The recently announced review of regulations hampering small business must include input from business, the Centre for Development Enterprise (CDE) said on Monday.
While welcoming the review, announced during President Thabo Mbeki’s State of the Nation address, CDE executive director Ann Bernstein said: ”We strongly urge that this presidential regulatory review include a substantial contribution from the private sector and more importantly from entrepreneurs themselves.”
The organisation said a new CDE report, Key to Growth: Supporting South Africa’s Emerging Entrepreneurs, confirms that the government’s support for entrepreneurship in South Africa has been largely misdirected and it is time to accept the failure of the current approach.
The government’s strategy has tried to serve too many purposes and support for entrepreneurs has often been used as a vehicle for poverty relief rather than wealth creation.
”The costly new bureaucracy that aims to deliver finance and skills training to emergent entrepreneurs often misses its target. As a result there have been institutional failures and very high default rates amongst those who have been lent money while training and advice has largely been provided and managed by people with no business experience,” a CDE statement said.
A better approach will be to create a ”facilitative, hospitable environment for small business”.
Changes will include improve the regulatory climate, ensuring cheap and effective infrastructure and encouraging public-private partnerships that will do more to encourage aspirant entrepreneurs than ”relying on bureaucratic delivery of financial and other support”.
The government should urgently appoint a high-level public-private task team to make recommendations on reducing the costs of doing business in South Africa.
Business costs include security against crime, complex tax regulations, special levies that are added to the tax burden and labour costs, as well as delays in the granting of work permits for foreigners.
A ”regulatory impact unit” should be established in the presidency to review all proposed legislation to assess its potential impact on the costs of doing business.
The CDE said the government should also move away from overconcentrating on access to finance, saying the country’s successful companies started with a great idea championed by risk takers and their own capital.
The government must also ensure that its achievements with respect to access to education are matched by similar dramatic achievements with respect to the quality of education for poorer South Africans.
This in turn will provide the skills and confidence that some will take forward into founding their own businesses.
”CDE’s research shows that South Africa must get the environment right for business now and promote successful entrepreneurs as the new ‘struggle heroes’. South Africa has done far too little to recognise, analyse and celebrate the success of South Africa’s black entrepreneurs who have ‘done it on their own’.” — Sapa