Measuring the informal economy - stats and impact: the debate continues

GG Alcock's article in BizNews, his interview with Alec Hogg, my response and his riposte, and the Editor's Desk discussion between Alec and Felicity Duncan, have stimulated a lively discussion on how we measure the informal economy and what its impact is on SA's GDP, unemployment and growth.

BizNews has followed this up with a summary of the comments and points made by readers.

Long may this discussion continue, and hopefully it will filter through to the Treasury and Stats SA where the capacity and expertise lies to do the heavy lifting.

It is interesting that the Treasury's economic growth strategy document released yesterday with an accompanying press statement places great emphasis on the role SMEs will and must play in our growth. Many of its recommendations come straight out of work I did with my colleague Henro Kruger in the 5th term of Parliament between 2014 and 2019 - including his Red Tape Impact Assessment Bill, my Small Enterprises Ombud Service Bill, our focus on late payments and early-stage funding for SMEs, the need to exempt SMEs from regulations and bargaining council extensions and focus on exports, amongst others.

One topic it does not dwell on is the role of the informal economy in the broader economy. I will be sending my comments to the Treasury on this and other matters. Send comments to Rita.Coetzee@treasury.gov.za

Response to GG Alcock - shattering the myth of high unemployment rate, BizNews

Today, BizNews published my response to an article by GG Alcock which got a lot of reader comments (both positive and negative), due to its contrarian views on the state of the informal economy in SA. I have read both GG's books (Kasinomics and Kasinomic Revolution) and loved them both, and have met with him several times over a coffee to discuss various aspects of the entrepreneurial space. I have no gripes on his point that the informal economy is more alive than most people give it credit for, but was moved to respond in the context of SA's broader development and growth agenda, which his argument fails to address, in my view.

I will read the readers' comments with interest, this discussion has a long way to go.

You can read it on BizNews here or read it in full below.

Reflections on the election and my legacy of five years as Shadow Minister of Small Business Development

Over three months have passed since the election and the end of my five year term in Parliament. I had hoped to return for another five year term but the party had other ideas.

After the DA's poor electoral performance, in which its share of the vote dropped and the Parliamentary caucus went from 89 to 84, a three-man review panel was set up to look into the reasons why and what reforms the party should consider to bring it back to a growth path. So far, there has been zero accountability in the senior echelons of the party, with the exception of the resignation of Jonathan Moakes, the campaign director and former CEO. Instead, the leadership have taken "collective responsibility" for the first drop in the DA's national vote since 1994 - language which we associated with the ANC, not the DA, where personal accountability has always trumped the collective. Not any more, it seems.

The Financial Mail endorses the DA's economic policy, positive comments about approach to small business

This week's Financial Mail gives a strong thumbs up to the DA's economic policy, in its lengthy cover story by economics writer Claire Bisseker.

In her article she quotes Lumkile Mondi, who chaired the panel discussion I sat on at the SBI Indaba two weeks ago.

"Wits economics lecturer Lumkile Mondi chaired a recent panel discussion organised by the Small Business Institute in which the main parties were invited to present their policies for supporting the SME sector.

In Mondi’s view, the ANC "disadvantaged itself" by being unable to say what it would do differently, while the EFF offered no policies of its own and simply claimed it would do a better job of implementing the ANC’s if it were in power.

The DA had "a very good story to tell", however, based on its approach of boosting SMEs through deregulation."

I must say I am chuffed to have got his approval for my comments.

Bisseker also quotes my colleague and DA spokesman on jobs, Geordin Hill-Lewis as follows:

"...the DA would improve the operating environment for small firms by ensuring government departments pay them in 21 days, not the current 30. It would also exempt SMEs from most labour and employment equity legislation, reduce red tape and return to sector-specific minimum wages with a new minimum floor of R1,780 a month. "We need a recalibration of the power relationship between big unions and small businesses," says Hill-Lewis. "Shop-floor strike ballots should be mandatory and bargaining council agreements should not be imposed on small businesses which are not represented. These two reforms alone would go a long way in forcing the two towards a better working relationship."

The DA's policy on small business outlined in our manifesto has won the approval of most commentators. I am proud to have played a significant hand in writing it. 

Letter in Business Day about corruption in the Dept Small Business Development

Yesterday's online version of Business Day publishes my letter about rampant corruption in the Department of Small Business Development. It seems corruption is now everywhere. People laud Minister Rob Davies for his sound management of the Department of Trade and Industry which he has run since 2009 but under his watch corruption has spread like a cancer and Minister Zulu has done nothing to stop it after inheriting the "small bits" of the DTI when her department was set up in 2014.

Until now. Last month she suspended nine officials on the strength of an Auditor General's report, and I hope this will be just the start of a cleanup process to root out corruption entirely.

You can read the letter here or below for non-subscribers to BusinessLive.

Minister Zulu must release the Auditor General’s report on corruption in her department and initiate lifestyle audits on all her officials

25th April 2019

  

Minister of Small Business Development, Lindiwe Zulu, must release the Auditor General’s report on its investigation into corruption by officials in her department which was finalised in March. She must also initiate lifestyle audits on all department staff, many of whom are living lifestyles way beyond what their salaries would afford.

Minister Zulu's international trips revealed

Questions to Ministers, both written and oral, are an excellent way to extract information from the executive they are reluctant to reveal through other means. 

See how taxpayers' money is spent by one such minister, Lindiwe Zulu, Minister of Small Business Development. The air travel costs alone amounted to R1,3 million for 12 trips, some of which were paid for by the host country/organisation. That's over R100 000 per trip. 

The DA has been pressing for the Ministerial Handbook to be amended to minimise expenditure by the executive. Finance Minister Tito Mboweni might be forced to listen as a cost-cutting exercise will soon become mandatory, due to the government's coffers running dry.

Manifesto debate at the SBI SME Indaba

On Thursday 11th April I participated in a debate with the ANC and EFF on our election manifestos. It was part of the Small Business Institute SME Indaba held at the Bryanston Country Club.

My counterparts were ANC MP Ruth Bhengu, Chair of Parliament's Portfolio Committee on Small Business Development and a colleague of mine for the past 5 years on this committee; and Mandisa Mashego, Chair of the EFF in Gauteng. It was moderated by economist, commentator and SBI director, Lumkile Mondi.