Budget speech: What SMEs want from government

With the budget speech expected to take place on Wednesday, small and medium enterprises (SMEs) have outlined what they need from the government to play a more significant role in South Africa’s economy.

Minister of Finance Enoch Godongwana was supposed to deliver the budget speech on 19 February, but it was postponed because the parties in the government of national unity (GNU) opposed the increasing of VAT.

Miguel da Silva, Group Executive of Business Banking at TymeBank, says recent weeks have seen new challenges that will affect not only SMEs but the entire economy.

“These include the return of load shedding and the prospect of a further fuel price increase in March, although the price of diesel is expected to drop marginally.”

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SMEs can boost tax revenue  

While the future of taxes is uncertain, he says cutting back on expenditures is a likely scenario.

“Let us hope that whatever budget cuts are being considered, some money will be allocated to SME support — after all, SMEs’ increased participation in the economy will boost tax revenue while creating much-needed jobs.”

Da Silva adds that an increased allocation of the national budget towards infrastructure development would also be great news for small businesses, given the opportunities that could emerge in the subcontracting space.

Reduction of regulatory burdens for SMEs

He adds that the government must reduce regulatory burdens and increase funding access for SMEs to grow.

“Red tape has long been a major obstacle for SMEs. Multiple independent initiatives seek to address this and other issues.”

He made an example of the proposed Startup Act that SiMODisa has lobbied for in its effort to overcome the barriers that SMEs and startups face, including access to capital, markets, talent, and the lack of supportive enabling environments.

R100 billion transformation fund

Da Silva says it would be interesting to see if the Minister mentions the proposed R100 billion transformation fund on Wednesday.

The fund is an initiative to support black-owned businesses and small, medium, and micro enterprises (SMMEs), and will be funded through private sector profits.

He adds that the plan is still being developed and has yet to be made available for public comment.

“While any initiative aimed at supporting SMMEs is welcomed, it remains to be seen whether the transformation fund in its final form will deliver the intended benefits.”

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B20 and what it means for SMEs

“South Africa has assumed the Presidency of the G20 – a global forum for international cooperation on economic issues. It also takes the helm of Business 20 (B20), which serves as the official G20 dialogue forum with the global business community.

“The B20 kicked off in Cape Town on 24 February, marking the start of a year of global business engagement to set priorities for business in conjunction with the G20. The B20 platform consists of eight task forces, each focusing on a critical area of economic and social importance,” he says.

According to B20 literature, the Finance and Infrastructure Task Force will “focus on driving innovation in financing models, ensuring greater inclusivity in financial systems, and addressing infrastructure gaps critical to economic growth.

“Particular attention will be given to empowering SMEs by removing financial barriers, expanding access to affordable credit, and fostering their integration into global markets.”

How cloud computing can benefit small businesses

He says in recent years, the use of cloud computing technology among SMEs globally has skyrocketed to 80%, according to a recent report by Gartner.

“Once the domain of large corporates is established, it is attractive for SMEs because it reduces the need for expensive hardware and software licences. Since cloud providers manage software updates, this reduces the cost of IT maintenance.”

SMEs also recognise the benefits of data analytics, which help them make more informed decisions regarding operations, market trends, customer engagement, and strategy development, ultimately enhancing their competitiveness and efficiency. 

“As with all technologies, there are also some challenges. Apart from data quality and privacy issues, implementation can be complex and require staff upskilling.

“Still, for more established SMEs, both technologies are worth exploring to see if they align with their specific requirements.

“With specific reference to the upcoming budget, it is critical that we see more being done by way of reforms that reduce red tape and policy restrictions that continue to stifle SMEs’ growth.”

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