Company Announcement - Small, Medium and Micro-sized Enterprises are a backbone of long-term economic growth. They play a pivotal role in promoting economic growth and job creation. According to the Department of Trade and Industry, the estimated 2.8 million small businesses that made up the sector in 2012 contributed between 52% and 57% to South Africa’s Gross Domestic Product. During that period small businesses also provided about 61% of the country’s employment. However, these figures are still far less than the average in developed countries where SMMEs play a far bigger role in the economy. This can be attributed to structural challenges, including labour laws, access to finance and red tape that continue to hamper the growth of small businesses in South Africa.

Strict environmental legislation is another challenge that SMMEs also have to contend with in South Africa and poses a threat of further hampering the growth of the sector, if not addressed as a matter of extreme urgency. Compared to its African counterparts, South Africa has very stringent environmental legislation, with extremely steep pecuniary sanctions.  The National Environmental Management Act, for instance, stipulates that any person found in contravention of an environmental offence will be liable to a fine of up to R5 million and imprisonment of up to 10 years. Costs of environmental remediation are also high and depend on the extent of environmental damage caused. For example last year Nkomati Anthracite was ordered to pay an amount of R4 million, within 14 days from the date of the sentence, for environmental damage charges. Such enormous fines are enough to wipe some SMMEs out of existence. 

In addition to pecuniary sanctions, new entrants have to contend with pre-operational requirements and, once established, non-compliance to other applicable environmental statutes poses serious threats to business survival. The notion of strict environmental legislation is in itself not problematic. However, SMMEs need support in order to comply with environmental legislation.
SMMEs do not have the dedicated human resources to keep abreast of the latest developments in terms of legal requirements. In 2014 alone, nine pieces of environmental legislation were promulgated. Interpretation of some of the requirements is also challenging such that those that would like to comply simply don’t know how to do so.

For example, the National Pollution Prevention Regulations of 2014 require companies to submit Pollution Prevention Plans by 31 March 2015. The regulations do not stipulate any competency requirements for measuring greenhouse gases in order for the measurement results to be considered as valid. Can employers perform their own measurements? Do they even have the competence to evaluate and improve measurement methods as required by the regulations? Awareness campaigns on environmental legislation must be enhanced in order to ensure that affected employers recognise environmental risks in all aspects of their work.

It is unfair that Environmental Management Inspectors so rigorously enforce legislation that is not clearly understood by many.
According to the 2013/14 National Environmental Compliance & Enforcement Report, there has been an 18, 3% increase in enforceable non-compliance. Administrative fines for operation without environmental authorisation increased by 199.48% from R5 385 215 in the 2012/2013 cycle to R12 517 026. While this work is commendable, robust interventions are necessary to ensure that affected employers are aware of their obligations.

Examples of effective awareness drives were those conducted by the Department of Labour on the Construction Regulations of 2014 and Risk Assessment training sessions conducted during the course of last year. Implementation of some environmental requirements is another serious challenge since some employers do not possess adequate expertise and/or experience. Consultants also come at a price which SMMEs cannot afford. Though the South African Revenue Service provides “green tax incentives” in terms of the Income Tax Act of 1968, their scope does not always address the plight of the SMMEs.   In South Africa, where economic growth is painfully slow and unemployment levels extremely high, a thriving SMME sector could play a pivotal role in addressing South Africa’s socio-economic ills, creating desperately-needed employment opportunities and contributing towards the country’s GDP. SMME support must, therefore, be high in the list of priorities where environmental legislation is concerned.

We can only hope that the Ministry of Small Business created last year will play a crucial role in supporting SMMEs and in removing some of the red tape that they have to deal with. On the other hand, it is vital that small business owners know and understand the laws that affect them and that they seek the necessary assistance from organisations that are in a position to help. The Health, Safety, Environment and Quality Division within the Steel and Engineering Industries Federation of Southern Africa is one of those institutions in a position to help.