Finance Minister Enoch Godongwana has given some hope to SMEs when he delivered this year’s national Budget as the government provided a few supportive measures to help navigate the current challenging economic conditions, according to Palesa Mabasa, the business development head for SME funding at FNB.
She said with the planned Eskom debt takeover, businesses were looking forward to having less load shedding as the resources that would have gone to servicing debt will now be used to focus on the maintenance of Eskom infrastructure. “This will help SMEs to improve their bottom line as less load shedding means more revenue and less costs on running an alternative energy solution like a generator running off fuel,” Mabasa said.
She said changes to the Bounce Back Loan Guarantee Scheme were welcome as SMEs will be able to finance their solar power needs on the back of a government guarantee. She said all solar-related loans were guaranteed on a 20% first-loss basis in the scheme that will be launched in April this year.
Mabasa said that on the revenue collection front, the zero increases in corporate tax, personal income tax, VAT, the fuel levy, and road accident fund levy will go a long way to help ease cash flow pressure on businesses as the economy continues to struggle.
Furthermore, she said the ability to reduce taxable income by 125% of the cost of investment in renewables over the next two years was an incentive most SMEs would consider seriously.
On infrastructure investment, the business development head said the projected R903 billion to be spent on infrastructure like roads, power plants and water supply initiatives, among other projects, created vast opportunities for SMEs. “We suggest that SMEs get their houses in order, especially with regards to admin and governance-required admin. This is to avoid missing out on any opportunities because not having a tax clearance is not favourable.”
Mabasa said that SMEs have had to navigate challenging economic conditions over the past 18 months with worsening load shedding and the increasing interest rate environment. She said having the necessary government support to stimulate the economy was key to their survival.
Jenine Zachar, head of enterprise and direct banking at Standard Bank’s Business and Commercial Banking (BCC) division, said that businesses required stable and reliable energy to remain in business and grow.
“As such, Standard Bank welcomes any tax breaks or other initiatives aimed at reducing barriers to entry for renewable energy, particularly for small businesses. The diesel fuel levy (refund) is also significant. This will not only assist businesses operating in food supply chains, but will also be felt by end users, many of whom are operators and employees of small businesses. Any measure that tackles the cost of living in South Africa both directly and indirectly supports business survival,” Zachar said.
She said that Standard Bank saluted the grit and determination that comes with entrepreneurship as it was no secret that our rough ride from Covid-19 was not over as the country dealt with the energy crisis.
“Small businesses, more than ever, will need to carefully consider and evaluate the long-term costs of growth and survival. That said, putting any alternate energy solution in place costs money. Most businesses, especially smaller ones, will be very stretched to do this. Purchasing any renewable solutions will be seen as a grudge purchase. To this end, Standard Bank has developed the PowerPulse solution to help businesses purchase the right renewable energy equipment to suit their needs and pocket. While tax breaks will make the decision to tilt to renewables marginally easier for many businesses in South Africa, the real saving lies in knowledge – weighing up all the costs and associated benefits correctly and then choosing the right renewable package for your business.”
Zachar said the state of perma-crisis that most South African businesses find themselves in required a mindset able to ‘dig in for the long haul’.
Click here to view Business Report’s full coverage of the 2023 Budget Speech.
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