National Small Enterprise Bill: public hearings

Meeting report

National Small Enterprise Bill submissions

Employer SA

Mr Arno Roodt, Employer SA, delivered a presentation highlighting the organisation's dedication to representing businesses across various sectors in South Africa. The focus was on promoting economic growth, and collaboration, and advocating for favourable business conditions. Employer SA was seeking an amendment to the National Small Enterprise Amendment Bill, proposing the inclusion of a clause embodying the constitutional principle of non-racialism.

The proposed amendment emphasises the moral and economic importance of non-racialism, asserting that it is vital for fostering an equitable and inclusive environment for small businesses. The success of small enterprises was emphasised, transcending the race or ethnicity of owners, and contributing significantly to economic growth and job creation. The presentation underscored the historical context of racial discrimination in South Africa and the need to address these injustices by committing to non-racialism. Promoting non-racialism in the economic sphere was seen as crucial for achieving a thriving and inclusive economy. The proposed amendment was positioned as a practical commitment to justice, equality and human dignity.

Mr Roodt said Employer SA believed that incorporating clauses enshrining non-racialism in the Bill aligned with the constitutional values of the nation, contributing to a fair and equitable business environment. In conclusion, the organisation advocated for an inclusive and non-discriminatory business environment, asserting that success in entrepreneurship should be determined by dedication, innovation and hard work, rather than racial considerations.

See attached for full submission

Property Point

Ms Nokwanda Motsitsi, Property Point, delivered a presentation focusing on the small business landscape in South Africa, and emphasised Property Point’s crucial role in economic development. Acknowledging the Bill's importance, she expressed reservations about the proposed amendments and called for a socio-economic impact assessment on small businesses to avoid potential harm.

Regarding the merger of entities and the Small Enterprise Finance Agency (SEFA), Property Point supported the move, but recommended clarifying the definition and components of a service delivery network for legal consistency and accountability. The establishment of the Office of the Small Enterprise Ombud was acknowledged positively, but concerns about the financial implications led to a recommendation for diverse funding strategies and an expanded scope to avoid overlapping services.

The provision for a national review of small enterprises was welcomed, but Property Point recommended incorporating a specific timeline and proposing an annual review for a more comprehensive assessment.

In conclusion, Ms Motsitsi underscored Property Point's commitment to small business sustainability, supporting the Bill while advocating careful consideration of the socio-economic impacts, clarity in definitions, innovative funding strategies, and specific timelines for the national review. These recommendations aimed to enhance the Bill's effectiveness in creating an enabling environment for South Africa's small business landscape.

See attached for full submission

Longmark

Mr Kagiso Machele, Longmark, stressed the importance of a targeted and strategic approach in supporting South African small and medium enterprises (SMEs). Drawing on his experience in financial products, he urged a reconsideration of the historical context of SME development in South Africa, and emphasised the need for sector-specific initiatives.

Expressing concerns about potential overlaps in the proposed amalgamation of institutions, particularly the Cooperative Banks Development Agency (CBDA), he questioned whether sufficient thought had been given to the specific needs of the CBDA. He argued for a clear understanding of the central objectives of organisations like SEFA, highlighting the importance of avoiding redundancy.

Mr Machele noted the dominance of certain sectors in the South African economic landscape, and called for a targeted approach to address the challenges faced by SMEs, especially in the context of unemployment and economic structural changes. He acknowledged the CBDA's strengths in certain capacities but urged the organisation to collaborate and create a dedicated fund to deliver on its mandate effectively.

In conclusion, he emphasised the necessity of a clear service model and strategy for institutions involved in SME development. He cautioned against articulating ambitious goals without a corresponding plan to establish capable institutions, stressing the importance of aligning efforts and avoiding duplication for the collective benefit of SMEs in South Africa.

