THE general sentiment in South Africa’s business landscape
is that the environment is plagued by challenges that hinder commercial
activity.
In recent months much has been said about the significant
red tape that hampers business growth in the country, however, according to
Gerrie van Biljon, Executive Director of Business Partners, despite all the
negative reports, South Africa’s business environment is performing
significantly well in key areas.
Van Biljon refers to the World Bank’s Doing Business 2012
Report, which ranks countries across the globe according to how easy or
difficult it is for a local entrepreneur to open and run a small to medium-size
business when complying with relevant regulations.
Van Biljon says that overall, South Africa performed
relatively well and was ranked 35th out of 183 countries in 2012, excelling in
various elements which encourages the ease of business. “South Africa is also,
in fact, the best performing country worldwide when it comes to accessing
credit.”
He believes that the South African business environment
successfully caters for the local SME industry in terms of funding and
investment, for both entrepreneurs and financiers. “According to the report,
South Africa ranked 10th in terms of protecting investors. Even more
importantly, South Africa was the top ranked country internationally in terms
of accessing credit.
“Another positive indicator is the fact that South Africa
improved by 68% in terms of starting a business and is currently ranked 44th.”
Van Biljon explains that there is a general misconception
amongst small business owners that the lack of local entrepreneurs in the South
African economy is the direct result of a lack of access to capital. “The issue
surrounding funding is more a myth than a reality. The problem is not a lack of
access to capital, but is ultimately the result of an awareness gap between
financing institutions and aspiring entrepreneurs. It is essential that
entrepreneurs seeking capital fully understand the process and stringent
criteria required to obtain financial support.”
He also points to the fact that South Africa is ranked 44th
in terms of ease of opening a business, which is an improvement of 30 places
since the 2011 report.
“As all procedures, including the time and cost required to
complete these procedures, were analysed as part of this study, South Africa’s
ranking is very positive. The efforts of some government departments,
especially the inroads that have been made in clearing the backlogs at the
Companies and Intellectual Property Registration Office (Cipro) and the
streamlining of tax compliance by the SA Revenue Services, have greatly
contributed to improvements in the ease of doing business in South Africa.”
However, van Biljon concedes that there remain certain areas
of concern which are limiting for SMEs and may hamper the future growth of
entrepreneurs and small business.
“Latest data released by The Global Competitiveness Report
(GCR), reveals that the South African labour market is characterised by rigid
hiring and firing processes, inflexible wage setting structures and tense
employee employer relations. Our economy ranks 139th, 138th and 138th in these
categories respectively out of a total 142 countries, and is being
significantly hampered by these restrictive characteristics of the labour
market.”
Van Biljon says that in South Africa, our “First World”
labour legislation sometimes restrains SMEs from hiring additional staff due to
the country’s strict labour laws and regulations. He explains that this can
potentially result in SMEs making use of automated solutions such as machinery
as alternatives to new staff, which is harmful to the economy and skills
development goals.
He adds, “South Africa’s extremely powerful trade unions do
a great job of protecting the interests of their members, who are individuals
with jobs. However, many South Africans are unemployed and therefore no one
speaks out on their behalf.
“A more flexible labour regime is necessary for SMEs to
encourage them to hire more employees, thus making an even larger contribution
towards solving our country’s unemployment problem.”
Van Biljon says that although the South African business
environment is thriving in certain aspects, other sections need to be reviewed
in order to streamline SME growth in the country. “Like any business or
industry, in order to succeed it is essential to identify and analyse the
strengths and weaknesses of the corporate landscape,” says van Biljon.
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