Weekend Argus (Sunday Edition)
Opportunities for SMEs in Budget
week to all government departments and public institutions to pay suppliers on time or be charged with financial misconduct. This is crucial to the survival of small businesses as late payment has a direct impact on their cash flow. While this is nothing new, the threat of being charged is a welcome addition.
Another positive is the R100 billion Black Business Growth Fund to be created as a result of the finalisation of the revised Financial Sector Codes. This could have a significant impact on black businesses growth as the initiative is expected to dramatically improve their access to funding.
Gigaba will approve six special economic zones set to benefit from additional tax incentives including a reduced corporate tax rate for qualifying firms. This overall policy is driven by the Department of Trade and Industry and seeks to encourage investment in the manufacturing and tradeable services sectors. As such, it will provide opportunities for SMEs to tap into by either supplying infrastructure or material in these zones.
The speech, however, was not all positive for SMEs. For example, although the Treasury has made the provisional allocation of R2.1 billion for SME start-ups, it is disappointing that it will only begin operating in 2019/20. SMEs need support now more than ever.
Another setback is the announcement of the VAT hike to 15 percent. Although Treasury had to implement measures to minimise the fiscal deficit, this will have an effect on both price-sensitive SMEs as well as consumer expenditure.
However, the outlook for SMEs in 2018 remains mostly positive. Looking at the year ahead for SMEs, I am hopeful that the government will indeed address policy uncertainty through the support and input of the soon-to-be-established Presidential Economic Advisory Council, as announced at the Sona.
The Sona promised to reduce regulatory barriers for small businesses and should see the government improve efficient policy administration and implementation.
Efficiency and policy certainty will encourage co-operation between investors, business, government and labour.
This will have a positive impact on business optimism, which combined with the possibility of new infrastructure projects will lead to higher growth and possibly increased consumer spending, despite the increases in tax.
I believe that the country’s economy has turned a corner.
Ben Bierman is managing director at Business Partners Limited.