Business organisations cautiously optimistic about plans to support businesses

Business organisations say they are cautiously optimistic about plans to support businesses announced in President Cyril Ramaphosa’s State of the Nation Address (SONA).

These include plans to finalise amendments to the Businesses Act in order to reduce regulatory impediments for SMME’s and co-operatives.

Ramaphosa also announced plans to provide R1.4 billion to finance over 90 000 entrepreneurs.

The president says government will partner with the SA SME Fund to establish a R10 billion fund to support SMME growth.

In his address, Ramaphosa has acknowledged that small business remains key to job creation and plays an important role in the country’s economic growth.

“Growth and creation of jobs in our economy will be driven by small and medium sized enterprises, by cooperatives and informal businesses. Through the small enterprise finance agency SEFA we plan to provide R1,4 billion for over 90 000 entrepreneurs,” says Ramaphosa.

This has been described as a bold move by economists who say over time, businesses have had to endure unfavourable circumstances that have led to some small businesses closing down.

“I think for him it was good to at least acknowledge that there are some issues around the regulations and to kind of sort those out. It is going to be an important thing in general for SMMEs and its something that he was aware that there is a need to boost the economy, and SMMEs has been viewed in terms of creating those jobs and have proven to be a useful tool,” says Thabile Nkunjani, Agricultural economist.

Small businesses have welcomed talks of a R1,4 billion intervention for entrepreneurs and also say government’s planned partnership with the SA SME Fund to establish a R10 billion fund to support SMME growth will also go a long way in reviving the township economy.

Bheki Twala, founder of the Township Economic Council, says, “One of our biggest concerns is to make sure that the funds reach the intended recipients. We need to avoid the situation of the COVID-19 relief fund where the majority of the business in the townships never received those funds.”

The president also announced efforts to boost the country’s investment drive with plans to raise the target of R2 trillion in investments extended to 2028.

However, Business Unity South Africa CEO Cas Coovadia has poured cold water on this, saying the environment in the country needs to be conducive first.

“If you look at what is happening in places like Kenya, they are growing much faster than us, because they have recognised that they need investments and they need to grow the economy to address the problems and they are creating an environment for investments and that’s where investment is going currently. We are competing. So, we need to make the environment conducive,” says Coovadia.

The SONA paves the way for the budget announcement by the finance minister later in the month.

Economists and business organisations expect that it will shed more light on the moves by government, how the announced interventions will be funded and the country’s economy strengthened.