It is globally acknowledged that when small and medium enterprises (SMEs) thrive, economic growth and job creation follow. The importance of SMEs in the economy is one that is well understood by government. Accordingly, a new Ministry for Small Business Development has been created by Government’s appointment of Lindiwe Zulu as Minister.
In recent years, efforts have been made to help SMEs in the form, inter alia, of improved tax breaks, streamlining loan financing and a Department of Trade and Industry business incubator programme. However, there is no single clear government focus – this should be rectified by the new Minister and her department.
In South Africa, GDP fell by 0.6 per cent in the first quarter and unemployment is 36.1 per cent amongst the youth. Yet, SMEs find themselves confronting issues such as excessive red tape, restrictive labour laws, difficulty in accessing capital without onerous security and the lack of a mentor or incubator programme for fledgling SMEs. South Africa has one of the highest global business failure rates in the SME category – more than 70 per cent fail in their first year. It is envisaged that 90 per cent of the jobs to be created by 2030 in the National Development Plan will come from SMEs.
While some scepticism surrounded the creation of a new ministry that might conflict with others in the economic cluster and lead to turf wars, Ms Zulu says her role will be a “co-ordinating” one, bringing together existing government programmes and policies to grow the small business sector — and she is up to the task. Miriam Altman, who is on the National Planning Commission, says there are many policies in place to aid small business, including strengthening the procurement system. She also points to the regulatory environment as critical.
“This does not mean deregulation; it means simplifying the regulatory environment to enable small companies to compete more easily,” she says, describing the current environment as “onerous”.
“It’s about dialoguing with them (small businesses) to see where the challenges are,” said Ms Zulu, newly-appointed Small Business Development Minister.
The South African Institute of Chartered Accountants (SAICA) has just commissioned a comprehensive SME research project to try and understand what is required to make SMEs thrive in South Africa. Readers involved in the SME sector can positively contribute to government initiatives by going to www.surveymonkey.com/s/SAICA_SME_Research and completing the survery. The closing date is Friday, 11 July, and should take no more than 15 minutes to complete.
The research will be used to lobby government to take concrete actions to address the concerns of SMEs. SAICA frequently engages government departments and has been successful in lobbying and working with government. In addition to lobbying government, SAICA will be ascertaining if there are any concrete steps or new programmes it can implement to further assist SMEs.
One area which has been frequently mooted is to give SMEs easier access to government tenders – where expenditure runs at some R190-billion annually. This will need to be coupled with prompt payment terms to SMEs as cash flow is one of the primary reasons for business failure.
Overall, the future looks more positive for SMEs. Businessess should do all they can to assist SAICA with its research – as indicated above it is a quick easy process, the Minister has a good track record and there is a good chance she will listen and respond to sensible lobbying which is backed up by good research. Thus, the timing of SAICA’s research is perfect.
This article is adapted, with permission, from an article that first appeared in CA(SA)DotNews (copyright holder DotNews)
