SONA 2020: What are the Expectations of Small Business Policy?
It is important that President Cyril Ramaphosa has recognised the importance of entrepreneurs in driving job growth and wealth creation in his fourth SONA speech.
Just as importantly, while the President made mention of a number of initiatives specifically related to promoting the growth of the small business sector, in particular, it should be borne in mind that everything the President spoke of will also impact the small business sector. It’s all inextricably linked.
It’s All Going To Assist Small Business
- One initiative is to increase private-sector power generation. This will improve life for franchises and small businesses which don’t have the resources to create their own power: walk around any mall and you’ll see how many small businesses shut for those four hours of load shedding.
- Another example is the R38-billion earmarked for constructing student accommodation, where franchises and small businesses will undoubtedly also be part of this value chain. The same applies to the various master plans announced for textile, poultry, agri-processing and the auto sectors – many of these sectors are populated by franchises.
- The proposed investment in infrastructure projects all creates opportunity for entrepreneurs and franchises to thrive. However, with all these potential opportunities, we need to simultaneously see investment in training and education – at the moment it’s hard for SMEs and entrepreneurs to find skilled resources in South Africa.
- One of the more intriguing initiatives in SONA was the proposal to designate 1,000 locally manufactured products that the government must procure from SMEs. However, the details are obviously still thin at this point. It is hoped that procurement policies will somehow decree which products need to be sourced and from which small local producers – and also hoped it will be with the aim to replace products that are currently imported into South Africa, and not simply a move to procure locally produced goods from one domestic player to another.
- Slow payment to small suppliers would appear to be a more serious barrier to SMEs and wasn’t mentioned in the President’s speech, something which may not have been mentioned because they already have some policies governing payments to small businesses, which consequently simply have to be implemented. The government already has a 30-day payment principle for small businesses: though many businesses may say that’s not being strictly complied with. That said, a seven-day cycle is perhaps more fitting for what small businesses need – funding the working capital cycle of small business is a pressure point for any entrepreneur, and they cannot be hampered by delayed payment – it has many consequences for them.
In conclusion, South Africa’s growth can only be fuelled by small businesses and the opportunity needs to be created for small businesses to thrive in this country.