According to the NDP, 90% of all new jobs should come from businesses defined as small, medium and micro enterprises

In his much criticised postinauguration state of the nation address, President Cyril Ramaphosa made an interesting call. He said:

“At the same time, we must restore the National Development Plan [NDP] to its place at the centre of our national effort, to make it alive, to make it part of the lived experience of the SA people.”

In the same address he conceded the obvious when he said: “ … with 10 years to go before we reach the year 2030, we have not made nearly enough progress in meeting the NDP targets … unless we take extraordinary measures, we will not realise Vision 2030.”

He then went on to enunciate seven priorities over the next decade. In a way, the president was acknowledging that the NDP is dead — in fact, it has been lifeless for some while now.

The story of the NDP is a sad one. Alongside hastily introducing fee-free higher education and expanding the social protection net to about 17-million South Africans, the NDP should have been one of the positive aspects of the otherwise controversial legacy of Ramaphosa’s predecessor, Jacob Zuma. It was under him, after ousting Thabo Mbeki in Polokwane, that the plan was drawn up.

It was then shepherded through ANC and government structures. In 2012, at its Mangaung conference, the ANC adopted it as its programme. And today it is supported by two-thirds of parties represented in the National Assembly. Outside parliament, the SACP and Cosatu have objections to the NDP’s economy chapter.

To support its implementation, a strategic plan was drawn up, with 1,100-odd metrics to measure progress. But it wasn’t fully implemented. Sensing Zuma’s general lack of interest in the economy and casual approach to statecraft, ministers developed cynical coping mechanisms, for example, to get approval in the cabinet for their vanity projects, they would insist that officials should insert references to the NDP to appease colleagues and the president.

Of course, the NDP isn’t the first postapartheid plan to be abandoned in midstream: in 1996 the government dumped the reconstruction and development programme which, like the NDP, had been a product of consultation.

As well as a lack of political leadership to implement the NDP, offers to help implement it by well-intentioned nonstate actors were not fully accepted, in effect killing the plan. In what would have been its first five years of implementation, instead of GDP growth of about 5%, the economy grew by an annual average of 1.6%.

According to the NDP, 90% of all new jobs should come from businesses defined as small, medium and micro enterprises (measured in terms of turnover and employment numbers). As Ramaphosa observed, insufficient progress has been made and it is time for choices if SA is to address poverty, inequality and unemployment, especially among the youth.

If SMEs are to be the backbone of the economy in 2030, as they are in other countries, SA needs to treat them as such. In fact, it should mollycoddle them, as it does with big business. A few urgent actions are required.

First, SA needs to stop killing SMEs through late payments. Big business and government departments, agencies and state-owned enterprises need to pay all invoices within 30 days of submission. The government has paid lip service to prompt payments to small suppliers for some time, but the results have been disappointing. Perhaps the time has arrived for government to follow other jurisdictions by criminalising late payments to SMEs.

Second, the president is correct in saying that it should be possible to register a company in one day. But that’s not where the greatest problem is. The main problem is continuous compliance. The cost thereof is extremely onerous. For example, it boggles the mind why changing a bank account requires a visit to the SA Revenue Service. A presidency-led campaign to weed out red tape would be a commendable first step in the right direction.

Third, according to the former minister of small business development, the government had earmarked more than R15bn for small business support. Still, far too many SMEs are dying before they turn two. The president should commission an audit of all financial and nonfinancial government support for SMEs to find out what is working and why it’s working, as well as what’s not working and why not. This will help better tailor future support for this segment of the economy.

Fourth, last year the government announced new definitions of SMEs. It’s time to implement these across the board.

And fifth, the government needs to urgently implement section 18 of the Small Business Act. This section requires that before passing new laws, regulations or policies, the government should conduct an impact assessment on small business. For example, the measures being considered by the tourism department to deal with the hospitality industry should not be approved without an impact assessment on SMEs.

The private sector has an important role to play, especially in the area of finance, if SA is serious about breathing life back into the NDP.

• Dludlu, a former Sowetan editor, is executive for strategy and public affairs at the Small Business Institute.

 

by Business Day – https://www.businesslive.co.za/bd/opinion/columnists/2019-07-03-john-dludlu-the-sad-story-of-small-business-and-the-national-development-plan/