Where is the focus on growing South Africa’s small business sector?
That is the overriding question we are left with at the end of Finance Minister Tito Mboweni’s maiden budget speech. The few mentions the Minister made about Small & Medium Businesses were short on detail at a time when we desperately need to supercharge the growth of this segment.
A highlight of the speech from Sage’s perspective was the Minister’s acknowledgement that we must free small businesses from stifling regulations and complicated taxes because we desperately need them to boost employment and drive competition. This aligns with President Ramaphosa’s pledge to improve the ease of doing business in his State of the Nation Address this year.
However, these pronouncements need to be followed rapidly by concrete policies and regulation. We believe that there are many steps government could take to streamline red-tape for small businesses -from streamlining some SARS processes such as VAT refunds and issuing of tax clearance certificates to increasing the maximum thresholds for turnover tax and VAT registration.
We hope to hear more about such steps after the May general election and in the October Medium Term Budget Policy Statement.
One welcome announcement in the speech was the allocation of R481.6 million to the Small Enterprise Development Agency to expand the small business incubation programme. Such programmes can play an invaluable role in helping small businesses to survive the difficult start-up phase and then scale up into larger businesses.
As a software company, we were also pleased that the Minister spoke about using the budget to get our country ready for technology. His focus on the importance of technology in education, his commitment to working with the Minister of Communications to resolve the issue of spectrum licensing in order to drive down data costs, and his mention of FinTech innovation programmes at the Reserve Bank all point to a focus on creating a competitive, digital country that ready for the future.
However, I would have liked to have seen more of a specific focus on innovation as a vehicle for driving economic growth. The fourth industrial revolution and the rise of a digital economy has been a theme of recent government speeches and addresses, and it would be good to see the words matched with investments and policies.
On the whole, Minister Mboweni and the National Treasury have done a good job of negotiating a challenging economic climate. They are to be commended for balancing the books, keeping a lid on government spending, taking steps to put Eskom and other state-owned entities on a more sustainable footing, and committing towards investing in infrastructure.
Such steps could help boost business confidence and create an enabling environment for businesses of all sizes. As the Minister notes, the private sector is the key engine for job creation. Taking policy actions that offer more certainty to the business community will help to reinvigorate investment in the economy and unlock entrepreneurial activity.