ENVIRONMENT OF SMALL BUSINESS IN KWAZULU-NATAL RED TAPE STUDY

Transcription

1 ENVIRONMENT OF SMALL BUSINESS IN KWAZULU-NATAL RED TAPE STUDY

2 Regulations affecting businesses in KZN Each sphere of government have wide-ranging powers to administer certain provisions of national government legislations. Provinces and Municipalities have a direct impact on businesses through their policies on development and planning, zoning and business licensing provincial and municipal regulations are limited in number and predominantly impose once off administrative costs Tax compliance burden and costs are high on the list of regulations constraining growth and development of business Labour laws are also problematic especially for large businesses The tourism, manufacturing, mining, power and water sectors experience the most administrative burden owing to long list of regulations imposed on them

3 Regulations with high information obligation and administrative burdens VAT Labour laws, C CM A, Barg aini ng counci ls SAR S tax adm in UIF PAYE SETA/Training M uni cipal reg ul ati ons and charg es H ealth and sfety BEE and empowerm ent R egi str ati on procedur e M ini mum wag e reg ul ati ons Customs and excise O ther (g eneral fees) Nothing /don't know %

4 Recurring compliance cost by category Information to government 8% Annual registration 9% Local government regulations 6% Tax compliance 27% Employment equity 12% Labour and employment 17% Additional/ sector regulations 21%

5 PRELIMINARY COMMENTS ONE OF MANY STUDIES COMPLETED IN THE PERIOD A SNAPSHOT TAKEN IN THE PERIOD JULY NOVEMBER 2013 INCOMPLETE STUDY THAT REQUIRES FURTHER VALIDATION IN SOME AREAS RED TAPE DEFINED TO EMBRACE THE PUBLIC POLICY FRAMEWORKS OF GOVERNMENT AND THE ADMINISTRATION OF THOSE FRAMEWORKS STATISTICAL SIGNIFICANCE?

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7 SMALL BUSINESS IN MACRO CONTEXT CHALLENGED TO BE MAJOR CREATOR OF EMPLOYMENT. RED TAPE IS ONE PART OF THE TOTAL ENABLING/DISABLING ENVIRONMENT. THE SMALL BUSINESS EXPERIENCE OF GOVERNMENT. DIFFERENT SECTORS HAVE DIFFERING DYNAMICS AND RISK PROFILES. HOLISTIC/ SYSTEM WIDE APPROACH A REASONABLE THOUGHT. SMALL BUSINESS A DISTINCTIVE BUSINESS FORM.

8 WHAT IS OUR PURPOSE?

9 A SYSTEM INPUT OUTPUT ELEMENT BOUNDARY RELATIONSHIP

10 SURVEYDETAILS QUESTIONNAIRE DRIVEN : 1934 RETURNS RECEIVED. INTERVIEWS CONDUCTED WITH LOCAL GOVERNMENT (3), BUSINESS INTERESTS (2) AND A BUSINESS SUPPORT AGENCY (1). RANDOM SAMPLING USED, GIVEN NATURE OF SURVEY TEAM. DESIRABLE TO CONDUCT FURTHER VALIDATING WORK, E.G. FOCUS GROUPS, SME INTERVIEWS.

11 WHAT DOES THE SAMPLE LOOK LIKE?

12 Figure 2.1:Sample Location 35.1% 26.2% 12.4% 14.1% 12.2% Pietermaritzburg Durban Newcastle Empangeni Port Shepstone

13 SECTOR (NUMBER OF RESPONSES) EXTRACTIVE (33) TRANSFORM ATIVE (518) CONSUMER SERVICES (900) BUSINESS SERVICES (319) Sector Constituents Agriculture Forestry Fishing Mining Construction Manufacturing Transport Communicatio ns Utilities Wholesale Retail Motor Vehicle Hospitality Personal Education Recreation Finance Insurance Real Estate

