New blood, new vigour: Lindiwe Zulu

2014-06-01 15:00

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The new department of small business development will be run by a determined but novice minister

Small businesses should not be subjected to the same labour regulation as big business, first-time minister Lindiwe Zulu said.

“A discussion between us [the small business development department] and the unions will have to happen. Minimum wages must be ensured, but we must be realistic when it comes to small businesses.

“When owners make little profits, they can’t be forced to pay high wages or be forced to keep staff at the cost of their business.

“But we need to be careful and also make sure labour is not exploited,” the minister said.

A few days into her new job, she has already identified challenges facing her new department and she says she will waste no time cutting through red tape and re-examining regulations that hinder the growth of small businesses.

Small businesses have been identified as main job creators in developing countries, but they have an exceedingly high failure rate.

According to Dun & Bradstreet, “businesses with fewer than 20 employees have only a 37% chance of surviving four years and only a 9% chance of surviving 10 years”.

The company adds that the failure rate for new businesses seems to be at about 70% to 80% in the first year, and only about half of those who survive the first year will remain in business for the next five years.

Zulu said a lack of financial knowledge and red tape were the main things behind the high failure rate and that the first thing her department will do is help develop business skills and teach small business owners about how to access finance and run a sustainable business.

“Most informal traders become entrepreneurs because of the need to survive, so they venture into business without proper plans.

“We will teach them about savings, accounting and how to reconcile their accounts,” she said.

According to Zulu, her department will ensure the compliance burden of small businesses is reduced.

“The department will work with small businesses to address these challenges and also work more closely with government departments to ensure departments pay small businesses within agreed time periods because most businesses depend on the income for cash flow,” she said.

The minister said her immediate concern is to organise small businesses, including street vendors. “They compete selling the same product and are sometimes forced to undercut each other in terms of pricing.

“We need to organise those small businesses and teach people about unifying and bulk buying.

“This is not to discourage competition but to help create a network of successful businesses,” she said.

Biography: Lindiwe Zulu

Zulu is the former special adviser to President Jacob Zuma on international relations. She returned to South Africa in 1991 and became head of communications in the ANC Women’s League, where she became an executive committee member in 1993.

That year, she was seconded to the ANC’s department of information and publicity as the spokesperson for the elections. In 1994, she became a member of the Gauteng legislature and in 1995 was appointed as deputy speaker.

In 1999, she became the special adviser to the foreign affairs minister; and in 2001, she became chief director for western and central Africa until 2003, when she moved to the private sector. In 2004, she became ambassador to Brazil and in 2007 was elected to the ANC’s national executive committee.

She was elected to Parliament in 2009.

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