February 23 2021

As our country continues the battle of defeating the coronavirus and saving livelihoods, the Small Business Institute has called on finance minister to speed up economic reforms, invest in infrastructure and not abruptly cut off support for small and medium-sized enterprises (SMEs).

Finance minister Tito Mboweni is due to unveil the national budget tomorrow (Wednesday, February 24 2021).

“We applaud the announcement by the President that support to households (via the special covid-19 grant) will be continued for a few more months and that unemployment benefits to select firms affected by the virus will remain in place for a while. As the virus is still raging – with strident mutations – this support to households and firms remains vital,” says John Dludlu, SBI CEO.

A week ago, President Ramaphosa announced that some R1.3 billion worth of relief had been extended to companies mainly small business and of the R200 billion credit guarantee scheme – backstopped by the National Treasury and the Reserve Bank – R19 billion had been tapped by 13 000 firms. This is over and above R2 billion from two South African charitable families.

“As the pandemic has yet to be overcome through a rigorous vaccine programme, we believe the support to households and companies should not be abruptly withdrawn; rather we need a careful sequencing informed by measures to avert the real prospect of a third wave of infections. This plea applies to both the public and private sector role players,” Dludlu says.

“Without the social grants – especially the special covid-19 grant (of R350 to anyone who doesn’t receive any grant at the moment) – the country would have been plunged into a humanitarian crisis of hunger in the middle of this pandemic,” says Dludlu.

Equally important is accelerating the implementation of long-overdue economic reforms to make the South African economy competitive. “Minimally, without a robust vaccination rollout plan, energy supply security, modernisation, investment in infrastructure and research and development as well as speedy allocation of high-demand spectrum, any talk of economic recovery will not be credible,” warns Dludlu.

Constrained as the fiscus is, it would be counterproductive to raise taxes. “People need money to buy from SMEs.”

The SBI also called on all social partners and the broader civil society to maintain the spirit of solidarity that was evident during the first wave of the pandemic. “Now more than ever we need to stand together as South Africans and confront this deadly virus. There is a room for all of us – business, government, labour and wider civil society – to do a little bit more to overcome this crisis. Initiatives such as #paysmesin30days should be continued and, where possible, 50% upfront payment of invoices should be considered especially where there’s a long-standing relationship between a major corporate and an SME. Our priority at this stage ought to be to save existing businesses,” he says.

The SBI cautioned against diverting funding towards costly new initiatives – a new set of institutions. Rather, government needs to bolster efforts to strengthen the state’s capacity to deliver public services and fight corruption which steals from the poor – President Ramaphosa’s fourth priority.