14 Figure 2.2: Sector Locations 70% 60% 50% 40% 30% 20% 10% 0% Extractive Transformative Consumer Services Business Services

15 Fig. 2.3: Business Forms 46% 29% 7% 6% 10% 1% Sole Proprietor Family Business Partnership Close Corporation Pty(Ltd) NPO

16 Fig 2.5: Age Profile by Sector (Years) >10 35% 40% 37% 32% 21% 18% 18% 18% 18% 17% 15% 15% 14% 14% 11% 12% 22% 19% 20% 8% Extractive Transformative Consumer Services Business Services

17 Fig 3.1: Employees By Sector 0-9 Employees Employees Employees 80% 69% 62% 72% 28% 34% 19% 24% 3% 4% 2% 4% Extractive Transformative Consumer Services Business Services

18 EMPLOYMENT SITUATION AVERAGE NUMBER OF EMPLOYEES: 2.4 STATIC EMPLOYMENT SITUATION SEEMINGLY STABLE UNSKILLED EMPLOYEES LEAST LIKELY TO BE ENGAGED INFLEXIBLE LABOUR MARKET LABOUR COSTS HIGH, SKILLS SHORTAGES, POOR PRODUCTIVITY FAMILY FUNDED AND OPERATED ENTERPRISES.

19 Fig 3.2: Historic Employment Changes by Sector Increase Decrease No Change 67% 63% 67% 55% 33% 22% 23% 11% 19% 14% 14% 12% Extractive Transformative Consumer Services Business Services

20 Fig 3.3: Future Employment Plans Increase Decrease No Change 83% 74% 64% 59% 31% 36% 22% 13% 4% 5% 4% 4% Extractive Transformative Consumer Services Business Services

21 Fig 3.5: Factors Affecting Employment Decisions 44% 40% 28% 27% 32% 19% 22% 9%

22 BUSINESS PROSPECTS AND FUNDING TURNOVER PERFORMANCE RELATIVELY STATIC BUT PROJECTED TO IMPROVE OPTIMISM ABOUT FUTURE FINANCIAL PERFORMANCE : TYPICAL SME PERSPECTIVE ILLEGAL, INFORMAL AND FOREIGN TRADERS RECESSIONARY CONDITIONS CRIME, CORRUPTION AND POLICING LIMITED USE OF OFFICIAL FUNDING SOURCES AND SUPPORT AGENCIES

23 Fig 4.1: Turnover Change by Sector Increase Decrease No Change 32% 24% 44% 35% 35% 40% 30% 31% 29% 36% 31% 34% Extractive Transformative Consumer Services Business Services

24 Extractive Transformative Consumer Services Business Services Extractive Transformative Consumer Services Business Services Extractive Transformative Consumer Services Business Services Extractive Transformative Consumer Services Business Services Extractive Transformative Consumer Services Business Services 80% 70% 60% 50% 40% 30% 20% 10% 0% Fig 4.4: Future Financial Prospects by Location and Sector Pietermaritzburg Durban Newcastle Empangeni Port Shepstone Confident Not Confident Do Not Know

25 Fig 4.6: Perceived Problems Affecting Small Business 27% 19% 21% 6% 7% 5% 4% 10%

26 Intended Strategy Percentage of Respondents Improve share of existing markets 40 Access to new local markets 33 Access to export opportunities 9 Opening additional business site(s) 21 Forming alliances or joint ventures 12 New product development 29 New process development 13 Increased number of employees 20 Employee skills upgrading 26 Expansion of existing facilities 20 Relocation to new site 15

27 Fig 4.7: Financial Support for Small Business 33% 26% 19% 16% 7% More Government Support Strict Lending Criteria Insufficient Support High Bank Charges More Awareness Needed

28 PUBLIC SUPPORT SERVICES SERVICE DELIVERY IN GENERAL, RATES AND SERVICE CHARGES, ROADS CIVIL SERVICE CULTURE INVOLVEMENT IN LOCAL AUTHORITY AND OTHER GOVERNMENT PROCESSES BRAZIL AND INDIA ARE WORSE!! BUT ENTERPROSE DEVELOPMENT IS TWICE AS FAST!!!

