Small business is the answer to president's desire for thriving SA

President Cyril Ramaphosa makes a quick lunch stop at the Palace Fisheries in Salt River, Cape Town, in between his meetings and preparations ahead of the State of the Nation Address.
President Cyril Ramaphosa makes a quick lunch stop at the Palace Fisheries in Salt River, Cape Town, in between his meetings and preparations ahead of the State of the Nation Address.
Image: Jairus Mmutle/GCIS

It's easy to find out where your favourite side ranks in the sporting world, but far less so to appreciate where South Africa's economy falls compared to other countries.

There is a global competitiveness index, an innovation index, an entrepreneurship index and several others. The best known is the World Bank's Ease of Doing Business index.

Since becoming head of state a year ago, President Cyril Ramaphosa has consistently expressed an aspiration to see SA's ranking in that index to be among the top 50 countries. We are currently ranked 82 out of 190 countries tracked, a precipitous drop from 32, a decade ago.

He repeated this aspiration last Thursday when he delivered his state of the nation address and made a commitment to working towards improving the business environment.

He said: "We are urgently working on a set of priority reforms to improve the ease of doing business by consolidating and streamlining regulatory processes, automating permit and other applications, and reducing the cost of compliance."

He has our full support in doing this. That's, in part, why we are participating in the Private-Public Growth Initiative with other business leaders. The PPGI aims to facilitate focused investment plans of leading companies across 19 sectors of the economy, from mining to renewable energy, from manufacturing to agriculture.

In addition, to make it easier to monitor our economic position in the world, the Small Business Institute (SBI) has created an on-line score card called the SBI Index Tracker. Over time, we can measure whether our policies and particular interventions give us an advantage - even incrementally - to ensure our standing is moving up and not down.

Unfortunately, since the global financial crisis and scoring own-goals, like removing finance ministers at midnight, SA has dropped significantly over the past few years relative to our peers and other sub-Saharan countries. (We are ranked nine-out-of-ten in Transparency International's Corruption Perception Index and 78th in the world.)

Our interest is on South Africa's performance in facilitating the growth of small and medium enterprises (SMEs) which, according to the National Development Plan (NDP), should contribute 90% of all new jobs by 2030. It is important to see small business as a continuum and the ease with which enterprises can start, run and grow.

As an initial step, we've identified several variables that explain what we mean by start, run and grow.

For example, we looked at how hard is it for individuals to start and then obtain funding for a business in SA; to what degree is the whole process of paying taxes burdensome; how hard is it to obtain municipal services as business and is the cost of the rates justified?

What about red-tape, skills development, enforcing the rule of law, cross border training?

Over the past two years, start-ups have seen a decline in the following measures: financing for entrepreneurs, government support and policies, skills, and getting credit. They're better off in 2019 finding risk capital and opportunities for networking.

Running a business is harder in respect of market size and infrastructure, but has seen marginal improvements in taxes and bureaucracy, labour market efficiency and business sophistication.

Businesses in the growth phase suffer from poor measurements for research and development transfer, internationalisation and human capital, while scores for protection for minority investors, trading across borders and knowledge and technology outputs have risen.

Our hope is that the SBI Index Tracker will keep us all on our toes in holding all role players to account so we can achieve the president's aspiration of improving our ranking in the World Bank study and in achieving the NDP goal.

Everyone knows that Liverpool managed to come from
3-0 down to beat Barcelona. SA can also overcome the difficult odds?

We have done this before when we overcame apartheid, and built a new nation. All we need is to field our best players, self-belief and support from the crowd.

*Sipho Nkosi is chair of the SBI. The indices we track are Global Entrepreneurship Monitor, Global Entrepreneurship Index, Ease of Doing Business Index, Global Competitiveness Index, Global Innovation Index and Corruption Perceptions Index.

The SBI Index Tracker can be found on our website.

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