Question NW2676 to the Minister of Small Business Development
30 October 2023 - NW2676
Kruger, Mr HC to ask the Minister of Small Business Development
Whether, in light of the Auditor-General’s 2020/2021 report revealing that 84% of municipalities fail to adhere to the standard 30-day payment guideline which puts immense financial strain on small companies, sole proprietors and cooperatives, her department has undertaken an in-depth analysis of the potential job losses and economic dislocation, the failure could engender within the specified economic units; if not, why not; if so, what (a) are the pertinent details of the findings and (b) plans does her department have to support these entities, considering the cash flow difficulties they face due to late payments from municipalities?”
Reply:
I have been advised that:
a) The Department of Small Business Development (DSBD) has not undertaken an in-depth analysis of the potential job losses and economic dislocations caused by the failure of municipalities to pay service providers within the prescribed 30 days payment period.
However, the Department has prioritised the research and investigations to assess a broader structural impediment faced by Small, Medium and Micro Enterprises (SMMEs) and Co-operatives relating to:
- Access to finance.
- Non-financial support from Government and Private sector.
- Legal impediments to SMME and Co-operatives development; and
- Access to Markets.
In addition to the above and emanating from an investigation into regulatory impediment affecting SMMEs, DSBD is to engage with National Treasury on improving monitoring, reporting, enforcement and consequence management. National Treasury has set up an email, [email protected] for service providers to register complaints payments older than 30 days. DSBD is to increase awareness of this platform to SMMEs through its Red Tape Reduction Programme at the Provincial and Municipality levels. DSBD further intends to investigate the possibility of expanding the current Innovation Bridge Portal project to include a platform for registration of complaints on adherence to the 30-day payment period commitment of Government to SMMEs.
The Department has recently introduced the National Small Enterprise Amendment Bill to Parliament, which is currently out for Public Hearings, this Bill aims to remedy the lack of effective and affordable access to a justice mechanism for small enterprises in instances of business to business disputes or non-payment of enterprises on time. The establishment of an Ombud Service will bring justice in this instance for SMMEs without them incurring costs.
b) These are part of a holistic Research Agenda for the 3-year cycle (2023/2026) to advance the development, job creation and job preservation for those SMMEs and Co-operatives that are still battling under the current economic strains and loadshedding. It is expected that two (2) studies, (1) Sector Specific support: challenges and opportunities and (2) Market Access: Demand for Goods and services post Covid-19, will be completed by the end of the 2023/2024 financial year. These will provide the Department with the basis for evidence driven interventions to support SMMEs and Co-operatives.
The work on Red Tape Reduction with the Provincial and Local governments ongoing with Provincial Task Teams set in place to raise awareness on the Red Tape Reduction commitment made by the President to improve the operating environment of Government and its stakeholders. It is expected that these interventions and investigations will provide the Department with leverage to engage municipalities to address the issues of non-payment and other non-financial impediments faced by SMMEs and Co-operatives.