By: Anna Majavu
The City of Tshwane is not supporting SMMEs well. It should be setting up partnerships with financiers, innovators and small business development agencies to provide support for these businesses and arrange regular training in financial management and how to apply for funding, according to new research. Hayley Boks and Adrino Mazenda of the School of Public Management and Administration at the University of Pretoria investigated the factors preventing SMMEs in Tshwane from being successful.
They found that the small businesses had bigger problems than being starved of funds – their top difficulties are red tape, corruption, lack of access to markets, inadequate training, poor infrastructure and scanty training opportunities.“In South Africa, small business development is an important local government responsibility and should be managed in a well-coordinated and expert manner,” Boks and Mazenda wrote, adding that the city had not catered well for small businesses in its Integrated Development Plan (IDP).
Tshwane’s IDP should also set out what transport, utilities, and reasonably priced land it was offering to small businesses. “Moreover, infrastructure development, such as small business incubation centres, needs to be linked to small business-friendly legislation,” wrote Boks and Mazenda. They recommended that the city also cut out red tape, such as zoning by-laws and the complex compliance requirements imposed on SMMEs. Corruption was another big problem that needed to be wiped out if SMMEs were to flourish in Tshwane, they found. “The city needs to prioritise fair procurement practices that are likely to attract small businesses, and take all possible steps to eliminate corrupt practices,” wrote the researchers.
They also recommended that SMMEs should not be taxed for the first three years after they launch, because most small businesses that failed generally did so within three years. The city should also be arranging business breakfasts or forums in community halls for small businesses, and make an effort to link SMMEs with larger companies as a means to help small businesses grow. “In particular, the city should work with shopping mall owners to create spaces for small businesses within those precincts” as well as creating online business platforms for SMMEs, found Boks and Mazenda.
Dr. McEdward Murimbika of the University of the Witwatersrand’s Business School says his research also found that the biggest challenge to SMMEs in South Africa was not financial. “It is well and good (even populist) to claim SMMEs are the engine of growth (we have heard this in almost every SONA and the annual [budget] speeches since Mandela’s government). Yet in reality, the ecosystem to build, strengthen and grow this sector remains constrained and largely under-capacitated,” said Murimbika. He said injections of money on their own would not unlock the SMME sector’s potential to grow and create jobs. The City of Tshwane did not respond to questions from Vutivi News.