No apologies for radical transformation of the economy

Posted on October 24th, 2014

/No-apologies-for-radical-transformation-of-the-economy/The National SMME Policy Colloquium came to an end on a high note yesterday with speakers taking an unapologetic stance about radical transformation of the economy and calling for a repealing of legislation they perceive harmful to small businesses.

Minister of the Department of Small Business Development (DSBD), Lindiwe Zulu, on the first day of the three day colloquium said radical transformation of the economy was about getting SMEs into the mainstream economy by legislating government policies which would aid SMEs.

Yesterday Chris More, executive director of Small Business Development Institute, who chaired the closing proceedings, echoed these sentiments. “We cannot be apologetic about radical transforming our economy” he said.

The suggestions from the colloquium will be collated and compiled into a comprehensive document in the form of a White Paper. This was Chris More, executive director of Small Business Development Institute, who chaired the closing proceedings. This report will then  be presented to the Department of Small Business Development for its consideration in a month’s time.

Issues resolved

Challenges ranging from the role of business chambers and cooperatives, private and public sector procurement, taxation and regulation, enterprise and supplier development programmes, access to debt and funding for SMEs, all came under scrutiny.

Among the solutions the gathering agreed upon were:  coordination and streamlining of activities, legislating laws for prompt payments of small suppliers, establishing an SME one-stop shop centre and a tribunal platform, simplifying tax regimes and the amendment or repeal of the Preferential Procurement Policy Framework Act (PPPFA) to align it to Section 217 (2) of the Constitution which states that, when an organ of state contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective.

The PPPFA also stipulates that when government assesses contracts, it must take into account a preference point system which prescribes functionality, price and reconstruction development programme goals.

But delegates said this Act is being shrewdly subverted by government officials and big corporates to exclude SMEs from doing business with government.

“There is a hidden genocide of small businesses cause by late payments”

SME genocide

“We want an introduction of clear targeted procurement, and so we are asking the department to help us repeal the PPPFA to introduce a procurement regime that allows for the implementation of set-asides,” general secretary of Black Business Council, Gregory Mofokeng said.

Delegates agreed that late and non-payment of small businesses by state-owned enterprises was killing small businesses.

“There is a hidden genocide of small businesses cause by late payments,” added Mofokeng.

Xolani Qubeka, CEO of Small Business Development Institute and the colloquium’s host, encouraged SMEs to create value-chains within their communities and develop a progressive business philosophy.

The deputy minister of DSBD, Elizabeth Luthuli, addressed the closing ceremony. She said government was prepared to consider all the colloquium’s recommendations and work with all stakeholders to find solutions and start implementating.

Here are 10 significant proposals to assist with the growth of SMEs that were adopted by business leaders.

Overall proposals

At the center of all recommendations adopted was a proposal that all legislation impacting SMEs fall within the Small Business Ministry, and to be championed by Minister Lindiwe Zulu herself.

According to delegates at the colloquium, the DSBD will have to consider these most important proposals as a matter of urgency:

  1. Establishment of visionary SME one-stop shops and localising government agencies for easier access.
  2. Payment guarantees, charging of penalties for late payments, and workshops for small suppliers on how to compile valid claims.
  3. A legislative instrument ensuring every business belongs to a chamber and business rehabilitation centres to revive failed enterprises.
  4. Government financial development institutions must be mandated to have greater appetite for risk.
  5. Protection of intellectual property when SMEs submit unsolicited bids to authorities.
  6. Transparent tendering processes and information readily accessible to avoid corruption.
  7. Inculcating honest business practices, establishing toll-free lines to report corruption and address it through best practices found in private sector.
  8. Establishment of small business centre within SARS, and government consultation prior to introducing SME legislation
  9. Simplified tax regime for micro-businesses increase from R1 million to R5 million, and similar tax breaks and incentives by Treasury as big businesses.
  10. Businesses and cooperatives encouraged to create value-chains