The 2023 National Budget Speech made one message crystal-clear – over the course of the next few months, all available resources and efforts will be directed towards mitigating the impact of the ongoing energy crisis. In the speech, government also invited on the millions of small businesses that have kept the country’s GDP ticking over, to become part of the solution.
This was one of the most significant insights to emerge from Minister Godongwana’s recent address as he outlined various state-led interventions that will be implemented as relief measures for small- to medium-sized enterprises (SMEs). These are the policy changes you need to be aware of, and the practical steps you can take to position your small business for success in 2023.
Prepare to bounce back
The just energy transition is well underway in South Africa – one of government’s solution to the loadshedding crisis and their commitment to meeting sustainability targets. For ordinary South African households and businesses, a big part of the solution is to invest in solar-powered systems.
As per this year’s Budget Speech, government will provide solar-related loans to SMEs as part of an amendment to the Bounce Back Loan Guarantee Scheme that was implemented as a measure to help small businesses recover from COVID-19 related losses. Furthermore, as part of these developments, government will allow commercial banks to mobilise funds in the scheme to lease solar energy equipment to SMEs throughout the country.
Business owners can expect to hear more about how to access solar-related financing by May 2023 and are being urged to watch the news pages of banks and other financiers on how to apply. In the meantime, you can prepare by ensuring that your cashflow statement and business plan are up to date, your tax obligations have been met, your business is registered and that your income statements are ready for review. With a bit of forethought, you can poise yourself and your business to capitalise on the benefits of the scheme as soon as updates have been made.
Go solar
A total of R5 billion has been allocated to companies through the expansion of the renewable energy incentive. As per these amendments, businesses will be able to claim a 125% tax deduction in the first year for all renewable energy projects, with no thresholds on generation capacity.
This will apply to all systems installed between 1 March 2023 and 28 February 2025. Enlisting the assistance and advice of a tax practitioner who can help you make the most of this incentive, within the required timeframes, may prove incredibly useful in decreasing the tax burden on your business.
A boost for the township economy
As part of government’s efforts towards alleviating unemployment and uplifting businesses in underserviced areas, a total of R2.8 billion will be injected into the Township and Rural Entrepreneurship Fund to support over 120,000 township and rural businesses.
Furthermore, there are sector-specific schemes available for businesses within the following categories: small-scale bakeries and confectionary, autobody repairs, mechanics, butcheries, clothing, leather, textiles, personal care, spaza shops, shisanyama and cooked food.
To apply for funding or support, small business owners can approach the following institutions: The Small Enterprise Development Agency (Seda), the Small Enterprise Finance Agency (sefa), National Empowerment Fund (NEF) and the National Youth Development Agency (NYDA).
Look forward to less red tape
Reducing the red tape involved with conducting business in South Africa remains one of the key ways in which government can contribute to the fostering of an enabling environment for business.
In this year’s Budget Speech, it was announced that amendments to the Businesses Act (1991) to reduce the regularity constraints for small businesses are in the process of being finalised. What these changes will mean for the way in which entrepreneurs enter the market and do business will become clearer within the next few months.
ENDS
About the Author: Nkululeko Gudazi
