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SMEs should be at centre of Zuma's Sona - expert

Feb 08 2017 11:43

Cape Town - Last year, in his State of the Nation Address (Sona) President Jacob Zuma mentioned that government would set aside 30% of appropriate categories of state procurement for purchasing from small businesses, co-operatives as well as township and rural enterprises.

It also promoted funding for youth-owned enterprises through the National Youth Development Agency.

Therefore, with Small Business Development Minister Lindiwe Zulu seeking a raise in her annual budget - from R1.4bn to R5bn - from Treasury, Zuma might talk about new initiatives to boost small, and particularly black-owned, businesses, according to Anton van Heerden, managing director and executive vice-president for Africa and the Middle East at integrated SME support company Sage.

More than half (54%) of SMMEs which took part in a recent Sage survey reported that they were confident about their prospects over the next six months.

"We have a diverse community of 2.8 million small and medium businesses (SMMEs) in South Africa. According to estimates from the Ministry of Trade and Industry, they account for a contribution to gross domestic product (GDP) of 52% to 57% and 60% of employment. As such, they should be at the centre of any government strategy to catalyse growth and address unemployment," said Van Heerden.

"The Sona might touch on the role of business in creating a more prosperous and equal SA. President Zuma might allude to the National Development Plan (NDP), which envisages an important role for small business in job creation and economic growth. Big business and government have worked closely together in recent months, but small business should ideally also have a seat at the policymaking table."

The NDP envisages 90% of new employment by 2030 will be generated by SMMEs. Van Heerden said it is critical for SA, because more than 50% of the youth are unemployed.

READ: Five top SA entrepreneurs making waves

Minimum wage and national health

Zuma’s Sona 2016 mentioned the importance of implementing a minimum wage for SA, and it would not be surprising to Van Heerden if more detail is provided this year.

"A commission appointed to investigate recommended that government implements a minimum wage of R3 500 per month and R20 an hour. We might get some hints about how a minimum wage will be phased in as well as about any special arrangements for vulnerable industries where companies are shedding jobs," said Van Heerden.

National Health Insurance (NHI) is another topic on which Sona might shed some more light this year.

"Government is currently piloting a National Health Insurance scheme, but this year we might get information about how a wider rollout will be funded and implemented. The cost of implementing the NHI is projected to be R225bn by 2025," said Van Heerden.

"The impact on small businesses could be significant – they might need to be ready to administer a payroll levy. Alternatively, government might choose to lift VAT or income tax, which will hit consumers' pockets."

READ: Fintech fertile ground for young entrepreneurs

Infrastructure investment

According to Van Heerden, it would be interesting for SMMEs to hear what Zuma says in Sona about government's infrastructure investment plans.

"A well-managed and sustainable infrastructure investment programme could help boost our competitiveness as a country. Businesses of all sizes will benefit from better broadband connections, a more reliable power supply and world-class rail, road and port links. Some businesses might also be well positioned to win government business if it steps up spending," said Van Heerden.

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sage  |  sona 2017  |  small business  |  entrepreneurs
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