“red tape study” - public sector economists forum treasury red tape... · additional/ sector...

“RED TAPE STUDY”

ENVIRONMENT OF SMALL BUSINESS IN KWAZULU-NATAL

Regulations affecting businesses in KZNEach 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 businessLabour 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

Regulations with high information obligation and administrative burdens

0 5 10 15 20

Nothing /don't know

O ther (g eneral fees)

Customs and excise

M ini mum wag e reg ul ati ons

R egi str ati on procedur e

BEE and empowerm ent

H ealth and sfety

M uni c ipal reg ul ati ons and charg es

S ET A /T rai ning

PAYE

U IF

SA R S tax adm in

Labour laws, C CM A, Barg aini ng counci ls

VAT

%

Recurring compliance cost by category

Tax compliance27%

Additional/ sector regulations

21%

Employment equity12%

Annual registration 9%

Information to government

8%

Labour and employment

17%

Local government regulations

6%

PRELIMINARY COMMENTSONE OF MANY STUDIES COMPLETED IN THE PERIOD 2005-2011

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?

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.

WHAT IS OUR PURPOSE?

A “SYSTEM”

ELEMENT

BOUNDARY

INPUTOUTPUT

RELATIONSHIP

SURVEYDETAILSQUESTIONNAIRE 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.

WHAT DOES THE SAMPLE LOOK LIKE?

26.2%

35.1%

12.4%14.1%

12.2%

Pietermaritzburg Durban Newcastle Empangeni Port Shepstone

Figure 2.1:Sample Location

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

0%

10%

20%

30%

40%

50%

60%

70%

Figure 2.2: Sector Locations

Extractive

Transformative

Consumer Services

Business Services

29%

7% 6%

46%

10%

1%

SoleProprietor

FamilyBusiness

Partnership CloseCorporation

Pty(Ltd) NPO

Fig. 2.3: Business Forms

15%

11% 12%

8%

15% 14%

18%19%

18%

21%

18%

22%

18%

14%17%

20%

35%

40%

37%

32%

Extractive Transformative Consumer Services Business Services

Fig 2.5: Age Profile by Sector (Years)

0-1 0-3 0-5 0-10 >10

69%

62%

80%

72%

28%34%

19%24%

3% 4% 2% 4%


Fig 3.1: Employees By Sector0-9 Employees 10-49 Employees 50-100 Employees

EMPLOYMENT SITUATIONAVERAGE NUMBER OF EMPLOYEES: 2.4STATIC EMPLOYMENT SITUATION –SEEMINGLY STABLEUNSKILLED EMPLOYEES LEAST LIKELY TO BE ENGAGEDINFLEXIBLE LABOUR MARKETLABOUR COSTS HIGH, SKILLS SHORTAGES, POOR PRODUCTIVITYFAMILY FUNDED AND OPERATED ENTERPRISES.

22% 23%19%

33%

11%14% 14% 12%

67%63%

67%

55%


Fig 3.2: HistoricEmployment Changes by Sector

Increase Decrease No Change

13%

31%

22%

36%

4% 5% 4% 4%

83%

64%

74%

59%


Fig 3.3: Future Employment Plans


44%

19%

28% 27%

40%

32%

9%

22%

Fig 3.5: Factors Affecting Employment Decisions

BUSINESS PROSPECTS AND FUNDING

TURNOVER PERFORMANCE RELATIVELY STATIC BUT PROJECTED TO IMPROVEOPTIMISM ABOUT FUTURE FINANCIAL PERFORMANCE : “TYPICAL” SME PERSPECTIVEILLEGAL, INFORMAL AND FOREIGN TRADERSRECESSIONARY CONDITIONSCRIME, CORRUPTION AND POLICINGLIMITED USE OF “OFFICIAL” FUNDING SOURCES AND SUPPORT AGENCIES

32%35%

29%

36%

24%

35%

40%

31%

44%

30% 31%34%


Fig 4.1: Turnover Change by Sector


0%

10%

20%

30%

40%

50%

60%

70%

80%

Extr

activ

e

Tra

nsfo

rmat

ive

Con

sum

er S

ervi

ces

Busi

ness

Ser

vice

s

Extr

activ

e

Tra

nsfo

rmat

ive

Con

sum

er S

ervi

ces

Busi

ness

Ser

vice

s

Extr

activ

e

Tra

nsfo

rmat

ive

Con

sum

er S

ervi

ces

Busi

ness

Ser

vice

s

Extr

activ

e

Tra

nsfo

rmat

ive

Con

sum

er S

ervi

ces

Busi

ness

Ser

vice

s

Extr

activ

e

Tra

nsfo

rmat

ive

Con

sum

er S

ervi

ces

Busi

ness

Ser

vice

s


Fig 4.4: Future Financial Prospects by Location and Sector

Confident Not Confident Do Not Know

19%

6% 7%

27%

21%

5% 4%

10%

Fig 4.6: Perceived Problems Affecting Small Business

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

33%

19%

16%

26%

7%

More Government Support Strict Lending Criteria Insufficient Support High Bank Charges More Awareness Needed

