Subscribe & Follow
Advertise your job vacancies
Trending
Show more
Jobs
Budget misses SMEs, but key growth opportunities spark optimism
Although South Africa still faces challenges, signs of progress are emerging nationwide. Efforts to rebuild the electricity supply—evident in the absence of load shedding since 24 March—are commendable. Additionally, increased infrastructure investment, coupled with policy reforms, is setting a foundation for growth. A pro-growth agenda aims to boost employment opportunities while strengthening the country’s fiscal position.
Source: Pexels
So says Miguel da Silva, group executive of business banking at TymeBank, in the latest edition of the TymeBank SME Monthly Forecast.
Challenges remain an economic burden
Of course, one cannot look at the country's positive initiatives through rose-tinted glasses. Major challenges persist, with water scarcity, incessant unemployment, high business costs, unreliable logistics, and loss of Foreign Direct Investment (FDI) to neighbouring countries high on the list.
The economy is also forecasted to grow by just 1.3% this year, which is far from celebratory. It is within this challenging context that the SME sector has been silently propping up the economy, yet it is in need of greater support—financially and otherwise.
Unsurprisingly, the sector was not mentioned once in the recent Medium-Term Budget Policy Statement (MTBPS), raising concerns as SMEs continue to receive little in the form of supportive policy reforms.
Luckily, the nature of SMEs is one of resilience; they always find a way to keep going.
As we head towards 2025, focusing on growth is essential, with investment in SMEs—ranging from mom-and-pop shops to high-growth entrepreneurs—seen as the most viable way forward.
In the '24/25 financial year, South Africa is expected to spend R266.21bn on social grants, up from R250.97bn in the '23/24 period. Directing funds towards SMEs could fuel job creation and help reduce the country’s heavy reliance on grants.
"SMEs remain our country's backbone, yet so little is directed their way from the powers that be. It’s a travesty because it is clear how impactful SMEs can be on our economy, society, and livelihoods.
They continue to create opportunities for jobs, increase business activity, and pay taxes, which contributes to the tax base. Investing more in our SMEs—through policy changes, rebates, or funding efforts—could positively impact the country's GDP forecast, projected at only 1.3% for 2024 and 1.6% by the end of 2025," says Da Silva.
Reforms ahead of the festive season?
SMEs, accounting for 64% of all jobs in South Africa, stand to benefit from recent visa reforms that enable them to attract offshore skills.
SMEs in hospitality and tourism can also take advantage of this year’s industry boom: by the end of 2024, projections for tourist arrivals are estimated to reach 10.7 million, with international tourism growth expected to increase to 15.1 million by 2030.
South Africa’s Trusted Tour Operator Scheme (TTOS) aims to attract Indian and Chinese tourists by reducing visa inefficiency and red tape, addressing issues that have historically hindered tourism from these markets.
However, tension remains around Airbnb's impact and regulation. While the platform has boosted the tourism industry, the soaring prices in the Western Cape’s short-term rental market are straining local residents’ access to affordable housing.
This issue, shared by other cities worldwide, has prompted local calls for regulation, with a memorandum of understanding signed last year with the Department of Tourism. Now, it’s a waiting game to see how appropriate and proportionate these anticipated regulations will be.
Water crisis strains Joburg-based SMEs
Beyond other utility issues, a pressing concern in Gauteng has severely impacted SMEs in sectors such as manufacturing, food security, and agriculture. The issue? Water—or the lack thereof.
This longstanding problem, rooted in years of state capture, dysfunctional municipalities, and neglected infrastructure, now leaves SMEs vulnerable.
A dam project to support Gauteng’s water needs is underway, yet completion is years away. Meanwhile, the province's population has surged, with approximately 15.83m people as of July 2024, stretching existing water supplies thin. While the second phase of the Lesotho Highlands Water Project (LHWP) aims to alleviate this, its completion is only expected by 2028.
Impact on SMEs
For SMEs, unreliable water supply has damaging implications, especially for those reliant on water-intensive operations. The lack of water disrupts their supply chains and negatively impacts tourism and manufacturing sectors.
With water security central to energy generation, economic growth, development, and food security, SMEs must devise risk mitigation strategies to adapt to the ‘new normal.’
To prepare, SMEs need to evaluate their water-related vulnerabilities and devise strategies accordingly. This includes assessing supply chains, determining water cost and quality impacts, and considering alternatives.
Global Entrepreneurship Week removes barriers and welcomes all
Rounding off the month, Global Entrepreneurship Week (GEW) takes place from 18–24 November. Launched in 2008, GEW aims to inspire people worldwide to start and grow businesses by hosting events that foster collaboration and innovation.
South Africa’s activities during this important week will center around the theme "Removing Barriers and Welcoming All," emphasizing the value of inclusive entrepreneurial ecosystems.
Joburg's 22 on Sloane and its Cape Town hub will host events for SMEs, showcasing local businesses, launching new programs and funds for SME development, fostering public-private partnerships, enabling market access, and advocating for policy improvements.
Related
