By Anna Majavu
Small, medium and micro enterprises (SMMEs) will benefit this year through a new, “very substantial” R10 billion fund, according to President Cyril Ramaphosa. “Growth and the creation of jobs in our economy will be driven by small- and medium-sized enterprises, cooperatives and informal businesses. In other countries most of the jobs are created by this category of companies,” Ramaphosa said in his State of the Nation Address on Thursday night. The new R10 billion fund will be a partnership between the government and the SA SME Fund, a private sector investment vehicle that invests in incubation programmes and other smaller seed funds.
However, the finances for the fund are not yet in place, and Ramaphosa said it would need to raise the bulk of the money from the private sector – something which there are no guarantees it can do. “Government is looking at the possibility of providing a portion of that funding and yes – R2.5 billion for the fund – and for the balance of R7.5 billion to be raised from the private sector,” he said. The president has previously been criticised for launching new multi-billion rand funds or bank guarantee schemes that are either inaccessible to the majority of small businesses or are not new at all, but rather reworked components of already existing schemes.
An upbeat Ramaphosa was short on the details of the new fund, only describing it as “a great fund that our SMMEs will be able to tap into”. “Now the good thing here is we will be working with the private sector, who are much more driven, who are much more focused and who move faster, and together with them we as the government will then be able to have this fund set up so that we can support the creation of jobs through the SMMEs,” he said. He also said that through the Small Enterprise Finance Agency, the state planned to provide R1.4 billion in financing to over 90,000 entrepreneurs, but it was unclear if this would be an additional R1.4 billion or part of the R10 billion fund that was yet to be financed.
The effects of load-shedding took centre stage during Sona, and Ramaphosa announced plans to roll out rooftop solar panels this year. He said that small businesses would be granted funding to buy solar panels. This would be done through the government-guaranteed bank loan scheme set up during the Covid-19 pandemic to support companies that had suffered losses.
Placing further emphasis on his plan to have a big business – and not government -providing financial support to small businesses, Ramaphosa announced that he would be expanding the state’s five-year-old investment drive, which had targeted R1.2 trillion in investment from the private sector, saying the investment had “resulted in new jobs and new opportunities for small emerging businesses”. In his 2022 Sona, Ramaphosa promised to review the Business Act of 1991, saying it placed overly burdensome regulations on SMMEs. However, the review did not take place and the president has now promised that these amendments would be finalised this year.