Minister, cut the red tape and free small businesses

It would be premature to pass judgment on our newly appointed Minister of Small Business Development, Khumbudzo Ntshavheni, based on a few post-appointment media remarks and her recent budget vote speech. Equally, it would be irresponsible for the organisation representing small and medium-sized enterprises (SMEs) at Business Unity SA not to point out where she might direct more attention to successfully promote small business.

Since her appointment a month ago, her remarks have shown that she is one of the few new ministers who seems genuinely eager for the job. This is despite the widespread speculation that her domain, one of the fifth administration’s creations, was to be folded into an uber economics ministry including trade and industry, economic development and other agencies of economic policy.

In media interviews, conducted days after her appointment, she appeared alive to the challenges facing SMEs: late payments, a maze of red tape and general survival issues related to the operating and policy environment. However, her ideas on cutting red tape require more fleshing out.

Soon after the post-inauguration State of the Nation Address, she signalled her priorities as minister looking after the segment of the economy that the National Development Plan (NDP) envisioned would create 90% of all new jobs by 2030. Tellingly though, she makes no mention of the NDP, the government’s official policy blueprint.

Her first major policy address was the budget vote for small business development. Linking her address to President Cyril Ramaphosa’s seven priorities over the next decade, she told MPs that: “Our work in this term of office will be directed at ensuring that SMMEs [small, medium and micro enterprises] and cooperatives contribute to the two goals of, first, growing our economy at a much faster rate than our population, and; second, a million more young people being in employment over the next 10 years.” This is considerably less than the NDP’s roughly nine million jobs envisioned as coming from SMEs, but far more realistic.

A few of her pronouncements require support from other agencies, notoriously difficult to muster, with a mandate to support SMEs. These include the plan to audit all government’s financial and non-financial support to SMEs and to sort out, once and for all, the late payment issue, which is a slow assassin of SMEs.

On the payments issues, we don’t need to reinvent the wheel. Other jurisdictions have done much that is worth emulating, such as requiring big businesses and state departments to declare payment terms (and making it a criminal offence for businesses not to do so).

Ntshavheni’s policy priorities include creating:

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  a one-stop shop facility to assist small businesses (a good idea, but the devil is in the detail);

  
  


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  a ministerial advisory panel (which should include people experienced in starting, running and growing a business); and

  
  


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  rolling out incubators across SA, with the maximum period of support raised to five years;

  
  

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  tackling the abuse of cooperatives laws (we would suggest a review of the track record of cooperatives as well – according to the International Labour Organisation, there were more than 120,000 operating in SA in 2015, but only 1,000 were filing the legally-required annual financial statements);

  
  


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  introducing a new funding model (a combination of grants and loans) to crowd in private sector money to support small businesses;

  
  


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  enrolling 100,000 youths on an entrepreneurship programme; and

  
  


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  setting up an SME ombudsman (voted down in the last Parliament when the opposition DA proposed the concept).

  
  

Dludlu is executive for strategy and public affairs at the Small Business Institute. Business Maverick editor Tim Cohen’s wife, Jennifer Cohen, also works for the SBI.