24 October 2017

Medium Term Budget must support SMEs to ensure Radical Economic Growth

The SBi small business chamber organisation (formerly AHi) calls on the finance minister to ‘think small first’, as government is mandated to do by the Small Business Act, and be wary of imposing new taxes or suggesting cuts to programmes that will disproportionately affect SMEs.

“One of the most injured parties in the South African economy today is our small and medium enterprise sector,” says Bernard Swanelpoel, Chairman of SBI. “SMEs in most economies are a significant driver of GDP and the primary job creator; most importantly SMEs are the main source of new employment. “

“More than 95% of registered businesses in the world are small in size, employing fewer than 250 people and account for 60%-70% of the working population. This is sadly not true of South Africa,” says outgoing-CEO Dr Ernest Messina.

The SBI urges the minister to ensure that spending priorities will be directed at programmes to deliver Radical Economic Growth. Without prioritising growth, the minister will never be able to make his budget balance, or deliver services to those who need it most.

“Eskom’s proposed tariff hikes will already force many SMEs out of business. Government asking individuals and businesses to refinance our sole, taxpayer-funded utility company looted by Gupta Monopoly Capita (#GMC) is a perversion,” said Swanepoel. “It will undermine whatever growth we are anticipating, increase barriers to entry for new competitors (and black industrialists), and limit both foreign and domestic investment.”

The SBI also proposes that the minister consider that provincial allocations, many of which ultimately fund local development in municipalities, are currently based on more on population than unemployment (need) and take no account for rural-to-urban migration. For instance, according to research by SBP, the Northern Cape and Northwest provinces have two of the highest proportion of unemployed people (expanded definition). And yet their budget allocations represent only 3% and 7% of the provincial budget allocation, respectively.

The results of this is evident in this year’s Global Entrepreneurship Monitor report confirming that the number of South Africans intending to start a business has dropped more than a third since 2013 and halved from 2010.

The minister needs to focus on inspiring confidence and enabling investment and growth. Without both, small and medium job-creating enterprises will struggle to get traction and the millions of South Africans without work will be turned away yet again from opportunity’s door.


For more information contact us:
Cobus Bester – SBI Spokesperson
082 457 7218

Bernard Swanepoel – SBI Chairperson
083 303 9922

Ernest Messina – SBI outgoing CEO
083 571 1795