The effect of regulations and legislation on small, micro and medium enterprises in South Africa

ABSTRACT

The rates of entrepreneurship and new venture creation are of concern in the South African economy. This phenomenon is reflected in the low rates of businesses operating as small, micro and medium enterprises (SMMEs). Due to the importance of SMMEs in the economy, this study identified and investigated employment and wealth creation factors inhibiting the establishment and growth of SMMEs. The regulatory environment and related legislation and compliance were identified as primary inhibitors of business start-up and growth. Excessive red tape with regards to compliance with labour laws, human and industrial relations, tax and tax-related issues, legal requirements, municipal regulations and support for business start-ups are key obstacles experienced by SMMEs. To improve rates of SMME establishment and performance, the government is urged to review its restrictive regulations and implement initiatives to promote a more supportive environment for business. Such changes would contribute to economic growth and improved government performance.

KEYWORDS:

• Regulations
• legislation
• SMMEs

1. Introduction

SMMEs contribute to economic growth and employment, contributing to the Gross Domestic Product (GDP) of both high – and low-income countries. Their contribution to GDP varies from 16% in low income countries to 51% in high income countries. More than 95% of businesses across the world are SMEs, employing 60% of workers in the private sector. This includes both formal and informal SMEs, with the latter group constituting a disproportionally high percentage of the informal sector in low income countries (Edinburgh Group, 2013:7). The contribution of formal SMMEs to the Gross Value Added (GVA = GDP before taxes and subsidies) in South Africa increased from 18% in 2010 to 22% in 2015 (Bureau for Economic Research, 2016:31). In the 27 European Union countries, the GVA of SMEs was estimated to be much higher, at 58%, and employment at 67% of all workers (Edinburgh Group, 2013:7). According to the Global Entrepreneurship Monitor and the Banking Association of South Africa, SMMEs contribute between 35%–45% to GDP and create 50%–60% of employment (Long, 2016:1). In South Africa, there are differences in the estimated contributions of SMMEs to GDP due to the large number of informal or non-registered businesses in the country. Therefore, it is difficult, if not impossible, to determine the actual contribution of SMMEs to the economy, GDP and employment in South Africa. Nonetheless, the value of SMMEs to the economy cannot be underestimated.

In 2015 there were 2,251,821 SMMEs in South Africa. However, only 667,433 were formally registered businesses while 1,497,860 – or the vast majority – were informal SMMEs (Bureau for Economic Research, 2016:1). These figures were marginally up from 2008, when there were 2,180,000 SMMEs, of which 666,500 were registered businesses. Thus, only 933 additional formal businesses were established over a period of eight years. This is despite concerted efforts by the South African government to stimulate SMME growth over many years through initiatives such as the Small Business Act (1996), the Small Business Amendment Act (2003), the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) (2006), the National Development Plan (NDP) (2012) and the establishment of a Small Business Ministry including the Department of Small Business Development in 2014.

The primary reasons for this virtually non-existent growth in the formal business sector are, according to numerous authors, the regulatory environment and restrictive legislation. Herrington & Kew (2017) and Nyamwanza et al. (2016) maintain that regulations and legislation are the most important constraints to SME growth in many developing countries. Government regulations and policies were indicated as a major inhibiting factor to entrepreneurial activity by 60% of respondents in a study by Herrington & Kew (2017) and by 80% in a study by Cant & Wiid (2013). Muriithi (2017) contends that ‘red tape’ is one of the most common causes of failure of SMEs. According to the Small Business Project, 78% of the participating SMEs reported an increasingly hostile environment for business growth, mostly imposed by government regulations (SBP, 2015). This was primarily attributed to burdensome regulations, lack of skills, local economic conditions and the cost of labour. A major concern is that the regulatory burden has become the biggest constraint for business growth, that it is increasing annually and that domestic factors rather than global conditions are negatively impacting SMEs. Thus, less SMEs are established, existing SMEs are not growing, many do become formal but fail to survive, resulting in a dramatic decrease in employment in SMEs. Although for all intents and purposes the intention of the South African government is to support SMEs, it seems unable to curtail the legislation that impedes the establishment and growth of SMEs (Cant & Wiid, 2013).

