By: Zandile Majavu
Industry stakeholders and experts believe that smaller black businesses have largely been excluded in the 30 years since the country’s transition to a democratic state. This is even more so following President Cyril Ramaphosa’s failure to outline key issues and what the government has done for SMMEs in his State of the Nation Address (SONA) last week.
Although this year’s SONA was a commemoration of South Africa’s 30 years of democracy and taking stock of where the country stands, SMMEs got one mention in the address, with Ramaphosa saying: “We will continue to position our economy to grow and compete in a fast-changing world, to support small businesses by providing funding and resources to small and medium-sized enterprises…” Black Business Council Vice President Gregory Mofokeng told Vutivi News: “The minimal focus afforded to the SMME sector in SONA is disappointing, especially when viewed against the backdrop of the role that the sector is expected to play in the country’s employment creation, initiatives, and contribution towards GDP.”
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He added that black companies still struggled to access funding to start up their businesses, which impeded them from playing a significant role in the economy. Also, the government provided limited market access for black businesses and often did not pay them on time. “In a nutshell, 30 years into our democracy, the operating environment for black small businesses is far from conducive,” Mofokeng said.
Ubuntunomics owner and sustainability practitioner Sibusiso Nyathi echoed the same sentiments, saying Ramaphosa was not invested in the SME sector as the governing party perceived the small business sector as a ‘by the way inconvenience’. “This is evidenced by the government’s pro-big business philosophy, both [in] policy and incentives. This is even though medium-sized enterprises make up 91% of formalised businesses, provide employment to about 60% of the labour force, and total economic output accounts for roughly 34% of GDP,” Nyathi added. On the president saying that around 1000 industrialists had been supported through the Black Industrialist Programme, Nyathi said: “Black industrialists in the main fall within the definition for SMEs (bracket range: R5–R210 million). Meaning, these were not big businesses, but medium-sized enterprises. The concern, however, is that R36.7 billion was used to advance only 1000 – resources, which could have been spread to achieve a much larger impact.”
Mofokeng said another failure of SONA, was that promises of a comprehensive social compact remained unfulfilled. “In the 2023 SONA, Ramaphosa announced that there will be a social compact concluded with business and other social partners. This hasn’t happened. However, black business is engaging with government, particularly the Presidency, on the role it can play…,” he said. The National Chair of the Federated Hospitality Association of SA (FEDHASA), Rosemary Anderson, also raised concerns, saying that after 30 years of democracy, small black businesses in hospitality were severely impacted by the lack of a constant supply of electricity and water. “And if anything, small black businesses are more negatively and severely affected than larger businesses, who generally have the funding to provide alternative provision for energy [and] water,” she said.
Anderson also questioned how business-friendly the tourism sector is for smaller black enterprises. “It does not favour black small businesses at all. If our Minister of Home Affairs developed a true eVisa system like many other countries have all over the world (ours is only an online facility, but we call it an ‘eVisa’) and had a visa exemption for the world’s largest tourism markets (India and China) – we could attract millions of more visitors to our shores and, therefore, growth opportunities for the small black tourism sector, which could very easily grow into the large black tourism sector,” Anderson argued. Meanwhile, Cosatu Parliamentary Coordinator Matthew Parks told Vutivi News that: “the government has done work on many fronts, including giving support to SMMEs. What it means is that Ramaphosa’s speech was not focused and missed the opportunity to provide details society is looking for.”
Parks said that the Department of Trade, Industry, and Competition (DTIC) had done quite a bit to support its black industrialist programme. “Our disappointment is that the government is not allocating sufficient resources to DTIC’s industrial and export incentive programmes,” he said. Parks also said the major issues that needed urgent attention were fixing Eskom, Transnet, other embattled SOEs, and dysfunctional municipalities. “Give more resources to the state financing institutions to support SMMEs. Require all government and public institutions to buy locally produced goods. Do that, and SMMEs will grow,” Parks said.
