Garth Rossiter says government needs to step up and provide the basics to support SMEs’ growth.
With the Minister of Finance Enoch Godongwana expected to deliver his medium-term budget policy statement (MTBPS) on Wednesday, entrepreneurs are calling for an immediate focus on fiscal discipline alongside targeted relief for small businesses.
Small and medium enterprises (SMEs) expect the minister to deliver clear, non-negotiable timelines for the structural reforms that actually matter to the sector.
Garth Rossiter, Lula’s chief risk officer, says small businesses can’t commit to investment and job creation without stability. “With the economy facing persistent structural problems, high debt, and bleak growth forecasts, Lula insists the MTBPS’s single mission must be to slash the cost and risk of doing business.”
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Greatest threat to small businesses
Rossiter adds that the greatest threat to the growth of small businesses is not lack of resilience, but fiscal paralysis.
“Our businesses cannot commit capital for expansion and hiring when the government remains unable to offer a guaranteed, clear trajectory for electricity, logistics costs, and the national debt path. The minister’s main job is to remove this uncertainty.”
He is of the view that small businesses in the country have proven their resilience time and again. However, they cannot make long-term plans for growth or confidently secure the capital needed for expansion when the future of three massive cost drivers remains completely uncertain.
Small businesses do not need more promises
“I’m referring to the outlook for electricity supply, the trajectory of logistics costs, and the current, opaque path of the national debt,” he adds.
“What we really need from the Minister is not another promise, but a genuinely credible and binding fiscal framework. It must be a framework that gives us a clear guarantee that those debt stabilisation targets will actually be met, followed by an undeniable and steep decline.”
Rossiter says government needs to step up and provide the basics to support SMEs’ growth.
Areas where the mini budget must provide clarity
He highlights that there are three critical areas where the MTBPS must provide clarity and support for the SME community:
- Infrastructure reform and timelines: While public infrastructure spend is necessary, the Minister must provide measurable, time-bound targets for the government’s structural reform agenda, particularly regarding energy generation and port/rail efficiency. Every day of operational inefficiency serves as a direct, untaxed cost on small businesses.
- Structural tax relief to drive growth: Lula urges the Minister to resist broad-based tax increases, such as an increase in the value-added tax (VAT) rate or adjustments to the fuel levy that exceed inflation. Crucially, the MTBPS should signal the government’s intention to urgently adjust the VAT registration threshold, which has been stagnant at R1 million for 16 years. This limit is a significant administrative and financial bottleneck for growing small businesses.
- Digital-focused procurement and compliance: The MTBPS should detail plans to streamline government tender and payment processes, particularly for SMEs. Furthermore, prioritising spending that promotes digital inclusion and cybersecurity will help future-proof smaller businesses against global threats.
Raising the VAT threshold
“We have long held the belief that raising the VAT threshold from R1 million to a more contemporary level, such as R3 million, is a critical step for the government to lighten the burden on small businesses,” Rossiter adds.
“By easing the administrative and compliance requirements associated with VAT, which often requires expensive external accounting, small businesses are better equipped to reinvest time and capital into core operations, stimulating economic growth and job creation.
“The mini budget must signal to the private sector that the Government is serious about clearing the obstacles to economic activity. Our risk calculation is directly tied to the stability of the operating environment. Commitments made in the mini budget must translate into tangible improvements on the ground, such as more stable power, quicker movement of goods, and a lower overall compliance burden.”
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