Productivity SA calling for improved access to funding
Productivity SA has urged the government to improve access to funding for SMMES by becoming the primary source of financial assistance to the sector as a measure to reignite economic growth post-covid-19.
The organisation, which is tasked with promoting employment growth in South Africa, this week outlined its proposals to create jobs and rebuild the economy.
One of the recommendations from Productivity SA is that there should be policy cohesion and programme alignment to ensure an integrated enterprise development (targeted at SMMES).
The organisation also recommended that financial support by development finance agencies such as the Small Enterprises Finance Agency, Industrial Development Corporation and
National Empowerment Fund to SMMES should be linked to productivity outcomes, and that non-financial support should be coordinated.
Productivity SA CEO Mothunye Mothiba said there is sufficient evidence that small enterprises have the potential to create large numbers of jobs.
“Helping the SMMES to restructure and move up the productivity value chain through well-coordinated assistance programmes is critical,” according to Mothiba. “Experience to date is that there is limited policy cohesion and programme alignment, resulting in efforts to support enterprises [SMMES in particular] being very fragmented, which often result in duplication and/ or even competition amongst public sector entities for scarce resources to provide such assistance.”
Small businesses have borne the brunt of the impact of Covid-19 on the economy with many of them having been forced to go cap in hand to government for bailout packages.
Brett Hamilton, visiting lecturer in corporate finance at the University of Stellenbosch Business School, said support for informal businesses was also critical.
“Viewing the informal and formal sectors as two separate market participants is erroneous and has led to ineffective policy to support and develop the informal economy.
“What Covid-19 has shown is just how interconnected economies and markets are, and that the formal and informal sectors are no different.”
The Department of Small Business Development has in recent weeks put together relief packages targeted at businesses operating in the informal economy via a support scheme for spaza shops and general dealers.
Cosatu lends support
Trade union federation Cosatu has come out in full support of black businesses demanding that the government open its doors to firms owned by historically disadvantaged persons.
Cosatu president Zingiswa Losi said the federation supports black businesses in their fight to be included in government procurement and government business in general.
“Economic transformation cannot be delayed or postponed any longer, and the government cannot continue to do business with companies that are not complying with employment equity laws.”
The Covid-19 pandemic has seen black businesses pitted against white firms for the supply of protective equipment to government.
Health and safety codes required for mines
The Labour Court on Friday ordered companies in the mining sector to prepare and implement a code of practise for health and safety standards in response to Covid-19.
The order of the court directs the chief inspector of mines to publish the guidelines for the preparation and implementation of codes of practise by mines to mitigate the effects of Covid-19.
The Department of Mineral Resources and Energy said it welcomed the legal certainty provided by the order granted in the Labour Court. South African mines have been allowed to operate at 50% during the state of national disaster.
Covid-19 poses threat to SA’S banking sector
Fitch Ratings said this week that the Covid-19 pandemic poses a significant risk to the profitability and asset quality of South African banks.
The rating agency said: “Banks will be affected by their exposure to households, SMES and industry segments most affected by the pandemic.
“These include tourism, hospitality, retailers and manufacturers reliant on global supply chains.”
Fitch last month downgraded credit ratings of SA’S five largest banks – Absa, Standard Bank, Nedbank, Investec, and Firstrand – citing a deteriorating operating environment following the outbreak of the novel coronavirus.
The South African Reserve Bank has also directed banks not to pay dividends to shareholders or bonuses to executives this year.
Helping SMMES to move up the productivity value chain is critical