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Late payments killing small business development and jobs

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The statement below follows a press briefing by the Democratic Alliance (DA) Spokesperson on Access to Jobs, Geordin Hill-Lewis MP, the DA Shadow Minister of Small Business Development, Toby Chance MP, and small business owner Bobby Mabe, on the scourge of late payments by the ANC government which threaten critical jobs.

Bobby Mabe
Bobby Mabe, Geordin Hill-Lewis and Toby Chance

Small businesses are the life-blood of the South African economy, contributing nearly 60 % of the labour force and 34% of GDP. However, the reality is that, some 80% of South African small businesses fail within the first three years of activity. Many of these businesses fail because of unnecessary burdens placed on them such as late payments.

Today, we are joined by Bobby Mabe who owns a steel manufacturing business. Mr Mabe’s business is a supplier of Eskom and his business nearly went under due to late payments. In many similar cases, lack of payment has resulted in the closure of emerging businesses and the loss of jobs.

With this approach, it is no wonder that the country is facing an unemployment rate more than 27%.

The ANC government continues pay lip service to the small business community but fails at every turn to create assist the small businesses. The government is notorious for the late and non-payment of small and medium enterprises (SME), with about R27 billion in outstanding invoices.

In Gauteng alone, the provincial government owed R9.5 billion by end of March 2018, with the provincial health department owing R7 billion rand to suppliers. Suppliers are forced to wait up to four years to receive money due to them. These are the job killing policies of the ANC-led Gauteng government at play.

The reality is the failing ANC government has at every turn failed to create an environment where small businesses can thrive.

SMEs cannot cope with longer payment times and the possibility of non-payment can have a devastating impact on any business, large or small. What’s most worrying is that this late payment culture has a ripple effect on the whole supply chain.

Failing ANC blocking job saving initiatives for small businesses

The DA is the only party addressing the scourge of late payments on SME’s, and we have proposed various measures in Parliament to address this issue head on.

In May, the DA introduced a Private Member’s Bill (PMB) for the establishment of a small business Ombud, which the ANC voted against. The ruling party called the PMB “undesirable”, this proves that the effective solutions to disputes which cripple small businesses in South Africa, are not a priority for the governing party.

Recognizing the need to support SMEs and save jobs – the DA’s Bill sought to address the problem of delayed payments and bullying by government and big business through the establishment of an Ombud Service to create a level playing field between small businesses, big businesses and government.

The Portfolio Committee on Small Business Development rejected the Small Enterprises Ombud Service Bill based on unfounded promises by the Department of Small Business Development that they would be attending to the problem themselves. Unfortunately, small business cannot pay their employees and build their businesses on promises.

This was however not the first time that the Portfolio Committee and the Department has let small businesses down. Last year the ANC also moved to reject the Red Tape Impact Assessment Bill. This Bill sought to create an enabling environment that will stimulate small business growth and create jobs by addressing the following problems associated with dense bureaucracy and red tape in South Africa.

DA has a plan make small businesses thrive

Where the DA governs we have the best employment record because we support small businesses. The Western Cape created more than 75% of all the new jobs in South Africa in the first quarter of 2018. In the DA-governed City of Johannesburg, 109 000 jobs were created in the first two quarters of the year reducing the unemployment rate in the City by 1.5%. This is proof of the DA difference, we do not just talk big, we get the job done.

The DA has a plan to empower small businesses create jobs and grow the economy:

  • Introducing an overtly pro-small business policy approach which removes blockages and red-tape in the political/economic system and immediately enact the Small Enterprises Ombud Service and Red Tape Impact Assessment Bill.
  • Department of Small Business Development has completely failed in their mandate and has been mismanaged from the outset. The only way to move forward is for the Department to be disbanded and funds be moved to support small business.
  • Ease the cost of doing business, exempt small businesses from certain labour and BEE regulations.
  • Creating Enterprise Development Hubs throughout South Africa providing entrepreneurs with digital services to professionalise their businesses.
  • Expanding support and incentives for youth, informal sector businesses and cooperatives to grow and hire more employees.

The DA will continue to champion the cause of small enterprises and job creation. The DA is committed to building One South Africa for All. We are the only party with a plan to create fair access to real, long-term jobs across South Africa.

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