By: Anna Majavu
Township SMMEs are unlikely to benefit from a new SMME and co-operatives funding policy unless the government introduces a new bank or guaranteed R10 billion loan scheme for small businesses, experts say. Last week, the Cabinet promised that its new draft policy – yet to be released – would set up “17 critical interventions that will enable the estimated 3.2 million SMMEs and 43,000 cooperatives in the country to thrive”, adding that government would provide more support to SMMEs to develop their businesses and would improve SMMEs access to start-up capital.
But National African Federated Chamber of Commerce (Nafcoc) president Gilbert Mosena said the policy would be another flop for small black businesses if it did not include government-funded seed capital and working capital. “SMMEs wait for six months to be paid for work done for the government. So many Nafcoc members have gone out of business because of that,” he told Vutivi News. “The government must set up a mini-bank to pay small businesses and then claim the money back from the government. At least if the government continues to pay 90 days late, the small business would already have been paid.”
Mosena accused the government of being confused and paying lip service to small businesses by not consulting Nafcoc and other chambers of commerce when it developed its policies and set up institutions for SMMEs, such as the Small Enterprise Finance Agency (SEFA). “How do you have finance development institutions for a small business like SEFA, but there are no small businesspeople represented on their boards or council? It means that they are only bureaucrats doing their own thing,” Mosena said.
Ubuntunomics owner and sustainability practitioner Sibusiso Nyathi said the new policy must set up an additional guaranteed loan scheme of R10 billion for start-up businesses in townships. This was just a fraction of the amount of R200 billion which the government guaranteed to the banks for the 2020 Covid-19 SMME loan scheme, which most SMMEs ultimately did not qualify for as the loans were based on commercial lending criteria. “An additional R10 billion must be given to the Industrial Development Corporation so that it can extend loans to small businesses. Government must put in place some sort of cushion for small businesses that are failing,” said Nyathi.
Mosena said the new policy would also have to eradicate corruption if it was to improve the lot of SMMEs. “The current corruption in government is too much. There is serious corruption day in and day out in the procurement system. SMMEs cannot survive in situations where they have to pay under the table to do work for the government,” said Mosena.
He added that Nafcoc’s members had also reported that if they went to the government’s small business agencies with business plans, these would often be rejected by officials, but later they would find that the plans and funding had been given to relatives and friends of the officials. Nyathi said if the government was serious about supporting SMMEs, its new policy would set up a procurement general’s office to compel government departments to do business with informal and formal small businesses.
He said there were many possibilities for upholstery, ceramics, cellphone repairs, woodwork, furniture and baking SMMEs to set up in townships and grow their product offerings. But additional electricity cuts to many townships, over and above load-shedding, potholes, and a lack of proper service delivery such as regular garbage collection were hampering the township economy from growing. “SMMEs in the township are often survival businesses, and these problems make the cost of doing business in the townships much more exorbitant. It is a drag on those small businesses” Nyathi said. The Draft SMMEs and Cooperatives Funding Policy will be published in the Government Gazette as well as on the Department of Small Business Development’s website www.dsbd.gov.za