See attached for full submission

DigiBiz

Mr Sifiso Ndwandwe, Programme Director, DigiBiz, focused on the provisions for the ombudsman in the Bill. DigiBiz strongly supported the establishment of the Office of the Small Business Ombud, recognising its potential to address the significant challenges SMEs face.

Key components of the DigiBiz programme included coaching and training on technology uptake, an online platform for discussions, and active engagement through social media. DigiBiz recommended digital tools for innovation in service delivery, advocating for accessible communication channels like WhatsApp and web interfaces. It proposed a combination of automation and in-person support for effective dispute resolution, emphasising the importance of investigating trends beyond individual complaints.

DigiBiz suggested the Ombud should monitor laws affecting small businesses, share education and information, and promote inclusivity in adopting digital technology. Further, it encourages the Ombud's Office to aspire to global competitiveness by harnessing the power of digital tools, and drawing inspiration from successful models in other countries.

In conclusion, DigiBiz believed that adopting digital tools was essential for the efficiency and advancement of the small business ecosystem. The Ombud's Office, as a new institution, had a unique opportunity to strategically incorporate digital transformation for effective service delivery.

See attached for full submission

KP Consulting

Ms Khumo Raseroka, Director: KP Consulting, highlighted her company's commitment to providing essential information technology (IT) services, and shared her journey in technology and entrepreneurship. As a representative, she commended certain aspects of the proposed Bill, but stressed the need for functional and grassroots-level benefits.

Expressing concerns about the merging of key entities into SEFA, she called for a clear operational strategy and a detailed transition plan, preserving the unique strengths and mandates of each entity. She emphasised financial support for SMEs, citing delays in securing funds, and recommended an approach that included a loan guarantee programme and collaboration with private banks.

Ms Raseroka suggested a collaborative approach with the African Bank, and proposed a partnership with SEFA providing guarantees to loans issued by the bank. She recommended incorporating successful local initiatives into the Bill for non-financial support, focusing on mentorship and community support.

Highlighting the need for a robust monitoring and evaluation system, she cited Singapore's SME model, and suggested regular feedback loops, user-neutral data collection, and stakeholder engagement.

She concluded by urging the government to prioritise local products and services over international brands to foster local innovation and entrepreneurship. She provided a comprehensive analysis of the proposed Bill, offering valuable insights and recommendations to enhance its effectiveness in supporting SMEs in South Africa.

See attached for full submission

South African Cooperative Banking Association (SACOBA)

Mr Tebogo Phadu, representing the South African Cooperative Banking Association (SACOBA), presented overall comments and specific recommendations regarding the National Small Enterprise Bill.

In his overall comments, he likened the Bill to a puzzle with crucial missing pieces, emphasising the need for comprehensive consideration of necessary elements and stakeholder engagement. He particularly highlighted the perceived lack of adequate consultation with the cooperative sector. Specifically addressing concerns related to the cooperative banking sector, he pointed out the Bill's failure to consider recent amendments to cooperative legislation, particularly the Cooperative Development Agency mentioned in the Cooperatives Act of 2019. He stressed the importance of proper consultation and urged respect for the extensive discussions that had shaped cooperative policy and legislation in South Africa.

Mr Phadu argued against the use of the term "small enterprise" in relation to cooperatives. He stressed the clear distinctions between cooperatives and small enterprises in terms of ownership structure, size, decision-making, objectives, and prioritisation of member benefits. He recommended avoiding the broad categorisation of all cooperatives as "small enterprises," to prevent their potential marginalisation.

In conclusion, he underscored the necessity for the Bill to recognise and respect the differences between cooperatives and small enterprises, urging proper acknowledgement of the diverse nature of cooperatives, regardless of their size.

See attached for full submission

Congress of South African Trade Unions (COSATU)

Mr Matthew Parks, Parliamentary Liaison Officer, COSATU, expressed both appreciation for the Bill's objectives and concerns about its development process. He commented that the Bill had not undergone the usual engagement with the National Economic Development and Labour Council (NEDLAC), a concern shared by a previous presenter. He emphasised the importance of adequate engagement in addressing socio-economic issues before legislation reached Parliament, expressing worry that bypassing such processes might set a precedent for future Bills.

