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2022 Budget Speech, renewed hope for SMME’s

In his maiden budget speech, Minister Godongwana has sustained the pronouncements by President Cyril Ramaphosa when he presented the State of the Nation Address two weeks ago on unemployment and job creation. We have highlighted three items from the budget speech to help Small to Medium Size Enterprises see where they can benefit. 

To counter the triple threat of inequality, unemployment, and poverty faced by our society, the government aims to accelerate the implementation of the Economic Reconstruction and Recovery Plan, which puts the creation of jobs at the heart of our economic recovery. 

Most notably: 

  1. Bounce back scheme / loan guarantees 
  2. Infrastructure upgrades 
  3. Tax relief: Employment tax incentive 

Bounce back scheme to support SMME’s 

Small business loan guarantees to the value of R 15 billion will be facilitated to participating banks and development financiers, providing access to qualifying non-bank small and medium loan providers. This means that SMMEs will have access to loan guarantees through these institutions, with relaxed criteria for SMMEs. 

Second to the bounce-back scheme is an additional equity-linked scheme, budgeted at R 20 billion, which is based on loans that will be provided to SMMEs with their business equity as collateral when applying to access the bounce-back scheme. Exact details will be provided by the Ministry of Finance.

 

Infrastructure upgrades

A budget worth R 17.5 billion has been allocated to infrastructure upgrades and development. 

An important requirement if the private sector like small to medium-sized enterprises (SMMEs) are to unlock unemployment. This allocation will see the upgrade of roads, water, bridges, schools, clinics – essentially basic services required by citizens. This catalytic project will see businesses in these industries provide services to the government whilst simultaneously providing employment. Well networked roads are an important requirement for businesses requiring seamless access to markets. The modernisation of six border posts underway will further provide more affordable mechanisms for exports to neighbouring countries. 

 

Employment tax incentive 

The employment tax incentive (ETI) will be increased by 50 % to R 1500. This incentive provides a cost-sharing incentive from businesses hiring young people and the government footing the remainder of the salary without compromising the amount earned. Thus, reducing the cost of hiring whilst simultaneously providing employment and experience for young people. Read more here

 

In conclusion, the 2022 budget speech fared well in trying to reduce the burden of rising prices, for South African households and SMMEs alike. The non-increase of the fuel levy is a testament to this. However, unemployment remains high, and the gap of inequality, which is said to be the highest in the world, has been exacerbated by the COVID 19 pandemic. The cost of corruption has added to the woes of taxpayers with citizens calling for repercussions for corrupt government officials and state-owned enterprises. The strong stance by the government as an enabler of economic development calls on the private sector including SMME’s to work in partnership with the government to ensure we move South Africa forward. 

Junior Achievement South Africa is committed to ensuring we play our role of preparing young people for economic success through programmes like the JA Youth Enterprise Development Programme, where corporate sponsors can also improve their BBBEE scores while beneficiaries gain skills and become job creators. 

In the last year, we have empowered 700 young people who have set up or sustained 259 businesses and 75 jobs created and 42 new businesses registered.