The Small Enterprise Ombud service, establishment along with the adoption of the National Small Enterprise Amendment Act of 2024 into law, represents a pivotal advancement in creating a more equitable business landscape for small enterprises across South Africa. As someone who has launched multiple small businesses in this country, I have often questioned whether I would recommend the entrepreneurial journey to others. While numerous challenges plague the small business sector, the most difficult obstacle I have encountered is securing access to justice—whether in disputes with other businesses, large or small.
Fortunately, a new chapter has begun for small enterprises with the implementation of the Small Enterprise Amendment Act of 2024. Among its key provisions is the establishment of the Office of the Small Enterprise Ombudsman Service, which is designed to provide affordable and effective access to justice for small businesses navigating legal disputes and regulatory challenges.
This legislative development marks a crucial turning point in addressing one of the most pressing barriers facing South African entrepreneurs today.
Office of the Small Enterprise Ombud
On April 3, 2025, the Parliamentary Portfolio Committee on Small Business Development recommended four candidates for the position of Small Enterprise Ombudsman. As of this publication, the final appointment has not yet been confirmed.
The Office of the Small Enterprise Ombudsman serves a fundamental purpose: providing small businesses with vital support and establishing a credible mechanism to address marketplace disputes and unfair treatment. The office’s mandate is to adjudicate and resolve small business complaints through processes that are procedurally fair, cost-effective, and timely, while considering existing contractual and legal relationships alongside the provisions of the Act.
This article examines the scope and authority of the Small Enterprise Ombudsman role, offering small business owners a comprehensive understanding of the services and support they can expect from this newly established office.
Who can Complain and What Issues are Covered?
A “complainant” is defined as a small enterprise or a small enterprise organisation that lays a complaint against another entity. A “small enterprise” includes a separate and distinct business entity, its branches or subsidiaries, including co-operatives, co-operative financial institutions, or co-operative banks, operating in any sector or sub-sector and classified as a micro, small, or medium enterprise meeting prescribed criteria.
A “complaint” is any complaint lodged by a small enterprise or organisation against:
- Another small enterprise or organisation.
- A large enterprise.
- An organ of state.
Complaints must relate to the interpretation of terms in an agreement for the procurement of goods or services, or the late or non-payment of amounts due to the small enterprise. Importantly, a complaint falling under the jurisdiction of a financial sector ombud is excluded.
The Ombud is competent to investigate alleged unfairness, abuse or unjustifiable exercise of power, unfair or other improper conduct, or undue delay in performing under a contractual or legal relationship. They can also investigate any practice, act, or omission causing unlawful or improper prejudice to a small enterprise. Investigations can be initiated based on a complaint, on the Ombud’s own initiative regarding prohibited conduct, or when directed by the Minister.
Resolving Disputes
Once a complaint is formally received, the Office is required to notify all relevant parties in writing, providing comprehensive details that enable them to respond appropriately and offering a reasonable opportunity to submit their response. The Ombudsman has the discretion to employ any suitable alternative dispute resolution (ADR) mechanism, with initial efforts focused on achieving resolution through conciliation or mediation processes acceptable to all involved parties.
When a complaint cannot be resolved through ADR methods, the Ombudsman will issue a final determination. This ruling may either dismiss the complaint entirely or uphold it in whole or in part. In cases where the complaint is upheld, the Ombudsman is empowered to award the complainant fair compensation for financial losses or damages incurred and may direct the opposing party to take corrective action. For monetary settlements, the Ombudsman can mandate disclosure of relevant contractual terms and financial transactions. The Minister retains authority to establish maximum monetary award limits and determine cost allocation through regulatory provisions.
All final determinations must be issued in writing with detailed reasoning. These rulings can only be challenged in court on specific grounds: illegality, procedural unfairness, or irrationality. Should parties fail to comply with the Ombudsman’s determination, enforcement can be pursued through standard court procedures.
Where a cash award was made, the ombud’s finding would have the power of a court judgment, so the sheriff would be able to attach the assets of a party that did not pay up.
Addressing unfair trading practices
The Act empowers the Minister, on the recommendation of the Ombud, to declare certain practices concerning small enterprises as prohibited unfair trading practices via a notice in the Gazette. Small enterprises have specific rights in trade and transactions, including the right to unambiguous contracts, a reasonable payment date and interest on late payments, disclosure of relevant information, and accountability from large enterprises and government entities. Principles guiding such declarations include whether the practice harms or is likely to harm the sustainability and competitiveness of small enterprises, unreasonably prejudices or deceives them, unfairly affects them, or defeats the objects of the Act. Once a practice is declared prohibited, affected parties must cease the practice. The Ombud can then direct parties to rectify any harm caused and can impose administrative penalties for non-compliance.
What this Means for Small Businesses
The establishment of the Office of the Small Enterprise Ombud Service provides a dedicated mechanism for small enterprises to seek recourse against unfair practices and unresolved payment or procurement issues with other businesses or government organs. This offers an alternative to potentially costly and time-consuming court litigation, promising a more accessible route to justice. The Ombud’s power to investigate on own initiative and recommend unfair trading practices for prohibition can proactively address systemic issues harming the sector. The Office is also tasked with stakeholder education to promote awareness of its services, including reaching rural and underserved urban areas.
Conclusion
In essence, the Office of the Small Enterprise Ombud Service is designed to level the playing field, providing small businesses with essential support and a credible avenue to address disputes and unfair treatment in the marketplace.
Further Reading
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