Small Business Owners Contribute to the Blueprint to Grow the Economy
Yesterday evening I held a session with owners and representatives of small and medium-sized businesses across South Africa. This forms part of a weeklong series of policy engagements on growing our economy and creating jobs.
The discussion revealed what I knew to be true; that small businesses are massively under-supported in South Africa and contribute less than they should to our economy and job creation as a result of restrictive policies that hinder rather than help.
Small business owners spoke of difficulties they experience in registration, cost of banking, access to finance, meeting the requirements for tendering and the level of red-tape that hinders their operations.
Of great interest was the discussion around South Africa’s labour law regime. Owners of these small businesses confirmed that despite it being advantageous and profitable to expand their operations and employ more people, they opt not to do so to avoid the rigours of South African labour law.
This is the real tragedy in South Africa. We have a country with 40% unemployment before Covid-19, and many more are expected to join the ranks of the unemployed, but our labour regime disincentivises employment.
A number of proposals arose from the discussion, that we will be taking on board in developing our blueprint for small businesses and their role in growing our economy:
- Streamline tax, UIF, SDL and HR-related reporting to reduce the administrative cost of doing business for small enterprises.
- Review the thresholds for tax and other statutory requirements to reduce the burden on small and medium-sized businesses.
- Incentivise the township economy by establishing the equivalent of Special Economic Zones in townships with tax support breaks businesses as part of the offering.
- Establish SMME support hubs where they can access business advisory services as well as financial advice, similar to the Opportunity Centres I introduced in Johannesburg during my time as the Mayor.
- Make entrepreneurial skills mandatory as part of the education system. This should include skills related to labour law, tax, basic finance etc. We must teach young people to become employers and not just employees.
- Relax draconian labour laws, particularly for small and medium-sized businesses, to reduce the contractual risks and exposure of making permanent employments.
- Effectively police illegal immigration and border control to protect local businesses and crackdown on the sale of counterfeit goods in our economy.
- Achieve a socially stable environment for businesses to grow.
It is clear that by engaging small business owners, our blueprint to be presented following our lunching in August this year will address the practical and necessary solutions that are needed.
My background in starting my business in the dark days of our country’s history makes this a subject of huge importance to me. What we should have seen in 1994, is an explosion of potential. Instead, small businesses have been oppressed by red-tape, bureaucracy and legislation.
The greatest potential in our economy lies in small businesses. Around the world, in developed economies, small and medium-sized businesses contribute more than half of all economic activity. In South Africa, it is around 20%.
We must become a nation of employers, and not just employees. Our plans will work to ensure that small business training starts in school and that the system is designed to make it easy to initiate and grow a small business.
The engagement last night has produced the starting point of our plans to rescue and grow the small business sector in South Africa, and we are humbled by their support of our initiative.