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Finance Minister Tito Mboweni made the right move when he extended the employment tax incentive by ten years and increased income eligibility thresholds for the incentive in his Budget 2019 speech, says Gugu Mjadu, spokesperson for the 2019 Entrepreneur of the Year competition, sponsored by Sanlam and Business Partners.
In Mjadu's view, the decision will help curb youth unemployment while rewarding employers, particularly entrepreneurs, for creating much-needed jobs.
From as soon as next month, employers can claim R1 000 per month in tax incentive for young employees earning up to R4 500 - up from R4 000.
"The impact of this on entrepreneurs is a positive one as those currently evaluating the viability of hiring staff will now hopefully be more inclined to do so," said Mjadu.
"In the process, these SMMEs will not only be creating much needed employment for the youth but by hosting them in their companies, they will be contributing towards stimulating entrepreneurial activity by exposing young people to the world of entrepreneurship."
Small Enterprise Development Agency
Another step in the right direction by Mboweni, according to Mjadu, is the announcement that the National Treasury has allocated R481.6m to the Small Enterprise Development Agency (SEDA) to expand the small business incubation programme. This will increase the chances of survival for SMMEs in Mjadu's view.
"Furthermore, the R3.2bn budget allocation over the medium term for the small business and innovation fund addresses one of the biggest barriers to entry for entrepreneurs – funding. This and other budget increases for initiatives targeted at financing entrepreneurs by government is applauded, particularly when we consider that 88% of all entrepreneurs are self-funded," said Mjadu.
"While we appreciate steps being taken by government to bolster entrepreneurship in the country, we believe more needs to be done by both the public and private sector in order to achieve the National Development Goals."
In particular, Business Partners would like to see finality around the relaxation of visa regulations to make it easier for tourists to invest in and visit South Africa, as this sector houses a high number of entrepreneurs, has low barriers of entry for SMMEs, and is one of the biggest contributors to SA's gross domestic product.