South Africa plans ‘simplified’ procedures to support SMEs, says Zuma

Out-Law News | 12 Aug 2015 | 3:28 pm | 2 min. read

South Africa’s president has said the government and business leaders have agreed to work towards establishing “simplified processes” for setting up small and medium-sized enterprises (SMEs) in the country.

Jacob Zuma said the feasibility of launching a “single point registration process” was also being considered, to help SMEs comply more easily with a range of regulatory requirements such as VAT and pay as you earn (PAYE) reporting.

Zuma announced the move at a meeting of his ‘presidential business working group’, which brought together representatives of the national government and South African businesses to discuss initiatives that support the ‘National Development Plan’ (NDP) (70-page / 4.93 MB PDF).

Zuma said the government had also begun a feasibility study aimed at encouraging “increased investment in line with the needs of the NDP”, which was published in November 2011 and covers the period up to 2030. Investment in infrastructure continues to be a key NDP objective, Zuma said.

The government is also working with business leaders to find “innovative financial and risk-sharing solutions to ensure cost-effective and efficient bulk water and sanitation services”, Zuma said. “Ultimately, this will lead to the release of funds by the private sector for investment in municipal bulk infrastructure on a sustainable basis.”

Meanwhile, Zuma said several industrial parks had been earmarked for “revitalisation” and “within the next six months” the presidential business working group has pledged to “identify high-demand skills” for strategic infrastructure projects. Work is also underway to support the establishment of “centres of specialisation” within existing public education and training institutions.

South Africa’s 2015 budget, unveiled by finance minister Nhlanhla Nene last February, said support for small firms and infrastructure investment was among nine national “strategic priorities”, many of which are expected to involve public-private partnerships.

Nene said the National Treasury had met the mayors and city managers of metropolitan municipalities to discuss “how to accelerate investment, improve infrastructure maintenance and strengthen financial management”. Nene said a government-backed conference on urban infrastructure would be convened in 2015 “to enable private investors to obtain further details of financing opportunities that will arise from this new programme”.

The Banking Association South Africa has said research indicates that SMEs in the country “make up 91% of formalised businesses, provide employment to about 60% of the labour force” and their combined economic output accounts for roughly 34% of gross domestic product.

In addition, the association said “innovative and technology-based SMEs can provide a platform for local, regional and international growth”, especially in the BRICS economies of Brazil, Russia, India, China and South Africa.

According to the ‘SME Growth Index’ for 2015, compiled by Johannesburg-based independent private sector development and research company SBP, smaller firms in South Africa “are showing stagnation in both turnover and employment growth”. SBP said this was “contrary to global trends, where SMEs constitute the largest employer in either developed or developing economies”.

The index indicated that 29% of firms surveyed in 2012 reported a decrease in turnover. The percentage of those reporting lower turnover in 2014 was 22%, but the figure has risen to 25% this year.

SBP said: “SME sustainability and growth should be an obsession for job creation in South Africa”.