Jonathan Oppenheimer, scion of the family behind Anglo American and De Beers, is issuing a stark warning: South Africa's crippling red tape is suffocating small businesses and jeopardizing the nation's economic future. He's urging the government to urgently step back and allow entrepreneurs to flourish without being bogged down by excessive administrative burdens.
Small Businesses on the Brink
Small and medium-sized enterprises (SMEs) are the backbone of the South African economy, representing a staggering 91% of formal businesses and contributing over a third of the GDP. However, the country's economic growth has stagnated for a decade, while operating costs, licensing fees, and compliance expenses have skyrocketed. An index by Absa Group and the South African Chamber of Commerce and Industry reveals a grim reality: over half of the country's small firms are at risk of closure within a year if conditions don't improve.
Oppenheimer argues that the government needs to be acutely aware of the time and cost pressures faced by these businesses. "The most powerful thing the government could do is get out of the way, particularly in the entrepreneurial space," he stated. He clarified that he isn't advocating for a completely unregulated environment, but rather for a government that understands the critical importance of time for small businesses.
World Bank Echoes Concerns
The World Bank has consistently highlighted the detrimental effects of excessive red tape, particularly on smaller companies. It hinders hiring, undermines business creation, and is now manifesting as "signs of paralysis" within the South African economy. The country's GDP growth has averaged less than 1% annually over the past decade, underscoring the urgency of addressing these issues.
Oppenheimer's COVID-19 Intervention
During the COVID-19 crisis in 2020, the Oppenheimer family demonstrated their commitment to supporting South African SMEs by donating R1 billion to establish the South African Future Trust. This organization provided concessionary loans to approximately 10,000 companies in a remarkably short timeframe of just 34 working days. Oppenheimer has indicated that the trust intends to reinvest recovered funds to further support small businesses.
The message is clear: cutting red tape is not just a desirable policy, it's an economic imperative for South Africa's survival and future prosperity.