Fig 4.7: Financial Support for Small Business

PUBLIC SUPPORT SERVICES

SERVICE DELIVERY IN GENERAL, RATES AND SERVICE CHARGES, ROADSCIVIL SERVICE CULTUREINVOLVEMENT IN LOCAL AUTHORITY AND OTHER GOVERNMENT PROCESSESBRAZIL AND INDIA ARE WORSE!! BUT ENTERPROSE DEVELOPMENT IS TWICE AS FAST!!!

58%

3%

9%

16%13%

Service Delivery Policing Corruption SMME support Political Factors

Fig 4.8: Factors for Improvement in Local Government Practices

RegulationPoorly

Understood/Confusing

Time ConsumingCostly

Compliance Requirements

Health and Safety 15% 18% 14%

Labour 13% 21% 20%

Employment Equity 11% 18% 13%

Planning & Development 11% 14% 12%

Environmental 10% 13% 10%

Taxation 15% 17% 35%

7%10%

16%

22%

6%

36% 35%33%

41%38%

47%44%

36%

23%

44%

10% 11%

15% 14% 12%


Fig 5.1: Quality of Government Information

Good Adequate Poor Not Needed

7%9% 10%

17%

5%

57%53%

38%33%

52%

27% 28%

38%

43%

30%

9% 9%

14%

7%

13%


Fig 5.2: Quality of Government Services

Good Adequate Poor Never Needed

12%

56%

11%

6%

15%

Corruption SMME SupportServices

Service Delivery Crime Red Tape (esp.labour)

Fig 5.3:Key Issues for Attention of Government

7%

17%

42%

23%

12%

Training MunicipalStaff

Municipal Attitudes Enterprise Training ManagementTraining

Improve Availability

Fig 5.4: Required Training Programmes

Average Score Rank

Health 2.94 1Community Safety and Liaison 2.94 2Arts and Culture 2.94 3Office of the Premier 2.88 4Economic Development and Tourism 2.88 5Tourism KZN 2.88 6Social Development 2.81 7Sport and Recreation 2.81 8The Royal Household 2.76 9Education 2.75 10Trade and Investment KZN 2.75 11KZN Growth Fund 2.75 12Human Settlements 2.69 13Provincial Legislature 2.63 14Provincial Treasury 2.63 15Transport 2.63 16Ithala Development Finance 2.56 17Local Government and Traditional Affairs 2.53 18Public Works 2.50 19Agriculture, Environmental Affairs and Rural Development

2.00 20

Rank of Impact

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 66.67 11.11 22.22

Establishment of reliable electronic and web-based reporting system 87.50 0.00 12.50

Agencies sharing information and making sure there are no duplicate information requirements 62.50 12.50 25.00

Better communication and consultations with businesses when developing new regulations 62.50 25.00 12.50

Single location for all regulatory information and announcements 71.43 14.29 14.29

One agency which collects all the required information 80.00 20.00 0.00

Reduce the frequency of reporting requirements 75.00 0.00 25.00

Implement pre-populated forms and reports 66.67 33.33 0.00

Scheduled releases of new and amended regulation/s 50.00 50.00 0.00

RECOMMENDATIONSCOHERENCE OF POLICY OBJECTIVES REQUIREDENTREPRENEURSHIP 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 IMPACTSLOCAL STRUCTURES ESTABLISHED TO ENACT REGULATIONS AND RESOLVE DISPUTESMONITORING OF ILLEGAL TRADING, CRIME AND CORRUPT PRACTICESSERVICE DELIVERY IMPROVEMENTSCULTURE OF CUSTOMER SERVICE AND UNDERSTANDING OF SMALL BUSINESSESUNDERSTAND UNINTENDED SYSTEMIC CONSEQUENCES OF LABOUR AND INSITUTIONAL LEGISLATIONESTABLISH MECHANISMS TO RECORD TRENDS IN THE SMALL BUSINESS ENVIRONMENTRECOGNISE THE NEED TO DEAL WITH SMALL BUSINESSES AS A DISTINCTIVE BUSINESS FORM

“red tape study” - public sector economists forum treasury red tape... · additional/ sector...

Documents