The Department of Small Business Development conducted a comparative analysis of SMME legislation from eight countries to the National Business Act no 102 of 1996 as amended in 2003 and 2004.[1] We have added another layer to the comparison and looked at the National Small Enterprise Amendment Act No. 21 of 2024 which recently came into force. This is the second part of the results from the comparative analysis, to read the first part of the results, click here.
The establishment of SEDFA appears to be the main focus of the Amendment Act with not much detail added to address some glaring necessities for South African SMMEs. Some of the aspects that require urgent focus include:
i) Lack of support for entrepreneurs who have failed and faced bankruptcy to be able to quickly access a second chance. In South Africa, such an entrepreneur would find it extremely difficult to obtain funding.
ii) Failure to address the need for simplification was also another glaring shortcoming of the Amendment Act. The countless administrative tasks that entrepreneurs are required to fulfill can be discouraging.
iii) Improving SMME access to finance and the development of a legal and business environment that supports timely payment of SMMEs is a factor that must be addressed as soon as possible. Late payments of SMMEs have been responsible for a lot SMME failures.
iv) There needs to be an explicit prioritisation of imparting skills including knowledge transfer and intellectual property (IP) commercialisation. The impact that IP can have on a business is immense. The chances of a business growing and generating revenue are significantly increased when a business has filed a least one IP right (i.e. patents, trademarks, designs etc.).
It is not all doom and gloom and the fact that our legislation is being amended to try and address some of the shortcomings that were identified is a step in the right direction.
References:
[1] http://www.dsbd.gov.za/sites/default/files/reports/report-on-smme-legislation.pdf
[2] National Small Enterprise Amendment Act No. 21 of 2024
