Poor municipal service delivery a huge risk for the survival of SMMEs

21 August 2022

Poor service delivery in local governments, is crippling South African businesses and impeding the growth of the SMME sector.

Although the South African SMME sector is a crucial contributor to job creation, the degree of support provided by local government to the sector has thus far been unacceptably inadequate for a small business to be successful.

Sustained growth and viability in start-up SMMEs conducting business in South Africa are undermined by bureaucracy, overregulation, inconsistent electricity supply, and a severe lack of proficient municipal services.

Local economic development and high-quality municipal service delivery to support small businesses are crucial if South Africa wants to broaden economic participation and reverse its unemployment trend.

It is necessary for local governments to strengthen service delivery, which includes constant electricity availability, clean water supply, raw sewerage collection and disposal, refuse removal, accessible Municipal roads and stormwater drainage and to generate conducive environments wherein the SMME sector can flourish.

The high failure rate among start-up SMMEs extends beyond burdensome overregulation and unnecessary bureaucratic procedures to inefficient municipal services. While no two municipalities are the same, there are many cross-cutting service delivery problems inhibit trade.

The most significant factors that contribute to poor quality public service delivery are:

Lack of qualified staff;

A lack of capital expenditure;

Inappropriate and paralysing Supply chain management;

Poor Revenue generation and management;

Irregular, wasteful and unauthorised expenditure;

Corruption and inability to hold guilty parties to account; and

Underspending on repairs and maintenance

Economic growth in South Africa depends on Municipality's competence to support businesses to ensure service delivery does not throttle the already struggling business sector.

SMMEs that are exposed to lousy service delivery in their Municipality can visit the DA's non-compliance service delivery by municipalities survey portal. The survey will allow us to gain in-depth knowledge of the problems businesses experience in Municipalities not delivering services as they should.

Issued by Henro Kruger, DA Shadow Deputy Minister of Small Business Development, 22 August 2022