ago. Over time, they have developed into the giants they are today. Tomorrow’s giants will also mostly have humble beginnings.

The JSE’s AltX, which was established in 2003 and now includes more than 60 listed companies, is the ideal platform for helping smaller companies to grow within the framework of a highly reputable marketplace. AltX provides these companies with access to capital while providing investors with exposure to them in a regulated environment. This is the kind of catalyst that SA needs to help grow the economy and build profitable, well governed and sustainable companies.

Since the inception of AltX more than a decade ago, nearly 30 companies have migrated to the JSE’s Main Board, demonstrating that AltX is an excellent springboard for growth. Apart from this, we are working on a project to assist smaller companies that are not on AltX to raise capital. This will provide smaller enterprises with an opportunity to participate fully in the economy.

The JSE is also one of several companies that have recently contributed to a newly established fund that will invest in smaller enterprises that have a high impact on job creation. The fund, to which the private sector will supply about R1.5 billion in total – with government matching this amount – is likely to have a significant impact on driving the country’s small-business sector.

It is a big challenge to grow the SME sector, but this is one of the tangible moves we can make as the private sector to bring about change. Despite the challenges, we see great opportunities within our field.

In tandem with assisting enterprises, the JSE also has several projects to help transform SA’s capital markets. For example, at the beginning of 2016 we launched an enterprise development programme for black stockbroking firms. To be eligible, brokers must have an annual turnover of less than R35 million and more than 50% black ownership. This programme provides financial grants to these firms on a quarterly basis, with the money earmarked for growing their businesses.

We hope this progressive move will support black stockbrokers in building long-term sustainable enterprises and encourage more black businesses and investors to enter our capital markets. Transformation is a vital and necessary element of the way the JSE does business. Growing together is an integral part of that philosophy too. 

Graeme Brookes
Director: Governance, Risk, Compliance and Group Company Secretary

October 2016
Illustration: Hanlie Huisamen