Gigaba budgets R2.1-billion for small business

Gigaba: If the funding for small businesses could be accessible, unemployment will be cut in half through small business initiatives. (David Harrison/M&G)

Gigaba: If the funding for small businesses could be accessible, unemployment will be cut in half through small business initiatives. (David Harrison/M&G)

A fund with an allocation of R2.1-billion over the medium term is being developed between the departments of small business, science and technology and the Treasury to benefit small and medium enterprises, Finance Minister Malusi Gigaba announced during his maiden budget speech on Wednesday.

This fund will assist small, medium and micro-sized enterprises (SMME’s) during their early startup phase, he said

Gigaba said that by enabling new businesses with new ideas to emerge and thrive, “we are radically transforming patterns of production in the economy”.

According to Gigaba, government, labour and the private sector as well as civil society have the ability and responsibility to grow the economy inclusively. He cited initiatives such as the CEO initiative which has established a fund committing about R1.4-billion to support high- potential SMME’s.

“If the funding for small businesses could be accessible, unemployment will be cut in half through small business initiatives”, Gigaba said. Government must create an enabling environment for small businesses to thrive, as they are an important lever to create jobs and grow the economy inclusively. 

Karl Westvig, chief executive of Retail Capital, expressed disappointment at how much was allocated towards the fund in the context of a larger budget. “If government was serious about developing startups it would need to increase the value of this fund or use the fund as a guarantee allowing the private sector to fund on top of this.”

These are not the only efforts that government is putting forward to support small businesses. Treasury has amended its preferential procurement regulations to favour small business. A Bill awaits Cabinet’s approval.

The changes to these public procurement regulations will include targeted procurement from designated groups, including township and rural enterprises, black women and youth enterprises, cooperatives and people with disabilities.

The use of sub-contracting to designated groups in all projects or contracts above R30-million will be made compulsory. “Government spends around R800-billion annually towards supply chain in all spheres of government”, a Treasury official told the Mail & Guardian.

For example, with antiretrovirals which are manufactured in another country, we could have them manufactured in South Africa with the skills and expertise we have, said the official.

The Treasury director-general Dondo Mogajane will next week issue a directive to all government departments and public institutions, instructing them to pay suppliers within 30 days. If they fail to do so, they will be charged, said Gigaba during a press briefing on Wednesday.

​Thulebona Mhlanga

​Thulebona Mhlanga

Thulebona Mhlanga is financial trainee journalist  at the Mail & Guardian, currently enrolled for a masters in politics at the University of Johannesburg. In addition to her fervent interest in business writing, reading and educating others around issues of financial literacy, she volunteers her time to projects assisting women and promoting social justice.  Read more from ​Thulebona Mhlanga

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