BILL TO GIVE SMMES LEGAL ACCESS

Cases of a corporate behemoth exploiting its might, indulging in uncompetitive practices are too numerous to be documented. Start-ups with innovative business models find themselves being driven out of businesses due to unfair business practices like unsustainable underpricing, intellectual theft and others. To address this issue, Government has gazetted the National Small Enterprise Amendment Bill 2020 in an effort to provide an ombud service that will assist small enterprises with legal issues.

The small business sector is often punted as the country’s economic engine for growth. Nonetheless, in the discourse, little, if any, is cited about the obstacles that many a smart-up face to establish themselves in niche markets in which big corporations have the market pretty sown up.

Doubtless, capital-constrained small businesses cannot wait for the National Small Enterprises Amendment Bill 2020 to be passed into law, hoping that the generally uneven business playing field, in which odds are stacked against them will be levelled.

Long time coming

The National Small Enterprises Amendment Law is a long time coming.

Cases of a big corporate behemoth exploiting its might, indulging in uncompetitive practices are too numerous to be documented. In the dog-eat-dog world that is the corporate world, start-ups with innovative business ideas find themselves being driven out of businesses due to unfair business practices like unsustainable underpricing, intellectual theft and big players arm-twisting government into introducing tariffs on imports to protect their monopoly.

And so, in response to these kinds of situations and other, Government, through the Department of Small Business Development, has gazetted the National Small Enterprise Amendment Bill 2020 in an effort to provide an ombud service that will assist small enterprises with legal issues. On the objective of the Bill, the Department of Small Business Development says: “Despite the critical role of small businesses in the economy and development objectives of South Africa, the Small, Medium and Micro Enterprise (SMME) sector remains vulnerable to exploitation and unable to utilise available legal remedies due to the prohibitive costs.”

The scope of the Bill

The Draft Bill is intended to amend the National Small Enterprise Act, 1996 (Act No 26 of 1996) in order to improve access to justice for small businesses. In a nutshell, the following will be the scope of the Bill:

·        Provide for the establishment of the office of the Small Enterprise Ombud Service;

·        It will become a vital legal instrument to enforce SMME contracts and resolve business-to-business disputes; 

·        Considering and disposing of complaints by small enterprises in relation to the interpretation of the terms of agreement for procurement of goods, services or late and non-payment of amounts due and payable to small enterprises;

·        Assist with handling complaints in a procedurally fair, economical and expeditious manner and by reference to what is equitable in all the circumstances, with due regard to the contractual arrangement or other legal relationship between the complainant and any other party to the complaint; and

·        Serve as a guide to make recommendations to the Minister for Small Business Development to declare, by notice in the Gazette, rights of small enterprises including unfair trading practices that prohibit certain practices related to small enterprises.

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