Monday, 30 June 2014

A guideline for Minister Lindiwe Zulu

This week the Parliamentary portfolio committees sit for the second time in the current session, having elected their chairpersons last week. In an unusual arrangement, members of the Portfolio Committee on Small Business Development will attend not only their own but also those of Trade & Industry and Economic Development.

The reason, presumably, is that this new department will have to sequester a number of duties, functions and agencies from the other two in order to do its job. A fair amount of bargaining and arm-twisting needs to happen before the department’s shape is determined.

We will get a sense of Minister Lindiwe Zulu’s strategy when we see this shape emerging. Will she take over the bureaucracy managing the myriad agencies and programmes for small business residing in the DTI and EDD, or assume a co-ordinating and troubleshooting role, becoming a small business czar and advocate with the ear of the Presidency?

As she and her team ponder these questions, a good starting point would be to revisit the National Small Business Act promulgated way back in 1996 and amended in 2004. These established the legislative foundation for DTI policy on promoting and supporting small business.

It is surprising the Minister has not, so far as I am aware, mentioned this Act in statements issued since her appointment. Especially in view of what is contained in Section 4 of the Act, which I reviewed recently with Chris Darroll, CEO of policy think tank SBP.

Ms Darroll was one of the contributors to the Act, representing the now-disbanded Sunnyside Group that pressed for deregulation in all legislation passed in the 1990s. One of its focus areas was small business, which even then was wrapped in red tape. Little has changed, despite the provisions of the Act.

In the Determination of Guidelines of Section 4 of the Act, clause 18 (1) states: “The Minister may, by notice in the Gazette, publish guidelines for organs of state in national, provincial and local spheres of government to promote small business and the National Small Business Support Strategy.”

Falling within its embrace are small business organisations, trade unions and other representative organisations, whose affairs the Minister is empowered to regulate on “any matter which in terms of this Act is required or permitted to be prescribed.”

They key word for Minister Zulu to ponder on is “guidelines”.

Under the Act she can issue guidelines to the Department of Labour exempting small businesses from provisions in the Labour Relations Act that make life difficult for them, such as those entitling unions to use their premises for meetings and imposing sector bargaining council pay scales.

She can do the same with the Treasury, taking a cue from the Davis Tax Committee which recommended a raft of changes to tax law affecting small business.

But for the Act to have teeth guidelines are not enough.  Other organs of state and interested parties can ignore them. Recommendations and guidelines are unenforceable.

So, for instance, the Treasury only accepted two of the Davis recommendations, while measures on labour reform agreed in Nedlac last year, such as mandatory secret ballots before strikes are called, were thrown out by the Labour Portfolio Committee under pressure from unions.

Minister Zulu should bring the Act back into Committee and let us debate how we can give it, and her department, teeth and the power to legislate across departmental boundaries. Or at the very least, force her Cabinet colleagues to relax regulations that strangle entrepreneurship and hinder job creation.

Force is something the ANC understands well, but not when it is on the receiving end. Zulu will have to develop a thick hide, and very persuasive advocacy skills, to have any impact on her colleagues. The DA will support her if she shows some mettle, and prove the naysayers to the formation of her department wrong. She has already come up against resistance from COSATU when she hinted at changes to labour legislation to help small business.

One piece of legislation screaming for a re-write is the Business Licensing Bill which DTI Minister Rob Davis introduced last year.  He had to withdraw it after howls of protest from businesses and civil society, but insists he will bring it back to Parliament. If he does, it is an opportunity for Zulu to make her mark.

But first the Minister should focus on listening, especially to the likes of which the ANC has traditionally side-lined including the Free Market Foundation, the SA Institute for Entrepreneurship, chambers of business and other organisations sitting at the coalface of enterprise development. She needs to consult on how to define the sector: where does the department draw the line between small, medium and micro enterprises, and how should interventions be crafted appropriately for each? What is international best practice in small business development and how can we bring it to SA?

Exciting times lie ahead for the Portfolio Committee on Small Business Development. We will endeavour to keep the business community and other interested parties closely informed and ensure an open and noisy policy debate.

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