Ann Bernstein, executive director of the Centre for Development & Enterprise (CDE), has called for the closure of the Department of Small Business Development. She argues that South Africa’s current economic situation requires a reevaluation of government spending and resource allocation. Bernstein points out that the government is struggling to balance the national budget and is considering tax increases.
However, Edward Kieswetter, Commissioner of the South African Revenue Service (SARS), has argued that increasing tax rates is not the solution to the nation’s fiscal challenges. Bernstein also highlights the early retirement plan approved for 30,000 civil servants aged over 55. She suggests that streamlining government operations is necessary to reduce expenditures effectively.
She questions whether the Department of Small Business Development has fulfilled its mandate and suggests that its functions might be better integrated into other existing government frameworks. Bernstein emphasizes the urgency of making difficult decisions to create an agile and efficient government structure. She believes this is necessary to address South Africa’s complex economic challenges.
In a series of reports focused on priorities for the Government of National Unity (GNU), the CDE looked at how small business development can be accelerated. Bernstein criticized the idea that government officials with no experience in starting businesses are qualified to drive a dynamic small business sector. “The facts show that over 15 years they haven’t delivered,” she said.
The state has spent R6bn a year on small business development, “and we can’t see where it has gone.
The CDE recommends scrapping the government’s department of small business development and bringing in people from the private sector who have first-hand experience. “They’re not perfect, but they certainly have more experience in how firms work, how you grow them from small to medium, and what support they need,” Bernstein said.
Call to streamline government operations
She cited India’s example from the early 1990s, where deregulation and cutting red tape led to high growth rates. “Let’s get beyond the rhetoric of the president’s red tape reduction task team and actually do it,” she urged. Bernstein also questioned whether the government has paid attention to her reports and recommendations.
However, she noted that since the GNU started operating, she has been invited to strategy planning meetings in several departments and is now a member of the advisory think-tank for the Minister of Trade, Industry & Competition. The CDE has also made strong recommendations concerning the National Prosecuting Authority (NPA) and its failure to prosecute senior politicians involved in state capture or ongoing corruption. Bernstein believes the NPA lacks the necessary support from the executive.
She highlighted that NPA head Shamila Batohi wrote to President Cyril Ramaphosa in August 2023, asking him to suspend a senior NPA director suspected of being captured, but there has been no response. The NPA also still lacks full access to the Zondo archives, limiting its ability to act. Bernstein criticized business leaders for being too eager to align with the president without pushing for more urgent action.
“We’re not doing enough, we’re not making enough progress, and we’re not doing it fast enough,” she said. She emphasized the lack of urgency in the government’s approach to fundamental reforms. “The dominant view is we must just carry on with a whole lot of things from the previous administration that have got us into the crisis we’re in on almost every front.
We have to send some big, bold signals that we’re going to do things differently to get growth,” Bernstein stated. “We’re in deep, deep trouble, and just doing what we’ve always done, or carrying on with reform in a hesitant, not very fast, manner is not sufficient,” she concluded.
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