Regulations are being updated with the aim of keeping classifications fair and relevant to the economy.
The public have until 27 October to comment on the proposed criteria for determining the classification of micro, small, and medium enterprises (MSMEs) across different business sectors.
Once public comments have been finalised, Minister of Small Business Development Stella Ndabeni-Abrahams said she intends to officially issue the criteria under the legal powers granted to her by Section 20(2) of the National Small Business Act of 1996, as amended by the 2024 Amendment Act.
Section 20(2) lets the minister set rules for classifying businesses as micro, small, or medium. It also allows the minister to update these regulations over time, with the aim of keeping classifications fair and relevant to the economy.
ALSO READ: Half of SMEs may not survive the next year without urgent help
SME classification
In a media statement, Ndabeni-Abrahams said the proposed thresholds are grounded in evidence-based data obtained from the National Treasury and the South African Revenue Service (Sars).
“The draft thresholds have been developed in consultation with and are supported by key stakeholders including Statistics South Africa, Sars, the National Treasury, the Department of Labour and Employment, the Department of Trade, Industry and Competition and the Department of Agriculture,” she said.
The draft regulations also align with the international standard industrial classification (SIC) codes.
SME employees and turnover
Several factors determine whether a business is classified as micro, small, or medium, including the number of employees, annual turnover, the sector of the business and the value of assets or capital investment.
However, the published draft regulations only refer to the sectors of businesses, the number of employees and annual turnover.
For businesses to be classified as micro, they need to have zero to 10 employees. To be classified as small, a business must employ 11 to 50 employees. To be classified as medium, it must have 51 to 250 employees.
ALSO READ: How SMEs can leverage cross-border e-commerce opportunities
The aim of the changes
The minister said the proposed thresholds aim to:
- Provide guidance for the alignment of statistics and data collection on micro, small, and medium enterprises;
- Enhance data available for policy and programme development;
- Enable better targeted support interventions and measurement of impact; and
- Improve overall development of micro, small, and medium enterprises.
Comments can be sent to Sibusiso Bhila at [email protected] or submitted by hand to the Department of Small Business Development, 77 Meintjies Street, Sunnyside, Pretoria.
“Participants who wish to make oral presentations should indicate their interest in their written submissions and will be informed if any public hearings will be held in this regard.”
NOW READ: Entrepreneurship a solution to youth unemployment – but there are challenges
