Business in the township
SMES: WHAT NEEDS TO BE TACKLED TO THRIVE
Calls for government to look at the regulatory environment to ease compliance by small businesses.
Townships are vibrant and pulsate with a rhythm that can belie their limitations.
They house diverse economic activities, ranging from spaza shops, street vendors, hair salons and shebeens to minibus taxis. These are largely micro-enterprises with low capital and a low skills base.
However, township economies are estimated to be worth billions, as there are few records to quantify the money moving within the industry and they often face challenges in gaining new markets and accessing funding.
Black Business Council
(BBC) chief executive Kganki Matabane says one issue which hinders township entrepreneurs from leveraging new markets is accessing procurement opportunities in big companies and government.
“Big companies [work] with people they know. And the government legislation, like the Preferential Procurement Policy Framework Act, still favours big businesses instead of favouring small businesses.”
As a result, the BBC has been calling for the establishment of a black bank.
“We feel [it] should be run by black people and be owned by black people. In that way it will be able to understand the needs of small businesses in the township and rural economy,” Matabane says.
Another challenge to the growth of small township businesses is an inability to coordinate bulk buying.
Businesses that buy in bulk are able to offer customers cheaper goods and services.
“When you buy in bulk you’re able to take advantage of scale. What most township and rural economy businesses do is buy as individuals, and then they lose the economy-of-scale advantage.”
He says he has realised that many businesses in this sphere also lack prioritising, being regulated and compliance.
“They want to spend time doing actual business, not doing administration.”
Matabane said they have been calling for the government to relook at the regulatory environment because most small businesses are struggling with compliance, mainly because of access.
“If you are in a rural area, for example, for you to access the tax registration place, you probably have to go to a bigger town.
“You must spend a lot of money and, if you don’t have a car, you must use public transport just to go and register for tax. It can take you the whole day,” Matabane said.
He is calling for government to decentralise its services and create centres all over the country that will give access to all its services, such as the Unemployment Insurance Fund and tax compliance.
These one-stop shops would allow an entrepreneur to register for tax and UIF, register their company and more. He suggests these can even be mobile. “On day one you’ll be at rural area number one; day two at number two, and so on.
“So the small businesses then can spend a lot of time doing the business that they’re supposed to do,” Matabane said.
Let’s hope government is listening.
They want to do business, not administration