DSBD submission to Presidency Red Tape Unit; with Ministry

Small Business Development

15 March 2023
Chairperson: Ms V Siwela (ANC)
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Meeting Summary


The Department of Small Business Development (DSBD) presented its consolidated submission made to the Red Tape Unit in the Presidency. It stated it was the custodian of Red Tape Reduction (RTR) for Small, Medium and Micro Enterprises (SMMEs) and had been working over the last five years to implement measures to address this.

The presentation outlined:
• Background to DSBD Provincial Red Tape Work         
• The Red Tape Reduction Ecosystem
• Key findings of Inter-Provincial Ease of Doing Business and RRT Task Team (IPTT)
• Provincial Baselines on Red Tape Functioning
• Positive Aspects of Provincial Red Tape Reduction
• Key Red Tape Challenges identified in Provinces.
• DSBD Strategies to address Provincial Red Tape
• Challenges
• DSBD Amendments to the Small Business Act

Committee members commented that DSBD was headed in the right direction although it “dragged its feet”. They asked if DSBD understood what red tape was as the 30-day payment issue was not red tape. What could be done to reduce administrative and compliance red tape? Did municipal by-laws exist as claimed by municipalities? What was the timeline for the finalisation of the Small Business Amendment Bill? What were the achievements, targets, and timelines of DSBD programmes? How could the Committee hold DSBD accountable? Had DSBD conducted a feasibility study? Were small businesses charged an initiation fee to access the resources and opportunities available? Why were RTR efforts directed towards two provinces only?

Meeting report

Deputy Minister Opening Remarks
Ms Dipuo Peters, Deputy Minister of Small Business Development, said it had always been the intention of the government to create a conducive environment for businesses, generally, by addressing red tape. DSBD had accepted that even though legislative and regulatory protocols were necessary to create a conducive and enabling environment to achieve the government objectives and to support the growth of small businesses and cooperatives, there were substantive indications that, amongst the legislative and regulatory provisions, there were unnecessarily restrictive and expensive interventions that small businesses and cooperatives needed to comply with that specifically negatively impacted them within the different sectors of the economy. Restrictive legislative and regulatory protocols not only created an unfavourable environment for small businesses and cooperatives to thrive but eventually created delays and unnecessary compliance costs. They also reduced competition, lowered incentive to innovate, and improved the overall cost of competitiveness which contributed to the cost of living.

During the 2022 State of the Nation Address (SONA) 2022, the President made the following undertakings:
• Reviewing of the Business Act alongside the broader review of legislation affecting SMMEs to reduce the regulatory burden on informal businesses
• The appointment of Mr Sipho Nkosi to head the Red Tape Reduction (RTR) task team in the Presidency to cut red tape across government.
- The Deputy Minister noted that the special appointment of Mr Nkosi by the President was an indictment on the DSBD, Department of Trade and Industry and Competition (DTIC) and other departments that had worked with small businesses to reduce red tape.
• The RTR task team would identify priority reforms including mechanisms to ensure that government departments pay suppliers within the required 30 days.
- The Deputy Minister noted that it was not known what the problem was with departments and entities which failed to pay suppliers within 30 days. DSBD believed that the only exception to the 30-day payment period would be when departments and entities had queries. Unqueried areas needed to be paid within the set period. The presentation would discuss payment issues, progress made on departmental commitments, and the impact made by DSBD interventions to create a conducive environment for SMMEs and cooperatives. Cooperatives targeted the “poorest of the poor”. The ANC government was a pro-poor government and believed that SMMEs and cooperatives should thrive and their business grow. It was known that SMMEs created at least five jobs and that was a sector that needed to be supported to grow.

Department of Small Business Development presentation
Mr Lindokuhle Mkhumane, DSBD Director General, said the DSBD was the custodian of red tape reduction (RTR) for SMMEs and had been working over the last five years to implement measures to address it. DSBD was by no means the sole player in this ecosystem for addressing red tape reduction as DTIC, National Treasury, and the Presidency through focused programming all made inputs to address red tape reduction (RTR) and ease of doing business (EODB).

A key challenge was that the DSBD planned activities and those of the other role-players had been impeded by the fact that no national strategy or framework existed for addressing red tape.

