National Small Enterprise Amendment Bill at last

After ten years of thinking about it and doing nothing on the subject other than stopping others, the Department of Small Business has finally got round to legislating for a framework to assist small business in South Africa and provide for the mechanics to financially assist entrepreneurs. The money to do this has been available for even longer, held by the Development Bank of SA (DBSA).

Tabled before Parliament at long last is the National Small Enterprise Amendment Bill to establish what will be known as the Small Enterprise Development Finance Agency (SEDFA) and at the same time  introduce a structure for the appointment of ombud services to assist smaller and medium sized businesses to grow in the highly competitive SMME market.

Powers of the state

Most of the delay has been caused by the failure of five successive ANC ministers in as many years to implement any form of national programme to develop small business in the country other than than the half-hearted gazetting of a draft National Small Enterprise Amendment Bill two years ago. This called for public comment by Minister Khumbudzo Ntshavheni, now a minister in the presidency.

No bill ever appeared before Parliament  and what happened to all the earlier submissions from business and industry on the Bill pointing to this fact is not quite clear but it is also clear from published letters to the media that a good number of submissions called for protections in law from overriding ombud decisions; less in the way of power to a minister; less red tape with governance and on licensing matters.

Eventually, long standing member Hennie Kruger (DA), who had a record of earlier debates on the subject, demanded that the Speaker of the House address and summons the Minister of Small Business to explain how the department had ignored a parliamentary instruction for failing to produce a small business framework for this sector for so long.

The bad, the ugly and the good

This chastisement of the now appointed Small Business Minister, Stella Ndabeni-Abrahms “for excessive delay in bringing forward legislation” seems to have worked but only slowly.  Ten months later a Bill has suddenly appeared thus adding to the hallmark of this lady’s past political career where as Minister of Communications her total inability to deliver anything on time was apparent.

Of concern  now is the frustration of the administration’s demand  that the incumbent ombud be granted powers to intervene in a number of designated commercial business areas with the ability to trump established laws and regulations.

Political influence

Furthermore, although claiming independence from the ombud’s office and therefore any political intervention, the proposals shows clear line of influence between the minister and the new structure.  On these points. the Democratic Alliance have noted their complete inability to support the Bill but will sit in on further debate to contribute.  The IFP have also they will only give the Bill their vote if such powers are amended.

On the table for even longer and happily part of new proposal is to consolidate the Co-operative Banks Development Agency (CBDA) and the Small Enterprise Development Agency (SEDA) into one body to be known as SEDFA with the task of assisting with small business financing.

On this, all have expressed total satisfaction, the Development Bank of SA at present holding the funds for the entity to be established and who will also  attend to the establishment of SEDFA as a public entity.

Years of inaction

Looking back, it was in 2017 that a frustrated Toby Chance MP (DA), also having waited for answer for years as an MP  introduced his  own private members Bill to Parliament on the subject having demanded over the years for some action by government in the small business arena.

The key to Chance’s proposals was that any ombud had to be entirely capable of transparency in all judgments and free of any allegiances and independent of the state, the answer in this proposals being a firewall at law being created between state and this new ombud created in the wording of the Bill.

Given the green light

These proposals were carried by the portfolio committee across party lines and passed for a final vote in the National Assembly.  However, an urgent instruction was received at the last minute, it was assumed from an anxious Luthuli House, for ANC MPs reverse their support and that which was before Parliament to go nowhere.

Nevertheless, four ministers later the National Small Enterprise Amendment Bill finally arrived with little time for it to be debated properly before elections  and with many at loggerheads over both the powers granted to the proposed ombud and the very clear dotted line to the minister’s office on both ombud powers and financing.

Doing the bidding

“The government wants its ombudsman’s office for the SMME industry to do its calling,” said one business submission quoted on social media.  Others have pointed out, “In one corner there is the state who still believe in the old-fashioned concept that they alone can protect business owners from exploitation and yet still provide a dispute resolution mechanism.”

The Small Business Development department has responded “Many small businesses do not have the financial muscle to hire lawyers and commit to legal process in settling disputes relating to breaches of contracts and other business-related matters.”

Small Business Institute, in responding, have echoed the fact that powers granted by the Bill would give the ministry and the governing party the ability to encroach upon and override existing civil and contract law.

Patrick McLaughlin

editor