Question NW616 to the Minister in the Presidency

Reply:

The DSBD was requested to provide input on the Framework that has been put in place to address the issue of Red Tape.

The Department has indeed assessed measures nationally, provincial and locally. There are a multitude of legislative and regulatory criteria that small businesses need to comply with, not all of them are “onerous”, but still it provides a good indication that our regulatory frameworks are not well coordinated and synchronised, and are often duplicatory, placing both a cost and time burden on small businesses. The DSBD has prioritised twenty-nine (29) pieces of legislation (and related regulations, and by-laws, etc) that impact on SMME growth and development. This is summarised in Figure 2.

Names of legislation and Relevant Details

The twenty-nine (29) pieces affect informal sector, small, medium micro enterprises and cooperatives

across the spectrum. Regarding cooperatives, we have noted that CIPC reporting under the Co-operatives Development Act, is onerous as most co-ops are required to submit audited financial statements. That imposes a considerable expense, which does not apply to any other small enterprise. This contrasts with the Company’s Act which has specified thresholds over which enterprises are required to submit audited annual financial statements.

The Department has put out a request for quotations to enlist private sector red tape and small business development “experts” to conduct an analysis of these twenty-nine pieces of legislation and regulations, as well as other targeted sources of red tape like CIPC reporting for cooperatives. We have already however analysed several areas of “red tape” and ease of doing business challenges over the past few years and group these into the following categories:

1. Business Registration & Reporting;
2. State Procurement;
3. Construction Industry; and
4. Broad-Based Black Economic Empowerment.

The Pilot Administrative Simplification Programme (PASP) focuses on institutionalising the best practices and learnings made by the Department of Trade, Industry and Competition (the dtic) and Ease of Doing Business (EODB) and is focused on local government - its interventions target Districts/Secondary Cities and Local Municipalities. The Department of Small Business Development (DSBD) is by no means the sole player in this ecosystem for measuring impact of the red tape reduction ecosystem:

1. The Investment Climate Reform Programme (formerly, the National Ease of Doing Business Programme) follows and focuses on improving the Investment Climate within the country. The key focus of the National Programme is starting a business, paying taxes, registering property, Construction Permits and trading across borders. The programme is located within the dtic and falls under its InvestSA branch.
2. The Sub National Doing Business Programme finds expression through the National Treasury’s Cities Support Programme targeting metros, and focusing on Construction Permits, registering property, enforcing contracts and getting electricity.
3. In addition to the Doing Business Survey, the Department of Planning, Monitoring and Evaluation (DPME) vigorously pursues the tracking of MTSF Priority 2 targets, monitoring 40% of the indicators, as well as focusing on the expansion of access to procurement opportunities to SMMEs, youth and women.
4. The integration of the MFMA, Circular 88 sector and economic indicators (including electricity) is thematic and provides a level of integration between traditional indicators measured in local government, and those that have been shown effective in National and Sub National Doing Business Programmes.

Measuring the Impact of the DSBD Red Tape Reduction PASP

The key focus of the PASP is measuring the impact of seven (7) Red Tape Reduction dimensions identified by the Guidelines approved in 2014:

1. Improving Municipal Service Delivery: Citizen Service Charters and Complaints Notification Systems (CNS).
2. Improving Municipal-Business Communication and Customer Relationship Management (CRM).
3. Improving Municipal Policies, By-laws, and Regulations.
4. Improving Supply Chain Management Processes.
5. Speeding up Land Development Processes and Time Frames - Spatial Planning and Land Use Management Act (SPLUMA).
6. Speeding up Building Plan Approval Processes and Time Frames.
7. Better Management of Informal Trading.

The following is a multi-level strategy driven by the DSBD, that has been put in place for measuring the impact of the programme:

1. Questionnaires on compliance for managers, e.g., Supply Chain Manager, Building Plans Approval Manager, etc. for the seven (7) key red tape indicators.
2. Survey of SMMEs on the seven (7) key indicators of Red Tape challenges.
3. Focus groups with SMMEs to get clarity of the challenges they identified through the surveys conducted.
4. Assessment of Compliance for “good practise” in the above seven (7) areas of a municipality.
5. Functionality Assessment of compliance measures.
6. Action Plans developed to address performance deficits across the seven (7) key red tape indicators.
7. Action Plan Registers to Monitor Progress on the implementation of interventions contained on the seven (7) key red tape indicators of the Action Plans recommended.
8. Reports on the above.

The Presidency communicated to Premiers, in November 2022, to establish Red Tape Reduction Units in their respective provinces. There is continuous engagement with the provinces by the Presidency to facilitate the establishment of the Red Tape Reduction units in each province. The Department of Small Business Development (DSBD) continues to engage the Presidency to get feedback on the progress made on the matter.

It is anticipated that the business units responsible for the red tape in the provinces, especially in offices of the Premiers, will act as Red Tape Reduction Champions at the highest level in the respective provinces as something that is sorely needed to galvanize the entire SMMEs and cooperatives sector at the provincial level. This will be complementary to the work that is being done by the Departmental and Presidential red tape reduction business units.

NAME OF THE DRAFTER : ____________________________

DESIGNATION : ____________________________

CONTACT DETAILS : ____________________________

SIGNATURE : ____________________________