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Consumer Protection Act a Fatal Blow for Entrepreneurs?

How does the CPA affect your business, and what can you do to mitigate risk?

Liz Zambonini

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As of 1 April 2011, South African consumers became some of the most protected in the world, thanks to the implementation of extremely progressive legislation which is comparative to those of developed markets.

The Consumer Protection Act (CPA) applies to the supply of all goods and services (including every role-player in the supply chain), as well as to the promotion and marketing of these goods and services. For the average South African who is weary of poor service delivery, they will be pleased to know that ‘goods’ include gas, water and electricity.

Intentions

The intention behind the legislation is to promote a culture of consumer rights and responsibilities, as well as to encourage business innovation and enhanced performance. In addition, it is hoped that regulations will improve access to, and the quality of, information that will enable consumers to make informed choices and protect them from hazards.

Companies not abiding by the CPA face penalties of a fine of up to 10% of turnover, or a fine and a prison sentence of up to 10 years where an order is not complied with.

While this legislation is a boon for consumers, concerns are being raised that it may signal the end for many small businesses and entrepreneurs however.

Too much legislation, particularly around compliance and corporate governance, kills innovation and an entrepreneurial spirit. Entrepreneurs need to be agile and able to adjust quickly to changing circumstance, but legislation such as the CPA will hinder small businesses. Exemptions should be provided for these entrepreneurial ventures as not only is it extremely difficult for someone who is getting their business off the ground to be fully informed about all of the complexities of the Act, but there is also a cost of compliance which many will not be able to afford.

As even boards of large companies are finding that they spend far more time talking about compliance than they do about strategy, one can only imagine what this change in the business landscape will do to entrepreneurs.

Far-reaching consequences

One of the areas which the CPA will affect is food, including safety, labelling and hygiene. While no-one will deny that these are all important elements in the production and packaging of foodstuffs, entrepreneurs who sell homemade goods to earn a living will in all likelihood find themselves unable to comply with the legislation.

The knock-on effect of the CPA will be enormous for small caterers. One example is that we at The Hope Factory support an entrepreneur by packaging and selling her baked goods, the income from which she uses to support her two sons who are at university. Unfortunately she cannot afford to comply with all of the aspects of the CPA – such as the food labelling requirements – therefore we have no choice but to discontinue buying her products. The ramifications of this are that her sons will not be able to finish their studies, which will have an extremely detrimental effect on their futures.

It has been proven time and again that if developing countries such as ours aim to grow their economies, that encouraging entrepreneurs is the best way forward. While it is not wrong to have the CPA therefore, it would be beneficial for entrepreneurs and small business owners – and the country – if it could be moderated to give their businesses the best possible chance of survival.

Liz Zambonini is the CEO of The Hope Factory, an established Enterprise Development Initiative of the South African Institute of Chartered Accountants (SAICA). For more information, visit www.thehopefactory.co.za

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1 Comment

1 Comment

  1. Fudley Bez

    Nov 17, 2011 at 12:02

    Do we need any more proof that those in power have lost the plot? There seems to be no end to all this madness till they kill the proverbial goose that lays the golden egg. We’ve had them protecting tenants to the extent of killing off landlords, protecting the workers at the expense of the employers, protecting criminals while denying the rights of the victims, protecting the secrecy of government while flouting the right to privacy of SA citizens. On-and-on. Maybe our law schools are to blame for producing over-zealous graduates who lack the wisdom to think through the consequences of the legislation they conceive.

    What the govt fails to realize is that they steadily are making criminals of all of us. You cannot remain law-abiding unless you have just laws to begin with. And just laws cannot be moderated into palatability. Why do we need them invoked into existence in the first place? Who will be the moderator?

    So the very CPA brought into existence to protect the consumer, will ultimately end up causing more harm to the consumer. Now don’t tell me they didn’t think of that?

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Entrepreneur Today

5 Ways SMMEs Can Best Use An Incubation Centre

Here are some tips on how entrepreneurs can make the most of these incubation centres.

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Incubation centres play a meaningful role – not only in South Africa but around the world – as they groom SMMEs and give them access to opportunities that will help them survive in a competitive marketplace. These centres help entrepreneurs modernise their businesses with world-class technology, while providing insights that can help turn ideas into products. Incubation centres offer infrastructure and support, knowledge-sharing and a unique environment that helps strengthen their businesses.

Earlier this month, Cisco South Africa launched its R10 million Edge Incubation Centre in Pretoria where 30 SMMEs per year will have the opportunity to make use of the platform and speed up their entry to market. The centre gives SMMEs access to complete business facilities including workspaces, video conferencing and collaboration platforms, boardroom and training facilities, and access to global Cisco experts who can help them develop business ideas in a digital world.

