From pil­lar to post

Gov­ern­ment has done noth­ing to cut red tape

Finweek English Edition - - Letters -

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

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