Department of Small Business Development needs a strong captain at the helm

 Democratic Alliance press statement by

Toby Chance MP

DA Shadow Minister of Small Business Development

Department of Small Business Development needs a strong captain at the helm

08 August 2014

Release: immediate

A reply to a recent DA Parliamentary question reveals that the Department of Small Business Development continues to struggle with formulating an effective mandate and policy direction, crucial for justifying its existence as a new Ministry, and for growing effective support for small business enterprises.

According to the reply, the Minister will assess the “existing policy areas that inform the mandate of my department” and support the implementation of programmes for “access to finance, business skills development, market access, competitiveness, easing regulatory environment, and advancing localisation.”

 This response is vague, limited, and it does not directly address the various state entities and existing legislation which hinder small business development in the country.

It is crucial that the Minister creates unique policies for this Ministry and challenges conflicting and counter-productive legislation issued from the Department of Economic Development, the Department of Labour, and the Department of Trade and Industry. 

Small business is earmarked as a key job-creating sector in the country’s economy and entrepreneurship needs to be encouraged in South Africa as a catalyst for job creation. It is concerning that this Ministry, created to govern this crucial component, does not adequately address issues inhibiting the creation and success of small businesses in South Africa. Its unwillingness to take a firm position rejecting Cosatu Western Cape’s call to close down small businesses in the metals sector affiliated to the National Employers Association of South Africa, Neasa, is a case in point. As is its stated intention of not intervening in discussions underway between the Minister of Labour and Numsa in regard to Numsa’s continuing attacks on Neasa’s members.

The National Development Plan (NDP) presents a largely market-driven vision for the South African economy, including the promotion of entrepreneurship. If the Ministry of Small Business Development is to effectively implement its mandate, it is imperative that a clear and unique policy framework be devised and implemented to oversee and manage this crucial job-creating sector in the country.

To this end, I call upon the Minister and the Chairman of the Portfolio Committee on Small Business Development, Ruth Bhengu, to convene the much-promised workshop tasked to examine the Department’s mandate and strategy without delay. 

The DA believes that in order to give the Department meaning, the Minister must fully implement the NDP’s programmes for stimulating small business and entrepreneurship. She should also act as a determined government lobbyist for the removal of red tape which hinders the development and promotion of entrepreneurs in South Africa. The Ministry of Small Business Development should prioritise:

• reducing the red tape that makes it so hard to establish and operate a business in South Africa, with a specific focus on a streamlined small business regulatory system for registration, labour legislation and empowerment regulations;
• establishing opportunity centres where small businesses can access one-stop support and conduct all their business with government;
• rolling out incubators where small businesses can share resources and have a supportive environment in which to find their feet;
• scaling up the Small Enterprise Finance Agency (SEFA) which it is inheriting from the Department of Economic Development and which to date has barely made itself felt;
• working with Treasury to implement concessionary interest rates on government loans to small businesses and co-operatives;
• working with the Department of Labour to reform labour legislation, in particular making it easier for small businesses to opt out of bargaining council agreements negotiated by big business and big unions;
• re-focusing the Small Enterprise Development Agency (SEDA) towards developing small and growing rather than survivalist businesses in South Africa.

If the economy is to grow and achieve the goals of the NDP by 2030, largely generated through small and medium enterprises and entrepreneurial activity, the Ministry must take its place and fight for the creation of real opportunities for small business. 

The Minister needs to publish a timetable of milestones as a matter of urgency and reduce the uncertainty clouding the Ministry’s true purpose. 

Media Enquiries: 

Toby Chance MP

DA Shadow Minister of Small Business Development

083 251 5613

Luyanda Mfeka

Research and Communications Officer

079 546 9518