Small business gets a bit of a helping hand

A fund with an allocation of R2.1billion over the medium term is being developed between the departments of small business, science and technology and the treasury to benefit small and medium enterprises, Finance Minister Malusi Gigaba announced during his budget speech on Wednesday.

It will assist small, medium and micro-sized enterprises (SMMEs) during their early start-up phase and, by enabling new businesses with new and innovative ideas to emerge and thrive, “we are radically transforming patterns of production in the economy”, he said.

Government, labour, the private sector and civil society have the ability and responsibility to grow the economy inclusively, he added, citing examples such as the CEO initiative, which has established a fund committing about R1.4-billion to support high-potential SMMEs.

“If funding for small businesses could be accessible, unemployment will cut in half through small business initiatives,” tipster Karabo Tladi said, giving a recommendation to the finance minister.

The government must create an environment in which small businesses can thrive, as they are an important tool for creating jobs and growing the economy inclusively, Gigaba added.

Karl Westvig, the chief executive of Retail Capital, expressed disappointment at how much was allocated to the fund. “If the government was serious about developing startups, it would need to increase the value of this fund or use the fund as a guarantee allowing the private sector to fund on top of this,” he said.

But the treasury has also amended its preferential procurement regulations to favour small business.

Changes to the public procurement regulations will include targeted procurement from designated groups, including township and rural enterprises, black women and youth enterprises, co-operatives and people with disabilities.

Subcontracting to designated groups in all projects or contracts above R30-million will be made compulsory.

The amount involved is huge. “The government spends around R800billion annually towards supply chain in all spheres of government,” a treasury official said. “For example, with antiretrovirals that are manufactured in another country, we could have them manufactured in South Africa with the skills and expertise we have.”

Small business will also be helped by a commitment to be paid timeously. Next week, treasury director general Dondo Mogajane will issue a directive to all government departments and public institutions to pay suppliers within 30 days. If they fail to do so, they will be charged, Gigaba said during a press briefing on Wednesday.