Summary: The DA’s 6-point plan to develop small business in SA
The official opposition has proposed a business CODESA, BEE exemption for small business, and cutting red tape, among others, in its election manifesto.
JOHANNESBURG - The Democratic Alliance (DA) has outlined its six-point plan to develop small and medium-sized enterprises and stimulate economic growth in South Africa should the party be elected into government after general elections in May.
On Saturday, the DA launched its election manifesto at the Rand Stadium in Johannesburg, where party leader Mmusi Maimane said the party would put various policies in place to help create more small businesses to tackle the high rate of unemployment in the country.
Here’s a summary of the DA’s six-point plan on small business development as outlined in the manifesto:
PRO-SMALL BUSINESS POLICY APPROACH
• Introduce a start-up visa and other incentives to encourage direct investment by foreign entrepreneurs in the economy and partnerships with local entrepreneurs. The party said this would be its priority within the first 100 days of entering office.
• Revive the CEO Initiative which included business leaders from various sectors who worked with Treasury to prevent a downgrade in SA’s credit rating to junk. The DA said the restoration of the CEO Initiative would be aimed at “injecting new energy and optimism into the business sector”.
• Convene a “Business CODESA”, which would include representatives from big and small business, unions and civil society who would be tasked with “identifying and agreeing on a few key policy initiatives to reignite SA’s economy”.
EXEMPTION FROM ‘CERTAIN’ LABOUR AND BEE REGULATIONS
• More controversially, the DA wants to ease the cost of doing business in SA by “exempting small businesses from certain labour and BEE regulations”.
• Implement a DA “Red Tape Impact Assessment Bill” (as a Section 27 Bill) under the direction of premiers’ offices in the provinces to ease the cost of doing business in SA.
• Amend Section 32 of the Labour Relations Act to reflect the membership of Sector Bargaining Councils based on company representation and not number of employees. The DA said this would improve the bargaining capability and voice of small business owners over large corporations.
• Review the taxation and business registration systems for small business, administered by Sars and the Companies and Intellectual Property Commission to reduce the time it takes for small businesses to comply with tax requirements.
• Speed up the roll-out of “One-Stop-Shops” for small businesses.
CASH FLOW CHALLENGES
• Introduce a temporary amnesty on tax penalties for small businesses to improve cash flow, as well as, ensuring government and big business pay suppliers within 21 days.
• Explore the feasibility of two interventions, namely changing the Public Finance Management Act and the Municipal Finance Management Act to allow for finance providers to be co-signatories on government supply contracts (this will allow the financier to collect debt directly from government departments).
• Treasury to become the ultimate debt factoring entity buying invoices/providing guarantees for all small businesses with a turn-over below R30 million per annum.
• Introduce a temporary moratorium on VAT, PAYE and corporation/turnover tax penalties levied on businesses with annual turnover below R30 million, while implementing a review of the tax code through the Davis Tax Committee.
• Work with the SA Institute of Chartered Accountants and SA Institute of Professional Accountants to ramp up business rescue and business retention services available to small businesses. DA wants grants to be made available to recipients of these services to make them affordable.
• Impose penalties and name and shame ministers, deputy ministers and directors general for noncompliance with payment to suppliers, including supporting the Prompt Payment Code, which is a private sector led voluntary code of good practice for government and the private sector relating to supplier payments.
• Link government’s central supplier database to department procurement and payments systems, as well as to Sars, to enable the smooth processing of invoices.
• Consider establishing a Small Business Ombudsman to intervene in disputes concerning small business, and in particular, late payments.
FUNDING AND RELATED ASSISTANCE FOR SMALL BUSINESSES
• Institute a review of current Development Funding Institutions like the Small Enterprise Finance Agency, and the Industrial Development Corporation of SA - including regional funds like the Gauteng Enterprise Propeller - to assess the feasibility of creating a single Business Growth Fund that offers a combination of equity, grant, and debt funding.
• Formalise and regulate angel investors (wealthy individuals who provide capital for a business start-up) and the venture capital sector as well as simplify the Section 12J regulations and formalise equity crowdfunding for start-ups and growing small businesses.
• Support sourcing international grant and impact bond finance for the Small Enterprise Foundation and other impact funding organisations to increase the number of beneficiaries from 160 000 to 1 million within 5 years.
SUPPORT FOR SMALL ENTREPRENEURS
• Provide targeted support for micro-entrepreneurs in the informal economy. This includes developing a strategy to assist informal business owners and their employees through an inter-departmental task team.
• Develop a Code of Good Practice on engagement with informal traders to benefit entrepreneurs and strengthen their position in interactions with local, provincial and national government authorities.
• Adjust the legal and regulatory framework to accommodate those in the informal economy who need appropriate laws, including property rights and the ability to enforce contracts.
• A simplified application process for informal trading permits through an e-registration system that makes it easy for small entrepreneurs to register their businesses and gain access to trading sites.
INSTILL ENTREPRENEURIAL CULTURE
• Instill an entrepreneurial mindset and expand support and incentives for youth-owned businesses and cooperatives.
• Direct more resources to the Centres for Entrepreneurship which the Department of Small Business Development (DSBD) is piloting with some of the TVET colleges, to encourage entrepreneurship as a career choice, especially for young people pursuing trade and technical vocations.
• Issue a Request for Proposal to take over the Small Enterprise Development Agency offices and bring them into private ownership as Enterprise Development Hubs.
• Review the DSBD’s Enterprise Incubation Fund and the DTI’s Incubation Support Programme incubators to establish their return on investment.
• Cost-benefit exercise will be conducted on all other state-funded incubators including those supported by the Jobs Fund, and comparisons made with surveys to examine the effectiveness of mainly private sector- funded incubators and accelerators.
Read the full manifesto below