Parliament, Thursday, 26 September 2024 – A group of entrepreneurs, represented by the Startup Act movement, are calling on the Portfolio Committee on Trade, Industry, and Competition to remove restrictive exchange controls that stifle startup growth. The committee also received a briefing on the African Union’s Startup Model Law framework, which aligns with the Startup Act’s objectives.
The Startup movement voiced concerns over South Africa’s significant drop in the World Bank’s ‘Ease of Doing Business’ rankings, which has made the country less attractive to startups and investors compared to other nations. They stressed that this underscores the urgent need for reforms that foster a more competitive and welcoming environment for innovation and entrepreneurship. They argued that lifting these controls would enhance the ease of doing business in South Africa.
During discussions, the committee said that while exchange control fell under the purview of the National Treasury, it plays a crucial role in facilitating capital raising from the private sector and foreign direct investments. Committee Chairperson, Mr Mzwandile Masina, said, “In South Africa, obtaining loans for consumption is far easier than securing financing for productive ventures.”
The committee agreed that starting a business in South Africa remains challenging due to numerous barriers. The committee stressed that the Department of Trade, Industry and Competition should lead in driving economic growth. The committee noted that there was still a need to clarify what defines a startup and that a lack of public dialogue exists on launching a startup in the country, underscoring the need for a broader public education campaign to raise awareness and support for entrepreneurship.
The committee further acknowledged that the red tape reduction team in the Office of the Presidency, established to facilitate business in South Africa, needs to be engaged. The committee welcomed the engagements as a positive step and noted that achieving meaningful progress will require collaborative efforts across various departments to streamline processes.
The committee resolved to get legal experts to advise on the possibility of introducing new legislation or reviewing current legislation to support the startup ecosystem better.
ISSUED BY THE PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSON OF THE PORTFOLIO COMMITTEE ON TRADE, INDUSTRY AND COMPETITION, MR MZWANDILE MASINA
For media enquiries, please contact the committee’s Media Officer:
Name: Mr Jabulani Majozi
Parliamentary Communication Services
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Email: jamajozi@parliament.gov.za
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