Challenges impeding small business growth in SA identified
Government publishes SMME plan of action for public comment
The government has identified several challenges that impede the growth of small businesses in the country.
The ministry of small business development has published the draft National Integrated Small Enterprise Development (NISED) plan for public comment.
The document highlights challenges facing the sector, including a lack of comprehensive, dependable and accessible data within the three spheres of government that is used to consistently track and monitor SMME performance in the economy; lack of coordination of government interventions and programmes; policy uncertainty coupled with administrative “red tape” for SMMES; as well as onerous labour regulations that hamper their ability to employ more staff.
It suggests that South Africa’s economy has a structural bias that favours larger firms, which limits competition and SMME entry into markets.
Late payment also reduces the ability of SMMES to manage cash flow and affects the sustainability of enterprises.
To address these problems, the blueprint suggests various interventions that would help SMMES thrive.
According to NISED, a critical step for the early stage of implementation will be the successful merger of the Small Enterprise Finance Agency and the Small Enterprise Development Agency into a new organisation that will take a central role in coordinating the various governmental departments’ project activities that are SMME focused.
The document also calls for a review of tax laws and their effect on SMMES.
It suggests that the Department of
Small Business, in conjunction with the “red tape” task team, determine priority regulatory and legislative reforms for SMMES.
President Cyril Ramaphosa in February announced the appointment of respected businessman Sipho Nkosi as leader of the Presidency’s “red tape team” during the state of the nation address.
Ramaphosa said the government wants to unleash the potential of small business and has identified red tape as a big impediment to doing business.
“We are reviewing the Business Act, alongside a broader review of legislation that affects SMMES, to reduce the regulatory burden on informal businesses.
“We are therefore working to improve the business environment for companies of all sizes through a dedicated capacity in the Presidency to reduce red tape,” he said.
Small Business Development Minister Stella Ndabeni-abrahams said NISED is a support framework for the entire SMME ecosystem.
“The overall objective of the NISED masterplan is to coordinate the many actors on essential undertakings as tabled in the National Development Plan and the new Economic Reconstruction and Recovery Plan,” Ndabeni-abrahams said.
“It is wholly understood that the development and support of small businesses is not the domain of one department but the collective action of many public and private actors.
“The masterplan envisions increasing the participation of SMMES in the national economy. This is to expand the contribution of SMMES to GDP.”
We are reviewing the Business Act to reduce the regulatory burden on informal businesses