Gauteng finance and economic development MEC Lebogang Maile has made a plea to SA Reserve Bank governor Lesetja Kganyago to prevent the liquidation of embattled black-owned footwear company Drip.
Maile wrote a letter to Kganyago requesting that he initiate a rehabilitative intervention and not a punitive one when dealing with Drip’s failure to comply with tax law legislation.
Lekau Sehoana founded Drip, which is having issues with tax law non-compliance.
“In the letter to the governor, the MEC has expressed unwavering respect and commitment to the rule of law, which extends to the respect of the investigative process that the SARB [SA Reserve Bank] has undertaken in its legal matter with the company that is under investigation for the contravention of the provisions of the Exchange Control Regulations, made under Section 9 of the Currency and Exchanges Act, 1933 [Act No. 9 of 1933],” said Castro Ngobese, the spokesperson for Maile.
Law should be rehabilitative
“The investigation, instituted by the financial surveillance department [FinSurv] of the SARB, has been ongoing for just over two years.
“The MEC has communicated that in respecting the rule of law and wanting to maintain the very crucial principle of the separation of powers, it’s important that the law should never be punitive but rather rehabilitative.”
Ngobese continued: “When the law is rehabilitative, it makes allowance for business owners, particularly SMMEs [small, medium and micro enterprises], to understand the depths of tax laws and other laws, which most are not exposed to, and, as a result, place their complete faith in third parties who, unfortunately, can take advantage of this limited understanding.
“This, sadly, has happened to many SMMEs, including the Drip Group.
“MEC Maile is of the belief that the government of Gauteng has an obligation to help businesses in the province in material and non-material ways,” said Ngobese.
Maile said many SMMEs do not survive such challenges, and this is a contributing factor in why between 70% and 80% of them fail within the first five years.
Support for SMMEs facing challenges
Maile said: “We cannot sit back and watch. The Drip Group, a company founded in the township of Ivory Park by a young black man who had the odds stacked against him, was liquidated.
“The company provides employment to hundreds of people, many of them from historically disadvantaged groups that include women and youth.
“As a government, we must do everything possible to provide the necessary support to the Drip Group and other SMMEs that are facing challenges, particularly when such challenges arise from failures of compliance with legislation, which is not the same thing as blatant and intentional criminality.”
The MEC added that his intervention is meant to promote and boost the township economy in Gauteng.
Punitive approach discouraged
He said: “We have an obligation to equip such businesses with the necessary skills and ask that the government, private sector, and civil society all play their part in helping these businesses succeed.
“Part of what that demands is that institutions such as SARB also assist us in equipping these businesses with the requisite knowledge and skills rather than applying a punitive approach.
“In this way, we can ensure the sustainability and survival of township businesses and SMMEs broadly, thereby growing and developing the provincial economy to the benefit of all the people of Gauteng.”
Hats off to you Maile. I do hope Kganyago will adhere to your request on behalf of all small and medium businesses.
Didn’t he study finance and accounting….surely then he should know the laws and regulations instead of pleading innocent. this sets a dangerous precedent for all businesses and owners.
what township business is made in China and rips local saffers of their hard earned money…smme’s fail because we are greedy and rather not spend money on professional help for all this business cost. government should make Chartered Accountants do free internships at smme to do all the work smme can’t do themselves.