February 6 2019
Embargo: none

Ahead of his second State of the Nation Address (SONA), as part of the public-private growth initiative delegation to President Cyril Ramaphosa, the Small Business Institute (SBI) has tabled a set of proposals to ensure that the small business segment is placed at the front and centre of economic growth and job creation.

“The Small Business Development Minister, Lindiwe Zulu, once calculated that if 90% of new jobs by 2030 are to come from SMMEs as envisioned by the NDP, they need to be hiring 800 000 people each year. We need to make a conducive business environment for small businesses a national priority,” says Bernard Swanepoel, SBI’s executive director.

Key points raised by SBI:

• Pave the way for a business champion in Cabinet
• Shift the mindset of all ministers to see themselves as small business ministers – this means giving effect to Section 18 of the National Small Business Act which requires an impact assessment of all legislation and regulation on SMMEs
• Prioritize policies to introduce better cohesion and coordination between the public and private sectors – particularly between business chambers and municipalities
• Develop a Special Enterprise Zone, or Export Processing Zone, in each province
• Place a moratorium on state-owned enterprises (SOEs), particularly Eskom, from interrupting essential services
• Sanction government departments and agencies that cannot pay invoices from SMMEs between seven and 30 days, and encourage corporate South Africa to do the same
• Shift focus away from start-up enterprises to those medium-sized businesses poised for growth which statistically employ the most people particularly young people

SMMEs are a segment of every sector in the economy, not a “sector”, reminds Swanepoel.

“Importantly, we would like to see the appointment of a business champion within his Cabinet who will move support for SMEs to the centre of any inclusive and transformative growth strategy.”

SBI also calls on the President to lead the purposeful implementation of Section 18 of the National Small Business Act, requiring all ministers to conduct an impact assessment of legislation, regulations and policy on SMMEs.

“We believe that publishing the results of these impact assessments will contribute to better engagement with the public and SMMEs. By doing so, the President and his administration will then be ‘thinking small first’, which is vital for us to achieve,” says Swanepoel.

The President should also prioritize policy that introduces better cohesion and coordination between public and private sectors.

“The lack of capacity in municipalities and their resistance to involve the private sector must be addressed. Revitalizing local businesses through business chambers and establishing a framework for strong collaboration with local government structures – particularly around the issues of service delivery, municipal budgets, local procurement and job creation – is a matter of urgency,” says Swanepoel.

SBI also proposes the creation of at least one Special Enterprise Zone or Enterprise Development Zone per province in a town where there is a functioning public-private partnership between organized local business and the local municipal government. “This approach will allow space to relax red tape with emphasis on local issues and needs,” he says.

The SBI also calls on the President to sanction all the departments that continue to ignore his instructions to pay small enterprises on time.

“President Ramaphosa should instruct all relevant SOEs to stop interrupting essential services to local authorities when there are outstanding payments between the authority and, for instance, Eskom. Existing mechanisms should be used to normalize the arrears on these accounts,” according to Swanepoel.

Ahead of the launch of the second phase of South Africa’s first Base Line Study on Small Businesses, the SBI asks the President, government and Big Business to support the completion of this study.

“Future policies and interventions should be fact- and evidence-based based and South Africa has operated in an environment of assumptions about this critical segment of each and every sector of our economy for too long,” says Swanepoel.

He adds: “We would like to urge government to channel its energy and both financial and non-financial support towards existing small and medium-sized enterprises which have already escaped the two-year death trap; they have a better chance of success and job-creation potential. Indeed, the same approach should be adopted by non-state financing agencies.

“As SBI we are committed to working with all stakeholders especially government, big business and labour who are genuinely committed to the growth of the small business segment in our country.”

Notes for editors and news editors

o For more information and media interviews, please contact:
John Dludlu
083 676 1881
o The results of our Base Line Study on Small Business are available on our website: