Budget 2024: What SMEs need from this year’s Budget speech

Finance Minister Enoch Godongwana should address in his Budget speech issues such as load shedding and poor infrastructure which has had a significant impact on SMEs. Picture: Jairus Mmutle / GCIS

Finance Minister Enoch Godongwana should address in his Budget speech issues such as load shedding and poor infrastructure which has had a significant impact on SMEs. Picture: Jairus Mmutle / GCIS

Published Feb 21, 2024


There’s little denying that the extended economic crisis has taken its toll on small enterprises.

Factors such as load shedding have jeopardised the existence of small and medium companies (SMEs), many of which are crumbling under the extra constraints of the growing cost of fuel and food.

In view of the forthcoming election, 2024 will likely by a watershed year for the country, and now, with the rapid approach of the Budget speech, local SME owners will seek from the State, tangible solutions to their largest difficulties.

Energy issues

Jeremy Lang, chief investment officer at Business Partners Limited said that last year, Minister Godongwana’s Budget speech focused nearly entirely on the energy situation.

The speech proposed initiatives like the Energy Bounce Back Scheme as a way of providing micro and small enterprises with much-needed financial relief from the business disruption caused by load shedding.

Lang said that despite the launch date of April 2023 being put forward in the Budget speech, the Banking Association of South Africa (Basa) has reported that financial institutions were still involved in negotiations with the National Treasury and the SA Reserve Bank on the terms of the loan.

According to Lang, several banks have opted not to participate in the scheme, while financial institutions may be pushing for more relaxed qualifying criteria.

Focus on infrastructure

Lang said that investing in infrastructure will be crucial for the future of SMEs.

The delays at the Durban port in 2023, coupled with the deterioration of local rail and port transport, has put a significant amount of pressure on the local SME sector.

The knock-on effects of these challenges, as well as other infrastructural issues, was widespread supply chain disruption which exacerbated the struggles of small businesses across multiple sectors.

Lang said that improved infrastructure, including reliable electricity, internet connectivity, and transportation networks, is crucial for small businesses to operate efficiently and compete effectively.

Lang said: “In this year’s Budget speech, small business owners will likely be looking for indicators of the progress of initiatives such as Operational Vulindlela in terms of the fast-tracking of reforms in electricity, water, telecoms and transport.

“Addressing institutional inefficiencies in municipal water and sanitation services, migration from analogue to digital and addressing the efficiency of ports seem to be lagging and SMEs will want to know what is being done to improve on these areas.”

A call for much-anticipated tax reform

According to Lang, other key developments that would aid the recovery process of the SME sector relate to taxation.

In 2012, the system of turnover tax was introduced by the government, to alleviate the tax burden on micro-enterprises and assist them in better managing the administrative process of submitting information to SA Revenue Services (Sars) and paying taxes.

Lang said: “In the same way that the personal tax exemption should be upwardly revised by a big enough margin to make a material difference, turnover tax tables should also be revised accordingly.”

Since 2012, turnover tax became available to enterprises with an annual turnover of R1 million of less, which means that these enterprises are taxed at a much lower rate than other provisional taxpayers.

Over a decade later, however, this threshold remains unchanged. A development for this threshold to be increased to account for inflation, would bring more enterprises into the fold and significantly lower their tax obligations.

IOL Business