Battling SMMEs hail president’s funding lifeline
Share this article:
SOUTH Africa’s struggling small, medium and micro enterprises (SMMEs) have welcomed President Cyril Ramaphosa’s announcement of access to a “once-off business survival” payment as the sector battles the financial woes of Covid-19 and the recent civil unrest.
Details of this funding mechanism would be announced later.
This comes as the recent Global Entrepreneurship Monitor (Gem) found that South Africa had one of the highest business start-up failure rates in the world. In the Gem National Entrepreneurship Context Index, South Africa ranked 49th out of 54 countries, ahead of Croatia, Guatemala, Paraguay, Puerto Rico and Iran.
In his address to the nation on Sunday, Ramaphosa said: “We are also working with large business to determine their contribution to the support of SMMEs, job creation and eradication of hunger and poverty.”
Ramaphosa also extended the Employment Tax Incentive for four months to include any employee earning below R6 500 and increased the incentive by up to R750 a month to encourage employers to hire and retain employees, particularly those in the retail and hospitality sectors, which have been most affected by the lockdowns.
“We will also defer payment of PAYE taxes for a period of three months to provide businesses with additional cash flow, with an automatic deferral of 35 percent of PAYE liabilities for employers with revenue below R100 million,” Ramaphosa said.
Tom Stuart, the chief marketing officer for SME service provider Lulalend, said: “The president’s announcement shows that he understands the importance and the value of the SME sector and the part it plays in driving the economy of South Africa. It is a welcome step towards getting this sector – that creates over 90 percent of private sector jobs – on its feet again.
“The tax incentives he announced will also encourage employers, especially in the retail and hospitality sector, to create or maintain jobs.
“SME owners should now make sure that they do everything they can to secure their cash flow in order to best position themselves for growth and recovery, as well as make use of any of the support measures that have been put in place.”
In his weekly letter distributed yesterday, Ramaphosa said the government was working to build flourishing township and rural economies, and focusing on the growth of small businesses.