Cutting red tape to aid small business

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IOL SI Lindiwe Zulu

Jacoline Prinsloo

Lindiwe Zulu has been appointed by President Zuma to establish a new ministry tasked with supporting the small business sector.

Johannesburg - Newly appointed Small Business Development Minister Lindiwe Zulu was widely rumoured to be appointed the communications minister ahead of President Jacob Zuma’s cabinet announcement last month.

Zulu chairs the ANC national executive committee’s subcommittee on communications, and is widely respected by many in the media and the party as an effective communicator.

But Zuma had other ideas, appointing Zulu to head a newly established ministry for small business development, a sector identified by government as a key driver for economic growth in the next five years and beyond.

The last minister to be appointed by the president to head a newly established ministry, Lulu Xingwana, has lost her job.

Her department has also been reconfigured, with significant parts of the portfolio absorbed into another department.

Such are the challenges of starting up a completely new ministry, especially one dedicated to a sector that contributes 30 percent to the country’s gross domestic product.

A lesson from Xingwana’s department is that it can go horribly wrong.

But Zulu is unfazed by the challenge, saying the party has about 20 years’ experience in running the government and setting up institutions. “Actually, starting a ministry is not very difficult any more, considering that we have been in government now for 20 years. The systems are in place, from a legislative point of view.

“There are specific guidelines to follow, so it’s not very difficult. We have already met with the ministers of trade and industry and economic development… because those are the people who have been responsible for small business development before this ministry was established.

“There’s loads of documentation on what they have been doing, so that will be very helpful,” said Zulu.

While the establishment of the ministry has been welcome, there has also been scepticism over its ability to remove the red tape that mostly prevents small businesses from accessing government funds.

There are already agencies established for small business development, like the Small Enterprise Development Agency and the Small Enterprise Finance Agency.

There are strong indications that Zulu will take these over from the Department of Trade and Industry, but what the impact of this might be remains unknown.

Zulu has already given indications that she will push for the relaxation of red tape around small business funding, without necessarily absolving them of the responsibility of complying with requirements. “SMMEs can be the key driver for economic growth and job creation. Currently the SMME sector contributes more than 45 percent of the country’s GDP, and lots of people do not want to believe that but the reality is that it is true.

“We will focus on providing effective support for small businesses to ease the regulatory and compliance burden on small businesses.

“That does not mean that people must no longer comply.

“We need people to understand that compliance is important for stability.

“But we are saying we must not make it difficult for small businesses to comply.

“We must make it easy for them and understand the circumstances under which they operate.

“We must understand the constraints they deal with on a daily basis. The ultimate goal is to reduce the difficulty in doing business, and this includes improving access to finance and the markets,” she said.

Having crisscrossed the world travelling with Zuma as his international relations adviser, Zulu this week warned about the change of mindset necessary if small businesses in the country were to grow and compete on the continent and across the world.

As she arrived at a venue in Tshwane on Friday to address a gathering of young entrepreneurs, she was surprised to find the venue was almost empty, and that most of the young entrepreneurs she came to address were late for the event.

She was mildly disturbed that she had rushed to the venue on her way from Cape Town, where she had spent the entire week attending the State of the Nation address and its subsequent debate, but arrived to find excuses about transport problems resulting in people being late.

“The sentiment around the world is that South Africa is no longer a baby that needs to be nursed any more.

“Our international partners’ products are competing with our own products on the continent.

“We need to move at a global pace, so there is no time for us to be late. If you go to other African countries, you will be shocked that small business do not enjoy the kind of support from their government that small businesses do here.

“There are no institutions and structures designed to support small businesses – they are on their own.

“I’m not saying people must be grateful, but they need to be aware of the differences and take advantage of the opportunities which exist here,” she said.

With the ANC having promised to deliver 6 million jobs in South Africa by 2019, the growth and success of small businesses will be crucial in determining the legacy of Zuma’s second term.

Effectively, it puts Zulu in charge of a ministry that will play a crucial part in determining whether the “radical economic transformation” promised to voters is mere verbiage or a real economic policy shift.

Sunday Independent


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