29 Fig 4.8: Factors for Improvement in Local Government Practices 58% 3% 9% 16% 13% Service Delivery Policing Corruption SMME support Political Factors

30 Regulation Poorly Understood/Con fusing Time Consuming Costly Compliance Requirements Health and Safety 15% 18% 14% Labour 13% 21% 20% Employment Equity Planning & Development 11% 18% 13% 11% 14% 12% Environmental 10% 13% 10% Taxation 15% 17% 35%

31 Fig 5.1: Quality of Government Information Good Adequate Poor Not Needed 47% 44% 41% 36% 35% 36% 33% 38% 44% 22% 23% 7% 10% 10% 11% 16% 15% 14% 6% 12% Pietermaritzburg Durban Newcastle Empangeni Port Shepstone

32 Fig 5.2: Quality of Government Services Good Adequate Poor Never Needed 57% 53% 52% 43% 27% 28% 38% 38% 33% 30% 7% 9% 9% 9% 10% 14% 17% 7% 5% 13% Pietermaritzburg Durban Newcastle Empangeni Port Shepstone

33 Fig 5.3:Key Issues for Attention of Government 56% 12% 11% 6% 15% Corruption SMME Support Services Service Delivery Crime Red Tape (esp. labour)

34 Fig 5.4: Required Training Programmes 42% 23% 17% 12% 7% Training Municipal Staff Municipal Attitudes Enterprise Training Management Training Improve Availability

35 Rank of Impact Average Score Rank Health Community Safety and Liaison Arts and Culture Office of the Premier Economic Development and Tourism Tourism KZN Social Development Sport and Recreation The Royal Household Education Trade and Investment KZN KZN Growth Fund Human Settlements Provincial Legislature Provincial Treasury Transport Ithala Development Finance Local Government and Traditional Affairs Public Works Agriculture, Environmental Affairs and Rural Development

36 Measures in reducing the regulatory compliance burden Options (Indicate TOP 3) Top 1 Top 2 Top 3 Reduce the duplication of regulation across government departments and spheres of governments Establishment of reliable electronic and web-based reporting system Agencies sharing information and making sure there are no duplicate information requirements Better communication and consultations with businesses when developing new regulations Single location for all regulatory information and announcements One agency which collects all the required information Reduce the frequency of reporting requirements Implement pre-populated forms and reports Scheduled releases of new and amended regulation/s

37 RECOMMENDATIONS COHERENCE OF POLICY OBJECTIVES REQUIRED ENTREPRENEURSHIP SUPPORT IN EDUCATION SYSTEM (ED AS HIGHER PRIORITY IN BEE AGENDA) INVESTIGATION INTO LOW NUMBERS OF START-UPS AND PUBLIC FUNDING MECHANISMS FOR ADOPTION OF A SYSTEMS APPROACH IN FRAMING REGULATIONS AND THEIR IMPACTS LOCAL STRUCTURES ESTABLISHED TO ENACT REGULATIONS AND RESOLVE DISPUTES MONITORING OF ILLEGAL TRADING, CRIME AND CORRUPT PRACTICES SERVICE DELIVERY IMPROVEMENTS CULTURE OF CUSTOMER SERVICE AND UNDERSTANDING OF SMALL BUSINESSES UNDERSTAND UNINTENDED SYSTEMIC CONSEQUENCES OF LABOUR AND INSITUTIONAL LEGISLATION ESTABLISH MECHANISMS TO RECORD TRENDS IN THE SMALL BUSINESS ENVIRONMENT RECOGNISE THE NEED TO DEAL WITH SMALL BUSINESSES AS A DISTINCTIVE BUSINESS FORM

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