Open letter to the president His Excellency, Cyril Ramaphosa
May 12 2020
The Small Business Institute beseeches our government to revise regulations pertaining to business issued during our State of Disaster immediately. The harm they are causing the economy cannot be justified; there is no discernible link between many of them and the stated aim of protecting people from transmitting the Covid-19 virus to each other and keeping hospitals from inundation.
While we respect that our leaders in all tiers of government are making difficult decisions on a daily or even hourly basis, it is our duty as the Big Voice for Small Business, without further delay, to speak out on behalf of our members – business chambers, informal business organisations and SMMEs. We believe that within certain guidelines and within reason, this constituency (those still standing) should be allowed to open and run their businesses so that they and their 3.9 million employees can earn their living.
Small and medium enterprises make up not only 98.5% of the number of firms in our economy, but because of their size, they are best placed to manage physical distancing and practice hygienic care. With fewer employees than large corporations, they can better communicate, train, and ensure good habits of hygiene and physical distancing to protect themselves and the customers they serve. At the very least, they should be allowed to pivot their businesses, where possible, to trade online without further delay.
From research we conducted in 2018 we know that 66% of formal, employing firms in South Africa are categorized as ‘micro’ and on average employ fewer than four people (even more are freelancers, or self-employed). ‘Small’, or 26% of the total number of firms, employ, on average, 22 people each. These two classifications of businesses provide 2,234,675 jobs, with ‘medium’ enterprises employing another 1.6 million. Certainly the micro and small businesses, the most vulnerable in the economy, should be allowed to reopen – as well as the many, if not more, informal businesses of the same size. The business owners we hear from all express a willingness to work within the confines of rational regulations designed to protect our health and the capacity of our health system.
Even before lockdown, South Africa fared poorly in the ‘ease of doing business’ and other indices principally because of unnecessary or misguided regulations. A crushing quantum of red tape is not the only consequence. We legislate against anti-competitive behaviour rather than for competition. We accept sector codes that reward a large business more for starting a business under the auspices of an enterprise development category than ensuring it is sustainable. Even in the private sector we are renowned for our ‘tick box’ mentality, favouring compliance over ethics, or integrity. Is it any wonder we have been handed a tick list of sectors that can operate and products that can be sold (or not sold) and how they may and may not be sold? In none of the regulations is an acknowledgement that there are significant differences between the way large and small businesses operate within a sector, or that perhaps SMMEs could avoid much of the risk government has identified merely by being small. It’s time South Africa learn to think differently about how ‘big’ thwarts small. Small is where competition, innovation and dynamism thrive. Big should not dictate to small any longer.
Give small businesses (and their customers) sufficient information to assess and mitigate their own risks, staff their operations accordingly, put health and safety concerns above all others. Let people work. Let businesses get on with the important work of driving the economy. If we unlock small businesses now, we will activate the economy.
Small businesses are the customers of and service providers to large businesses, state-owned enterprises and government. Their employees, too, are customers, pay taxes and vote. The interconnected nature of an economy means small businesses are everybody’s business. Relax the regulations to allow them to operate. Please, Your Excellency.
Small Business Institute