SMME owners tell Parliament oversight committee how government destroys small businesses

closed foreverCAPE TOWN. Three women who are owners of SMMEs, two rural and one urban, spoke at the National Assembly Portfolio Committee on Small Business Development about how government fails SMMEs.

It was emotionally harrowing experience to see how far we have fallen from the aspirations as set out in the preamble to our constitution and to hear how the Department of Small Business Development and its agencies have failed to support and develop SMMEs.

Unlike Big Business and the Black Business Council who meet the President and his Ministers at the Presidency with pictures of self-congratulatory bushy eyed smiles of machismo, today at the PC meeting we entered into the deep vulnerability, with tears of hurt, disappointment, helplessness and sadness and we heard how the bars of institutional and systemic violence and intransigence determine the fate SMMEs in South Africa.

The three women SMME proprietors first encountered by the Portfolio Committee on oversight visits and were invited by the Committee to tell the nation, at the seat of legislation, of their pain at the hands of SEFA, and by implication also the DSBD and SEDA. Due to the lack of morality and unethical procedures, insensitive regulations and procedures the three business owners were driven to bankruptcy and the loss of homes and assets.

Under the wise and compassionate leadership of the Chair of the PC the Hon Ruth Bhengu and with multi party support they halted the litigation process, so that the nation could hear the suffering of SMMEs at the hands of corporate salary earning officials. Using tax payers money they were able to destroy three businesses, along with the jobs, personal assets of the proprietors and the whole social chain in families and communities.

The members of the PC were at one in their compassion for the three women and also in their condemnation of the destructive performance of SEFA. We also heard that SEFA incurred a huge bad debt book in excess of R500 million uncovered by a forensic audit that threatens to make SEFA itself unsustainable en and possibly be accused of reckless lending. The committee was appalled by the absence of the Director General of the DSBD who as the accounting officer has oversight over SEDA and SEFA and is primarily responsible for the enablement of SMME’s in the nation.

After hearing the women speak and the Parliamentarians respond, the Chair invited me in my role of CEO of SASMEF to comment.

I noted that this was a matter above party politics and went to the core reason of why the poverty gap increases and why it is necessary that SASMEF form the platform that the voice of SMMEs be heard. At the Presidential meetings, the voice of SMMEs is not heard. The Minister has not yet appointed the NSBAC, as noted by the Chair, a vehicle through which the plight of SMMEs could have been heard. It is SASMEFs view that what was heard was primarily a matter of ethics and morality and that the incidences reported were evil and ranked with atrocities against humanity.

Where do we go? SEFA may apologize and possibly make good justification but we have to find a mechanism that there will not be a repeat. This mechanism must be able to protect and enable SMMEs, that government use tax payer’s money productively for developmental purposes and empower government agencies and their officials to act with integrity and to exemplify the standards of Batho Pele and Ubuntu.

SASMEF says that the sample three experiences confirm that South Africa needs a complete new SMME support system that is mutually accepted and preferably endorsed through an Economic Codesa. It is imperative that government and big business realize that an inclusive market economy cannot deliver the dividends of growth and jobs without the participation of the voice of SMMEs. The NDP goals are unreachable without a thriving SMME sector.

The DSBD in its current form is a waste of tax payers’ money and should be restructured possibly as an auxiliary department to Treasury as the lead agency in micro economic policy, planning and strategy. The SMME support system must be a public private undertaking chartered by 20% public policy and delivered by 80% private sector managers who are developmental orientated.

By development orientated SASMEF means bottom up. The voice of SMMEs is fundamental in a SMME support system. Hence the role of municipalities and local economic development becomes pivotal. This requires a re-prioritization and distribution of state resources for promotion and capacitation of SMMEs. It will require Big Business to commit to inclusive business, open access to markets, and reduce barriers to entry created by selfish and exclusive business policy structures and practices in the supply chain.

Yet today, amidst the serious institutional and personal introspection and empathizing with the lived experience of vulnerable SMMEs, there was a sign of hope.

Under Ruth Bhengu and her multi party team, we saw the compassionate face of government, the restoration of Parliament as the voice of the people, that people can hold government accountable, that SMME has recourse to justice, and with good political will we may yet see South Africa’s aspirations of 1994 being realized.
SASMEF has been validated: the united VOICE of SMME must be heard and included to charter the way forward to an inclusive market economy and a better life for all.

Founded in 2012, the South African Small and Medium Enterprises Federation (SASMEF) is a national private social enterprise that unlocks resources from the political and economic centres as a catalyst for the creation and development of sustainable SME’s.

SASMEF Parthenon

General  Contact:

Carl J Lotter
+2772 881 7900

Media Contact:

The Spaza Agency
Dylan James
+2766 206 2109

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