SONA 2022: Sage looks to government to uphold promises on reducing red tape with action for SMMEs

 

By Pieter Bensch, Executive Vice-President, Africa, Middle East, Asia and Australia at Sage

In his State of the Nation Address on 10 February, President Cyril Ramaphosa has set a strong agenda for economic renewal over the coming year. We were pleased to hear him acknowledge that businesses create the jobs and promises to create the conditions for small, medium and large businesses to grow, access new markets and hire more people.

Echoing a theme of most of the Presidential Addresses and Budget Speeches under his administration, President Ramaphosa has again committed to cutting red tape for businesses. He said there are too many costly and complicated regulations that impact the creation of businesses and jobs.

Over the years, President Ramaphosa and his Finance Ministers have repeatedly promised to streamline bureaucracy for businesses, but we have yet to see this translate into action. With that in mind, we note with interest the appointment of the prominent businessperson and small business champion, Sipho Nkosi, to a position in the Presidency to help cut red tape and remove unnecessary bureaucracy hampering business.

The creation of a team to reduce the red tape is an acknowledgement that we need to focus on simplifying regulation and compliance, especially for informal small businesses. It is also welcomed news that government plans to review the Business Act and other regulatory frameworks that currently make it difficult to do business.

The President is correct in saying small and medium businesses (SMBs) create the most jobs and opportunities for the poor – and this is a sentiment echoed globally through various research. Furthermore, we know that many of these businesses have struggled through the past two and a half years. However, we look forward to seeing more details about the redesigned loan scheme the President mentioned to help businesses bounce back from the COVID-19 pandemic and July unrest.

 Infrastructure promises

 

 

In previous addresses, the President has also made a range of promises about investing in our country’s infrastructure, from the ports and power grid, to roads, rail and telecoms. He reiterated many of these plans this year, which now requires swift action.

With load shedding top of mind for South Africans, it was reassuring to hear about progress towards creating an enabling and competitive environment for electricity generation. Removing friction by fast-tracking the procurement of electricity from renewable sources and independent power producers (IPPs) by the President and his Cabinet will be fundamental to ensure businesses' sustainable survival. This will help grow economic equality, a climate-conscious workplace whilst improving the lives of SMB owners and their employees.  Businesses cannot thrive without access to affordable, reliable power.

It is also good news that the Independent Communications Authority of South Africa (ICASA) will commence with the auction of high-frequency spectrum within five weeks. Unlocking this resource could help unleash growth by driving affordable broadband for small businesses. We would, however, have liked to have heard more about how South Africa can position itself in the digital economy and Fourth Industrial Revolution.

With the recent announcement of a further loosening of COVID-19 restrictions under adjusted Level 1 lockdown, many businesses are hoping for a steady return to normal trade after two years of disruption. This will be facilitated by the President’s commitment to ending the State of Disaster – a key step in returning to a condition of relative normality.

However, the pandemic and the unrest in July 2021 have taken its toll on many enterprises’ balance sheets, and we cannot afford to delay urgent economic reforms any longer. Understanding that SMBs are the backbone of the global economy, we urge the President and his Cabinet to rapidly implement the growth-boosting policies proposed in the State of the Nation Address.

The Presidential Economic Advisory Council is correct in saying that growing the economy is the only viable strategy for getting South Africa out of its current negative situation. The good news is that our country’s dynamic and resilient SMB sector is a major asset in reaching this goal. Business owners and entrepreneurs are ready to get to work.