Unlocking opportunities: Topics SME owners should listen for at Budget2024

The South African economy in its current state has not been kind to the Small to Medium Enterprise owner (SMEs).

They have been left to battle load shedding, high interest rates and other challenges that have made staying afloat that much harder.

As such, these SMEs owners will be looking to Finance Minister Enoch Godongwana to deliver some positive interventions to help strengthen the economy and allow them to help build it.

Andiswa Bata, head of SME at FNB Commercial, said that adequately grasping the implications and opportunities outlined in the Budget Speech is crucial for assisting SMEs in their forward planning. She underscores specific focal points that SMEs ought to give special consideration to.

ALSO READ: ‘Engines of growth’: SMEs need support to boost SA economic recovery

Power supply

In the 2023 budget speech, a multitude of measures were unveiled to empower businesses, particularly in the realm of renewable energy investment.

One standout initiative allows businesses to slash their taxable income by a generous 125% for investments made in renewable energy generation projects.

Moreover, in collaboration with banks, the government introduced the innovative Energy Bounce Back Scheme, aimed at facilitating resilience and growth in the energy sector.

Bata said an update on these initiatives will be welcomed by small business owners, including any further interventions as the energy crisis continues to have ripple effects for businesses of all sizes.

VAT

Last year saw no hikes in corporate tax, personal income tax, VAT, fuel levy, or the road accident fund levy. This went a long way to help ease cash flow pressure on businesses.

However, economists are not convinced that this will stay this way. SMEs will do well to keep an ear out for any announcements of increases in VAT, especially as this will directly impact them.

ALSO READ: ‘Engines of growth’: SMEs need support to boost SA economic recovery

Infrastructure

Last year, the government committed to spend, over time, a projected R903 billion on infrastructure like roads, power plants and water supply initiatives, amongst other projects. 

Bata said: “Spending on infrastructure creates vast opportunities for SMEs, enabling them to participate in a wide range of projects across the country either in a lead or sub-contracting capacity as service providers.

“Despite the finance minister conceding that this year’s budget will be challenging, we remain hopeful that this kind of investment spend that stimulates the local economy will continue.”

Support

Besides the energy crisis, small businesses persistently encounter obstacles that hinder their expansion and capacity to generate employment within the country. It is imperative to provide industry-specific assistance, facilitated by various government agencies, to vital sectors that drive South Africa’s economic development.

Red tape

Bata says that in light of the tough economic environment, any measures to lessen red tape will help cut costs, boost innovation, and accelerate business growth as well as job creation.

She explained that streamlining bureaucratic processes not only fosters efficiency but also cultivates an environment ripe for entrepreneurial endeavours to flourish, ultimately contributing to a robust and dynamic economy.