Durban — Poor service delivery from local government is crippling South African businesses and impeding the growth of the small and medium-scale enterprises (SMME) sector.
This is the view of DA MP Henro Kruger and the party’s spokesperson on Small Business Development.
Kruger said the SMME sector is a crucial contributor to job creation, but the degree of support provided to it by local government has thus far been unacceptably inadequate, making it hard for a small business to be successful.
Kruger said sustained growth by SMMEs and the viability of start-ups in the sector were undermined by bureaucracy, over-regulation, inconsistent electricity supply, and a severe lack of proficient municipal services.
“Local economic development and high-quality municipal service delivery to support small businesses are crucial if South Africa wants to broaden economic participation and reverse its unemployment trend,” Kruger said.
Local governments need to strengthen service delivery, which includes constant electricity availability, clean water supply, raw sewerage collection and disposal, refuse removal, accessible municipal roads, and stormwater drainage, he said. This would generate conducive environments wherein the SMME sector can flourish.
Kruger believes that reasons for the high failure rate among start-up SMMEs extend beyond burdensome over-regulation and unnecessary bureaucratic procedures, to inefficient municipal services.
“No two municipalities are the same, but there are many cross-cutting service delivery problems inhibiting trade,” he said.
Kruger believes that the most significant factors that contribute to poor quality public service delivery are lack of qualified staff; a lack of capital expenditure; inappropriate and paralysing supply chain management; poor revenue generation and management; irregular, wasteful and unauthorised expenditure; corruption and an inability to hold guilty parties to account; and underspending on repairs and maintenance.
Kruger said economic growth in South Africa depends on municipalities’ competence to support businesses. Municipalities must ensure service delivery does not throttle the already struggling business sector.
Kruger has started a survey portal to monitor non-compliant service delivery by municipalities. The survey will allow him to gain in-depth knowledge of the problems businesses experience in municipalities not delivering services as they should.
Former Finance MEC and current premier of Kwazulu-Natal, Nomusa Dube-Ncube, held a meeting in August in Ugu District as part of the provincial treasury’s SMMEs Outreach Programme, aimed at assisting rural-based SMMEs and small businesses to overcome the challenges they faced.
The Q4 2021 SME Index conducted by specialist business financier, Business Partners Limited, showed the confidence level of small and medium-sized enterprise business owners that their businesses will grow in the next 12 months has increased to 71% – up almost 40% from the previous quarter.
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