As a result, RTR interventions suffered from a lack of coherence and cohesiveness, without clear guidelines and a programme of action to help them realise those objectives.

The appointment of the RTR champion at the highest level was something that was sorely needed to galvanise the entire sector.

Understanding the current RTR/EODB ecosystem was critical to DSBD efforts to work collaboratively with other key government stakeholders in the field, including the DTIC, National Treasury, Cooperative Governance and Traditional Affairs (COGTA) and South African Revenue Service (SARS).

Understanding the interrelationships between all role-players in the ecosystem allowed DSBD to clearly define its programmes in a complementary, supportive, and non-duplicative manner to the overall goal set by the President as having a country that is easy to do business with.

The National Doing Business Programme (Investment Climate Reform Programme – ICRP) followed and focused on improving the investment climate within the country. The key focus of the national programme was starting a business, paying taxes, registering property, construction permits, and trading across borders. That did not mean that the other indicators were not important, but rather that they were comparable to the global standard on executing them such as its Labour Regulations.

The Sub National Doing Business found expression through National Treasury’s Cities Support Programme targeting metros, and focusing on construction permits, registering property, enforcing contracts, and getting electricity. There was an overlap between the two programmes, in the areas of focus that are both national and local government competencies.

In addition to the Doing Business Survey, the Department of Planning, Monitoring and Evaluation (DPME) vigorously pursued the tracking of MTSF Priority 2 targets, monitoring 40% of the indicators, as well as focused on the expansion of access to procurement opportunities to SMMEs, youth, and women.

The integration of the Municipal Finance Management Act (MFMA), Circular 88 sector, and economic indicators (including electricity) was thematic and provided a level of integration between traditional indicators measured in local government, and those that had been shown effective in National and Sub National Doing Business Programmes.

The DSBD focus in the ecosystem was on :
• Effectiveness of complaints notification systems - process from registration to resolution;
• Municipal building plan approval and land development and zoning approvals;
• Lengthy and inefficient supply chain management processes, which ultimately affect the 30-day payment system as well as targeted procurement spent on SMMEs and Co-operatives –from contracting, verification of services provided, through to payment and closure;
• Municipal business registration, licenses, and permits – from application through to approval.
• Communication of relevant business information by municipalities to small businesses with particular reference to tender opportunities for the 30% directive that needs to be implemented in municipalities for the upliftment of the SMMEs and Co-operatives;
• Development and enforcement of municipal by-laws that promoted business development; and
• Better management of Informal Trading – Shared Infrastructure that promoted informal economic activity/dedicated trading zones for different categories of informal/crafts markets and the hospitality industry.

The Pilot Administrative Simplification Programme (PASP) was a DSBD intervention in association with KZN Department of Economic Development and Environmental Affairs, COGTA, and SALGA, targeting interventions in local municipalities in three districts in KZN. The programme targeted key RTR areas including access to infrastructure (specifically water as it permeates all municipalities), customer/complaints management, municipal policies, by-laws/regulations; land development and management, building plan approval timelines/processes; informal trading management. That pilot, if successful, would be extended to 226 local municipalities, 44 district municipalities, and 8 metros (278 municipalities).

(See presentation for DSBD Municipal RTR dashboard, challenges of municipalities, timeframes, DSBD framework; key findings of Inter-Provincial Ease of Doing Business and RRT Task Team)

The positive aspects of the Provincial RTR were:
• KZN Province stood out through its continuous dialogue with businesses in multiple formats,
• Gauteng Province was no less impressive in its red tape programming, which followed a highly integrated approach of partnering sector departments in the province
• The Western Cape which had an “institutionalised approach” used more direct one on one and digital channels to engage its businesses,
• Western Cape and KZN complaints were followed up by a resolution process.
• In Western Cape and KZN, multiple instruments and tools were constantly being tracked and improved. In both cases, there was a monitoring and evaluation system in place which allowed for continuous learning and evaluation.

The key RTR challenges faced in provinces:
• There were substantial gaps in dealing with RTR/EODB between the different provinces
• While each province has been involved in addressing red tape, they have been doing this from a perspective of “organised capacity” as opposed to institutionalisation.
• Poor coordination and no formal structures in place to deal with ongoing RTR/EODB issues arising from businesses.

