BusinessTech: South Africa keeps getting stuck in the same pothole


The Small Business Institute of South Africa (SBI) says that government cannot afford to keep spinning its wheels on cutting red tape for small businesses in South Africa.

In written and oral submissions on the new Ease of Doing Business Bill to parliament on Wednesday (23 June), the group said that the government has spent years introducing new projects, regulations and plans to make doing business easier in South Africa, but that many of the same pain points for small businesses remain.

“After almost three decades of acknowledging the legislative and regulatory burden as excessive for small businesses to start, run and grow and create jobs along the way, and that policy uncertainty negatively affects investment in the economy, it is more accurate to say that South Africa’s tragedy and farce cannot be distinguished,” it said in a submitted presentation.

It pointed to the newly established unit by the Presidency and National Treasury, ‘Operation Vulindlela’ which has been tasked with making long-promised priority reforms happen.

The project has pledged to focus on reforms related to electricity generation, the spectrum auction, ports, and resolving a new water framework.

While reforms in these areas are critical and encouraged, the regulatory burden choking the economy goes much deeper, the SBI said.

“It is yet to be seen how one unit, even with laudable intentions but without any new budget allocated to it, could possibly bring about reform to the structural challenges so deeply embedded in our regulatory and legislative landscape, which have been throttling our economy for years.”

For this to happen, all of the government needs to act in concert, urgently, and to act capably with growing the economy as the priority, it said.

“Continuing on the path of failed ideology and failing state capacity, with vested interests in the governing party lobbying to keep it so, is like being stuck in the same rut – or more colloquially – pothole.”

The SBI said that once stuck, doing the same thing or simply attempting to put more power into spinning the wheels will not get South Africa out of the hole that the government’s aptitude for self-harming has dug.

“A new course of action is desperately needed. To get that action requires a government that understands, and sincerely acknowledges, that government is not the proximate cause of growth. That role falls to the private sector, to investment and entrepreneurship responding to market forces,” it said.


Some of the SBI’s recommendations to address these issues include:

  • Stop the parody of Socio-Economic Impact Assessments (SEIAs) which are purportedly used to improve evidence-based policymaking.
  • Implement transparent and methodical regulatory impact assessment (RIA) methods to improve the quality of evidence-based policies, laws and regulations.
  • Strengthen parliamentary oversight to ensure that legislation is processed both in line with the constitution and processed with an appropriately diligent and professional understanding of the issues at stake.
  • Businesses should adopt a ‘red tape challenge’ – A web-based tool will provide for a dynamic interface with business owners battling red tape to have their say on regulations affecting their everyday lives; whether to speak up for well-designed rules that protect, or challenge those badly designed or badly thought-through regulations that are an unnecessary burden.
  • Improve the capacity of StatsSA so that there is actually evidence for the government’s ‘evidence-based’ policies.

by BusinessTech –

Staff Writer