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Pay small businesses promptly: Busa

Johannesburg - Big businesses should pay their small and medium counterparts within 30 days to encourage entrepreneurship and job creation, Business Unity SA (Busa) said on Wednesday.

"Busa calls for better cooperation between big and small business to reduce the turnaround time for payments to, particularly, small and medium manufacturing enterprises," it said.

Busa suggested a 30-day turnaround time.

"Ensuring greater consistency in paying SMMEs (small and medium manufacturing enterprises) on time, in shorter cycles, and opening opportunities for them to provide manufacturing inputs to larger manufacturers will be a valuable step in encouraging vigorous entrepreneurship."

Busa said South Africa has one of the lowest entrepreneurship activity rates globally. Small and medium manufacturing enterprises need to be encouraged, as these businesses are more likely to create jobs.

"A report produced by FinMark indicates 43% of all private sector jobs in South Africa are created by SMMEs (small and medium manufacturing enterprises). Most countries reduced unemployment via substantial efforts to encourage self-employment," Busa said.

It had set up a task group on small and medium manufacturing enterprises that would consider issues like how to strengthen the partnership between the state and the private sector, to make it easier for small businesses to borrow money.
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