The DSBD strategy to address challenges included:
• coherent approach by all provinces in identifying, resolving, escalating RTR/EODB challenges
• DSBD has compiled a baseline status report on the state of RTR across all nine provinces.
• DSBD has developed Awareness and Assessment Toolkits for Red Tape Reduction and trained officials from eight provinces

The “Doing Business” programme of the World Bank (now suspended) focused on ten indicators critical for the effective functioning of a business.

(See presentation for more DSBD strategies, amendments to Business Act, annexures on key drivers of provincial red tape, provincial challenges and interventions)

The Chairperson appreciated that the task team had reflected on what was happening in the districts, municipalities and provinces. That was exactly what the Committee wanted because at national level there were no people to coordinate Red Tape Reduction for small businesses which was long overdue.

Mr H Kruger (DA) said that DSBD was headed in the right direction although it had taken nearly ten years to get to that point. Did DSBD understand what red tape was? The 30-day payment issue mentioned in the presentation was not red tape but rather a regulation that needed to be complied with. DSBD was welcomed to share in the thesis research material from his Master of Business Administration (MBA).

It was confusing to see in the presentation that DSBD was the custodian of RTR for SMMEs because a solid principled Red Tape Reduction Private Member’s Bill had been tabled in the Fifth Parliament and DSBD at the time stated that the Bill was wrongly tabled in the DSBD portfolio instead of DPME.

The government did not have a red tape reform framework due to the lack of political will to design one so that “potholes for small businesses could be avoided”. Big business had the cash flow to buy “pothole-friendly tyres”, while small businesses did not. The PhD on a red tape reform framework he was currently busy with was the first, globally, to look at designing a framework to reduce the negativeness of red tape.

The main reason for having legislation and regulations was to stop chaos within the country and automatically those regulations gave rise to red tape. What could be done to reduce the cost of red tape, specifically, administrative red tape, which was the biggest “pothole” for small businesses, and compliance red tape? Dealing with the administrative cost of red tape would have been the easiest starting point but that was not measured in the DSBD presentation and that meant the cost would continue to burden small businesses because it had not been managed.

It was easy to send a new piece of legislation to DPME to perform a Socio Economic Impact Assessment System (SEIAS). However, that was not a red tape impact assessment that needed to be done on all new legislation being tabled.

A word search on the following words could be done on new legislation to measure the cost on small businesses which will subsequently eliminate 80% of administration red tape:
• Demonstrate, Apply, Assurance, Submission, Exam, Approval, Recordkeeping, Comply, Report, Monitor, Capturing, Collecting, and Requirement.

The conclusion to his MBA thesis suggested these recommendations as solutions to RTR:
• The enhancement of communication
• The political will to reduce red tape
• The implementation of the ease of doing business to identify, quantify and rectify regulatory burdens and barriers.

DSBD, however, did not outline the "quantify and rectify" part of the solution.

Instead of a business needing to obtain a tax compliance certificate every two months, why could it not be obtained annually which would reduce the compliance cost by 30%? When dealing with red tape, a broken window theory needed to be used. A former mayor of New York had stopped crime in the city by arresting people for petty crimes such as urinating in the streets which made bigger crime syndicates flee from the city. Red tape should be tackled “how one eats an elephant: little by little”.

The Committee and DSBD need to take a closer look at the municipal by-laws because sometimes municipalities claim to have by-laws while there was no record of such. The Committee needs to meet with the COGTA Ministry or Director General to discuss what will solve municipal by-law issue. Small businesses would be happy if that was solved.

The DSBD presentation to the Committee was the most informative one thus far in addressing red tape. What was the timeline for the finalisation of the Small Business Act? Mr Kruger had met with colleagues in higher positions and it seemed that even if the Bill was tabled today, there would not be time to finalise it by the end of 2023 which was very disappointing and DSBD “dragged its feet”. This would present a big problem in due time as DSBD would have to fight against other legislation that the Cabinet would consider more important for this five-year term.

The Chairperson remarked that the District Development Model (DDM) will solve some of the municipal challenges.

Ms M Lubengo (ANC) asked for the status of red tape in the eight provinces. How was the effectiveness of the programme determined? So far, what were the lessons learned from implementing the programme?

