Midrand - The introduction of the Guidelines for the Reduction of Municipal Red Tape will not only improve the survival rate of small business but will also contribute to the levelling of the business playing field, Trade and Industry Minister, Rob Davies, said on Wednesday.
“The Guidelines for the Reduction of Municipal Red Tape are based on the recognition that small businesses in South Africa are suffering from excessive red tape,” said Davies, adding that this was a challenge experienced by business both at provincial and national level.
The guidelines serve as a practical implementation framework to reduce local government or municipal red tape in support of SMMEs.
Speaking at the launch of the guidelines in Johannesburg, Davies said that research has shown that of every seven registered small businesses that are opened in South Africa in a year, only two will still be in existence a year later - which is a little bit higher than in most countries in the world.
This, said the minister, was telling that running a business requires effort, sacrifice and vision among others. Active support, mentoring and incubation are elements that are necessary in ensuring the success of business, he added. The dti is involved in mechanisms to support this.
Red tape can be defined as rules, regulations and or bureaucratic procedures and processes that are excessively complex and which impose unnecessary delays, inaction and or costs that exceed their benefits. Red tape further has undesirable economic, business or social impacts.
“However, red tape reduction is not deregulation,” said the minister, adding that often processes necessary to conduct business included insurmountable loads of paperwork, and costs of having to travel to the relevant offices to fill out forms take time away from businesses.
“This is not in the spirit of batho pele. Sometimes, we have unnecessary regulations,” he added.
The minister also spoke to the issue of a lack of a level playing field. “We have seen the need for a level playing ground,” he said. The uneven level playing field included businesses that operate illegally and sell sub-standard products. Levelling the playing field did not apply to businesses belonging to foreign nationals.
The purpose of the guidelines is to provide municipalities and businesses with practical tools and resources to address municipal red tape issues which have the potential to improve the business environment for small businesses.
An improved business environment is essential for supporting accelerated economic growth, job creation and the reduction of poverty. South Africa’s National Development Plan (NDP) and the National Growth Plan (NGP) speak to the importance of promoting small business.
Guidelines were informed by the results of the 2011/12 pilot involving 12 municipalities and funded by the department, the Department of Cooperative Governance and Traditional Affairs (Cogta) and the South African Local Government Association (Salga).
Red tape makes it difficult for businesses to succeed, grow, create jobs and invest in infrastructure and development.
Speeding up land development processes and time frames, improving supply chain management processes and improving municipal policies are among some of the red tape issues highlighted on the small business sector.
Salga deputy chairperson Councillor Mpho Nawa said that the guidelines will give “better hope to our people” in the fight against poverty.
Cogta Deputy Minister Yunus Carrim said that the guidelines - which will be rolled out across the country - have been long overdue. However, their value could only be seen with implementation.
“These guidelines have long been in the making and we need to have them working effectively,” he said.
Carrim added that cognisance needs to be taken into account that not all municipalities will implement them at the same time due to varying resources at their disposal.
“Our economic growth needs small business,” said the deputy minister, who also pledged Cogta’s support to the guidelines adding that the guidelines will strengthen municipalities.
Both Carrim and Davies spoke of the need to change bureaucratic mindsets.
Davies further added that there is a need to focus on township based businesses.
The department has put in place mechanisms to support business and this was evident in the World Bank Doing Business 2011 report having placed South Africa 34th out of a 183 countries in the ease of doing business.-SAnews.gov.za
