SMEs should take on a ‘bottom up’ approach with government - CNBC Africa

SMEs should take on a ‘bottom up’ approach with government

Southern Africa

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Small business owner. PHOTO: Getty Images

“The average citizen, meaning small businesses, must take an attitude that they are volunteers, not supplicants. They must seize the opportunities that are there and it requires both a top down and a bottom up approach. What we’ve seen over the few years is too much of top down approach,” Raymond Parsons, a special policy advisor at Business Unity of South Africa (BUSA), told CNBC Africa.

This follows after South Africa’s Finance Minister Pravin Gordhan broadcasted the country’s national budget for 2014 on Wednesday. Gordhan announced that the budget will allocate 6.5 billion rand over the next three years to support SMEs.

(WATCH: South Africa's 2014 Budget Speech)

Parsons explained that businesses should not sit back and wait for the government to take action in implementing the SMEs allocation, but to rather come forward and assist the state in getting it off the ground.

“My message to businesses is that there are a number of positive interventions here [in the budget], which you must engage in and say we want to make this happen. Don’t sit back and wait for a bureaucrat to call you,” he explained.

While many voices from the business world agreed that the budget was very positive, realistic and balanced, Matsi Modise, executive director of the South African Black Entrepreneurs Forum (SABEF), argued that the government needs to find ways to filter these budget allocations down to the average man on the street.

“South Africa has been notorious for having great initiatives and spending a lot of money. The budget was quite considerate, 6.5 billion rand to supporting small businesses, it’s a considerable amount but now the question is, how is it going to filter down to the guy on the street that’s trying to build a small business?,” she questioned.

“A lot of money has been deployed clearly but the administration of that money is a concern. Over the past five years, about 100 billion rand has been spent on supporting and funding small businesses but till this day we are still stuck with a rate of 25 percent of unemployed people and 70 percent of those are youth.”

She added that government and business engagements have been a challenge as they normally engage in a top down approach and never bottom up, which means that government doesn’t know the actual requirements of small businesses on the ground.

Edward Kieswetter, chief executive officer of Alexander Forbes, added that a major challenge is the implementation of policies and regulatory frameworks, and he believes that much more progress is still needed.

“The challenge always comes with the implementation of some of these policies and regulatory instruments, and yes I think a lot of work still has to happen in terms of ensuring that those frameworks and provisions that are either given through the tax or other measures actually filter down and impact on the actual programmes,” said Kieswetter.

“I think we can still step up and improve the levels of the dialogue and also the specificity with which some of these measures are implemented.”