Mr F Jacobs (ANC) said that DSBD was showing progress in the reduction of red tape but South Africans were good at establishing task teams and describing the problem. If the lives of government officials depended on it, red tape would have been reduced a long time ago. The fact that the President mentioned red tape twice in the SONA and put together a task team at the Presidency level was an indictment. RTR had also been mentioned by the Deputy Minister. Other issues highlighted in the SONA were: tourism; travel permits; mining licences ; work permits; visa administration; early childhood development (ECD) centres

Since DSBD had the RTR report from 2015, what were some of the achievements and targets of the programmes? The Committee was not getting a sense of what was completed or still work-in-progress as the presentation was generic. Previously, what went wrong with RTR? What were the reflections on the lessons learned? What will be done differently to pilot red tape programmes so that they are a success? Did DSBD have adequate capacity on hand? If not, what capacity was needed? If a small business has a problem, how accessible was DSBD to SMMEs that wanted to unblock red tape and move their business forward? Were there mechanisms for monitoring and providing oversight on those tasks?

What would the evidence be that the Committee could use to hold DSBD accountable? Had DSBD done a feasibility study on RTR for SMMEs in other countries? What were the results and what could be learned from them?

It was not easy for a business to open a business in any municipality in South Africa. That was because each municipality had its own business administration process and charges. For instance, the City of Cape Town (CoCT) municipality could charge R5 000 while the Swellendam municipality charged R2 000.

Had DSBD met with SALGA? Why was it difficult for SALGA to get all politicians in one room and to issue one by-law which would be signed by the COGTA and DSBD Ministers that all people could use to register businesses? During COVID, the President conceded that municipalities should register businesses for free which showed a caring and responsible ANC coming through. Businesses were happy about that but now that we were back to normal, we had 200+ municipalities having different regulations.

When could the people of South Africa register a business with only two/three steps without including all the words that meant nothing in the by-laws? The Director-General needed to lead the team alongside other departments. If government officials did not have their jobs and salaries and their lives depended on operating small businesses, would DSBD act differently?

Mr H April (ANC) replied to Mr Kruger’s comment that a business should not need to get a tax compliance certificate every two months by pointing out that it could do this with a few easy steps online. It would be beneficial to inform small businesses about the online process for obtaining a tax compliance certificate. In the SONA 2023 speech, the President mentioned the RTR team and the collaborative approach they took in working with agencies and departments in areas such as mining rights, tourism, travel, transport, operator licences, visas and work permits, early childhood development, and informal sectors. Could DSBD unpack the progress and impact made thus far in those sectors specifically focusing on the practical implementation for SMMEs? Were small businesses charged an initiation fee to access the resources and opportunities available for small businesses? If so, what was the percentage of the fee and why did it exist? The initiation fee would be a blockage for Africans to participate in and benefit from government programmes.

The initiation fee was presented as a prerequisite in one's constituency office and DSBD would not act unless a client complied with the requirement. DSBD should ensure that it did not inhibit citizens from participating in the mainstream economy.

Mr D Mthenjane (EFF) asked what criteria DSBD used to choose the Western Cape and KZN provinces out of all provinces to focus its red tape reduction efforts on? Were other provinces considered since red tape was affecting all provinces?

If presentation and implementation were the same things, then there would be no challenges. However, it was not so and he hoped that DSBD would speed up the implementation of its plans and also provide timelines on when things will be done. Given that red tape has been an issue for the past 15 years, people have suffered for a long time.

Ms B Mathulelwa (EFF) said the presentation was promising but the implementation was taking too long. Municipalities were implementing municipal by-laws in a way that was abusive to small businesses. People’s tools of trade were destroyed and there were no alternative plans provided by the municipalities. For example, the Matatiele municipality banned people from braaing meat in town. The municipality needed to make alternative arrangements by building a separate establishment and giving people stands where those trades could be conducted. The national laws also did not coincide with the municipal laws. Mayors and municipal managers had expressed that they did not have the power to change municipal by-laws but the Committee did. She hoped that the presentation resulted in plans being implemented and progress being fast-tracked.

Cooperatives needed to be assisted while the Committee and DSBD were dealing with red tape issues. Cooperatives, made up of people in rural areas and townships, were established under the directive of government. In reality, those people were discouraged from doing business because they were told that they would only be funded if they register as a group of at least five people and now they were stuck.

