Eric Naki
Political Editor
3 minute read
18 Apr 2019
6:58 am

Policy, political parties leave SMMEs out in the cold

Eric Naki

Crippling regulations, no recourse and only empty election promises by political parties prevent small business from boosting the economy.

The small business community has no confidence in the willingness of the political parties contesting the upcoming elections to create a more conducive environment for small, medium and micro enterprises (SMMEs) to thrive and grow, and believes all promises were likely to again be empty.

SMMEs say they had no recourse once they were faced with battles around tax, labour and company compliance, and none of the parties would come to their rescue.

Despite the fact the SMMEs represented 40% of all business in South Africa and are seen as the future of the country’s economy, there was an apparent lack of political will by parties to confront the reality that SMMEs were significant players in job creation.

The ANC’s own economic blueprint, the National Development Plan, contains optimistic estimates that said that SMMEs would produce 90% of all new jobs by 2030.

The plight of small businesses was articulated by Osidon CEO Hennie Ferreira, who said the ANC wanted to push for a more effective competition policy that would open up the economy to participation by small and medium enterprises, emerging cooperatives, township and village enterprises.

The Democratic Alliance talked about exempting businesses that employed fewer than 250 people from stringent labour legislation and regulation. The party believed this would help grow small businesses and increase their ability to create jobs.

Ferreira acknowledged that Julius Malema’s Economic Freedom Fighters railed for a black-owned economy, while the Inkatha Freedom Party wanted to build an inclusive economy that focused on SMME development and unemployment.

Ferreira was adamant that among all the promises by these four major parties, the devil was in the detail.

“There is a definite fear among small business owners and entrepreneurs that these election messages will once again turn into empty promises,” he said.

“While the onus is on the government to lead the overhaul of the current business environment, political parties also need to come to the party.

“However, we have failed to see anything ground-breaking in their election manifestos that will really solve the current problems faced by SMMEs.”

Ferreira said despite being the driving force behind the economy, the SMME sector was continuously facing challenges to reach its full potential.

He cited a baseline study conducted by Small Business Project on SMMEs that said 98.5% of all businesses in South Africa are SMMEs and yet they create only 28% of jobs; while the international norm is between 60 and 70%.

Ferreira said government and political parties have failed to touch on critical areas that are currently crippling SMMEs.

“We have a toxic business environment, especially for small businesses,” he said. “It is as if everything is geared towards discouraging entrepreneurs, rather than providing them with a helping hand.”

Compliance was a major stumbling block to small business growth but was not the only problem, as the labour environment was also very tough.

“When it comes to tax, labour and company compliance, SMMEs are once again faced with an uphill battle, without due recourse. Not one of the political parties has definite policies to address these challenges,” he said.

Ferreira’s comments echoed the sentiment expressed by role players in the industry.

The South African Institute of Chartered Accountants, reacting to Finance Minister Tito Mboweni’s budget, recently said although R2.1 billion was earmarked to nurture SMMEs over the medium-term period, industry players believe the generosity was meaningless as “not much has been provided about the actual effectiveness of most of the reforms and incubator programmes for SMMEs”.

Ferreira said Osidon firmly believed entrepreneurs should focus on running their businesses and not be plagued by compliance and red tape, hence they developed a custom-built software system to make compliance easier.

“We know how important a fully functional SMME sector is for sustained economic growth,” he said.

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