Mixed reaction to budget emphasis on SMEs

The budget’s emphasis on the importance of small to mediumsized enterprises (SMEs) in growing the economy and creating jobs has received a mixed reaction from the sector.

Finance Minister Malusi Gigaba said on Wednesday in his budget speech that a R2.1bn SME fund would be established over the medium term to assist small businesses during their start-up phase. Gigaba said if funding for small businesses was accessible, unemployment would be cut in half through small business initiatives.

The National Development Plan — the government’s blueprint for eliminating poverty and reducing inequality — has set ambitious goals for the SME sector, but entrepreneurs continue to face challenges such as red tape, a lack of access to finance, and the high cost of doing business.

Ben Bierman, MD at Business Partners, a specialist risk finance company for formal SMEs, said he was hopeful that the government would provide more support for the sector.

“Highlighting this is government’s commitment to the Preferential Procurement Regulations, as well as that the Public Procurement Bill will be submitted to Cabinet in March for gazetting for public comments. This regulation will ensure that SMEs are able to participate fairly in the public procurement process, which will in turn promote black economic empowerment, industrialisation and allow SMEs to create more job opportunities,” he said.

However, Simon Leps, CEO of XPRS Capital Africa, a small business funding platform, said it had become very trying over the years for entrepreneurs and business owners to obtain funding. A report in 2015 had revealed that the greatest obstacle to sustainable and profitable SMEs was inadequate access to finance.