Mr E Myeni (ANC) said DSBD was headed in the right direction although the progress was at a “snail’s pace” compared to what the Committee had expected. What were the time frames for the KZN PASP pilot programme? What were the key indicators that will show that the ultimate goals of the pilot were producing the desired results?

Mr J De Villiers (DA) said that EODB was one of the factors used to measure cities and countries globally and reducing red tape would positively impact this factor. When businesses thrived and were optimised to reach their potential, employment would be created and there was nothing that helps the poor more than creating employment that ultimately eliminates poverty and inequality.

The President and the Committee have previously said that it was important for small businesses to be part of job creation and SMMEs were the only place in the economy where the most jobs could be created.

DSBD was commended for admitting that it had only sometimes been optimal in its way of dealing with RTR and that the many spheres of government dealt with different forms of red tape.

The Western Cape government had a world-class RTR unit which had a small business-orientated approach. It had a user-friendly website with guidelines and video tutorials on how to navigate the different aspects of starting a business, and a client call centre where clients could express their frustrations with the government. Small businesses that wanted to get onto the supply chain network could also get registered and do business with the Western Cape government. This was a great example of a sphere of government that could be replicated at the municipal and national level via the Small Enterprise Development Agency (SEDA). The Committee and DSBD should visit this unit.

Ministry response
Ms Stella Ndabeni-Abrahams, Minister of Small Business Development, apologised for her late arrival as she had to attend a Cabinet meeting where submissions were made on the measure and approval of the business case that would give effect to the amendments of the Business Act.

The Minister replied that although the 30-day payment period was not considered red tape, the lack of adherence by government officials and the private sector, was a hindrance to the success of small businesses and needed to be addressed holistically. However, the payment delay at times was not only the fault of government and the private sector but sometimes due to small businesses themselves. She said Mr Kruger could share his research findings with DSBD as it outlined a framework to address red tape.

DSBD was not waiting for 18 to 24 months to pass but was doing its work on the legislative amendments. However, everything DSBD did had to be expressed by passing legislation which included either new legislation or amendments.

In dealing with the challenges DSBD presented to and engaged with SALGA to outline its role at the municipality level and what would happen if it failed to enforce certain things. The issues raised with SALGA included timeline for business licence application, payment of permit fees and rezoning. It was unanimously agreed that SALGA needed to sit with constituents and develop common by-laws where applicable. The team was currently busy with that and would present in the following SALGA National Executive Committee (NEC) meeting.

DSBD engaged with the SARS Commissioner on the administrative costs issue and SARS was looking at what could be done with the tax clearance certificate clause for small businesses. SARS would arrange a follow-up meeting with DSBD once an agreement was reached.

Other red tape issues were:
- The management of stakeholders,
- Collaboration with other departments that were part of the ecosystem DSBD worked in, and
- The required engagements with provinces to coordinate DSBD work.

DSBD met with all the MECs who were responsible for economic development in all provinces and it was unanimously agreed that the red tape faced by small businesses would be addressed as it negatively impacted communities and the economy. DSBD was in the process of signing agreements with the MECs but the newly appointed MECs of KZN and Western Cape had already signed as they had been tasked to work on their Memorandum of Understanding (MOU). In the reviewal of the MOUs, there were no timelines attached. Going forward, agreements would include implementation plans with clear timelines, costs of the MOU, and elements that talked to RTR. The Presidency was engaging the Office of the Premier in the provinces to set up their red tape units to have a coordinated approach.

The Minister noted that the Chairperson referred to the DDM. Unfortunately, the process of bringing COGTA and DSBD together was disturbed by the Cabinet reshuffle. Still, DSBD had already engaged with the new COGTA minister to outline the need for departments to collaborate in dealing with red tape. A presentation would also be made to the Cabinet. There was political will to address red tape as evidenced by the announcement by the President and the amendments made to the previous reports where red tape reduction was discussed. What needed to be done was to strengthen the extent of integration between departments. For example, DSBD could look at how the Department of Water and Sanitation (DWS) mandate affected small businesses.

