Applications get declined due to non-compliance and no knowledge of the sector the applicant is venturing into, said Tsepiso Makgothi, the chief director for strategic partnerships and customer care at the Department of Trade, Industry and Competition. This was revealed at an industrial funding and incentives webinar recently organised by the Department of Trade, Industry and Competition (the dtic), the Industrial Development Corporation, and the National Empowerment Fund.
She urged applicants to make inquiries before submitting their applications on how to go through the compliance requirements. Participants in the webinar argued that the red tape of getting feedback on applications was a pain. “Too many gatekeepers which creates room for corruption,” said one of the participants.
Meanwhile, President Cyril Ramaphosa in his State of the Nation address in February 2022 announced that the government was reviewing the Business Act – alongside a broader review of legislation that affects SMMEs –to reduce the regulatory burden on informal businesses. “There are too many regulations in this country that are unduly complicated, costly, and difficult to comply with. This prevents companies from growing and creating jobs, he said.
Ramaphosa added that If the government was to make progress in cutting unnecessary bureaucratic delays for businesses, there was a need for dedicated capacity with the means to make changes. Makgothi, said the role of the dtic: in overcoming the economic challenges facing South Africa had become more important than ever. The Department of Trade, Industry and Competition (the dtic) and its funding agencies supported 216 projects in the 2020/21 financial year has approved an amount of R8,8bn for the projects. The projected investment amount is R27,9bn with 18,330 new jobs to be created.
A participant in the webinar requested that the funding agencies disclose the number of businesses that have been funded, and not just approval letters, but those who received funding in their accounts. National Empowerment Fund (NEF) Strategic Projects Fund Manager Andile Stemela said the NEF’s reasons for declining applications included assessing the viability of the business, insufficient information submitted by the applicant to make an informed decision on the application, and the status of black business ownership.
“It is important to appreciate that red tape is part of the due diligence exercise that every applicant must go through. Unfortunately, it can be a tedious process, but it must be done. “We need to understand the business in which it operates and the fundamentals of the business and the applicant. It’s unfortunate that businesses fund this process as a deterrent said Stemela.
As of 31 November 2021, the NEF had approved 1,223 transactions worth more than R11,9bn across the country with a total project value of R20,98bn. More than R7,731bn has been disbursed to companies since inception. Deano Govender a participant said the administration and red tape with the Support
Programme For Industrial Innovation (SPII) Fund was its own worst enemy. He explained that he applied a year ago and still had not received any information on the progress of his application. Ntokozo Khuzwayo another participant, said the youth-focused funds are good but do not translate into reality as the Industrial Development Corporation requires 10% of the youth’s own contribution, irrespective of whether you are youth or not.