Red Tape Reduction Roll-outthe dti, CoGTA & SALGA

Contents1. Foundation and current status of RTR within the country2. National Roll-out of LRTR objectives overview 3. Symptoms of Red Tape4. Rationale for Red Tape Reduction at local government5. Variables/indicators for Red Tape Reduction assessment6. Approaching Red Tape Reduction from different perspectives7. Red Tape Reduction Programme Cycle8. Broad steps for developing Red Tape Reduction Plan9. Positive attributes of Reducing Red Tape from one case study10. RTR linkages between National, Provincial and Local

Government

THE 10 YEAR STRATEGIC APPROACH2004-2014

Strategic Pillar 3:

Reduce small enterprise regulatory constraints

Strategic Pillars for the SMME Strategy

Increase Supply for financial and

non-financial support services

Strategic Pillar 2: Strategic Pillar 1:

Creating demand for small enterprise

products and services

Collaborative approaches;• Streamline resources from

the public sector and crowd-in private sector resources

Public sector procurement strategy as a lever for increased demand • BEE codes of good

practice as a lever increased demand

Establish a regulatory impact assessment framework and monitoring mechanism

Foundation and current status on Red Tape Reduction

1. Comprehensive reviews conducted within government to assess the regulatory environment as per Cabinet directive since 2005

2. Different departs mandated to conduct regulatory assessments impacting SMMEs - taxation, labour, tourism, ( the dti and dplg: focus on municipalities)

3. Training manual cutting red tape, Improving local business environment, pilot on improving the regulatory environment (2006 – current). Regulatory review reiterated by Cabinet in 2013.

4. The vision for 2030 regarding SMME development as outlined on NDP highlights the need to have a simplified regulatory environment and better coordination of SMME policies and programmes

5. How do we effectively contribute towards this vision? creating a conducive environment for SMMEs by ensuring continuous assessment of regulatory and institutional environment within the different sectors (access business opportunities)

6. Partnership between the dti, cogta and salga guidelines for reducing municipal RTR - 12 municipalities within the country based in 6 provinces.

New local municipalities buy-in

Coordination of the Roll-out Process (clustering)

Highlight success stories

Processes Methodology Tools Sessions

Effective utilisation of the guidelines

Access to Business Opportunities by SMMEs

Improved Regulatory Reform

Assess Action Plans Variables (12 Piloted)

Solicit Partnerships with the Private Sector

Provide Support & Address Challenges

Stakeholder mobilisation and awareness creation

Initiate Roll-out in new Municipalities

Encourage benchmarking and networking

Support Provincial Red Tape Reduction Initiatives

Progression

Time

Baseline

Goals

Roll-out

Objectives of the national roll-out1. Enhance best practice and lessons learned on Municipal

Red Tape Reductiona. LED to define itself as an economic actor within the local economy (provincial and

local govt. policies, regulations and strategies)b. Target specific sectors for investment and economic growthc. Encourage local procurementd. Availability of services and infrastructure for economic developmente. Simplify regulation and by-laws to stimulate economic developmentf. Non-financial Regulations (Town Planning, Business Licensing, Informal trading) vs.

Financial Regulations (Property Rates, Supply Chain Management, Debt and Credit Control)

2. Sustain capacity and implementation of Local Red Tape Reduction Processes

3. Encourage Public Private Partnership initiatives that prioritise SMME development

a. Relationships between business and supporting institutions can affect stimulation of the local economy

b. The intensity of the dialogue quality, depth, sustainabilityImpact of municipal regulations on SMMEs: 2006

Objectives of the national roll-out4. Improve the Local Business Environment via Red Tape

Reductiona. Many concerns within LBE result in constraints to growth of SMMEs (regulatory

systems, improving govt. services, effective management of informal sector)b. Improvement of LBE to incorporate within the RTR Programme i.e. local business

climate/context, business retention and expansion

5. Initiate the institutionalisation of Red Tape Reduction Practices at local government levela. Long-term sustainability depends on guidelines adoption, RTR incorporated within performance of institutions and eventual institutionalisationb. Current programme initiated RTR at local govt. level (local municipalities) ultimate goal

conduct RTR within all spheres including enterprise development agencies utilising multi-disciplinary approach

Symptoms Red Tape

Symptoms of Red tape cont.…1. Why are we as government continuously reducing Red Tape?

1.1 Besides reducing duplication, long queues, endless paperwork, lengthy procedures1.2 Red Tape hampers performance, causing inefficiencies and ineffectiveness at organisational level ultimately leading to losses within the economy1.3 Reduce the cost of doing business and improve service delivery

2. Govt. developed policies, laws and regulations 2.1 Encourage open markets, innovation and competitive economy 2.2 Some local business environments discourage investors (domestic & international) 2.3 Unfavorable regulatory environment: high costs and risks of conducting business in certain areas

Benefits to Reducing Red Tape• Local Government:

– Improve access to and use of services– Strengthen financial position and available resources for

service delivery: increase municipal revenue, reduce cost of delivering services strengthen economy by retaining and/or attracting new investments

– Improve governance procedures and address low or declining levels of trust to support stronger partnerships with private sector

• SMMEs:– Save time, compliance costs and ability to stay in business

and grow due to improved cash flow, efficiency, competitiveness, and sustainability