DSBD presented to the Committee in the previous week on how it would change the strategy it employed to fund cooperatives. That would be done at national level, through Local Economic Development (LED) municipal offices, and DSBD sister agencies. The LED municipal offices and DSBD were aware of the challenges faced by small business and DSBD partnered with the National School of Government (NSG) to seek help with some workshop programmes to help those offices on the broader issues. When the municipality developed its own special planning processes, it was supposed to look at the issues raised. For example, if it was going to build a mall and land would be allocated to different businesses, the LED plan needed to specify the square metres allocated for small businesses. DSBD was in the process of reviewing the LED strategies as they were tied in with COGTA and other affected parties. DSBD did not want to leave small businesses behind because people were tired of being consumers only and wanted to participate in the economy.

Gauteng province is doing so well. Legislation had been passed and the RTR office was already established. Its interventions are one of the success stories – whether it is funding, bringing to the local people, the Gauteng Township Economic Development Bill and the interventions announced, including directly sourcing from locals and bringing back retail ownership to the locals. It is a good programme and together with the Western Cape and KZN, DSBD was trying to develop a framework that ensured other provinces learned from these provinces. The Minister stated that DSBD and the Committee were working to serve the same person and learn from what works and ensure they were inclusive of all persons.

DSBD response
Mr Mkhumane said the presentation indicated that the Western Cape and KZN provinces were running successful RTR programmes and would share their experiences and lessons at the inter-provincial level. The Office of the Presidency would pay provincial visits to ensure that RTR offices were institutionalised in all provinces because it had been proven that having a specific office that handled day-to-day complaints from SMMEs, gave better results. To ensure there was an impact, DSBD engaged with local business chambers to obtain feedback on whether municipalities were making progress in reducing red tape in each province. He acknowledged Mr Kruger's efforts.

Mr Mkhumane replied that mining rights concerns were dealt with by the Department of Energy and Mineral Resources (DMRE). DSBD met with the Department of Tourism (DT) and the Department of Transport (DOT) to discuss the solutions to red tape issues arising from tourism, transport, and operator licences. The private sector also participated by providing support to the DOT to resolve issues with the backlog for operator licences. The private sector also committed to offering its skills and automate the manual process of obtaining operator licences. Previously, an individual would need to travel to Pretoria to submit documents and if some were found to be outstanding, they would be required to make another visit.

The Department of Home Affairs (DHA) committed to dealing with visa challenges in the next few months and DSBD would be monitoring and working with them closely. DSBD was an advocate for SMMEs within government and needed to raise those concerns with the relevant departments and ask them to fast-track outstanding components for SMMEs. DSBD received some correspondence from the Presidency highlighting this and requested DSBD to assist with capacity through the EU programme so that they work with departments to amend their processes to help SMMEs easily obtain visas and work permits.

DSBD was part of the committee led by the Department of Employment and Labour (DEL) addressing immigration issues. DSBD was also part of the structure that was engaged at national level in looking at the different legislation affecting small business. Implementation timelines were indicated in the presentation and DSBD would look at all legislation that negatively affected SMMEs. A rapid review exercise had been done and DSBD was finalising a report pointing out the changes that needed to be made on a few pieces of legislation. They would be filed with Cabinet to make its decision. It was important to make those guidelines and ensure they were implemented by every municipality and province. The process of finalising the review of the Small Business Act was underway and the amendments dealt with uniformity of permits and licences as some municipalities charged a lot of money for obtaining permits. The standardisation of that process would shift the responsibility from the informal business to municipalities to prevent small businesses from not trading due to the government’s inefficiencies. In cases where small businesses cannot trade due to the municipality’s delay in issuing a permit after a specified period, the small businesses would be deemed to have a permit and would be allowed to continue with trade. DSBD was looking into implementing an online licence/permit application system which would modernise the process and limit human interaction. KZN province had already implemented this system because during COVID it was difficult to obtain permits for small businesses and some councillors issued licences from their homes.

There were no specific criteria used to select the Western Cape and KZN as the provinces where the PASP was rolled out. DSBD worked with all provinces but it was the commitment on their side that assisted in rolling out the programme in those two provinces. The KZN province had provided some resources. DSBD had also worked with specific municipalities in the Northern Cape where interventions were done. It had been the first time the PASP was rolled out and DSBD wanted to pilot it first to measure its success before rolling it out to other provinces like the Northern Cape and Limpopo where DSBD has already done some work. Capacity at a provincial level was quite critical and some provinces were already steaming ahead with putting together the capacity needed. However, the Presidency would ensure that all provinces had RTR units.

