Seeking real value from ANC’s new spaza
A veteran entrepreneur has practical advice for the small business ministry, writes Chris Barron
THE new ministry for small business development needs to set firm targets and be held to account, otherwise it will be a waste of taxpayers’ money, says the president of the National African Federated Chamber of Commerce and Industry (Nafcoc), Joe Hlongwane.
The veteran entrepreneur, who made his first million under apartheid, has been agitating for the new ministry for some time. But he says it won’t achieve anything unless it listens to what people trying to operate small businesses are up against.
Nafcoc, Hlongwane says, represents 200 000 small businesses in the townships and rural areas, so it knows what it’s talking about.
“We’re hoping the minister [Lindiwe Zulu, Minister of Small Business Development] understands that she will have to talk to us, otherwise it will be another wasted department, a department without sense,” he says.
He hopes to have his first meeting with Zulu next week.
Hlongwane took his proposals for a ministry that would focus exclusively on small business development to the ANC and the government last year because Nafcoc felt that the Department of Trade and Industry (DTI) was not doing enough to support the sector.
He says he met with minister Rob Davies, who apparently did not think a separate ministry was necessary. Davies’s argument was that there was a deputy minister in his department tasked with the issue.
However, Hlongwane felt it was barely on the agenda of the department in spite of frequent noises of support from Davies. Small business, for example, was entirely excluded from the DTI’s industrial policy action plan.
“A separate ministry of small business can be closer to the people running small businesses than a more generalised ministry like the DTI,” says Hlongwane.
It is not hard to understand why there was such a serious disconnect between Davies and Hlongwane.
Hlongwane is a hard-headed capitalist who started a township business in Mamelodi, Pretoria, in the 1970s. It made him a millionaire before he sold it in 1988.
Davies, on the other hand, is a committed communist who has no first-hand practical experience of starting or running a business and seems instinctively to distrust the private business sector.
“We wanted a ministry with its own budget that will provide easy access to us and that can be held accountable,” says Hlongwane. “When it comes to legislation, we need a champion who will fight for us.”
Hlongwane wants to see legislative changes that lessen the bureaucracy that he says is stifling the development of small businesses.
The Labour Relations Act, for example, may suit big business but it certainly does not work for small business.
“The ministry will have to look at labour legislation and see where it is causing problems. We need tax incentives and funding incentives for big business to support small business,” he says.
Other organisations, such as the National Employers Association of South Africa, say that big business uses the collective bargaining system to make it impossible for small businesses to compete.
Hlongwane says Nafcoc doesn’t have a position on collective bargaining, but “anything that is an inhibition to small business must go”.
What is evident is that something must be done.
Small businesses have taken a hammering this year, first with the five-month platinum strike and then the one-month metalworkers’ strike that has just ended with a wage agreement that, small businesses say, will force them to close or retrench.
Will Hlongwane look to the new ministry to protect small businesses against powerful union leaders with political agendas?
He responds that his members are more immediately in need of protection from illegal immigrants who are starting businesses in the townships.
“You must understand we’ve got people coming here from all over the world. They are doing business, they are selling illegal imports, they are not paying tax, we don’t know where they get their goods from. It is not something the government can ignore,” he says.
He adds that the skills crisis is something else he expects the new ministry to tackle.
“I have just heard that Sasol needs 5 000 welders — who they are getting from Bangladesh. Something, somewhere, is missing.”
Companies such as Sasol should be outsourcing these jobs to local small businesses, he says. But of course, Sasol can’t do this because these businesses don’t have the skills.
“That ministry must be responsible for developing skills, and it will have to deliver. It will have to set targets and reach them,” he says.
Hlongwane accepts that the success of the new department will depend on how effectively it works with other departments such as the Treasury, labour and education and training.
“It won’t make headway until these ministries come together in a summit and discuss what are the stumbling blocks for small business.”
One of the more convincing arguments that has been made is that if other departments did their jobs properly, there would be no need for a separate department for small business.
Hlongwane says without a dedicated ministry small business interests would, as in the case of the DTI, be lost among bigger competing interests.
The National Development Plan envisages 90% of all new jobs created by 2030 will come from small businesses. These jobs, says Hlongwane, must be created in townships and rural areas — a problem because “nothing is moving there.
“If township businesses fail then South Africa fails,” says Hlongwane.