Countries such as South Africa rely on SMMEs for economic stability, growth and employment, however, the effect of regulations and changes impacts dramatically on SMMEs’ survival and growth. SMMEs regard compliance with regulatory requirements as one of the primary impediments to their growth. Relative to their turnover, the cost of compliance is onerous as they often do not have employees or the internal capacity to attend to these and it is expensive to outsource such functions (Krause et al. 2010).

The state of the South African economy is disconcerting. Problems include:

• The continuing decline of the economy, with an average growth rate of 2.87% per annum from 1994 to 2017, with the highest at 7.10% in the fourth quarter of 2006 and the lowest at 0.3% in 2016 (Trading Economics, 2017; Stats 2018);

• Increased unemployment at 27.7% for the second quarter of 2017, with joblessness, according to the expanded definition, including those who have given up looking for employment, at 36.4% (Trading Economics, 2017);

• The low level of total early stage entrepreneurial activity (TEA) at 6.9%, with South Africa rated 52nd of 65 countries in terms of South Africans involved in operating their own businesses (Herrington & Kew, 2017);

• South Africa sliding on various ‘ease of doing business’ indicators to an overall low of 74 of 109 countries (World Bank Group, 2017); and

• South Africa ranked 47th of 138 countries in the Global Competitiveness Report due to inefficient government bureaucracy, which was indicated as the most problematic factor for doing business in the country, followed by restrictive labour regulations (Schwab, 2017).

The concerns listed above clearly indicate that business, and specifically SMMEs, as important contributors to employment, GDP and prosperity, are faring poorly. Literature points to a variety of factors that affect SMMEs negatively, however, foremost amongst these is the cost of compliance to a multitude of regulations which restrains the establishment or growth of businesses. Thus, compliance and the regulatory environment seem to be problematic for the start-up, registration and growth of SMMEs.

2. Research methodology

The research was conducted in two stages. The first stage consisted of secondary research that involved a qualitative research design due to the extensive use of existing sources of information. An archival and documentary research strategy was employed (Ahmed, 2010) and a wide range of reliable and reputable data sources, databases and publishers was used. These included Sabinet, Ebscohost, JSTOR and Google Scholar which were used to identify relevant studies, articles and reports on the regulatory environment and its impact on SMMEs in South Africa as well as other countries. The information gathered was then analysed to identify any positive or negative effects of the regulatory environment on SMMEs. In addition, relevant information from some annual reports was analysed and compared over multiple years.

In the second stage, qualitative empirical research was conducted to elicit detailed information on the experiences of SMMEs with regards to regulations. Gauteng is the province from which 46% of all formal SMMEs in South Africa operate (Bureau for Economic Research, 2016:17). It can therefore be considered as being representative of the country’s formal SMMEs. The database of a professional business services group that provides services to 170 registered SMMEs in Gauteng was identified as suitable for identification of SMME owners to be interviewed. Of the 170 client businesses of the business services group, 31 business owners or managers were interviewed. Some of the participating business owners owned multiple businesses, thus representing a total of 39 businesses or 23% of the client base. A structured interview schedule was used to determine why SMMEs make use of business services, which services were used most and why, and what were the primary problems encountered with regulatory constraints and compliance.

3. Findings of the stage 1 – secondary research

Regulatory constraints include the cost of compliance, namely, all costs incurred to ensure compliance to tax and other regulations such as:

• Assistance from experts to understand regulations and time spent by managers and staff to understand the rules and apply them;

• Costs incurred to maintain records;

• Preparation and submission of tax returns;

• Time spent on compliance issues and visits to relevant Sector Education and Training Authorities (SETAs) and South African Revenue Services (SARS) offices;

• Payments to consultants, tax practitioners and accountants to ensure compliance and address disputes; and

• All other costs including legal, travel, time.

The Department of Trade and Industry (DTI) launched its Integrated Strategy on the Promotion of Entrepreneurship and Small Business in 2003. This initiative seeks to create an enabling environment for SMMEs through three strategic pillars:

• ‘Increasing the supply of financial and non-financial support services;

• Increasing the demand for small enterprise products and services; and

• Reducing small enterprise regulatory constraints’ (DTI, 2003:4).

According to the DTI (2003), the chief aim of this strategy was to reduce regulatory constraints inhibiting SMMEs. However, according to a study by Mahadea (2008), the results indicate that respondents experience compliance with income tax, Value-Added Tax (VAT), the Skills Development Levy (SDL) and the Unemployment Insurance Fund (UIF) as burdensome with regards to time, money and opportunity costs. In addition, labour laws are also seen as a key constraint in SMME development. Government therefore does not seem to be assisting SMMEs in alleviating compliance with multiple regulations (Cassim et al. 2014:37).