DSBD was not dragging its feet – it was complicated to deal with the legislation. One of the challenges faced was that in 1993, the powers were shifted from the Department of Trade and Industry, as known at that time, to the provinces which ultimately delegated some powers to administer the Business Act to the municipalities. It was not only a matter of repealing the Act but they would have had to engage with provinces, municipalities, and other structures due to that power shift.

Additionally, new policy speaking to the Small Businesses Act was required to be drafted to accompany it. DSBD was finalising the Amendment Bill and would present it to the Minister by Quarter 2 of 2023/24. It was expected to be a section 76 Bill that would go to the NCOP for consultation as it touched on the powers of the municipalities and provinces. It would go for public consultation which could be limited to 60 days. After those inputs have been consolidated and it had been considered and approved by Cabinet, it will be presented to the Committee. DSBD planned to present to the Committee by the second quarter of the new financial year.

Mr Xolani Meva, Acting Executive Manager Direct Lending: Small Enterprise Finance Agency (SEFA), replied that SEFA charged an initiation fee as a default position. It was for the recovery of operational costs such as travel reimbursements for kilometres travelled and flights incurred when visiting clients. However, clients were not prejudiced by the absence of the fee if they indicated their inability to pay. In this case, a fee was not expected upfront.  

Mr Mojalefa Mohoto, DSBD Acting DDG: Sector Policy and Research, said a feasibility study had been embedded in the work on regulatory impediments which looked at the lessons picked up in various areas from other countries and was reflected in the recommendations of the study. The Department singled out Western Cape and KZN provinces because through its engagements, DSBD picked up that they were doing a good job that could be combined with the work of DSBD. From those two provinces, DSBD wanted to identify the lessons that other provinces could institutionalise when establishing their RTR units. DSBD is also putting together provision for a forum that had the RTR task team as a substructure to engage it on red tape issues, have periodic report presentations from various provinces to identify red flags, and identify red tape areas that needed to be urgently addressed.

Minister closing remarks
Minister Ndabeni-Abrahams thanked the Committee for the guidance it provided. The Ministry committed itself to ensure that DSBD looked at all the measures that assisted the work they did. On the stakeholders that were critical in the regulation of small businesses at the registration or compliance level, DSBD had already engaged the Companies and Intellectual Property Commission (CIPC) and would engage the Unemployment Insurance Fund (UIF). There was a need for DSBD to have a “one-stop shop” system by bringing all compliance bodies onto one platform so that small businesses went to one platform when applying on their devices. DSBD acknowledged that not everyone had access to technology.

DSBD is partnering with the Department of Higher Education and Training (DHET) and the Department of Science and Innovation (DSI) to get unemployed graduates to assist in areas where DSBD did not have a presence. This was done to breach the gap and bring on board fresh talent and minds to do the work of DSBD. The private sector was supportive of DSBD work and that could be seen in the report that will be compiled by Mr Nkosi. There were collaborations with the Johannesburg Stock Exchange (JSE) and other big corporations. Thus, DSBD and the Committee needed to join hands to ensure that when the draft legislation comes to Parliament, government and the legislature have the agility to ensure the legislative process does not take too long. Despite stipulated protocols, the amount of time it took to develop legislation needed to be reduced. Often when DSBD saw a challenge it wanted to address, the process of introducing or amending legislation took long and by the time it was finalised, the people had already taken measures to resolve the problem themselves, leading to complaints by the people. The Department looked forward to tabling legislation in the next cycle of Cabinet. The Ministry will be engaging with the Justice Minister Lamola to specifically look at setting aside a team dedicated to that as the Sixth Parliament is coming to an end in 2024. The business case had already been approved by Cabinet. DSBD did not have the luxury of time as small businesses were excluded from the economy and dying daily.

The Committee considered and adopted the minutes of 1 and 08 March 2023.

The Committee considered and approved the proposed structure for the North West province oversight visit.

The meeting was adjourned.

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