Need for regulatory, payment efficiencies highlighted during SME Indaba

The efficiency of securing regulatory compliance and the speed at which small and medium-sized enterprises (SMEs) are paid by private companies and public organisations were on Wednesday cited as some of the biggest concerns for small businesses.

Speaking at the Small Business Institute (SBI) SME Indaba, in Bryanston, SBI chairperson Bernard Swanepoel pointed to the National Development Plan (NDP) goal of the small business segment supporting 90% of all new jobs created and emphasised that this implied that the responsibility was shifted back to small businesses and small business organisations and chambers.

However, the small business sector was fragile and was not achieving its potential, which had to change if sustainable and inclusive growth was to be achieved.

South Africa had about 262 000 registered small businesses, he added.

According to a baseline study done by the SBI, the difficulty of starting a business and doing business, as well as regulatory hurdles, had increased, resulting in a decrease in entrepreneurial activity.

Delays in processing regulatory permits and permissions, the efficiency of bureaucratic processes and difficulty in securing payments within good time had to be urgently dealt with, said Swanepoel.

Public organisations and private companies took up to 120 days to pay small businesses. The SBI intended to gather information on the small supplier payment cycles of listed large companies and publicise these to pressure them to pay their small business suppliers in good time.

Withholding payment for such a long time for services rendered was tantamount to exploitation of small businesses, he averred.

The government has made significant promises to pay small businesses timeously and has implemented a minimum guideline to pay for goods and services within 30 days, and the Gauteng province has pledged to pay suppliers within 15 days.

Swanepoel called for the guideline to be shortened to have payments processed within seven days.

A final key issue highlighted during the indaba was that of corruption that contributed to the exclusion of small businesses from municipal work and contributing to larger projects, as well as a reduction in the availability of funds to provide services and development. He emphasised that corruption was a public and private sector feature and problem.

Governing political party African National Congress treasurer general Paul Mashatile said a key role the government and municipalities should play following the stimulus package and the investment pledges announced by President Cyril Ramaphosa over the past few months was to investigate the role played by, and ensure the involvement of, small businesses in projects and roll out of infrastructure.

This work also included ensuring that projects were well defined and bankable, which was partly the role of governmental structures such as municipalities, and the President had appointed a project management unit that would be run by the Presidency to support the planning and execution of projects resulting from investment or infrastructure development funds.


Mashatile highlighted the issues with bureaucracy and regulatory red tape and emphasised that the delays and challenges could be dealt with if there was decisive leadership in monitoring and enforcing good performance and good governance.

Highlighting Rwanda’s progress in reducing delays in government processes and improving the efficiency of government operations, Mashatile said that this was based on a simple guideline that all civil servants, including the mayor of Kigali Marie-Chantal Rwakazina who explained it to him, signed performance agreements that rewarded good performance, but, if they failed to meet a minimum of 50% of their expected targets, they were dismissed.

“The problem with regulations is not the pieces of legislation, but how they are applied. Faster does not mean illegal. There must be oversight and environmental control, but these do not need to take two years to fulfil and gain approval or refusal. Regulations must enhance business, not hinder it. We can achieve similar standards of efficiency to Rwanda if there is good leadership.”

Department of Cooperative Governance and Traditional Affairs (Cogta) director-general Dan Mashitisho highlighted the importance of good relations and engagement between SMEs and municipalities as critical for the success of projects.

Project-focused relations helped to ensure that all parties – municipalities, large businesses and service providers and small businesses – engaged and participated.

Municipalities’ and government’s role was to ensure that the environment was conducive for businesses, especially small businesses, by executing its duties effectively and efficiently. However, he also called on small businesses to obey municipal by-laws and to abide by regulations, including once they were relaxed if they were obstructive.

Cogta was helping to coordinate infrastructure development activities and projects resulting from investments and development funding in 57 priority municipalities, which focused on providing integrated service delivery. The issue, as mentioned by Mashatile, was to ensure that SMEs, which were crucial as engines of economic growth, were accommodated.

“Projects have been mapped out for the short-, medium and long-term, and we want to invite SMEs and SME organisations to determine how they can contribute to these projects,” said Mashitisho.

In response to a question about nonperforming municipalities, Mashitisho highlighted some of the political challenges facing under- and nonperforming municipalities, and emphasised the effects that skills shortages, and the intervention of deploying experts to assist municipalities, were having on municipalities’ ability to provide services.

However, pointing to municipalities under administration, he indicated that executive authority was imposed to turn them around and ensure that they could deliver services.

“Government must ensure that the environment and towns are clean, the roads maintained and without potholes and that water, sanitation and energy are uninterrupted, as well as ensuring that permitting, registration and payment processes are fast and easy.

“To create the jobs envisaged in the NDP, we must change the way we operate. If we ignore SMEs that make up 90% of formal businesses, employ 60% of the workforce, contribute 35% to gross domestic product, this target looks daunting,” said Mashitisho.

* We do not necessarily endorse the political views of this article, but we are pleased to see our work gaining traction.

by Creamer Media-

Schalk Burger