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Financial Planning
February 27, 2020

Key takeaways for SA’s SME sector

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<p><strong>By: Jeremy Lang, Regional General Manager at Business Partners Limited </strong></p>

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<p>During the National Budget Speech, Finance Minister Tito Mboweni touched on various points that could affect the local small and medium enterprise (SME) sector.</p>

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<p>Jeremy Lang, Regional General Manager at Business Partners Limited (BUSINESS/PARTNERS), says that in a nutshell, the 2020 National Budget is an attempt to keep everyone happy, which is an impossible task in the current economic climate. He says that, although the Minister provided clarity on Government’s expenditure priorities, little was said about how it plans to grow the economy, a crucial task in order to reduce the debt-to-GDP ratio, which remains significantly high.</p>

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<p>Lang says that, contrary to rumours, VAT will not increase. “This is positive as consumers will not be placed under additional pressure, therefore freeing up the additional disposable income for consumers to be spend amongst local small and medium businesses.</p>

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<p>“The small business incentives, including the Innovation Fund - which will be capitalised with R1.2 billion over the next three years - and industrial business incentives - worth R18.5 billion – is a positive injection for the SME sector and a much-needed boost to struggling business owners in these sectors. In addition to this, the R6.5 billion allocated to small business incentive programmes - of which R2.2 billion will be transferred to the Small Enterprise Development Agency (SEDA) – is very welcome. We did however hope for more detail on how business owners will benefit from these programmes.”</p>

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<p>Lang explains that key to increasing the country’s competitiveness is reducing the complexities and cost of doing business specifically for the SME sector, as it will result in the development of local business, employment and economic activities. “It is therefore positive to note that the Minister has listed lowering the cost of doing business as a key spending priority for the year, despite very little being said on how this will be done.”</p>

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<p>He says that curbing expenditure is always positive, and that although the commitment to cut spending on wages for the public service is positive, it’s unfortunate that the savings made will likely be ploughed back into SOEs, such as Eskom and SAA. “We would prefer to see this expenditure be better spent on boosting economic growth, education and other key priority areas.</p>

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<p>“There is also much merit in pursuing public sector and private sector partnerships, as this will allow private businesses to leverage off public projects, thereby ensuring that much more is accomplished. In this same vein, it is a good move to tap into the private sector to compliment the country’s power generation supply, and we hope that it will be implemented with the speed promised in SONA and repeated by the Finance Minister today.”</p>

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