Staff Writer | 12 June 2023
The Department of Small Business Development has gazetted its intentions to introduce a new bill to parliament, which would see a new state-owned company established in the country to support small businesses.
Minister Stella Ndabeni-Abrahams said that The National Small Enterprise Amendment Bill would amend the National Small Enterprise Act, making way for the new state company, as well as allow for the establishment of a small business ombudsman, and expand the minister’s powers in the sector.
Specifically, the bill enables the minister to declare certain practices in relation to small enterprises to be prohibited as unfair trading practices and to make regulations regarding them.
The bill will also deal with changes to definitions of small businesses in South Africa by getting rid of the “very small” category and moving away from using asset value as a criterion.
New state-owned company
The new bill would allow the department to establish a new state company in the form of the Small Enterprise Development Finance Agency (SEDFA).
This would see the subsequent disestablishment of the Small Enterprise Financing Agency (Sefa), the Co-operative Banks Development Agency (CBDA) and the Small Enterprise Development Agency (Seda), the department said.
This is part of a concerted effort to rationalise the number of public entities, it said.
SEDFA’s role would be to provide support – both financial and non-financial – to small enterprises, including co-operatives.
“The purpose of SEDFA will be to ensure that the small enterprise and cooperative ecosystem is able to offer the most efficient business advice, business development services, investment support, business facilitation and incubator support,” the department said.
“The vision of the SEDFA is to be a leading business development entity that will drive economic transformation and inclusive growth in the economy through ensuring the provision of customised financial and non-financial support and greater access to finance for small enterprises and co-operatives.”
The state will be the sole shareholder of the company, with the minister as the sole representative of the shareholder. Finances for SEDFA will be derived from money appropriated by Parliament, grants, donations and bequests made to the SEDFA, funding raised through investments and money lawfully obtained or raised by SEDFA from any other source.
Ombud
The bill also provides for the establishment of the Office of the Small Enterprise Ombud Service and outlines the functions of the office.
Broadly, the ombud will be required to consider and dispose of complaints by small enterprises in relation to the interpretation of the terms of an agreement for the procurement of goods or services or the late or non-payment of amounts due and payable to the small enterprises.
Through consultation with the ombud, the minister responsible for small business development, by notice in the Gazette, can declare certain practices in relation to small enterprises to be prohibited unfair trading practices.
It furthermore empowers the minister to make regulations relating to unfair trading practices and deal with “mischief” in the sector.
“The mischief the bill aims to remedy is the lack of effective and affordable access to a justice mechanism for small enterprises,” the department said.
“Business-to-business disputes and late or non-payment of amounts due and payable to small enterprises, are a significant reality in the lives of small enterprises across the world, with very adverse implications on their growth.
“Therefore, like all businesses, small enterprises need effective mechanisms to resolve their disputes in an efficient and cost-effective manner.”
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