Help start-up investors

Neva Makgetla’s perceptive article made two particularly telling statements — “SA’s market institutions are not designed to serve emerging entrepreneurs” and, referring to government support programmes, “in the absence of far larger efforts, small business in SA will never catch up with its peers internationally” (Slow-growing small business needs a shot in the arm, September 26).

In the UK, the “enterprise investment scheme” has been massively successful in kick-starting small businesses through tax relief for investors in start-ups and small companies.

A pale shadow of it was introduced here through section 12J of the Income Tax Act, but it is so hidebound by complicated rules and regulations that only a very few of the most sophisticated entrepreneurs can hope to access its benefits.

The government could provide the “shot in the arm” needed by small business in SA by liberalising the section 12J mechanism, making the tax relief concerned available to anyone investing in a small business against production of an auditor’s certificate to the South African Revenue Service.

This could be done virtually at the stroke of a pen and would be a superb mechanism to channel predominantly white capital to support black enterprises.

Unfortunately, considering the state of the ANC and the hiatus in government, it is probably too much to hope an imaginative step of this nature could happen, so growth and employment here stagnate.

Peter Curle

Forest Town