PLANS announced by Finance Minister Malusi Gigaba in his recent budget speech are insufficient to address the difficulty many small, medium and micro enterprises (SMMEs) experience in accessing finance.
That’s according to Simon Leps, CEO of XPRS Capital Africa who, we welcomed the commitment made by government to improve the operating environment for SMMEs and Gigaba’s acknowledgement that SMMEs employ 47% of the workforce, contribute more than 20% of GDP and pay about 6% of corporate taxes.
But given the vital role that SMMEs play in the economy, this was not enough. “An example of this is the enterprise development fund of R2.1 billion – announced in the 2017 MTBPS – only coming into operation in 2019/20,” Leps said.
“Over the past few years it has become very trying for entrepreneurs and business owners to obtain funding. The South African Institute of Chartered Accountants (Saica) SMEs Insights Report published in 2015 revealed that the greatest obstacle to the successful operation of sustainable and profitable SMEs is inadequate access to finance.
“Lack of funding and stringent lending regulations hinders SME growth and development and ultimately hamper growth of the sector. This is very worrying when one considers that SMEs employ a hefty percentage of the country’s workforce.”