In the 2015–2016 Global Entrepreneurship Monitor (GEM) report, South Africa received a low score of 3.1 out of 9 for supportive government policies, taxes and bureaucracy which is a clear indication of the ineffectiveness of the South African government in this regard (Herrington et al. 2016). In addition, and according to the findings of the SME Growth Index (SBP, 2013, 2014, 2015):

• Regulatory requirements and red tape pose serious challenges;

• Frequent changes in the regulatory environment require time and financial investment to ensure compliance;

• There is often overlap and conflicting regulatory requirements between different governmental institutions; and

• The environment is becoming increasingly hostile for business growth, mostly due to government regulations.

SMEs indicate that the most onerous red tape issues are SARS, mandatory regulations, Black Economic Empowerment (BEE), municipal issues and labour issues. SARS was noted as the most problematic and burdensome (SBP, 2013:6). The same issues were also seen as the key inhibitors of growth (SBP, 2013:12). For example, Abor & Quartey (2010:224) found that licensing compliance in South Africa could take up to 18 procedures over a period of 176 days.

The ‘Ease of Doing Business’ report is an annual World Bank publication that compares business regulations for domestic firms in 190 economies. The ease of doing business is determined by ten factors, namely, ‘starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency’ (Doing Business, 2017:1). In 2017, South Africa was ranked 74th out of 190 countries with regards to ease of doing business, after Mauritius (49th) and Botswana (71st). This contrasts sharply with ten years ago when South Africa was ranked 29th (of 175 countries) and deemed to be the easiest country in Africa in which to do business, with Mauritius then as the closest African country in 32nd position. At the same time, South Africa was also one of the easiest countries in which to start a business (World Bank Group, 2006). Sadly, this has changed and ten years later South Africa has dropped to a dismal 131st position (of 190) in the world to start a business (Doing Business, 2017:11). The decline in the ease of doing business is reflected in the plummeting South African growth rate, which has dropped from 7.1% in 2006 to 0.3% in 2016. For business start-ups, Sub-Saharan Africa is a very expensive region, with the cost of establishing a business more than 100% higher than in other regions of the world (Munemo, 2015:13). These statistics indicate that the regulatory environment is becoming more restrictive, prohibitive and hostile for SMMEs. It is also likely responsible for the increasing resistance of SMME owners to register their businesses to become formal businesses. This dismal state of affairs is reflected in the deteriorating economy with growth, GDP and employment flagging over recent years.

SARS, and specifically VAT-related issues, are problematic to SMMEs and their cash flows as they are required to pay VAT on invoices, often long before they receive payment from clients, meaning they have to carry the cost on behalf of clients for the South African Revenue Services (SARS) (SBP, 2015:2). Ironically, the South African government and its departments are the worst late payers to their suppliers and service providers, including SMMEs. Thus, through SARS, government is quick to claim payment but slow to pay its own dues for services rendered by SMMEs. Apart from late payment, other reasons for over 80% of SMMEs’ reluctance to do business with government are that Broad Based Black Economic Empowerment (B-BBEE) and tender processes are onerous and the government decision process is extremely protracted (SAICA, 2016:8).

In 2017, the paying taxes indicator of the ‘Ease of Doing Business’ World Bank report was expanded to include post-filing processes such as tax refunds, tax audits and tax appeals, thus processes occurring after compliance with regular tax obligations. The specific interest of the expanded paying taxes indicator was to determine ‘the time it takes to get a VAT refund, deal with a simple mistake on a corporate tax return that can potentially trigger an audit and good practices with administrative appeals process’ (Doing Business 2017:5). In South Africa, the Paying Tax Index is a very high 81.09% whereas the Post-Filing Index is a weak 58.6% (Doing Business, 2017:14), indicating how difficult it is for tax payers to get SARS to address problems, deal with refunds and address enquiries. South Africa, compared to Nigeria, is one of the worst-case scenarios where the Paying Tax Index is 28.09% and the Post-Filing Index is 17.2%, indicating that tax collection is nearly as bad as post-filing. One of the best case scenarios is the UK where there is good alignment between the Paying Tax Index of 90.74% and the Post-Filing Index of 87.4% (Doing Business, 2017:14).