Rationale for Red Tape Reduction at local government level

1. Red Tape evident within three spheres of government and some private sector space: increases with growth and complexity/specialization

2. It is the responsibility of each sphere of govt. however municipalities lead in specific jurisdictions improving LBE maximize economic opportunities

3. SMMEs interface constantly with local government for the provision of services

4. Encourage investors (local & international) by limiting high costs and risks of doing business local govt. and exacerbate favorable regulatory environment encourage innovation, growth & sustainability of SMMEs

5. Long-term: Provision of SMME services at local govt. level

Variables/indicators for Red Tape Reduction Assessment

1. Lengthy and inefficient supply chain management processes, (which affects the 30-day payment system to SMMEs);

2. Poor enforcement of Municipal Informal Trading by-law results in trading outside demarcated trading areas, unfair competition with existing businesses, food health problems, contributes towards crime which negatively impacts on CBD businesses;

3. Infrastructure maintenance and bulk infrastructure backlog costs when new developments are proposed and internal capacity and processes weak and inability to spend the capital budget;

4. Poor communication by the local municipalities of relevant business information to businesses;

5. Lack of knowledge and difficulty in accessing of small business funding available and the need for support in utilising funding effectively;

6. Limited awareness of municipal tender information and too few qualified local service providers access tenders;

7. Lack of approved municipal investment and marketing plan;8. Land not being accessible for development;

Variables/indicators for Red Tape Reduction Assessment cont…

9. Challenges with the Construction Industry Development Board rating system requiring a level 7-8 accreditation where local providers can only reach level 3-4

10. Limited Intergovernmental relations in planning, EIAs and rezoning including old provincial planning legislation

11. Delegation of powers – affects timeous authorisation of SMME payments

12. Marginalisation of LED in the municipal structure

13. Recruitment of inappropriate personnel – deployment in strategic positions

Approaching Red Tape Reduction from different perspectives

1. Degree of regulation: unhealthy competition, health hazards and environmental destruction

2. Regulation that hamper the effective development of SMMEs, inappropriate or unduly restrictive regulatory conditions constrain inception, operation and growth

3. Addressing Red Tape to reduce costs related to compliance (time and money) non-compliance (fines, harassment) and barriers created by procurement procedures

4. Addressing Red Tape to improve the use of services and service delivery

5. Multi-disciplinary and no “One size fits all”. Local context, interaction within three spheres and Local PPPs.

Red Tape Reduction Programme Cycle

Understanding Local Context

Preparing People

Establishing mandate

Action Research & Mobilisation

1. Scoping Phase

Red Tape issue analysis and selection of Champions

2. Assessment & Implementation Phase

Focus Workshops, additional Research

Consultation and Implementation

3. Institutionalisation Phase

Measures to sustain the Process

Public-Private Partnerships

Sustainability & Positive Economic Outputs

4. Evaluation Phase

Setting up Processes

Celebrate Success

Benefits of Red Tape Reduction for Municipalities E.g. Steve Tshwete

1. Building plans are approved within app. 10 days (from 3 months) – if all information is correct and not paralleled by rezoning

2. Rezoning time down to 45 days (from 6 month) – if no objections – due to downward delegation of decision making power

3. Information to the public was improved to provide clarity on procedures, avoiding incorrect applications and managing expectations

4. Staff employment to avoid backlogs

RTR linkages between National, Provincial and Local Government

RTR ProgrammeNational

Provincial

Local

DTI & CoGTA

 

Nat. depts.Nat. agencies

Prov. depts. Pro. agencies

Metro

SMME DEVELOPMT.

Locality, sectors, different levels of growth

District

Local

Private sector

Fin. & non-finregulations

LED

RTR National, Provincial and Local Task Teams

1. National RTR Task Teama. Representatives: the dti, CoGTA & SALGAb. Create an enabling environment for SMMEs, concern regarding performance of some local

municipalities, recognition that low capacity municipalities face serious economic challenges, ensure implementation of guidelines providing practical, hands-on support to municipalities

c. Best Practice: addressing regulatory & compliance processes by establishing mechanisms to reduce barriers affecting SMMEs (i.e. national policy implications as identified at prov. & local govt.)

d. Solicit participation of relevant national govt. departmentse. Support Public-Private Partnershipsf. Sustainability & initiate institutionalisation

2. Provincial & Local RTR Task Teamg. Representative: Economic Dev., CoGTA, SALGA, Municipalities, Enterprise Dev. Agenciesh. Red Tape Reduction Plan: SMME strategy, IDP, Programmesi. Assessment of regulations affecting SMMEs within LBE/ provide contextj. Solicit involvement of private sectork. Scope of work/sectorsl. Monitoring and evaluation

0% 10% 20% 30% 40% 50%

Reducing employment

Limit size/keep below VAT level

Tax avoidance/evasion

Using part time staff/foreigners

Mechanisation, Higher Efficiency

Outsourcing

Take chances/ignore some regulations

Avoid registration/informal

Avoid VAT registration

Avoid UIF

Limit wages and benefits

Limit visibility

Double registrations/use other bank accounts

Pay bribes

Close business/do not start business

Percentage of resondents presenting options

SBP Ways of avoiding/reducing regulatory compliance costs

71%More difficult

20%stayed the same

9%Easier

SBP 2014: Legislation, market, performance of economy

Thank you!!!