As 2024’s Global Entrepreneurship Week is drawing to a close, entrepreneurs across South Africa have mixed emotions. The Rand has weakened above the R 18-mark due to changes in global politics (growing unrest in the Russian-Ukraine war and, Trump returning for his second term in the US presidency), consumer inflation dropped to 2,8%, drawing closer to pre-pandemic levels, and South Africans expect the final interest rate announcement for the year by the Federal Reserve. The question remains: What does 2025 hold for SMEs?
Recently, SARS commissioner Edward Kieswetter indicated that a large amount of the R 11,7 billion overshoot collected in corporate tax collections was paid by law-abiding small and medium-sized businesses (SMEs). This once again highlighted the important role the SME sector plays in the economy beyond the 64% of jobs it is responsible for. Kieswetter added that this surprise alone demonstrates that the country should make it easier for them to do business. Yet, during his October, mid-term budget statement, Enoch Godongwana did not mention SMEs at all – A huge red flag for entrepreneurs.
A Call for SME Support
SMEs struggle with a multitude of issues that seem to remain unaddressed. Water supply, high unemployment rates and struggles with logistics, just to name a few.
“SMEs continue to receive little in the form of policy reform that is to their benefit,” says Miguel da Silva, Group Executive of Business Banking at TymeBank. “It seems simplistic but investing more in our SMEs – either through policy changes, rebates or funding efforts – could change this country’s GDP forecast, which at the moment is projected to be 1,3% by the end of 2024 and 1.6% by the end of 2025 due to the recovery of certain sectors,” da Silva said in a recent statement.
According to Miguel, SMEs will benefit greatly from the visa reforms, enabling them to attract offshore skills, while those in the hospitality and tourism sectors can take advantage of this year’s industry boom. This refers to the projections of an estimated 10,7 million arrivals by the end of 2024. Furthermore, he believes that the water crisis has a profound effect on SMEs. He advises SMEs to develop risk mitigation strategies to reduce their exposure to water-related risks, such as infrastructure degradation and slow responses to breakdowns.
Not All Doom and Gloom for SMEs
In spite of the lack of support that SMEs apparently receive, the news isn’t just hopelessness.
Positive and noteworthy developments include the rebuilding of the electricity supply and (although slow) improved infrastructure investment. “This underpins SA’s growth mandate through policy reform, to a pro-growth agenda that aims to increase jobs while improving our fiscal position,” da Silva added in the TymeBank SME Monthly Forecast.
He encourages SMEs to focus on finding new programmes where they can showcase their innovation. “There is a need for funds to support SME development, drive dialogue and collaboration between public and private sector incubators, enable access to markets and improve existing policies that hinder SMEs’ growth,” he adds. “This should be the outcome of the 2024 Global Entrepreneurship Week.”
Celebrations across the world this week highlight the vital role that SMEs play beyond contributing to the GDP. On home ground, entrepreneurs are also responsible for bringing about social change because they bring solutions for unemployment, gender inequality and the skills gap – Social issues that are rampant in South Africa.
In spite of the muddled feelings that SMEs might have there is much to bring hope for 2025. These entrepreneurs have carried the majority of the burden of growing the economy and reducing the unemployment rate. Although they will most likely continue to do so, the sector needs support from government and private sectors to increase its success and enable growth.
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