Relationship with govt is a big bugbear for small business

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South African entrepreneurs face many challenges – including power cuts, labour unrest, insufficient infrastructure, red tape and the cost of compliance – but the most prominent issue raised at a recent gathering of more than 50 seasoned South African business owners was the need for government to work more closely with small businesses.

The alumni gathering was of business owners who have won various categories in the Sanlam/Business Partners entrepreneur of the year competition over the last few decades. Now in its 27th year, the competition and its alumni seek to harness entrepreneurs’ expertise to remove barriers to entrepreneurship.

A discussion around the Department of Trade and Industry’s 26 incentive programmes for businesses highlighted the divide between government and the sector. Some entrepreneurs described the DTI as much more accessible and efficient than it used to be, but a surprisingly small number of entrepreneurs said they made use of any of these programmes, many of them saying they simply didn’t know they existed.

Christo Botes, spokesperson for the competition and facilitator of the alumni events, says that while intentions may be good, government didn’t always fully understand the implications of new legislation and how it could be counterproductive for smaller businesses. Botes said that a survey conducted by the Small Business Project indicated that SMEs lose out on a week’s worth of income per month while trying to sort out red tape or comply with regulations.

Lack of communication regarding government’s efforts and programmes for small business was another concern. “It is left up to the entrepreneur to dig deep to get the correct information, and sometimes this can take months. If government’s current efforts could be packaged and promoted more effectively, it would be significantly more beneficial to entrepreneurs,” Botes said.

An overwhelming attitude that Botes found among the Entrepreneur of the Year alumni, most of whom have built thriving businesses up from scratch, was a positive, can-do approach. He described a group of Western Cape entrepreneurs who had signed a partnership agreement with City of Cape Town to decrease power usage by 10 percent to avoid the business park they operate in being affected by power cuts. He says this collective business thinking could make a difference on a national level.

“Platforms need to be available for entrepreneurs to engage more openly with government decision and policymakers. For instance, with the right engagement, load-limiting, which sees the City of Johannesburg remotely limiting electricity usage in order to avert the implementation of loadshedding, could be expanded to specifically target industrial and business parks in the rest of South Africa.”

Botes added that the group of entrepreneurs found no shortage of ideas on how South Africa could boost its stagnant rates of entrepreneurship. “Some felt that a decrease in production taxes (company tax and income tax) and an increase in consumption tax (VAT) would go a long way to boosting economic activity and growing the economy. “There was also a call to review tax incentives as these were viewed as not substantial enough to provide clear incentives for entrepreneurs to invest and expand.”

Under the National Development Plan (NDP) government aims to create 10 million jobs through new enterprises but in order for SMEs to flourish government needed to be more informed on issues that could hinder those building a business.

Botes added: “Many entrepreneurs felt that there should be a moratorium regarding new laws introduced in the entrepreneurial space while the country worked to meet the targets in the NDP.”

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