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Tips, advice, and information for South African business owners

16 May

Do We Need A Small Business Ombud?

Government officials and corporate leaders love to talk about how committed they are to small business development, but their cliched lies can’t disguise the lack of meaningful action. By way of illustration, small enterprises are forced to survive on scraps: for every rand invested in SME funding, more than R100 gets allocated to parastatal bailouts and corporate incentives.

Nonetheless, being seen as championing the small business sector is a great way to accumulate political capital, so it’s no surprise to see the Democratic Alliance propose the establishment of a Small Business Ombud. According to them, an ombudsman is needed to mediate disputes between SMEs and their clients to ensure that small suppliers are paid on time.

Everything about this proposal infuriates me.

For starters, isn’t the late and non-payment of SMEs precisely the sort of problem that the Department of Small Business Development (DSBD) was tasked with solving? The DSBD was established several years ago and has been allocated billions of rand to fulfill its mandate. So why has the shoddy treatment of small suppliers (particularly by government departments) been allowed to fester?

Secondly, helping small suppliers get paid long after they ought to be paid, doesn’t change the fact that they weren’t paid on time in the first place. Instead of corralling horses back into their barn after they bolt, why don’t we build a more secure barn? A good starting point would be to fire the heads of every government department that doesn’t pay small suppliers promptly.

Thirdly, there’s a real risk that the establishment of a Small Business Ombudsman will validate and exacerbate the very problem it is purported to solve. Like traffic offenders who wait for a summons before they finally settle their fines, bad debtors may brazenly delay payment until the ombud is notified.

Fourthly, how much faith can we have in a public sector body tasked with solving a problem created and perpetuated by other public sector bodies? Even if the Small Business Ombudsman is staffed with competent professionals who execute their responsibilities successfully, it would make more sense to have those people run the offending government agencies instead of admonishing them.

Of course, all of these are moot points because the Democratic Alliance (like the rest of our government) doesn’t care about small enterprises any more than it does the rest of their constituents. The only people who truly care about small business are small business owners.