By Viresh Harduth
In his fifth annual State of the Nation Address, President Cyril Ramaphosa faced the challenge of showing how government will help businesses and people navigate the coronavirus crisis in the short-term while providing a roadmap out of the pandemic and a destination for the future. On the whole, Sage believes that he managed to balance these demands, though the detail was sparse and we are eager to see his commitments translated into action.
Businesses that were heavily affected by the most recent tightening of lockdown restrictions will be pleased to hear that the Covid-19 TERS benefit has been extended until 15 March for those sectors that have not been able to operate. We await more details—I hope that the programme will be structured to help the many small tourism and hospitality businesses who were so badly affected by lockdown measures in the part of the year that they earn a large portion of their revenues.
When it comes to our path out of the crisis, the confirmation that government has secured more than 41 million vaccine doses and will soon start inoculating healthcare workers is also heartening. This gives us hope, and turn our focus onto how we will build back a more vibrant, competitive economy. It is here where we believe that the President may have missed an opportunity to discuss ways in which government will create an enabling environment for entrepreneurs and businesses.
Power generation: crisis must be addressed
On the plus side, it is encouraging to hear that government plans to urgently increase power generation capacity, though the President has made this promise before. The recent bouts of load shedding we have experienced are especially painful for businesses seeking to rebuild after the hard lockdown in 2020. Businesses in South Africa will thus hope to see the promises in the President’s address followed by rapid action in terms of emergency power procurement and promulgation of new regulations.
There can be no real prospect of economic rejuvenation without a reliable, affordable supply of power for businesses and consumers. Equally, we cannot position South Africa as a winning nation in the digital economy without a coherent ICT policy. For that reason, it is somewhat disappointing that the President had little to say about driving affordable broadband for small businesses, building digital skills or accelerating digital transformation in government.
The brief mentions of the SA Connect programme and progress in licensing high demand spectrum and digital broadcast migration were noteworthy. However, it would have been even better to hear about plans to use technology more effectively to reduce red tape for citizens and businesses, or to support businesses exploring opportunities in next-generation sectors like artificial intelligence. We think that small companies are underinvested in digital—it would’ve been exciting to see ideas about how to incentivise them to invest more heavily in the digital economy.
Small business—catalysing growth
On the subject of small businesses, we were reassured to hear the President highlight the small and medium business sector as an engine of growth for the future. The plans to support local manufacturers through the SMME Focused Localisation Policy Framework and the industrialisation strategy could help to catalyse growth.
The progress the President reported in the master plans for the clothing & textiles, sugar, poultry and automotive sector are good examples of what we can achieve in the spirit of private/public partnership. The President is to be applauded for committing to create a more conducive environment for the private sector to be able to create jobs. The steps he has taken to improve ease of doing business signal that commitment.
Yet driving growth of the private sector, especially small businesses, is not just about top-down interventions. Small businesses are agile and resilient. They are used to fending for themselves and if their potential is truly unleashed, they can take South Africa’s growth to a whole new level. We need to create a culture and a framework that encourages people to go out and set up their own businesses.
To that end, we’d like to see government incentivise entrepreneurs to invest. Removing blockages such as the unstable power supply and relatively high connectivity costs is just the beginning. We believe that this could, for instance, be an opportune time to explore a simpler tax and compliance regime for smaller businesses, for instance. As we look ahead to the Budget Speech later this month, we hope to see measures to support small businesses and consumers rather than steep tax hikes.
Viresh Harduth is the Vice President of Small Business at Sage Africa & Middle East
BUSINESS REPORT