By: Moipone Malefane
We hear the same message in South Africa ad nauseam: SMMEs should be the backbone of our economy, but we are largely failing to support their growth. The list of complaints and even advice coming directly from small businesses on what needs to be done is endless. At the same time the government, including the Department of Small Business Development, is moving at a snail’s pace to amend and introduce legislation and policies to support their development, and financial institutions continue to apply rigid demands on SMMEs that make it mostly impossible for them to access funding.
Just last week Finance Minister Enoch Godongwana acknowledged in his 2022 Medium Term Budget Policy Statement that the slow growth experienced by South Africa’s SMMEs was one of the key reasons for the country’s sustained sluggish economic performance. He warned that several long-standing economic structural impediments such as high levels of market concentration and barriers to entry that suppressed the emergence and growth of small businesses would impede the country from reaching its developmental goals if there was no decisive action.
And let’s not forget those small businesses were already in distress before the Covid-19 pandemic and the country flirting with an economic recession. Everyone is frustrated and acknowledges that more needs to be done. A recent meeting by Parliament’s Committee on Small Business Development, which was held to adopt its Budgetary Review and Recommendations Report (BRRR) for the department and its entities, gives some insight into where we are concerning laws and regulations to ensure sustained growth of SMMEs.
One of the major concerns is that the department has still not referred the National Small Enterprise Amendment Bill, which was published for public comment in 2020, to Parliament. The committee has now recommended that the department takes a segmented approach to the review of the National Small Enterprise Amendment Bill, that the Small Enterprise Ombudsman Services Bill be referred to Parliament or establish the Office as a juristic person, and that the SMME and Cooperatives Funding Policy be accelerated and completed.
The proposed legislation and policies are central to addressing concerns around SMMEs and their lack of access to finance and markets, the amount of red tape they deal with, and the lack of infrastructure. So irate were some opposition party committee members that they accused the department of wasting money as there were no results in providing services to people and they said it must merge back into the Department of Trade, Industry and Competition.
The ANC noted that the BRRR did not highlight that the committee had never done proper oversight over the department and its budget since the 6th Administration, except at the time of looting in KwaZulu-Natal, yet department officials kept going on overseas trips while nothing was happening in terms of services to South Africans. It was also noted that the Financial and Fiscal Commission’s (FFC) comments reflected that there was no coordination on the funding that was needed and that loan sharks were still prevalent, and banks charged exorbitant rates for funding.
These are only some of the issues highlighted during the committee meeting, but they illustrate the disarray concerning the Department of Small Business Development. Minister Stella Abrahams-Ndabeni has been at the helm of the department for over a year now. It is time that the minister and her senior team get their house in order to lead the way to build a sustainable SMME environment in South Africa.
