A plan to help SA small businesses fight back against just about anybody is back on track
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David slays Goliath, from the “Gates of Paradise” panels by Lorenzo Ghiberti at Florence’s Baptistery of San Giovanni.
The long-dormant National Small Enterprise Amendment Bill is officially back on track, as of Monday.
It is meant to establish an ombud to help small businesses get justice, without having to use the actual justice system.
The ombud will be able to award small businesses damages if they are treated unfairly.
And, as originally planned, they would be able to complain about suppliers, customers, government, or just about anyone else that treat any small business unfairly.
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A plan to create an ombud office for small businesses with the power to issue money orders without necessarily getting lawyers involved is back on track.
On Monday, Small Business ministerStella Ndabeni-Abrahams published an explanatory summary of theNational Small Enterprise Amendment Bill, a key step to getting it before Parliament and into law.
That bill, she said, seeks to set up theOffice of the Small Enterprise Ombud Service, which is supposed to deal with small businesses, notably in order to get them paid what they are owed.
“The mischief the bill aims to remedy is the lack of effective and affordable access to a justice system for small enterprises,” said the minister in her notice. “Business-to-business disputes and late or non-payment of amounts due and payable to small enterprises are a significant reality in the lives of small enterprises across the world, with very adverse implications on their growth.”
We know roughly how that is supposed to work, because the law is not an entirely new one. Almost exactly a year ago,
Ndabeni-Abrahams’ department declared that it was ready to go after first being introduced in late 2020
.
As it stood at the time, the draft law proposed an ombud office that could deal with non-payment, but that also went a long way beyond that, encompassing anyone who has any kind of dealings with any small businesses.
The original bill said the ombud would be able to deal with both contractual and “other legal relationships” that are not captured in a contract, or, in theory, even written down.
Within such a relationship, small businesses would be able to complain of any of three things of increasingly broad reach:
“unfairness”
“abuse or unjustifiable exercise of power or unfair or other improper conduct or undue delay”, and
“practice, act or omission which results in unlawful or improper prejudice to a small enterprise”.
If the ombud upheld such a complaint, they would have the power to award “damages”, which could exceed amounts specified in contracts or invoices.
The result could be that the small business ombud would be able to intervene in anything from unfair government tenders to cases where individual customers try to overturn a credit card transaction.
Much like South Africa’s most famous ombud office, the Public Protector, the small business ombud would be able to direct any action they deem fit beyond just a cash award.
Where a cash award is made, that ombud finding would have the power of a court judgment, so the complaining small business would be able to send in the sheriff to attach assets should the other party not pay up.
Investigations by the ombud would likewise fall under court rules, so anyone who stands in the way of an investigation could be found in contempt of court and, in a sufficiently extreme case, could be jailed.
Specific abuses the original draft law considered included ambiguous contracts, unfair leases, sudden termination, long-term exclusive agreements that keep others out of a market, and shifting risk from a stronger to a weaker party in a relationship.
When Cabinet last week approved the introduction of the 2023 version of the law, it promised, by way of Minister in the Presidency Khumbudzo Ntshavheni, the amendment will “realise greater stability to the sector and advance economic opportunity through the creation of job opportunities by small, medium and micro enterprises”.
In at least its broad strokes, the law seems set for a smooth ride through Parliament, with the DA in May welcoming it as an antidote to “the apathetic government” and its “lack of urgency” in supporting small businesses.
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