From pillar to post
Government has done nothing to cut red tape
WITH THE ELECTION just months away many will be hoping to see Government up its support for small businesses in a bid to boost job creation. But despite a pledge to promote and assist the sector entrepreneurship experts and business bodies say Government has still far to go when it comes to assisting business owners.
While the taxman in recent years granted tax breaks – such as graduated tax and a tax amnesty in 2007 and is expected to grant more tax breaks and incentives in this year’s Budget – many say the Department of Trade & Industry has failed business owners.
Jerry Moloi, chairman of the Soweto Small Business Executive Council, which represents 432 members, says its members are often taken from “pillar to post” when they try to access Government support services.
Lesley Africa, CEO of the Western Cape Business Opportunities Forum (Wecbof), with 400 members, says the lack of competent individuals in Government is a problem. He pointed to a drawn-out process of applying for funding from the DTI’s Black Business Supplier Development Programme. “It (Government) wants to do enough, but it doesn’t filter down.”
Adding credence to Africa’s statements, a 2007 SMME study by World Wide Worx, which surveyed more than 5 000 business owners, only 34% of respondents registered some level of satisfaction with Government support programmes.
Much of the criticism has been levelled at Government’s Small Enterprise Development Agency (Seda), intended as a first port of call for business owners looking for assistance. But since it was set up in 2004 many have questioned its performance.
Last year Seda hit the spotlight with the departure of then CEO Wawa Damane, who many slammed for her dismal performance at the agency’s helm. Damane has been replaced by acting CEO Hlonela Lupuwana, the former COO for enterprise and industry development in the DTI, who has promised to clean up Seda’s problems.
Mike Herrington, director of the Centre for Innovation and Entrepreneurship at the University of Cape Town’s Graduate School of Business, says many of the agency’s problems can be put down to poor management at many of its branches. Added to that he says many of its advisers lacked business experience and confessed his experience in training advisers was like “hitting your head against a brick wall”.
For example, Herrington says a study in 2007 – in which 10 500 entrepreneurs aged between 18 and 35 were interviewed – revealed that just 0,2% of KwaZulu-Natal respondents had accessed Seda.
The agency isn’t the only organisation to come under fire. Those organisations tasked with financing small business – Khula, the Industrial Development Corporation and the National Empowerment Fund (NEF) – have also recently been heavily criticised for not increasing lending to business owners.
At the centre is Khula, which since its inception in 1996 as Government’s finance agency, has failed to hand out more than 1 000 guarantees to business owners in any single year. The agency doesn’t lend directly to business owners but rather through banks and intermediaries. Last year Cabinet approved in principle the decision to turn Khula into a bank to up its lending.
Wolfgang Thomas, Professor in Economics at the University of Stellenbosch Business School, cautioned against the decision by Government to start a bank for small businesses and believed it wouldn’t prove viable against banks in the private sector. Thomas, who wrote 1995’s White Paper on the national strategy for the development and promotion of SMEs, said the central challenge facing Government was a “lack of imagination” among those overseeing small business policy and a failure to retain competent personnel. He said the answer lay in Government fostering more private/public partnerships.
“It (Government) has to realise that improvement in the environment won’t be helped by one