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Small business funds gather dust as spaza shop owners are hamstrung by red tape

Informal traders are calling on the easing of red tape in government programmes as the auditor-general on Friday told Parliament there had only been a 10 percent uptake of a R175 million fund meant to provide relief to spaza shop owners. Picture: Sifiso Gumede, file photo.

Informal traders are calling on the easing of red tape in government programmes as the auditor-general on Friday told Parliament there had only been a 10 percent uptake of a R175 million fund meant to provide relief to spaza shop owners. Picture: Sifiso Gumede, file photo.

Published Apr 4, 2022

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Informal traders are calling on the easing of red tape in government programmes as the auditor-general on Friday told Parliament there had only been a 10 percent uptake of a R175 million fund meant to provide relief to spaza shop owners.

Parliament’s portfolio committee on small business development were told by senior manager for small business, Aphendule Mantinyane, that only about R17m of the fund meant to provide relief to spaza shop owners had been taken up, while another development fund was farmed out to Nedbank as informal traders showed lacklustre interest.

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“We need to increase the footprint for these funds because there is uptake is very low. The debt-relief programme could not assist all applicants, and it was then transferred to Nedbank for management purposes,” Mantinyane said.

At the height of the Covid-19 pandemic and subsequent lockdowns, the government created the fund for spaza owners to get urgent assistance, and another fund for debt relief which both have been underutilised.

In August, 2020 President Cyril Ramaphosa announced the relaxation of permit requirements for traders until the end of 2022, followed by directives published by former small business development minister, Khumbudzo Ntshavheni.

The extension was given to all informal traders whose permits had expired or who had begun trading, and were unable to apply for trading permits due to the lockdown regulations.

South African Informal Traders Alliance (Saita) president Rosheda Muller said yesterday that there was too much red tape around the government’s assistance programmes, citing cases of applicants who waited over a year for relief but were after a year of waiting granted less than half of what they sought.

“They should stop planning for us and plan with us. There is no real assistance from government agencies to hold the hand of the business owner and walk them through the process. I think the applications have to be rewritten because the requirements are too stringent for people who are informal (traders) anyway,” Muller said.

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On Human Rights Day, Saita, with over 2 million informal traders attempted to march on the Union Buildings to press demands that the government do away with red tape hampering the growth of micro and informal businesses, that all municipalities recognise and respect the president’s trade permit waiver, and that law enforcement immediately halt the harassment of informal traders.

Saita said Ramaphosa acknowledged in his State of the Nation Address how crippling red tape was for business, especially informal and micro businesses while municipalities continuously ignore a national directive, aimed at unblocking the path for business to operate and flourish.

They said municipal officials countrywide were not adhering to the directive, and they continue to harass and arrest traders, and confiscate their goods.

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“This directive is now the law, and yet municipal officials are ignoring it. For this reason, we have no choice but to take to the streets to try to stop the constant harassment of informal traders over trading licences, especially female traders who are the most vulnerable of workers.

“We are taking our concerns directly to the Presidency, and will present Ramaphosa’s office at the Union Buildings with a memorandum of demands,” Saita said.

Parliamentarians on Friday called for a more interactive approach by the state towards informal traders, saying the requirement that the application forms be completed only online was one of the big obstacles.

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Muller said many informal traders were not formally registered because they operated on the outskirts of bureaucracy, and had a tough time acquiring municipal licences and permits which were a requirement for the processing of any government-sponsored interventions.

“Many businesses want to register and pay tax, we are already paying millions if not billions in tax through the products that we buy on the open market, but the requirements for formality are what stops people cold.

“We can’t claim back value added tax or anything for that matter, while big business is able to do that. Also, the Small Enterprise Finance Agency (Sefa) and the Citizen Entrepreneurial Development Agency (Ceda) are not helpful,” Muller said.

Parliamentarians on Friday called on the Department of Small Business to initiate more personal contact, as the online interaction was not suitable for most people.

“Our people believe in personal contact, requiring them to apply for assistance online is not going to work,” one Parliamentarian said.

Saita’s membership includes informal traders, hawkers, spaza shop owners and home-based operators across all nine provinces.

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