News — 01 April 2016
Red tape hampers SMMEs growth
Reduce the bureaucracy … Small enterprise MEC Sam Mashinini who leads the government initiative to promote SMMEs

Reduce the bureaucracy … Small enterprise MEC Sam Mashinini who leads the government initiative to promote SMMEs

Department takes the bull by the horns to ensure small business development, and growth…

Government red tape continues to top the list of bottlenecks hampering the growth and development of small, medium and micro enterprises (SMME’s) in the Free State.
This emerged at an indaba initiated by the provincial department of small business development and tourism (Destea) at the Bram Fischer hall, Mangaung Metropolitan Municipality in Bloemfontein last week.

Delivering a presentation on red tape, Khomotso Ramaifo of the department said it was vital to eradicate red tape or excessive bureaucracy in order for radical economic transformation to have any meaning.

“Red tape in doing business should be eradicated to allow for small and medium enterprises as well as co-operatives to enter the mainstream economic sphere and be competitive,” she said.
She said the reduction of red tape will also lead to an improved service delivery record for the government, by reducing lengthy processes.

She noted that red tape lead to sharp increases in the cost of doing business, and also hampered the performance of emerging, small and medium enterprises, which always suffer the most where red tape is in place.

Ramaifo said, as a measure to eradicate red tape, various government departments have been given time to assess regulations that lead to delays and constitute red tape in their engagements with small and medium sized businesses.

“We need to simplify regulatory processes, even though regulation is necessary. The issue is the degree of regulation which eventually hampers growth,” she said.

She said government has a role of creating an enabling or conducive environment for business to thrive through the provision of water, roads and electricity as well as safety.
However, she said, red tape remains evident throughout the three tiers of government encompassing the national, provincial and local municipalities.

She said as a result the department has proposed that a single window station be created for small and medium businesses to get information and advice under one roof.

“The single window format is the best business practise in Canada, and it will enhance access to information for small and medium businesses, and that is the way we are going,” she added.
Ramaifo said it was time to attend to some by-laws that were hindering the growth of businesses in the province, and cited – among others – the rezoning of businesses that takes longer than usual as one of the factors small business blame for their sluggish growth.

She said a research carried out by the department three years ago, which is still relevant today, indicates that in Mangaung the major hamstrings to small business growth had to do with irregular or faulty water and lights billing systems, while in the Matjhabeng Local Municipality, the rezoning hiccups came out tops as an impediment to business growth.

“The research respondents were drawn from 414 companies including small and medium ones that were polled for the survey.

“Nationally, the main barriers cited by respondents had to do with the regulatory framework as the major obstacle towards small business growth, as well as the labour laws which in some sectors demand that workers be paid certain amounts of money which are out of reach for the employer.

“The research also says 70 percent of respondents in Mangaung, compared to 40 percent in Matjhabeng, said it is easy to apply for and be issued with a Black Economic Empowerment accreditation certificate.

“We have also heard complaints from employers about the black economic empowerment requirement of compliance. I sometimes wonder if it is because people do not know of the benefits that come with being BEE-complaint. However, immense benefits follow from this as it enables small business to apply for and be awarded government tenders,” she said.

The indaba was also attended by the president of the South African Youth Chamber of Commerce in the Free State Tshidiso Thinane.

Kwezi Consultations, Mojaentertainment, K2014 (Pty Ltd), Enactus, the South African Police Services and the South African Receiver of Revenue (Sars) Taxpayer Education Unit were all present for this information-sharing Indaba.

The department of co-operative governance, human settlements and traditional affairs, and the International Labour Organisation of the United Nations in South Africa were also present.

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