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 While President Cyril Ramaphosa made some good commitments in the State of the Nation Address (SONA), the small and medium enterprise (SME) sector is hoping to get more clarity in the upcoming 2020 National Budget Speech.

This is according to David Morobe, Executive General Manager of Impact Investment at Business Partners Limited (BUSINESS/PARTNERS)* – one of Africa’s leading business loan and equity providers and 2019 Gold winner: SME bank of the year (Africa)* – who says that a key area for Government to focus on is increasing the competitiveness of the country. “This, in turn, will make South Africa more investor-friendly, spur economic activity and assist with issues like unemployment.”

While South Africa’s ranking in the Global Competitiveness Report has improved, rising seven places to 60th in 2019, Morobe believes there is still a long way to go – particularly in improving the ease of doing business in South Africa. “Contrary to President Cyril Ramaphosa’s goal to be ranked amongst the Top 50 countries on the World Bank’s Ease of Doing Business Index, South Africa fell two places from 82nd to 84th in the most recent report.”

One positive development that Morobe notes around increasing the country’s competitiveness, is the announcement made during SONA that a new platform, called Bizportal, will now allow a company to be registered in only one day, as well as register for UIF and SARS, and even open a bank account.

“Given the well-known fact that SMEs contribute significantly to job creation, it would bode well if Government could offer tax incentives to SMEs who create new jobs, as that would help alleviate the high unemployment levels that our country is facing.” 

Added to this, Morobe believes that Government should explore ways to reduce the high costs of cross-border transactions. “We need to improve our trade agreements, by looking at new and re-negotiated agreements with preferential markets, and increase capacity so that more local businesses can export,” he says.

Another positive point raised during SONA was Government’s continued efforts to lower data costs. “There has been a lot of talk in the past about the Fourth Industrial Revolution, but the country’s technological readiness will largely be determined by making data more affordable,”

As Eskom’s failure to meet the country’s energy needs remains the biggest issue currently facing local businesses, Morobe hopes that there will be a short-term solution provided in the 2020 Budget Speech. “We are hoping to see, for example, significant rebates or tax reductions for generators or inverters that could help small-and-medium-owner-managed businesses to better manage their energy challenge.”

The President also announced at SONA that a Section 34 Ministerial Morobe weighs in. Determination will be issued shortly to give effect to the Integrated Resource Plan 2019. This, Morobe says, is to enable the development of additional grid capacity from renewable energy, natural gas, hydro power and battery storage – another welcomed development in the quest to address the debilitating electricity supply constraints.

Another immediate issue that he says needs to be addressed in the Budget Speech is better fiscal discipline to address the ever-rising ratio of expenditure to GDP. “The need for discipline is even more pronounced at local Government level where you find some towns that don’t even have basic services like access to water and rubbish removal. This has a negative impact on local businesses and the broader economy.

“Employing people with the right skills and obtaining clean audits by municipalities are therefore crucial in delivering much-needed services to our citizens, and our SMEs in particular.

“On a positive note, the Infrastructure Fund implementation team has finalised the list of shovel-ready projects and has begun work to expand private investment into public infrastructure projects. Not only will small-and-medium-owner-managed businesses be included in the supply stream, but as infrastructure projects are rolled out, they will have a positive impact on economic growth and a downstream effect on all businesses,” he says.

Lastly, Morobe commends the President’s promise to support the transformation of the tourism industry with the imminent launch of the Tourism Equity Fund. Also welcome is the stepping up of measures to provide safety by increasing SAPS visibility at identified tourist attraction sites, among other efforts. “Tourism is a big contributor to GDP, so this will be good for businesses and economic growth.”

While these are all positive developments, Morobe says that the Budget Speech needs to offer more concrete proposals to truly turn things around. “Even as Minister Mboweni tends to put forward commendable ideas to improve things – as seen in his maiden speech - what is urgently needed now is policy certainty and cohesion from all social partners in implementing agreed upon policy,” he concludes.



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