Include private sector in planning
Small business development minister Lindiwe Zulu last week announced plans for her department to devise a draft national strategy aimed at reducing red tape for new and existing small businesses.
According to Business Day, Zulu assured parliament this document would most likely be ready for consultation at the end of 2019, with government investing R2m to fund the development.
The announcement has reignited a very crucial conversation around the issues faced daily by small business owners and, even more importantly, what government should be doing about it.
In the World Bank’s most recent Doing Business report for 2018 – which evaluated 190 economies based on their governmental support and policies for small businesses – World Bank CEO Kristalina Georgieva notes:
“Policy reforms catalyse private investment. Promoting a well-functioning private sector is a major undertaking for any government. It requires longterm policies of removing administrative barriers and strengthening laws that promote entrepreneurship.”
Following this assertion, Zulu’s announcement is certainly a step in the right direction.
From the Nelson Mandela Bay Business Chamber’s perspective, however, we would urge her and her department to include the private sector in the planning process that will culminate in this strategy.
It is important that the business community be engaged during the process of drafting the strategy; not only because these entrepreneurs know which processes prove most stifling to small businesses with limited resources, but also because a one-size-fits-all solution may not be sustainable.
It is our hope as a Business Chamber that the national strategy will offset or include regional considerations – especially relating to the socio-economic needs and priority industries of the different regions.
As a country, we still have a lot to learn about simplifying the processes of starting a business. The World Bank report, which considered factors ranging from the time it takes to start a business to the ease of paying taxes and trading across borders, places SA 82nd out of 190 countries. The report also fails to mention any significant improvements in our policies since 2016/2017.
The countries at the top of the list, however, are not necessarily the powerhouse economies one would expect: New Zealand is ranked as the number one country for business owners, with Singapore and Denmark in second and third place. A significant contribution to this accolade is the time it takes to start a new business. In New Zealand, a new business can be registered through a single process that only takes half a day from start to finish. The same registration would take 2.5 days in Singapore and 3.5 days in Denmark.
This efficiency is not exclusive to distant continents. Rwanda is ranked at number 41 in the world, owing to the country’s shift to online systems for paying taxes and registering properties, as well as increased quality control during construction processes.
The case of Mauritania in north-west Africa is also highlighted in the report, particularly as their government recently implemented a one-stop shop that combined multiple registration procedures under one roof. Thanks to this improvement, entrepreneurs there can now register and start businesses within six days. In SA, the same process would take roughly 45.
The Business Chamber has its own help desk to assist companies in reducing red tape. Through our Metro Collaboration Task Team, the Business Chamber has also been advocating for the establishment of a one-stop shop to reduce red tape and streamline various processes for new and existing investors in the city.
We have been engaging on a regular basis in this regard with the metro’s leadership and will continue to do so in the year ahead. We believe our triple helix model of collaboration with government and academia will prove vital to the future of sustainable business development in the Bay.
While this may seem to be an issue that relates only to business and government, the potential ripple effect of red tape removal is immense. The World Bank report states that regulatory reform empowers the private sector “to create jobs, lift people out of poverty and create more opportunities for the economy to prosper”, while economies weighed down by bureaucratic red tape can “[stifle] entrepreneurial endeavours”.
If we are to build a stronger, more sustainable economy – both at local and national level – we must make it as easy as possible for investors to create opportunities and operate their businesses. The matriculants of 2018 have just received their results. With better systems in place, they may choose to become business owners instead of employees.
At every opportunity, we must learn from our neighbours across the world and their best practices for increasing the ease of doing business.
An environment that provides simplified, faster processes for establishing new businesses is an environment that fosters a culture of entrepreneurship. In a country that is seemingly producing more job seekers than job opportunities, is this not the simplest answer?
In New Zealand, a new business can be registered through a single process that only takes half a day