Red tape counterproductive for SMEs, says South African minister

Red tape counterproductive for SMEs, says South African minister

Red tape, a set of bureaucratic processes an application goes through before any official action is taken, is a huge obstacle for the survival of small and medium enterprises (SMEs).

This is the view of South African trade and industry minister Rob Davies, whose country is one of the most bureaucracy-infested in the world, and where it can take up to a year before getting any official response from its slow administration machine.

Davies was speaking at the launch of guidelines for reducing municipal red tape in SMEs in Johannesburg.

“Red tape is inappropriate or unduly restrictive legislative and regulative conditions and relate to overlaps and duplication caused by unnecessary or inflexible regulations, where the convenience of bureaucracy overrides the impediment which is imposed on the clients,” he said.

Many South African companies, including SMEs, which plan to import rare skills into the country – employ highly skilled foreigners – often see their plans curtailed when the work permits for these employees take up to two years to be delivered.

And this week, the minister said red tape places a burden on SMEs. Its reduction is based on a recognition that small businesses in South Africa are suffering from excessive red tape, not only in municipalities but at provincial and national level, in all their interactions with government and with big business, Davies added.

Vice-minister of cooperative governance and traditional affairs Yunus Carrim said government was aware of the capacity challenges experienced at municipalities and that these guidelines will strengthen municipalities.

Photo: South African minister of trade and industry Rob Davies

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