SA Franchise Warehouse

SA SMEs SEEK MUTUAL RELATIONSHIP WITH GOVERNMENT 

Christo Botes

Despite challenging economic conditions, South African entrepreneurs remain determined to make their respective businesses a success, but what if Government played a bigger role and consulted more widely in improving the chances of success by working more closely with small and medium enterprises (SMEs), in order to better understand the direct implications of policies on business owners. Imagine the potential of entrepreneurship in the country with a mutually beneficial relationship between the private and public sector?

This was the general consensus from an alumni gathering of over 50 seasoned South African business owners who have won various categories in the Sanlam / Business Partners Entrepreneur of the Year® Competition over the last few decades. While entrepreneurs were vocal about the challenges within the country’s entrepreneurial environment – such as power cuts, labour unrest, insufficient infrastructure, red tape and the cost of compliance – the most prominent issue raised was the request for Government to work more closely with small businesses.

Now in its 27th year, the Sanlam / Business Partners Entrepreneur of the Year®  Competition holds a database of top entrepreneurs and through its alumni, it seeks to harness entrepreneurs’ expertise to remove the barriers they see as hindering entrepreneurship within the country. 

Christo Botes, spokesperson for the Sanlam / Business Partners Entrepreneur of the Year® Competition and facilitator of the alumni events, says that collectively, entrepreneurs want to create a thriving business environment, but to achieve this, Government needs to work more closely with the private sector and SMEs themselves on the issues impacting small and medium businesses. “There needs to be a more direct link between government and entrepreneurs. While intentions are good, Government doesn’t always fully understand the implications of new legislation and how it can be counterproductive to small and medium businesses.”

Entrepreneurs stated that increasingly challenges are being introduced to business and where one door opens, another closes it. Botes adds that a survey conducted by the Small Business Project (SBP) titled Examining the Challenges Facing Small Businesses in South Africa, 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, highlighting the complexity that businesses are expected to comply with.

Stressing the divide between the two sectors was a discussion around the Department of Trade and Industry’s (DTIs) 26 incentive programmes for businesses. “While some entrepreneurs described the DTI as much more accessible and efficient than it used to be, surprisingly only a small number of entrepreneurs actually make use of these programmes, as they either simply didn’t know they existed, or how they can be accessed.

“The lack of communication regarding Government’s current efforts and programmes for small business is a concern. Currently it is 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.”

An overwhelming attitude that Botes found among the Entrepreneur of the Year® alumni, most of whom are owner-managers who have started small and have built up thriving businesses, is a positive, can-do approach of seeking solutions around the problems. “For instance, to counter the impact of load-shedding, a group of Western Cape entrepreneurs have signed a partnership agreement with City of Cape Town to decrease power by 10% when warned to avoid the business park they operate in being affected by power cuts.”

He says that it is this collective business thinking that can make a difference on a national level. “Platforms need to be available for entrepreneurs to engage more openly with Government decision and policy makers. For instance, with the right engagement load-limiting, which sees the City of Johannesburg remotely limit electricity usage in order to avert the implementation of load shedding, could be expanded to specifically target industrial and business parks in the rest of South Africa.”

Botes adds that the group of entrepreneurs found no shortage of ideas on how South Africa can 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 boost economic activity and grow 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.”

With the National Development Plan (NDP), Government aims to create 10 million jobs through new enterprises, either start-ups or growing businesses; however, for SMEs to flourish, Government needs to be more informed on issues that can hinder and those that develop a business.

“Many entrepreneurs felt that there should be a moratorium regarding new laws introduced in the entrepreneurial space while the country works to meet the targets set in the NDP, especially during this period of economic downturn. 

“Entrepreneurs will always find a solution to current challenges – it may take them longer, but they will achieve results. Failure isn’t an option for them. With the insight from the gatherings, we aim to engage with the respective Government agencies to establish how we can work more closely together to minimise the challenges presented to entrepreneurs. With the Entrepreneur of the Year® alumni collective voice, we seek to establish a voice for all established, emerging and potential entrepreneurs in the country,” concludes Botes.