What the budget speech means for business funding solutions
By Johann S|
February 24, 2023
Finance Minister Enoch Gondogwana delivered his annual Budget Speech on Wednesday, 22 February. If you’re reading this article, it’s possible that you didn’t watch it and you need to arm yourself with just enough information not to look like a fool at the water cooler. Or you just like to remain just really, really well informed. Either way, we’ve got you covered.
Unlike last year’s address, in which he outlined several measures that the National Treasury would undertake to support small-to-medium enterprises (SMEs) in their efforts to recover from the immediate aftershock of the pandemic, SMEs didn’t feature prominently in the 2023 speech.
So, what does the budget speech mean for SMEs business funding solutions? We’re happy to tell you.
TL;DR – the most pressing issues highlighted by the budget speech
Loadshedding, geopolitical conflict, climate change: these are the biggest threats to economic growth in the country at the time of the budget speech. Much like it did in the SoNA, load shedding took centre stage in the budget speech as the most pressing threat to economic growth in the country. GDP growth is expected to slow over the medium term, averaging at 1.4% due to continuous rolling blackouts.
As such, the Minister of Finance announced debt relief measures to the tune of R254 billion for Eskom. He also announced renewable energy tax incentives for both businesses and individuals. From 1 March 2023, businesses stand to reduce their taxable income by 125% of the cost of investment in renewable energy sources. But you’ve only got a year to install those solar panels on your roof for the incentive, so best get the ladder out of the garage ASAP.
Generally speaking, the budget speech was received with less anxiety than most anticipated. That’s a nice change. Nevertheless, Gondogwana outlined the historical economic challenges which continue to cast a long shadow over our national progress. A decade of state capture, the pandemic, outbursts of public violence, and the ever-escalating energy crisis are stacking up like a Jenga tower of economic obstacles for struggling businesses. The fact that that sentence also resembles a Jenga tower of obstacles only serves to reinforce the point.
As always, SMEs are the players who are at once the most profoundly affected by these obstacles while simultaneously driving the economy forward. As the President pointed out in his address earlier this month, SMEs need sustainable business funding solutions now more than ever.
State of inflation: the business funding solutions for SMEs outlined by the President
In his annual State of the Nation Address earlier this month, South African President Cyril Ramaphosa stated that “[g]rowth and the creation of jobs in our economy will be driven by small- and medium-sized enterprises, cooperatives and informal businesses.” That’s high praise, but it’s also a fair amount of pressure. With the myriad of economic challenges facing SMEs, how are they supposed to continue driving the economy forward? Sounds like a Catch-22, chicken-or-the-egg situation to us.
Happily, the President also announced several gestures of support for SMEs. By declaring a state of disaster, the government can provide practical supportive measures (like rolling out generators, solar panels, and uninterrupted power supply) for businesses in food production and storage and retail supply.
This year, the government also intends to finalise amendments to the Businesses Act to reduce red tape for SMMEs and cooperatives. Hopefully, the amendments will make it easier for entrepreneurs to start businesses. The government has also partnered with the SA SME Fund to establish a R10 billion fund in support of SMME development – though they’re only looking at providing R2.5 billion of the fund.
Alternative business funding solutions
If the budget speech and the SoNA have proven anything, it’s that the South African government has voiced its unequivocal support of the country’s SMEs. And not a moment too soon – SMEs continue to make up the backbone of the local economy.
Considering their essential economic contributions, it’s prudent to consider alternative business funding solutions to see out the many challenges outlined by the President and the Minister of Finance in their respective speeches this year.
Now is the time to capitalise on an abundance of support. Need to take out a loan to buy those solar panels before the incentive expires? Get up to R5 million in business funding from Bridgement in approximately 24 hours. With our highly flexible business funding solutions, you won’t even have to worry about installation fees. Your ladder can collect dust in the garage for another year (phew).
Don’t wait for the Jenga tower to grow taller. Don’t wait, full stop. Applying for your working capital facility from Bridgement takes only two minutes. No waiting. No application fees. No commitment. Just business funding, plain and simple.
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