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Tips, advice, and information for South African business owners

07 Jan

Government’s Small Plans For Small Business

A fundamental mission that drives my work is to help entrepreneurs become economically self-sufficient. My utopia is where small business owners are masters of their economic freedom, independent of ongoing government support for their longevity.

I find it fascinating, now, that the socio-political landscape seems to be conspiring to reinforce my mission. As we look ahead to 2019, self-reliance is no longer a nice-to-have but a must-have for South African entrepreneurs.

With 2019 being an election year, I expect even more vacuous and false promises from government than usual. Despite their rhetoric of supporting business and small business in particular, government is failing dismally. The trend is toward irrelevance at best and hindrance at worst.

The National Development Plan aims for SMEs to contribute 90% of job growth by 2030. It’s a laudable target, but I’m not holding my breath because the bulk of that big, hairy goal rests with the Department of Small Business Development (DSBD).

When Zuma enacted the DSBD’s creation in May 2014, I was interviewed by Bruce Whitfield on his Radio 702 Money Show for my opinions and expectations. At the time I made what I thought was a throw-away comment about the language of “Small Business Development” rather than simply “Business Development”. Little did I realise how portentous “Small” would be…

Fast forward to 2018 and DSBD’s sleep-inducing 179-page 2018 annual report. No amount of spin-doctoring by minister Lindiwe Zulu and her henchmen can hide DSBD’s terrible performance or its uninspiringly “small” strategy.

Much of the report is a mishmash of (deliberately?) obtuse clichés, like “informed and empowered communities” and “equitable and accessible services”. If you can stomach sifting through all of the waffle, what you are left with are bafflingly unambitious targets.

For example, DSBD wants 1,696 informal traders to benefit from its Informal Trader Upliftment Program in 2019, up from the estimated 1,600 of 2018. Why plan for such a paltry impact given that there are hundreds of thousands (if not millions) of informal traders eking out a living in SA’s townships and streets?  This barely scratches the surface of the dozens more issues I spot in DSBD’s strategy.

Not only are the numbers negligible, but the development and funding programs that were ring-fenced for SMEs appear to be drying up.

Case in point: a mining company recently contracted Evergrow to source expansion capital. (Of late, we’ve secured over R1 million in non-repayable grant funding for clients). This company ticks all the right boxes. It is 100% black-owned and black-managed, entirely self-funded, operates in a high-priority industry, and has secured a multi-year contract on merit (this isn’t another wannabe tenderpreneurs). And if all of that isn’t enough, it contributes a 2% royalty from sales to community upliftment.

This is exactly the sort of legitimate, promising SME that government claims to support. So you’d be justified to expect a bun fight between all the government funding agencies and programs to get involved with this Holy Grail of empowerment.

Not a chance!

While the Industrial Development Corporation and Department of Trade and Industry are more than happy to lavish billions on big corporations, they won’t even lend (let alone grant) a cent to this business. As for the DSBD, it’s clearly more interested in blowing its budget on informal traders than supporting viable, job-creating SMEs.

There are still pockets of hope, but only a fool will count on getting help from a feckless government. I’ll be delighted to be wrong, but it’s time to call out government’s bullshit for what it is.

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