South Africa is going through immense political turmoil at present. Labour and the Communist Party are wanting a greater say in government for bringing Zuma to power. Labour is demanding the end to labour broking, of which government is an enthusiastic user. Umkhonto we Sizwe are attacking moderates like Kader. The ANC Youth League and it's leadership, using the term broadly, are demanding the nationalisation of the mines. Netshitenzhe has resigned. Trevor Manuel is under pressure to go from these same players. Look at our FPI.
Talk about supping with the devil. Zuma must be regretting his choice of partners I should imagine.
Labour broking is a direct consequence of labour market rigidity that has its roots firmly embedded in the unbelievably complex and labour friendly legislation in South Africa, which is further complicated by the CCMA who believe it is their duty to always award money to labour, even when finding in favour of business. Never mind the impact on inward FDI.
The efficiency of SARS in tax collection is sadly not recognisable elsewhere, mores the pity. Policies are uninformed by reality, and becoming more and more socialist as the days progress. Purchasing by government does not focus on sustainable business creation. I could go on and on, but the message would remain the same.
The fragile embryo stage SME component of our economy is very much like the humpty dumpty story, sitting on the wall. The question is how it will land, soft or hard. There is ample evidence that entrepreneurship prefers a free market (or close as possible) in order to grow and create new businesses and jobs.
However, the closer we move towards socialism, the more like we will have omelette instead of boiled eggs.
This means that the SME sector is under serious threat from these people, and as businesses we need to understand the seriousness, and tell Zuma that he has our support to follow the capitalist line, as opposed to the socialist line. He can get the votes he needs without these living antiquities and uninformed posers that claim to be the leaders of various fringe organisations.
Rob
Showing posts with label Zuma. Show all posts
Showing posts with label Zuma. Show all posts
Saturday, October 24, 2009
Sunday, May 10, 2009
SMEs in South Africa - a big challenge
SMEs in South Africa - a big challenge. One of the biggest threats to SME development in South Africa is the BBBEE legislation. Why do I say this, especially as I believe the BBBEE legislation to be generally fair and reasonably well thought out?
As a consultant operating in this arena, I am aware that the bulk of businesses are actively attempting to comply with the BBBEE legislation. However, the efforts of the business community in this regard are being destroyed by the South African Government, the same people who created the legislation in the first place. How?
By not forcing government departments at national, provincial and local government level to comply with their own legislation. Government has not changed the legislation that applies to their own procurement activities (Public Preferential Procurement Framework Act PPPFA)to reflect the BBBEE requirements which they legislated into place, and we are now 3 years down the road.
This has allowed insignificant people with their own personal agendas to create their own policies in each department at every level. The nett result is a system that is unfair and directly in contravention of the spirit and the law related to BBBEE.
The South African Government created a tool to try and re-align the economy so as to remove previous racial biases, but their failure to complete the job properly is an indictment of their lack of true commitment to economic development through the use of SMEs.
I am aware of many businesses who have spent large sums of money in complying with the BBBEE legislation, and have made a significant difference in the community as intended, and yet they remain excluded from business opportunities purely on the basis of their race. This not only applies to White entrepreneurs but also to Indian and Coloured entrepreneurs.
The Government must either accept that their lack of action will soon lead to businesses refusing to comply as the system is not applied correctly and fairly, with a major loss to the communities they operate in as a result, or they must fully implement their legislation. Failure to do so will continue to create opportunities for corruption as is so often the case right now, with incompetent and over-priced suppliers often getting the business. This is resulting in massive overspending on purchases by government which is in turn contributing to ongoing inflation and lack of delivery by government, as budgets run short. Many White and Indian businessmen now only go to compulsory tender meetings to meet the Black business people who will get the business. When the tender is issued they then get the business at the same profit margins as they would normally make, except that the order is channeled through a Black business. These Black individual are merely adding a level of intermediary costs and not adding any value. So no development is occurring. Emails are often received from black individuals offering to sell their orders. They are in effect making themselves to be no more than a front, in direct contravention of government's intent.
