Mtho Xulu, president of the South African Chamber of Commerce & Industry, which is the biggest voice of small business in the country, says only the small business sector can save SA from the “national crisis” of unemployment, but government policies and red tape continue to stifle it.
“The latest [unemployment survey] results [46.6% including those who've given up looking for work] are very shocking, and we're going to keep getting worse results.
“We always talk about the potential of the small and medium enterprise sector to give us the numbers but it's not being prioritised.”
He estimates that there are 2.5-million small businesses in the country. “A decent small business should not be employing less than 10 people, so you can see the scale of jobs this sector should be producing.”
Instead, they're fighting for survival, battered by everything from load-shedding to red tape and the government's failure to implement its economic recovery strategy.
“Government needs to sort out the energy crisis as a matter of urgency. Load-shedding has been terminal for small businesses. It's the greatest source of anxiety across the SME community. Many have had to close because of load-shedding on its own, never mind the other problems confronting them.”
Most of these involve red tape, which continues to be “a big problem”.
The government regulates for everybody irrespective of the size and circumstances of a business, Xulu says. “We need regulations that are fit for purpose, that are appropriate to your level of growth and affordability.”
Regulatory difficulties are compounded by the fact that turnaround times from regulators are not honoured. “Even if it is legislated that they need to respond in a week or so it takes months.”
There's little sense that labour laws are driven by performance and productivity, he says. “We accept laws that protect human rights, but beyond that they must be anchored in productivity.”
Centralised bargaining doesn't work for SMEs, he says. “It becomes very expensive to expect smaller businesses to be bound by the same negotiations and commitments made by big business.
“We need different and more agile structures for smaller businesses. We should allow SMEs to be more flexible and leave the current structure to the bigger corporates, who tend to be the ones at the bargaining table and have the resources to fulfil the commitments made there.”
If we continue like this by the end of next year we will most likely be over 50% unemployment.
— Mtho Xulu, president of the SA Chamber of Commerce and Industry
Most small businesses are not represented at the central bargaining table, have no opportunity to present their own circumstances and are bound by decisions they can't influence.
Government promises to improve the ease of doing business for SMEs have not materialised, says Xulu, an advocate and successful entrepreneur who started and runs his own investment company.
“It doesn't move on the plans it announces. The infrastructure office and various departments regularly talk about improving turnaround times but very little is implemented. So we never get to this supposed end goal of a particular ranking in the index because we simply just don't get implementation in between.
“The commitment to ease of doing business is never fulfilled because you're not doing what you set out to do.”
Nothing illustrates more starkly the government's seeming failure to comprehend how critical small businesses are for the economy than the issue of late payments, “one of the biggest problems for the SME sector across the board”, he says.
“The biggest culprit is the government. The delays are unreasonable and have devastating consequences for small businesses.”
For those responsible for the late payments there are no consequences, he says. “Some years ago the government spoke about naming and shaming departments that don't pay on time, but you don't find it unless you go to the National Treasury website and look for the report.
“It's not publicised, there are no consequences, life goes on.”
For the accounting officers at government institutions notorious for not paying small businesses for their services it's just another day at the office. “No-one seems to be taking it seriously even though it was spoken about as being part of the performance agreement.
“I have yet to see an accounting officer — local, provincial or national — being taken to task because his department has failed to pay SMEs within the 30 days stipulated in the law.”
He says it's another, albeit major, example of the government's failure to act on an issue that can ruin struggling small businesses, which are often powerless to do anything about it. “They don't have much lobbying power over government so in many cases they have to beg and be patient because often the government is their only client.”
The private sector is not blameless, but at least most corporates have honoured commitments they gave last year to pay SMEs within 30 days, he says. “You don't get the same response from government.”
He says if the government appreciates what a calamity the latest unemployment figures are for the country they don't show it.
“The only way we can confirm that they take it seriously is if they start changing their ways. I think government notes it, but they haven't demonstrated it in action.”
There's been a plethora of economic recovery plans from the president and the provinces, “but if you take the implementation of those plans, you find very little has moved”.
“We're exactly where we were because we've not done anything different, we've not done anything drastic.
“If we continue like this, by the end of next year we will most likely be over 50% unemployment. The fact that you have mainly young people in there who are also out of school and out of training creates a very dangerous situation.”
A lot of people are going into the SME community out of sheer desperation, he says.
“For many people who start small businesses it's a question of survival because they can't find work. And because we don't have a platform for training and development you have a pool of entrepreneurs who are willing to work but are not given the support either to access markets or develop skills.
“They're left to their own devices, and that becomes difficult for us as a country because you don't know what the outcome may be.”
