Tragedy and farce of South Africa's red-tape explosion
KARL Marx famously wrote that history repeats itself, first as tragedy and then as farce. Few in South Africa’s business community are natural disciples of Marx, but given South Africa’s tortuous business environment, one might find bemused agreement. About 7-million South Africans are either unemployed or discouraged from seeking work.
Worldwide best practice holds that business fares best in a clear, navigable regulatory framework. Red tape is not a peripheral concern.
According to our SME Growth Index, the average small enterprise is spending about 4% of its turnover on compliance with regulatory demands. Among the manufacturing firms in the index, this proportion represents, on average, R400,000 a year.
In his "Rubicon" speech, then president PW Botha said there were "too many rules and regulations in our country serving as stumbling blocks in the way of entrepreneurs". A decade and a political transition later, the Reconstruction and Development White Paper was promising "favourable amendments to legislative and regulatory conditions".
Nearly 20 years later, the Presidential Business Working Group was warning about the regulatory burden. After about 30 years of acknowledging the regulatory burden as excessive, perhaps it is more accurate to say that it is impossible to distinguish between tragedy and farce.
If anything, red-tape costs are rising. In 2004, we studied the cost of red tape to South Africa’s economy, which were about 6.5% of gross domestic product, or R79bn a year.... Read the full, comprehensive news article and discuss at Business Day