National Small Business Amendment Bill: hearings

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
9 November 2004
NATIONAL SMALL BUSINESS AMENDMENT BILL: HEARINGS

Chairperson: Mr B Martins (ANC)

Documents handed out: 

COSATU submission on the National Small Business Amendment Bill 2004
Chamsa submission on the National Small Business Amendment Bill 2004
National Small Business Amendment Bill [B23-2004]

SUMMARY
COSATU and CHAMSA (Chambers of Commerce and Industry South Africa) made submissions on the National Small Business Amendment Bill. Notwithstanding the broad representivity requirements prescribed in Clause 11(4), CHAMSA believed that a Board comprising as many as 15 persons could prove to be cumbersome and urged that the provision be re-examined. Members expressed concern whether the South African Chamber of Business (SACOB) represented the interests of small enterprises. The CHAMSA representative could not say if SACOB represented such interests.

COSATU regretted that the drafters of the Bill had not included the Growth and Development Summit (GDS) agreements of June 2003. It recommended that one of the objectives of the Small Enterprise Development Agency (SEDA) should be to promote job creation and the alleviation of poverty and inequality. It furthermore proposed that in terms of the functions of the Agency, the Agency must foster partnerships with stakeholders that included trade unions and co-operatives, NGO's and CBO's that could assist it to achieve its objectives. Members appeared to support this position.

MINUTES
Ms H Lupuwana (COO: Enterprise and Industry Development Division) represented the Department of Trade and Industry.

CHAMSA Submission
Mr K Warren (CHAMSA: Policy Executive) thanked the Committee for the opportunity to comment on the National Small Business Amendment Bill and to participate in the public hearings on the legislation.
CHAMSA represented the united voice of business chambers in South Africa. It was made up of four major South African business bodies, namely the Afrikaanse Handelsinstituut (AHI), the Foundation for African Business and Consumer Services (FABCOS), the National African Federated Chambers of Commerce (NAFCOC) and the South African Chamber of Business (SACOB).

Mr Warren said that although it had not been possible in the time available to consult with the Chamber's broad constituency, it was possible to express a broad consensus of agreement in respect of the overall intention of the legislation. From the memorandum accompanying the Bill it was apparent that there was a need to create a small business development agency that would co-ordinate the efforts of the various and disparate bodies that strove to promote and assist in the development of small business. Such an agency was designed to reduce costs, rationalise the use of resources and generally to improve and extend access to such resources. Notably, the Bill focused on the merging of Ntsika and NAMAC Trust. CHAMSA gave its support to the incorporation of these two bodies into a single agency.

Notwithstanding the broad representivity requirements prescribed in Clause 11(4), CHAMSA believed that a Board comprising as many as 15 persons (Clause 11 (5)) could prove to be cumbersome and urged that the provision be re-examined.

Discussion
Professor B Turok (ANC) said that it had often been said that the South African Chamber of Business (SACOB) represented small businesses. He asked if there was any evidence that SACOB did indeed represent the interests of small business.

A Member asked how many businesses from remote rural areas were members of SACOB. He also asked if there were plans to assist unorganised businesses in rural areas.

Responding to both questions, Mr Warren replied that when SACOB was restructured there was a specific directive given that focus should be on small businesses. SACOB was composed of corporates, chambers and national associations. Chambers were primarily composed of small businesses and membership was open to all. He could not say if there was a specific drive to invite micro enterprises. SACOB had a Small Business Standing Committee to focus on small businesses. The Johannesburg Chamber, a National African Federated Chambers of Commerce (NAFCOC) affiliate, made efforts to address the needs of township businesses. It was difficult to comment on what the initiative had achieved.

Professor Turok said that the issue was not about the recruitment of small businesses but whether the interests of such businesses were represented. He was aware that small businesses formed a significant percentage of the membership of SACOB.

Mr Warren said that he could not answer the question.

Dr E Nkem-Abonta (DA) said that the interests of small and big businesses were usually in conflict with each other. He wondered if there should not be a call for the establishment of a business association to protect the interests of small businesses.