If the South African Government is serious about economic development, all things must be created equal. Right now being Black is enough to get the business. Other race groups may have skills, better pricing, and be established businesses with large staff numbers (often Black), and they invest heavily in skills, socio-economic and enterprise development among other things, and yet they do not get the business. This cannot lead to economic development and growth, and can only lead to where we generally are, in a pool of corruption that destroys our economy as another layer of cost is added with no value add and no organisational development.
Our fragile economy needs to ensure Black entrepreneurial activity, and the BBBEE legislation was intended to do just that. However, the failure of Government to implement this thoroughly and as planned, has and will continue to result in tenders being given to friends, family and bribers, because it can safely be written off as BEE.
It will be interesting to see what the new Jacob Zuma government does, considering his statement that he wants to see BBBEE grow in the SME sector and no longer in the corporate sector.
ALL South Africans want to see the country prosper and are fully aware that it requires everyone to prosper. We need BBBEE to work properly so we can all benefit.
As a consultant operating in this arena, I am aware that the bulk of businesses are actively attempting to comply with the BBBEE legislation. However, the efforts of the business community in this regard are being destroyed by the South African Government, the same people who created the legislation in the first place. How?
By not forcing government departments at national, provincial and local government level to comply with their own legislation. Government has not changed the legislation that applies to their own procurement activities (Public Preferential Procurement Framework Act PPPFA)to reflect the BBBEE requirements which they legislated into place, and we are now 3 years down the road.
This has allowed insignificant people with their own personal agendas to create their own policies in each department at every level. The nett result is a system that is unfair and directly in contravention of the spirit and the law related to BBBEE.
The South African Government created a tool to try and re-align the economy so as to remove previous racial biases, but their failure to complete the job properly is an indictment of their lack of true commitment to economic development through the use of SMEs.
I am aware of many businesses who have spent large sums of money in complying with the BBBEE legislation, and have made a significant difference in the community as intended, and yet they remain excluded from business opportunities purely on the basis of their race. This not only applies to White entrepreneurs but also to Indian and Coloured entrepreneurs.
The Government must either accept that their lack of action will soon lead to businesses refusing to comply as the system is not applied correctly and fairly, with a major loss to the communities they operate in as a result, or they must fully implement their legislation. Failure to do so will continue to create opportunities for corruption as is so often the case right now, with incompetent and over-priced suppliers often getting the business. This is resulting in massive overspending on purchases by government which is in turn contributing to ongoing inflation and lack of delivery by government, as budgets run short. Many White and Indian businessmen now only go to compulsory tender meetings to meet the Black business people who will get the business. When the tender is issued they then get the business at the same profit margins as they would normally make, except that the order is channeled through a Black business. These Black individual are merely adding a level of intermediary costs and not adding any value. So no development is occurring. Emails are often received from black individuals offering to sell their orders. They are in effect making themselves to be no more than a front, in direct contravention of government's intent.
If the South African Government is serious about economic development, all things must be created equal. Right now being Black is enough to get the business. Other race groups may have skills, better pricing, and be established businesses with large staff numbers (often Black), and they invest heavily in skills, socio-economic and enterprise development among other things, and yet they do not get the business. This cannot lead to economic development and growth, and can only lead to where we generally are, in a pool of corruption that destroys our economy as another layer of cost is added with no value add and no organisational development.
Our fragile economy needs to ensure Black entrepreneurial activity, and the BBBEE legislation was intended to do just that. However, the failure of Government to implement this thoroughly and as planned, has and will continue to result in tenders being given to friends, family and bribers, because it can safely be written off as BEE.
It will be interesting to see what the new Jacob Zuma government does, considering his statement that he wants to see BBBEE grow in the SME sector and no longer in the corporate sector.
ALL South Africans want to see the country prosper and are fully aware that it requires everyone to prosper. We need BBBEE to work properly so we can all benefit.
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