These South African Paying Tax Index and Post-Filing Index figures indicate how easy it is for SARS to collect tax and how onerous it is for SMMEs to get tax refunds, tax audits and tax appeals after complying with their tax obligations. This could be the reason for the establishment of the South African Tax Ombudsman in 2013, which only became known to the wider public with the appointment of retired Judge President of the Gauteng High Court, Judge Bernard Ngoepe as Tax Ombudsman in 2017. Judge Ngoepe has found that the SARS system unfairly delayed payment of refunds to taxpayers and therefore did not sufficiently protect taxpayers. Over a five-month period, from November 2016 to March 2017, more than 500 complaints of delayed refunds by SARS were lodged with the Tax Ombudsman, of which 50% was validated. Claims of delayed refunds can run into the millions and can be devastating to the cash flow or even near collapse of businesses and can lead to staff lay-offs.

Skills development has also been identified as a burdensome issue for South African SMEs. Regarded as an additional tax, a skills levy of 1% on payrolls must be paid directly by employers to SARS. Initially, 80% of this amount was paid to 25 SETAs for the development of employee skills. Employers could then claim back up to 65% of their payment for staff training from SETAs. However, this has been reduced to 23 SETAs and only approximately 35% can be claimed back by employers, after training has been finalised. The process of claiming has also been burdened with additional compliance criteria and some training can no longer be refunded. SETAs are government bodies which have been established at great cost and although some do function adequately, most have vast amounts of unspent contributions as businesses are unable to access the money due to red tape. The paperwork and requirements to do approved training and claim back money is cumbersome and complicated. Most SMEs regard the skills levy as merely an additional tax and consider it too onerous to conduct training and then claim back the money. Compliance with skills development regulations is therefore time-consuming and demanding and SMEs have to employ people to do it or outsource this function. As far back as 2003, shortly after skills levies were implemented, Christianson (2003:10) reported that the mechanism dealing with the skills levy system placed an excessive burden on SMEs with limited, if any benefit.

In their study on the annual tax compliance costs of SMEs, Smulders & Stiglingh (2012) determined that the relative costs are proportionally higher, the smaller the business. This was primarily with regards to income tax, provisional tax, value added tax and employees tax, with time and cost being the highest for VAT. This finding is confirmed in a study by the World Bank Group that investigated tax compliance costs for businesses in transition and developing countries. The study revealed that the tax compliance cost is regressive with the tax burden and much heavier for smaller businesses. The findings also indicate that although the same discrepancy applies in developed economies, it is exacerbated in developing and transition countries, with tax compliance cost of around 15% of turnover coupled with very high rates of tax inspections and audits, including official and unofficial visits by tax authorities (Coolidge, 2012).

In their investigation of tax compliance red tape affecting SMEs in Australia, Lignier et al. (2014:222) found that tax compliance costs were very high and their effect on small businesses was disproportionally high. Relative to turnover, the compliance cost is around 9% for micro businesses, 1.2% for small businesses and .2% for medium businesses. The average costs for SMEs have increased 118% (in constant A$ terms), from around A$5,000 per business in 1995 to A$11,000 in 2012. This, is a key contributor to the growing complexity of the tax system, the cost of learning about taxes and tax changes, VAT legislation that involves high compliance costs and an increase in the administrative requirements from the tax authority. Consequently, the use of and reliance on external business services to assist with tax compliance has doubled. The study concluded that taxation compliance costs remained a primary area of concern for SMEs and that these should be alleviated through changes in legislation and administrative requirements (Lignier et al. 2014:246). In the same vein but at different percentages, the South African SME Growth Index determined that the smallest SMEs, i.e. those with less than 21 employees at 5% of turnover, spent most on red tape as opposed to businesses with more than 40 employees, which spent 3% of turnover on red tape (SBP, 2013:4).

One of the results of such stringent and burdensome regulations is the inclination of many small businesses to remain informal. Informal businesses reduce their operational costs, increase their wealth and often survive by not complying with government regulations and through tax avoidance (Ligthelm, 2006; Sallah & Williams, 2016). This inclination has serious repercussions in terms of economic indicators, tax evasion and reduction of government income.