COSATU submission
Mr E Paulus (COSATU: Research Co-ordinator) welcomed the opportunity to respond to the government's initiative to establish a new Small Development Agency (SEDA) by means of the National Small Business Amendment Bill. Whilst the Union affirmed efforts to address the range of ongoing problems and inefficiencies of the current approaches to small enterprises development, it asked for more information on the various options that were considered prior to deciding on the agency option. The Union was concerned by the establishment of agencies as mechanisms for service delivery. The government should avoid a situation that had developed with other institutional arrangements of institutions becoming more distant from the Ministry, developing their own life and having growing power over administration and finances.

COSATU regretted that the drafters of the Bill did not include, in the background of the Bill, the Growth and Development Summit (GDS) agreements of June 2003. This would have further contextualised the challenges that would face the SEDA. The GDS made a commitment to promote small enterprises and support co-operatives. SEDA would be required to align its business and operational plan to the GDS commitments.

COSATU appreciated the decision to replace "small business" wherever it occurred in the National Small Business Act with the term "small enterprise". It applauded the Committee for appreciating the significance of the definitions and effectively changing the terminology in the Bill. It recognised that the support to be given by the SEDA would extend to economic activity that would not ordinarily be defined within the domain of a traditional business.

Whilst the legal definition of a 'small enterprise' was provided for in the Bill, the Union hoped that the spirit of the shift in definition would ensure that a broader range of stakeholders would be included for consultation and participation by SEDA.

COSATU recommended that Clause 9A(b) should be amended to read as follows:

9A The objectives of the Agency are to-
(b) "promote a service delivery network that increases the contribution of small enterprises to the South African economy, and promote job creation and the alleviation of poverty and inequality."

The Union furthermore proposed that in terms of the functions of the Agency, Clause 10(1) should provide that the Agency must:

(c) (vi) facilitate, develop, co-ordinate and foster partnerships across all spheres of government, [and] the private sector and other stakeholders that include trade unions and co-operatives, NGO's and CBO's, that may assist the Agency to achieve its objectives.

The objectives of the Agency would be fundamentally flawed if partnerships were only fostered with the private sector and not other stakeholders.

Discussion
Professor Turok welcomed and appreciated the reminder about the Growth and Development Summit Agreements. The Committee dealt with the Bill with the Agreements in mind. It would probably have included some of COSATU's suggestions if they were made earlier. He supported the inclusion of the proposed Clause 9A(b). He found the suggested amendment of Clause 10(1) difficult.

Mr S Rasmeni (ANC) asked how the Union envisaged the nature of the partnership it proposed in Clause 10(1).

Mr Paulus replied that formal engagement between partners took place through NEDLAC processes. The measure of success of the Agency would be quantified once the business plan had been presented. He disagreed with the notion that small, micro and medium enterprises should be left alone to conduct business. There should be job creation and poverty alleviation

Responding to COSATU's submission, Dr Nkem-Abonta said that there was a tendency to attach too many objectives to a policy. He understood the need to create jobs and alleviate poverty. It was good to have a policy that supported small businesses and nothing more had to be added to it. If small businesses were supported, they would create wealth, jobs and alleviate poverty at the same time. The only other objective that could be added to the Bill was to promote enterpreneurship.

Mr M Stephen (UDM) disagreed with Dr Nkem-Abonta. The proposal by COSATU did not add an additional target or function. It sought to empower the Agency to use all available resources to facilitate the meeting of its objectives. The Union proposed the fostering of partnerships in order to assist the Agency to meet is goals. There was no difficulty in including civil society.

Professor Turok said that Dr Nkem-Abonta's concerns were covered by Clause 10(1)(b)(ii). The clause provided that the Agency must design and implement small enterprise development support programmes in order to facilitate the promotion of enterpreneurship.

Ms Lupuwana responded to some issues raised by the submissions. The 7-15 member Board was a standard composition of boards designed to accommodate various groupings. There was no problem with recommending to the Minister that COSATU should be represented in the Board. With regard to options considered before deciding on the Agency, she said that the current approach was around a wholesale model. The Department had decided to look at an approach wherein the institution would be able to deliver directly to the public. She had no problems with the business plan of the Agency including job creation and poverty alleviation as some of the objectives of the Agency.

The meeting was adjourned.