Nene offers helping hand

2015-03-03 00:00

THE R3,5 billion allocated to the Department of Small Business Development in the Budget will be spent on mentoring and training, Finance Minister Nhlanhla Nene said on Saturday.

He spoke at a breakfast event hosted by Morar Incorporated, a national firm of chartered accountants and auditors that is based in Pietermaritzburg.

There have been questions from commentators about what the ­department, that was created last year, is going to do in the small business development sector considering the big proliferation of small business development initiatives already underway.

There are small business development initiatives in various national government departments, provincial departments, municipalities and state-owned enterprises.

Sipho Zikode, the acting chief executive officer of the Small Business Development Agency (Seda), an agency of the Ministry of Small Business Development, said Nene’s budget has firmly responded to the call to encourage and promote entrepreneurship and the small business sector in South Africa.

The tax exemption for a small business with an annual turnover below R335 000 is a win-win for tax authorities and the small business sector.

“It will also encourage greater compliance by the small business sector as they will need to enter the formal economy through registration with SARS to benefit from this exemption.”

Nene said the Small Business Development Department’s role is to develop policy and “put together a plan to create as many entrepreneurs as possible”. He said a major problem with small businesses is “they do not make it through the first year” due to a lack of skills and a lack of support.

Nene said the state has reached a ­financial turning point — it needs to cut costs and raise more revenue.

“At the end of the day no amount of resources that we have will be able to address the [socio-economic] backlogs that we have,” he said.

The government plans to cut its own expenditure by R27 billion over two years, which, with the latest taxes increases, should bring the fiscal situation back in the good health, Nene said.

“We will freeze our headcount” and “bring to life our state-owned enterprises to discharge their responsibility of the development agenda”, he said.

He said the motive behind increasing personal income taxes by one percent in the budget, as opposed to other forms of taxation, was that the tax would affect only people with jobs, as these people were most able to afford a decrease in their personal incomes.

The government could not resort to borrowing more, because debt service costs were already one of the highest expenditure items in the budget.

“Tough times require that we make responsible choices,” he said.

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