Regulation Pushes SMEs to Non-Compliance

Monday, October 23, 2006

Many Small to Medium Enterprises (SME) become illegal because of excessive regulation, an expert with the South African-based Strategic, Business Partnerships for Growth in Africa said on Tuesday.

Speaking at the Bifm/FinMark Trust Forum, Douglas Irvine said that SMEs usually fly under the radar and operate hiding from the law and end up being harassed and becoming non-compliant. Irvine said that this excessive regulatory network is not good for business.

“A country like Botswana needs a good business environment to create employment and opportunities,” he said. He added that a good business environment that could help small businesses thrive is one that protects property rights. Equally, a business would boom where there are no excessive bureaucratic delays, he said. Irvine also revealed that it has been found that South Africa and Namibia are ahead in terms of conducive environments for doing business. Another speaker at the forum, Peter Hinton of the International Financial Services Centre (IFSC) accredited company-Enterprise Banking Group revealed that Botswana has SME potential.

“Effective support for SMEs is possible but it needs committed players. Banks will benefit and the country will also benefit,” Hinton said. Hinton said that their recent study on SMEs in Botswana: “The under banked market”, revealed that 15 percent of the SMEs in Botswana are under banked while nine percent utilise government schemes.

Only 13 percent utilised bank loans although there are still opportunities for the banks to finance the sector, while the study revealed that 69 percent needed training and mentoring, according to the study.

He revealed that the sector needs affordable banking and decried that high interest rates increase pressures on SMEs.

Continue reading ?Regulation Pushes SMEs to Non-Compliance?

Source: The Reporter (link opens in a new window)