Share Article

With the 2021 Municipal Elections on 01 November fast approaching, there has been much public debate around the role of local government in supporting and providing services to communities. The pivotal role that local government plays in the operational affairs of small and medium-sized enterprises (SMEs) is however often overlooked. South African small business owners are acutely affected by decisions taken at a municipal level and as such, they should never underestimate the importance of their vote and the value of active participation.

At the very onset of the business process, local government decisions have implications for the licensing of start-ups. Currently, the license that entrepreneurs require to start their own businesses is governed by the Business Act No. 71 of 1991 (and as Amended No. 186 of 1993).

A number of considerations are taken into account when issuing business licenses and the process may involve physical inspections to ascertain the viability of the business, its impact on environmental health and safety, town planning (for brick-and-mortar establishments) and regulations around the preparation and serving of food. Over and above inspections by health and safety officials, there are also many by-laws that are taken into account. Failure to demonstrate compliance with these by-laws can result in licenses not being issued or SMEs being shut down.

Local government also plays a significant role in the development of SMEs – a role that should be informed by practical knowledge and experience coming from SMEs on the ground. The establishment of business support service centres will only be prioritised if small business owners actively participate in the decision-making and feedback process.

The relationship between local government and SMEs is symbiotic in the sense that it is in the government’s best interest for small businesses to thrive as job creators and income generators. It is commonly reported that small businesses are the backbone of the South African economy, from the informal trading sector right through to tech businesses who are leading the charge in innovation on the continent.

Municipalities have dedicated Local Economic Development (LED) offices within their departments. These offices engage extensively with SMEs whose experiences and advice ultimately shapes policy. To ensure an enabling environment for small businesses, reliable infrastructure and  accessible, user-friendly regulatory processes for SMEs at a grassroots level is crucial.

Local government is acutely aware that small business owners are in their own right, investors into the local economy. It is the duty of the local government to encourage SME participation in initiatives and forums initiated by the LED offices in each province and the duty of the private sector to partner with government and civil society in making decisions that positively impact the business landscape as a whole.

The votes of small business owners matter not only in their individual capacities as South African citizens but also as contributors to the local economy. LED initiatives shape the business environment within municipalities. Currently, one of the biggest challenges that local municipalities face is creating appropriate growth strategies for entrepreneurs in both the formal and informal sectors. Business incubators and support initiatives for example, are key to the prosperity of the SME environment, and requires regulatory reform from the ground up to be realised.

Regulatory reform does not only involve government – it relies on the participation of small business owners as professionals, administrators, lawyers and economists. In short, your vote as an SME owner goes a long way in creating the environment your business needs to thrive.


About the Author: Ben Bierman

Avatar photo
Ben Bierman has been our Managing Director since 2015. He joined our company in 1990 and has risen through the ranks occupying various positions ranging from being a management accountant, Head of Information Technology and Chief Financial Officer. Ben is an avid reader, enjoys classical music and being in the outdoors including for hunting trips. He is our go-to-spokesperson for our SME Confidence Index, SME sector policy and trend matters, and business leadership articles.