Here are some tips on how entrepreneurs can make the most of these incubation centres:

1. Collaboration

Gain insights from global experts using the latest Webex technology and collaborate with other SMMEs. Utilise the meeting spaces to drive commercial sales initiatives with the help of business support facilities.

2. Resources & Equipment

Make use of laboratories and tools like cloud-based facilities, smart interactive whiteboards for content sharing, video conferencing, and meeting rooms. Utilise the high-tech customer demo centre as a practice platform.

Related: The Definitive List Of South African Business Incubators For Start-Ups

3. Support

Take advantage of the enablement programmes as well as the ongoing training and development. Knowledge transfer will always help your business. Utilise the technical support and business insights to grow your business and make it competitive in the digital economy.

4. Connectivity

This is your main tool in a digital marketplace. Make use of the high-speed broadband facilities and develop your digital skills because you will need it.

5. Sales

Don’t forget to utilise the pre-sales support as this may give you the edge in the marketplace. Gain insights and experience and use it to your advantage.

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9 In 10 Workers Want A Festive Gift From Their Employer To Make Them Feel Valued

29% Would like to receive vouchers from their company.

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As the festive season approaches, digital print company instantprint have revealed what managers can be doing to show staff they are appreciated.

Over 9 in 10 workers (94%) want a gift from their employers to make them feel valued, appreciated and happy this Christmas.

The research, which surveyed 1,500 UK office workers, also revealed the most in demand gifts that employees would like to receive from their employers:

  • 29% would like a gift voucher
  • 8% would like an early finish
  • One in five (20%) would like a free bar at the company Christmas party
  • One in ten (10.3%) would like a physical gift
  • 7% would like a charitable donation to be made in their name.

Related: Why Innovative Employee Benefits Are Your Competitive Advantage

Different sections of the workforce had varying demands. IT professionals would prefer an early finish this festive period, with 35% in the IT department choosing this as their ideal Christmas gift.

Senior management seem to have a more selfless approach to the gifts they would like to receive. One in ten (11%) said they would like a charitable donation to be made in their name, compared to the average demand for this present of just 7%.

There was some difference between men and women too. Women are the ones really pressing for gift vouchers, with 33% saying they are the ideal present, compared to just 23% of men. Male employees seem to prefer a free bar, with 22% choosing this, compared to just 18% of women.

James Kinsella, CEO and Co-founder of instantprint, said about the research:

“Most organisation take part in the festive period, with decorations, Christmas parties and office Secret Santas.

“But this research highlights how important a small show of gratitude can be for your workforce. Something as simple as an early finish, free bar at a party or a Christmas gift voucher can make employees feel valued and appreciated. This in turn can help boost employee morale, loyalty and productivity in the workplace.”

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South African Students To Battle In Universities Business Challenge To Win Up To R50 000

Students will compete in a simulation that encourages business skills.

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Cognity Advisory’s Universities Business Challenge (UBC), sponsored by General Electric (GE), launched in July this year, has seen 500 students from 13 different universities across South Africa participate in a business simulation competition, that’s designed to develop their entrepreneurship skills. The challenge is now down to just 10 teams from five different universities (approximately 50 students), who will travel to Johannesburg to compete in the two-day final event on the 5 and 6th December 2018.

The ten teams competing in the final includes three teams from the North West University, two from Mangosuthu University of Technology, two from the Vaal University of Technology, two from the University of Limpopo and one from The University of KwaZulu Natal (UKZN). These teams will be competing for the chance to win up to R50,000.

Related: Call For Applications: Young Entrepreneurs Global Exposure Trips

The aim of the UBC, now in its second year in South Africa and 20th year globally, is to tackle South Africa’s high level of youth unemployment. Statistics South Africa (Stats SA) announced that South Africa’s official unemployment rate increased by 0.3 of a percentage point to 27.5% in the third quarter of 2018.

The competition simulates a business environment, with students given a problem to solve. The simulation is designed to foster skills such as analytical thinking, problem solving, commercial awareness and team-working. The challenge is designed to empower young people and equip them with the necessary skills to succeed in business.

Tope Toogun, development advisor and CEO of Cognity Advisory says, “Students are very prepared in terms of theory when they leave university, but not the practical skills they need to start and run a business. Seeing as SMEs make up 90 percent of formal businesses it’s really important that these students know how to build a business on their own or at the very least, in small teams.”

Toogun explains how the simulation encourages business skills, “The students competing in the challenge learn all about managing people, customer service, working in teams and how to create a start up without even realising they are being exposed to all these skills. These are the skills that will separate the members in the final. Students must work as a team and make instinctive decisions.”

Cognity Advisory is engaging students through social media competitions and newsletter updates. These competitions include spot prizes for students who post an image or video and receive the highest engagement on it.

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