Minister of Small Business Development Stella Ndabeni-Abrahams maintains that the National Small Enterprise Amendment Act will foster growth in South Africa.
President Cyril Ramaphosa signed the act, dubbed a one-shop-stop for small businesses, on Tuesday.
Ramaphosa said this will organise support services that the government has provided to small and medium businesses. This in an effort to improve the South African economy.
It incorporates the Small Enterprise Finance Agency (Sefa) and the Cooperatives Bank Development Agency (CBDA) into the Small Enterprise Development Agency (Seda).
Act gives minister powers
“The act also establishes the Office of the Small Enterprise Ombud Service. It may recommend that the minister declare certain practices prohibited unfair trading. This in relation to small enterprises as part of dealing with complaints,” said Ramaphosa.
The department’s spokesperson Cornelius Monama said it welcomes the formation of the ombud services. He said having an ombud services office will help to reduce legal costs as it avoids costly litigation processes.
Monama said it has been a concern for the department that it lacked effective and affordable justice mechanism.
“Business-to-business disputes and the late and non-payment of legitimate invoices remain a significant reality. This… in the lives of small enterprises and cooperatives. And with very real implications for their growth and sustainability,” said Monama.
New ombud office a relief for SMMEs
Having an ombud office would also mean that that the SMMEs would avoid the costly litigation route. Instead they will make use of the office.
Monama said the resolution by the ombud would be mandatory and binding. He assures that the provisions will continue to protect the constitutional rights of everyone involved.
“The act also enables the minister to declare certain trading practices as unfair practices. This in relation to small enterprises, on recommendation of the ombud. It sets the parameters and procedures. In terms of which the minister, by notice in the Gazette, may declare certain practices to be prohibited unfair trading practices,” said Monama.
“The unfair trading practices relate to exclusionary compliance requirements for small enterprises. Also retrospective changes to contracts, ambiguous contracts, sudden and unjustified termination of a commercial relationship. Or termination without reasonable notice to SMMEs and cooperatives,” he added.
