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Mixed reactions to proposed small-business ministry
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14 April 2014

THE possible establishment of a ministry for small business by the incoming government has been welcomed by the South African Institute of Tax Professionals (SAIT), but dismissed by the Free Market Foundation as a way of increasing bureaucracy.

The contradictory views followed a hint by African National Congress secretary-general Gwede Mantashe last week that a stand-alone ministry for small and medium-sized enterprises could be announced soon after the elections. Small businesses are regarded as a solution to South Africa’s unemployment crisis.

SAIT CEO Stiaan Klue said the sector was critical for South Africa’s economic growth and could help it regain its position as Africa’s largest economy from Nigeria. Sharon Smulders, head of tax technical for SAIT, said on Thursday that the responsibilities, initiatives and projects aimed at assisting and growing small and medium enterprises (SMEs) were fragmented and not delivering visible results.

The 2014 SME growth index compiled by research company SBP showed that 71% of the companies participating in the survey said it became harder to operate a business in South Africa last year. The numbers were a marginal improvement in sentiment over 2012, but were nonetheless deeply negative, SBP said.

Free Market Foundation chairman Herman Mashaba said government departments believed their purpose was to constantly increase regulation, including laws related to SMEs.

"Not a single ministry has set out to facilitate business activity by reducing the level of regulation in its sphere of influence," he said.

"If all the departments were instructed to apply the fundamental principles of the rule of law in the drafting of laws and regulations, we would have fewer and clearer statutes and a more conducive business environment," Mr Mashaba said. He said laws such as the Labour Relations Act that were "unfriendly" to SMEs were largely responsible for the country’s unemployment situation.

Democratic Alliance finance spokesman Tim Harris said voters should reject Mr Mantashe’s proposal as the "election gimmick" that it was. He said the proposal flew in the face of government’s promise to rein in the public-sector wage bill.

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