Time to stop talking and cut the red tape for small business

The government should introduce changes that will foster economic growth, rather than implement punitive tax measures in the budget, says Raizcorp chairperson Alfie Naidoo.
The government should introduce changes that will foster economic growth, rather than implement punitive tax measures in the budget, says Raizcorp chairperson Alfie Naidoo.

Cape Town – Cut the red tape. That was the message by major political parties during the Ministry of Small Business Development budget debate in Cape Town on Wednesday.

While Minister Lindiwe Zulu explained what her department aimed to do to cut red tape, DA MP Henro Kruger said “one year later … [Zulu's department has] nothing to show for it besides a talk shop here and there”.

“The biggest hindrance to the success of small businesses is red-tape and regulation,” said Kruger, who is the DA’s shadow deputy minister of small business development. “Red tape is a hidden tax that kills jobs and suffocates business.

“It takes an average of 19 days to register a new business in South Africa, which is roughly a week longer than it takes in other countries,” he said.

“Regulatory burdens are increasing – particularly the observance of labour laws,” he said. “A total of 81% of Commission for Conciliation, Mediation and Arbitration (CCMA) cases involve small businesses.

“A typical firm is taken to the CCMA twice a year to resolve a dispute, meaning that ten business days are wasted."

Zulu agrees on red tape issues

Zulu said in her speech that government recognised the need to review the policy and regulatory environment that continues to hinder the development, growth and competitiveness of small businesses.

“All spheres of government should institutionalise the guidelines aimed at reducing red tape at local government level,” she said.

“To date, the Red Tape Reduction guidelines workshops have been conducted for 102 municipalities across the country in partnership with the provincial departments of economic development as well as district and local municipalities.

“It is envisaged that during the 2015/16 financial year, the department will continue with the rollout to ensure inclusion of other municipalities,” she said.

Regulatory act

Kruger said “no significant impact in the reduction of red-tape materialised” when government launched the Regulatory Impact Assessment (RIA) in 2007.

“Business must know exactly how long they must wait for permits, licences and other requirements dreamed up by bureaucrats, and this must be made available and accessible on government department websites.

“Government must keep track of just how much red-tape they are cutting and how much progress they are making in improving service delivery and lessening the burden for small business.

“Due to the 11 year delay in implementing RIA in its entirety, I will this year introduce a Private Members Bill before this House to make RIA assessments required by law.”

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