Zulu's maiden budget speech on small business

Lindiwe Zulu. (GCIS)
Lindiwe Zulu. (GCIS)

Cape Town – Small Business Development Minister Lindiwe Zulu said her ministry’s “hawkish eyes will search and grab every opportunity presenting itself in support of growth and sustainability of SMMEs and cooperatives” in her maiden budget speech in Parliament on Wednesday.

She is currently waiting for the approval of “cooperatives” to be added to the name of her ministry, a sector that was left out when the department was first created by President Jacob Zuma.

The ministry’s main aim, she said, was broadening the participation of black businesses in the mainstream of the economy. “Radical economic transformation is about turning this ugly picture on its head,” she said.

Zulu said there was “consensus that South Africa’s business activity rate, growth and sustainability are declining”, lagging behind its Brics partners.

Big business

“Big companies have for a long time managed to crowd out small businesses through their financial muscle, cash reserves and economies of scale,” she said.

“The diversification of supply chains assists big business to have a wider choice of suppliers from SMMEs and promotes innovation within the value chain,” she said.

“We are therefore encouraged that the revised Broad Based Black Economic Empowerment Codes present added opportunity for small enterprises to access the supply chains of large organisations.”

Transversal agreements

Zuma said during his 2015 State of the Nation Address that government would set-aside 30% of appropriate categories of state procurement for purchasing from SMMEs and cooperatives.

“We wish to announce that we are working with National Treasury and have set a target of September 2015 for the issuing of Practice Notes to implement the public procurement programme,” said Zulu.

“The implementation of the 30% target for public procurement by SMMEs and cooperatives will ensure increased participation by emerging enterprises in the mainstream economy.”

Access to finance

Zulu welcomed the creation of a special unit by the Minister in the Presidency responsible for Planning, Monitoring and Evaluation that will monitor the implementation of the 30 day payment of SMMEs.

“The non-payment of SMMEs and cooperatives creates a barrier to business growth and ultimately to the growth of the economy,” she said. “Cabinet agrees with us that late and non–payment of suppliers constitutes financial misconduct.”

The Small Enterprise Finance Agency’s move to her department would ensure a more integrated approach towards extending support to SMMEs and co-operatives, said Zulu. “From inception to date SEFA has approved loans in excess of R2bn to small enterprises,” she said.

“Going forward we will assess the impact of this expenditure with a view to increasing additional financial support to our people,” she said.

Finance and development

The Department said it was reviewing the guidelines for the Black Business Supplier Development Programme to ensure that it was aligned to its mandate.

The Youth, Women and People with Disabilities’ Business Support Scheme was conceptualised as a response to the specific challenges faced by enterprises owned by these targeted groups, especially at start-up level.

“Women-owned enterprises and youth-owned enterprises have been allocated R30m each in the current financial year,” she said.

“This funding instrument will assist enterprises to acquire critical assets and equipment required to grow and expand their business operations.”

Township and Rural Economy Summit

Zulu said her department, in partnership with provincial and local government structures, would convene a Township and Rural Economy Summit later this year.

“This will be geared towards the creation of a master plan or common framework for township and rural economic development,” she said.

“The harsh reality is that 79% of informal traders do not have a bank account; 96.8% had loans from friends/family for day-to-day operations; more than 95% have no credit facility, or asset finance or a mortgage loan for their business,” she said.

“”My department remains seized with the task of working with local and foreign nationals who are operating in the informal sector to find lasting solutions to the violence that gripped parts of the country in the last few months,” she said.

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