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Harsh SME red tape coming to an end

Dti launches guidelines to reduce municipal red tape for small businesses.

JOHANNESBURG  –  Acknowledging the red tape challenges that small businesses often face when dealing with municipalities, the Department of Trade and Industry (dti) is taking a step to correct this. However the cornerstone of the process, implementation, is still not sufficiently addressed.

Together with the South African Local Governance Association (Salga) and the Department of Governance and Traditional Affairs (Cogta), the dti has drawn up  a 37-page document detailing the municipal guidelines that are intended to improve service delivery and assist small business development.

Speaking at the launch of the Red Tape Reduction Guidelines publication, dti minister, Rob Davies, says that a pilot programme was conducted across 12 municipalities in South Africa to find out what common forms of red tape were faced by small business and how could municipalities devise solutions to help reduce it.

With only five out of seven businesses managing to survive for longer than a year Davies stressed that an intervention was needed.

The common forms of red tape that were identified included inefficient communication, administrative overlaps, insurmountable amounts of paper work, a perception that regulations were not even handed,  political interference and the costs involved for compliance. The 2013 SME Growth Index published by SBP states that red tape affects the bottom line of small businesses by anything between 3% and 6% of turnover.

Planning to plan

However there is no clear plan for how the guidelines will be implemented across all nine provinces and how the monitoring process will work.  Importantly there is also a lack of directive about how municipalities that fail to implement the guidelines will be held to account.

Davies says that the dti would not be directly responsible in overseeing the guideline implementation but would be working closely with Salga which will give direction and a framework for how the roll-out will occur. Mpho Nawa, Salga deputy chairperson, says the key would lie in capacitating officials within municipalities.

Yunus Carrim, Cogta deputy minister, says that the success of the guidelines will be judged by how well they are implemented. The guidelines, which are long overdue, allow for a standardisation across municipalities but do not provide the answers for how to deal with officials, says Carrim. He adds that that the goal will be to win over municipalities as they will be the key drivers of the guidelines – civil society and small business would also have to play a role in holding officials accountable.

In a similar vein, Nawa says that small business often has to face harsh regulations and  that the hope is that the guidelines will not only be spoken about on podiums or gathering dust in municipal offices but will be put to good use.

Davies did warn however that the regulation should not be misunderstood – the point of the guidelines is to reduce unnecessary processes and systems that hinder business development but he adds that “red tape reduction is not the equivalent of deregulation.”  

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