The cost of regulatory compliance to Canadian businesses at .75% of turnover is low compared to most other countries and at 6%, only a small minority of SMEs regard regulatory compliance cost as a serious obstacle. In Canada, business owners do not find it time-consuming to comply with regulations, they realise the benefits of compliance and see the net cost of compliance as less than the gross cost. Canadian SMEs submit only two compliance-related forms and spend an average of three hours per month on compliance. However, firms in some provinces (Quebec and the Atlantic provinces) with between 5 and 99 employees and medium-sized firms reported more paperwork. It was also determined that the compliance burden in Canada does not disproportionately affect the smallest businesses but that it increases initially when businesses grow and appoint employees and then decreases when economies of scale are reached. It was also found that regulatory compliance was increasingly outsourced to professional service providers. The majority (65%) of businesses felt that the cost of compliance was acceptable but most indicated that the reduction of red tape should be a moderate to high priority for government (Seens, 2013:26).

4. Findings from stage 2 – primary research

The services provided by the business services group indicate the specific need of businesses and the regulatory, compliance and legislative requirements. These are summarised as follows:

• Payroll administration and related tax and compliance payments such as Pay as You Earn (PAYE); Unemployment Insurance fund (UIF) and Skills Development Levies.

• Human resource management including Black Economic Empowerment (BEE) amended scorecard review; submission of Employment Equity report to the Department of Labour; Broad Based Black Economic Empowerment (BBB-EE); Basic Conditions of Employment Act (BCEA) compliance; Compensation for Occupation Injuries and Diseases Act (COIDA) compliance; Skills Development Act (SDA) submissions. Without a valid Workplace Skills Plan (WSP) and Annual Training Report (ATR), a company will not be able to claim any points in Skills Development on the BEE scorecard, timeous completion and submission of the WSP and ATR to the relevant Skills Education and Training Authority (SETA); compliance including appointing Occupational Health and Safety consultants.

• Industrial relations (IR) including Commission of Conciliation, Mediation and Arbitration representation; attending to disciplinary procedures and coordination of related processes; IR policy review; assistance on any industrial related aspect of the business.

• Accounting services including preparation and submission of VAT returns, compiling of monthly financial statements, tax advisory services including corporate tax compliance, preparation, completion and submission to SARS of the company’s and individual income tax returns and responding to queries from SARS to errors on assessments identified by review of assessments.

The types of businesses and the number of employees in the 39 businesses (total of 2,710) whose owners or managers were interviewed are presented in Table 1 below.

Table 1. Business type and employee numbers of SMMEs.

SMME business type	Number of employees
Retailers of gholf equipment – 20 shops	600
Building contractors	300
Plastic recycling for production of material and medical products	350
Transport and logistics	200
1. Property owner and management company, flat rentals	100
2. Property owner and management company, flat rentals	100
Owner of two hotels	100
1. Tree felling business	100
2. Tree felling business	100
Retirement village management	100
Distributors of mining equipment	100
Manufacturer of tyre patches	60
Manufacturing and powder coating of equipment and articles	50
Owner and renting of storage facilities	50
Office movers	50
Upmarket ladies clothing retailers	40
Packaging and wholesale distributors of spices	40
Courier company	30
Call centre	30
Manufacturers of road sign boards	30
Stationary distributors	25
Manufacture and service steel products for the mining industry	25
Importers and maintenance of household appliances	20
Manufacturing and branding of products	20
School and care for autistic children	15
School and care for under privileged children	10
Second hand car sales	10
Insurance agency	10
Own and renting of storage facilities	10
Electrical contractor	10
Emergency and maintenance of truck tyres	10
Nursery school	5
Cellular shop agency	5
Financial consultants	5
Total employees	2710

When asked which obstacles they had experienced, the majority (81%) mentioned problems with laws including labour laws, industrial relations, laws and regulations in general and bargaining councils. Appointment of experienced employees was mentioned by 68% and access to finance by 33% as obstacles in their businesses.

In response to the question ‘What compliance, regulations and red tape issues affect you?’ the respondents specified the following: VAT, PAYE, UIF, the skills development levy and reporting on it, labour laws, BEE, BBB-EE, industrial relations, tax and tax-related problems, enquiries, appeals, municipal regulations and registration of new businesses.

To the question ‘Do you understand the benefits of compliance and regulations?’, answers included the following:

Of course, tax has to be paid but don’t make it so difficult to communicate with SARS when we experience problems.

