South Africa Preparing New Legislation to Protect SMMEs

In what is seen as a major step to protect small, micro, medium and co-operative enterprises (SMMEs) from bullying by big businesses, non-payment of goods and services, predatory, exploitative practices and anticompetitive practice, South African lawmakers are drafting a new law to police big business.

During the fifth Parliament, following several grievances from small, micro, medium and co-operative enterprises, the Portfolio Committee on Small Business Development resolved to invite and encourage small enterprises to come forward and table their concerns.

Obviously, some did not do so out of fearing reprisals from big or private business.

The committee was aware of its limited powers to hold the executive of big business accountable. So, the committee decided to use the art of persuasion to engage with big players such as Ericsson, Huawei, MTN, Telkom, Vodacom and others on behalf of small enterprises.

But during the engagement, big players such as Vodacom were in “contempt of parliament” due to their non-participatory attitude. For more read: Leaked Recordings – Vodacom, Ericsson and The Cover-Up to Sacrifice MDPS

Last week of November 2019, Vodacom was expected to appear in front of the Portfolio Committee to respond to issues related to their dispute with a KwaZulu-Natal small business, Mobile Diesel Power Systems (MDPS).

MDPS is suing Vodacom. For more read: Couple Sues Vodacom For Close To R100m

Last year, Vodacom promised parliament to solve the problem with MDPS. But to date, absolutely nothing was done by Vodacom to prevent MDPS from closing down with job losses as a consequence.

However, the committee decided three weeks ago not to hold the meeting with Vodacom.

The Department of Small Business Development has already begun with this process.

The new or revised bill is due to be tabled to Parliament during the next financial year, 2020/21, said Siwela.

The new legislation is likely to be similar to the Competition Act or National Credit Act, which made provisions for the creation of hard-hitting institutions like the Competition Commission and the National Credit Regulator.

An alternative recommendation was to review the National Small Enterprise Act and make provision for i.e. Small Enterprise Committee and Tribunal, or, National Small Enterprise Commission and Tribunal.

Siwela added that the issue of MDPS points to a market failure.

But Vodacom said it rejects the intimation of amoral and unethical conduct.

Henro Kruger, a member of the Portfolio Committee and DA MP, was not happy with  Vodacom’s attitude towards SMEs.

He said Vodacom doesn’t care about SMMEs nor does their business model strive to create jobs via SMMEs.

“They act as bullies and their strategy, in this case (of MDPS), was to prolong the process as long as possible until the problem disappears,” Kruger told TechFinancials. “Employees that told me (personally in my office) they represent the CEO (Shameel Joosub) admitted that Vodacom is wrong in this case and will rectify the situation as soon as possible.”

Asked whether Vodacom was in contempt of parliament, Kruger agreed with Siwela that the Portfolio Committee decided not to invite Vodacom due to its non-participatory attitude.

However, he said Joosub was requested to appear before the committee but decided not to do so. Other Vodacom executives, who were requested to appear before the committee include Andries Delport, Till Streichert and Steven Barnwell.

“I believe that MPDS is doing the right thing in claiming damages against Vodacom for loss of income,” Kruger explains.

“It was evident through the process of engaging with Vodacom that there was no respect for Parliament or SMMEs.

“Empty promises and lies were the order of the day. MDPS lost everything because of corrupt officials and management of the Natal region of Vodacom and the top management turned a blind eye to it and thought if the apply bully tactics the problem will be wiped under the carpet.”

Kruger said Vodacom terminated this small business service contract prematurely and without any good reason.

“This is emblematic of various large companies that drag the process as long as possible, knowing well that a small business will eventually suffocate and their problem will disappear.,” he explained.

“This Government that stands for Radical Economic Transformation is not capable of protecting the right to trade for all South Africans.”

To put Small Business Development in South Africa in perspective, the ANC Government spend more than R15 billion over the medium term on Small Business Development across all departments. The Department of Trade and Industry’s latest statistics put the failure rate of small businesses as high as 80%.

With 9,5 million unemployed South Africans, small businesses should drive job creation but are not. – lourie@techfinancials.co.za