Sunday World: New dawn awaits SMMEs

Johannesburg- The concrete steps to improve the ease of doing business in South Africa, announced by President Cyril Ramaphosa during his State of the Nation Address, have the potential to create much-needed jobs, economists say.

Ramaphosa took many by surprise when he announced the appointment of business veteran Sipho Nkosi to lead efforts to cut red tape and allow for a seamless way of doing business in the country.

The president also said his administration will revive the loan scheme meant for small businesses that were first announced in 2020 in response to the impact Covid-19 had on the economy. The R100-billion scheme saw few businesses access funding due to, among other things, the strict criteria imposed by banks.

“We are reviewing the Business Act – alongside a broader review of legislation that affects SMMEs – to reduce the regulatory burden on informal businesses. There are too many regulations in this country that are unduly complicated, costly and difficult to comply with. This prevents companies from growing and creating jobs,” Ramaphosa said.

Nkosi is currently the chairman of Sasol and the Small Business Institute. He also sits on the Sanlam board and previously served as CEO of mining group Exxaro. Small Business Development Minister Stella Ndabeni-Abrahams said she is looking forward to working with Nkosi.

“Small businesses are the lifeblood of the economy of this country. Dealing with the red tape and allowing SMMEs and informal businesses to thrive will go a long way in reducing the unacceptably high levels of unemployment in this country.

“The department is also in the process of concluding the national integrated small enterprise development master plan, which seeks to enhance efforts towards practical interventions towards the promotion of SMMEs to create jobs and contribute towards the GDP,” she said.

Senior economist at BNP Paribas South Africa Jeff Schultz said one broad strategic shift that is becoming more apparent is that the Presidency is centralising key functions – from intelligence and just energy transition to tackling red tape.

“These shifts are important and useful with the reformist character of [ Ramaphosa], but in as far as they imply structural shifts in governance could be threatening under a less benign presidency in the future,” Schultz said. Investec Treasury economist Tertia Jacobs said: “With SMEs having the potential to create jobs, there are two standouts.

The first is announcing a new, redesigned loan guarantee scheme from DFIs and non-bank SME providers to replace the loan guarantee scheme.

“SMEs may also be allowed to bypass certain aspects of labour legislation. The challenging regulatory environment has long been flagged as a significant obstacle to growth and job creation.”

by Sunday World –