Yes, we just want to pay our dues, all the forms and procedures are cumbersome.

Yes, for some things, others such as the skills development levy is just an additional tax with no benefits and lots of paper work.

We have to and do pay taxes but the government systems including SETAs are ineffective, except when it comes to collecting taxes.

Comments regarding compliance and the cost of red tape were as follows:

It takes too much time to attend to all the regulations and compliance that is why we outsource it as far as possible.

Complying to all the regulations is frustrating and time consuming. It’s more about the time and effort than the cost.

We do not have the in-house expertise or time to do everything associated with red tape. We outsource what we can.

You pay tax and VAT but when it comes to refunds and appeals it becomes a protracted story.

The skills levy started off as a feasible idea and we could claim for training. It has now become so difficult, with only a minor refund possible and the administration of it is exceptionally time consuming.

SARS acknowledges our income but does not accept the expenditure. Then it’s over to us to submit and resubmit documentation that they lose and in the end, we have to pay tax specialists to try and sort our problems out.

We received a letter from the Department of Labour on action against the company due to limited BEE even though we have more black than white employees.

The majority (84%) of respondents outsource their payrolls, which includes compliance with various HR and IR regulations and PAYE. IR, which is outsourced by 81% of respondents, deals with all labour legislation issues such as disciplinary hearings, arbitration, negotiations, strikes, redundancies and dismissals. HR is outsourced by 71%.

Compliance with skills development is regarded as the most time-consuming HR issue, followed by BEE and employment equity. The majority (71%) of respondents outsource these functions as they prefer specialists do the work related to compliance with HR and IR regulations. Fifty eight percent outsource some functions as they prefer to focus on their core business whereas only 33% do it because they see it as being cost-effective. Seventy four percent reported that they experienced red tape as being too onerous.

5. Discussion and implication of findings

The findings of the secondary research and introductory section indicate that in South Africa, the majority of government-imposed regulatory constraints are restrictive and expensive. These relate primarily to business start-up and growth, SARS, post-filing and all forms of taxation including VAT, the regressive burden of tax compliance cost, labour laws, the cost of compliance in terms of time and money, paperwork and requirements for the skills development system. It was also found that there are exemplary cases, such as Canada, which managed to simplify and reduce regulations and compliance.

The results of the primary research study confirmed the findings of the secondary research insofar as most businesses experience problems with regulations and compliance issues especially with regard to labour laws (HR and IR), SARS, tax-related issues and skills development. The businesses perceived regulations and compliance issues to be burdensome, both in terms of time and cost. The business owners also found that there was insufficient knowledge in their businesses to keep up with ever-changing regulations and to personally attend to all compliance issues. They conceded that regulations and compliance were important, however, these should be simplified.

6. Concluding remarks

In order to achieve the goal of simplifying regulations and compliance, the following actions should be taken:

• South Africa’s Ease of Doing Business rating should be increased to at least where it was ten years ago, with a clear plan and time frame. This will require government consideration of legislation that affects the establishment and growth of businesses. Countries with exemplary records in this regard, such as Canada, should be emulated.

• The South African Government has failed to achieve its own goal of providing a stimulating and empowering environment for SMMEs. Greater commitment is required to implement the government’s existing development plans and to cease the continuous increases in regulations and focus on limiting red tape that affects SMMEs.

• The effects of existing and planned government policies and regulations should be evaluated in terms of their impact on job creation and economic growth rather than the possible benefits to government.

• Labour legislation should be reviewed as it is the source of severe problems for SMMEs in terms of employment in enlarging and reducing their workforces. It is also onerous in terms of cost and administration.

• Compliance with SARS and related issues such as VAT should be alleviated to reduce their negative impact on SMMEs. Measures could include payment after receipt of income and easier access to SARS to address problems. Currently it is easy to pay tax but very difficult to sort out problems, as reflected in the Post-Filing Index. Tax incentives to SMMEs that grow and employ people should be implemented.

Growth and employment come from new and growing businesses. By imposing additional costs and regulations on existing businesses that contribute to the economy of the country, attention is diverted away from stimulating growth and entrepreneurship. In order to address the problem of limited business establishment and growth, government should focus on creating an environment which is conducive to business start-up and development with no political intervention.

Disclosure statement

No potential conflict of interest was reported by the author.

ORCID

Cecile Nieuwenhuizen http://orcid.org/0000-0003-4925-3212