How will Zulu spend the R3.5bn SMME cash pile?
Just as many people were starting to perceive Small Business Development (SBD) Minister, Lindiwe Zulu, as more of a fist-brawler than a champion of capital-starved entrepreneurs and business owners, the R3.5 billion financial injection her department received from the National Treasury last month may help change her image.
Meanwhile, outside of the political arena, frustration was growing as thousands of struggling SMME-owners were wondering when is the SBD, established in May 2014, going to get on with its mandate of providing support to small businesses and start-up companies.
Small business and startup companies are crucial if we are to treble our R3.4 trillion economy by 2030 and make a long-lasting dent on South Africa’s staggeringly high unemployment.
Now Zulu has a R3.5 billion war-chest to play with and the SMME community will be watching closely how she spends it. She is expected to make her second budget vote speech in Parliament at a yet to be specified date, which will spell out how she plans to utilise the cash.
Xolani Qubeka, the secretary general of the Black Business Council, the mouthpiece for black business that successfully lobbied for the establishment of the SBD, believes the money should be used to increase financial incentives for SMMEs.
“We would like to see a significant increase in the provision of incentives to ensure that the barriers to market entry are removed. It is important that SMME-owners are given grants to invest in tools and equipment to start their own businesses or scale their businesses,” Qubeka said.
INREASED FINANCIAL SUPPORT FOR SMMEs
Two speeches made by Zulu last week at separate speaking engagements in the Western Cape give a hint on where she thinks the priorities for SMME development lie as it can be gleaned from the government’s Integrated Strategy on promotion of Entrepreneurship and Small Enterprises.
A closer look at the strategy indicates that the SBD will spend the bulk of the money on providing financial and non-financial support (training and mentoring) to SMMEs as well as cutting red tape stifling small business take-off.
“It has been indicated that the private sector spends three times more on procurement than the public sector. There is clearly greater potential for procuring opportunities for small businesses in the private sector”
The fourth pillar of the strategy centres on increasing market access for SMMEs through procuring 30% by the state of prescribed goods and services from small businesses, co-operatives, township and rural enterprises.
“Efforts to open and provide procurement opportunities for small businesses by some companies in the private sector must be applauded. We would further encourage the private sector to set specific targets for procuring from small businesses,” Zulu noted in her speech at a smart procurement meeting in Cape Town last week.
“It has been indicated that the private sector spends three times more on procurement than the public sector. There is clearly greater potential for procuring opportunities for small businesses in the private sector,” she said.
In another speech at the launch of a Centre for Entrepreneurship, Zulu promised a concerted initiative aimed at instilling a culture of entrepreneurship in South Africa.
“We must consciously strive to build a nation of entrepreneurs and not a nation of job-seekers. We are painfully aware that fostering a culture of entrepreneurship is not something that blossoms over a short period of time. It takes a long time to develop,” she said.
Her upcoming budget vote speech should also give an update on the incorporation of Small Enterprise Development Agency (SEDA) and Small Enterprise Finance Agency (SEFA) to the SBD.
She announced last year that these agencies will be respectively hived off the Department of Trade and Industry (DTI) and Department of Economic Development and incorporated into SBD, where they will form part of the nucleus of her department.
*Article first published by www.getbiz.co.za