Support package welcomed, fears remain for small firms

2011-10-26 00:00

BUSINESSES taking strain in the uncertain economic environment and amid fragile business confidence levels will hope the support and incentive programmes announced by Finance Minister Pravin Gordhan in his medium-term budget speech will deliver the necessary dividends as early as possible.

Gordhan announced a R25 billion spending plan to boost industrial development over a six-year period as a competitiveness package, as well as an R8 billion tax incentive programme for industrial development, technology and training.

A significant portion of the money will be spent on industrial development zones (IDZs), including the recently launched Richards Bay IDZ.

Gordhan is under no illusions about the fragility of the economy. He expects moderate economic growth this year.

Nedbank’s group economic unit described the mini-budget as a cautious statement amid a vulnerable global climate, “but with the right emphasis on investment, jobs and private sector participation in key sectors”.

Severus Smuts, head of the VAT team at Deloitte, pointed to Gordhan’s comments that the softer levels of VAT receipts could be a sign of the woes faced by small and medium businesses.

“This could be attributed to small and medium businesses facing margin pressure due to consumer price inflation that has increased over the past year,” Smuts said.

Durban Chamber of Commerce and Industry chief executive Andrew Layman echoed these sentiments.

Layman told The Witness that many businesses, particularly small enterprises, are struggling as orders dwindle in the face of renewed economic uncertainties.

“Things are very slow in fact,” Layman said, summing up the mood.

Pietermaritzburg Chamber of Business chief executive Melanie Veness told The Witness the chamber welcomes the competitiveness support package.

“We welcome the additional spend on infrastructure, which is critical [as] the current state of our infrastructure is a serious barrier to economic growth,” Veness said.

• kavith@witness.co.za

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