Mr Parks identified several clauses in the Bill as vague or unclear, and suggested that more clarity or tightening in certain areas would be beneficial. One major concern he raised was the lack of reference in the Bill to ensure that lending practices aligned with the principles of decent work or compliance with labour legislation. He emphasised that public funds should not support companies that undermined labour laws.

Another significant issue was the potential misuse of cooperatives by some companies to avoid complying with labour laws. He highlighted cases where businesses that were registered as cooperatives, engaged in criminal activities, including human trafficking and labour abuses. He expressed disappointment that the Bill did not take significant steps to prevent such abuse or address the issue of bogus cooperatives.

Regarding the reconfiguration of the state, Mr Parks expressed concern about rushing the Bill before potential changes after the 2024 elections. He emphasised that issues around unfair trading practices needed attention, pointing out ambiguities in certain sections. Specifically, he highlighted concerns about vague language that might be misinterpreted or abused, potentially undermining labour laws and collective bargaining agreements.

Mr Parks also raised concerns about governance issues, including the need for clear timeframes in certain sections and criteria for fees. He questioned the rush to pass the legislation without adequate consultation. He suggested that delaying the Bill for further refinement might lead to a more effective and well-thought-out piece of legislation.

In conclusion, he expressed the sentiment that rushing the Bill without proper engagement could lead to ambiguities and conflicts in the legislation. He suggested that postponing the Bill for further refinement and engagement might result in a more effective and comprehensive piece of legislation.

See attached for full submission

Discussion

Ms B Mathulelwa (EFF) raised concerns about the scheduling of simultaneous important meetings, suggesting that it was practically impossible to participate fully in two meetings at the same time. She recommended avoiding such clashes in the future to ensure effective participation.

Directing her questions to all the presenters, she asked whether they had attended the public consultations conducted by the Committee. She highlighted the apparent diversity of views from the public, and emphasised the importance of presenters providing feedback on the Ombud, especially in the context of the public consultations. She sought clarification on whether the presenters had been present during the public participation sessions.

Mr F Jacobs (ANC) acknowledged the valuable input from stakeholders, and mentioned that the Committee appreciated the diverse perspectives presented. He urged fellow Committee Members to be flexible, considering the Parliamentary schedule and the importance of the Bill. While he did not pose specific clarity-seeking questions, he emphasised that the Committee would process all the inputs, and thanked everyone for their time and effort in participating.

Responses

Ms Raseroka responded that KP Consulting had already addressed the query related to the Ombud's service, and they would send it through with their presentation. She assured the Committee that KP Consulting not only had the information, but also the steps on how to go about it.

Mr Parks expressed appreciation for the urgency in government departments, acknowledging the pressure to complete legislation before the elections. He highlighted the common practice of departments waiting until the last minute to submit bills, causing challenges for Parliament. He stressed the need for proper engagement and consultation through structures like Nedlac before bills were submitted to Parliament. He was concerned about the rushed nature of the process, pointing out the potential for drafting mistakes and the need for clarity.

Mr Parks also discussed the importance of addressing issues related to cooperatives and SMEs, noting the potential for abuse of laws by unscrupulous owners. Finally, he expressed support for institutions, but suggested a more comprehensive approach to defining their powers and responsibilities. He mentioned the possibility of submitting a supplementary written submission to provide specific suggestions for improvement.

The Chairperson expressed gratitude for the invaluable input from the presenters, emphasising that their contributions were essential in providing the needed substance to the Bill. She said that the Bill was like raw material, and the inputs from various stakeholders were crucial in adding the necessary "flesh" to make it comprehensive and effective. She also welcomed any additional responses or feedback from the presenters.

The meeting was adjourned.