Image: Gallo

No Caption

Small- and medium size-enterprises can provide a sustainable solution to the reduction in the high level of unemployment in SA, as well as contribute to the country's economic growth.

However, government and financial institutions need to make funding more accessible in order to support local entrepreneurs and compete with growing entrepreneurial levels in other emerging economies - particularly Brazil, Russia, India and China, which form the BRIC countries.

This is according to Marc Sternberg, founder and managing director of Spark ATM Systems, SA's independent ATM deployer, who says that SA needs to be more aggressive in promoting a national entrepreneurial culture.

Sternberg cites Brazil as the perfect example of fostering SME growth. According to data gathered by Endeavor Brazil, SMEs are responsible for 96% of the jobs in Brazil and comprise 98% of all companies in the country.

"The majority of the country's SME sector is geared toward high-growth ventures, as opposed to companies that form and then remain small.

"Brazil's government also plays a key role in growing SMEs through the creation of dedicated funding agencies than disperse around US$65,000 to start-ups focused on innovation. The current aim of these agencies is to aid 10,000 innovative companies over four years, and thereby generate 10 new jobs for each one directly generated by a new company.

"This clearly demonstrates that the introduction of pro-entrepreneurship policies at government level can be effective in fostering a country's entrepreneurial growth."

He adds that South Africans entrepreneurs also need to play a role by getting rid of their fear of failure, conducting sound research and identifying crucial gaps in the market in order to provide sustainable and profitable solutions.

Sternberg says the idea for Spark ATM Systems occurred when he returned to SA in 2005 after living in Australia for a few years.

"I noticed I had to travel long distances in order to find an ATM to draw cash whereas in developed countries, such as in Australia and the United States, ATMs could be found everywhere, from supermarkets, to restaurants, sports clubs and butcheries. There was a clear need for conveniently located ATMs across SA and we established a business plan to solve this problem."

Sternberg adds that the concept is simple.

"We locate suitable venues that offer consumers easy access to cash, following which we enter into an agreement with the owner of the venue to setup the ATM. The merchant then fills the ATMs with money from the day's trade, which greatly reduces banking fees and security risks as transporting and collecting money is both expensive and highly risky.

"Our latest research shows that merchants using our ATMs experience a 10%-40% cash retention rate, meaning cash withdrawn at their venue is then spent at the same venue. This has resulted in a highly positive uptake from many merchants, among others, supermarkets, pharmacies, sports facilities and restaurants."

Since the company commenced five years ago it has grown to employ 85 people with a national footprint of over 15 points of contact across SA.

"As in Brazil, an entrepreneurial mindset can flourish in SA and creating this is crucial for a country where young people between the ages of 18 and 25 comprise a significant portion of the unemployed workforce. Fostering entrepreneurship is key to moving SA up the global economic ladder," concludes Sternberg.