NEWS & ANALYSIS

Govt’s failure to budget for Small Business fund revealed – Toby Chance

DA says private sector should forge ahead without waiting for assistance before SA faces imminent credit downgrade

DA reply reveals government’s failure to budget for important Small Business fund

22 September 2016

In a reply to a DA oral question, Deputy President Cyril Ramaphosa admitted that government had not yet budgeted for its half of the funds to match the private sector’s contribution of R1,5 billion to the SA SME Fund. This is telling of government’s stance to be all talk without any tangible action in creating jobs.

The SA SME Fund is a joint venture capital fund between the private sector and government where the aim is to bolster the creation of jobs through supporting the growth of SMEs, which will ultimately create jobs. These joint ventures therefore serve as the engine room for creating jobs in South Africa.

Our stance is that the private sector should forge ahead without waiting for government’s assistance as the longer we allow government to delay, the greater risk we face of a spiralling job crisis and imminent credit downgrade.

The fund is one of three work streams set up under Minister Gordhan and Business Unity South Africa (BUSA) President, Jabu Mabuza, aimed at kick-starting South Africa’s economy and avoiding a ratings downgrade.

In the hastily arranged May 9th press conference, timed to get maximum attention from the ratings agencies, President Zuma and work stream leaders Discovery’s Adrian Gore and Bidvest’s Brian Joffe acknowledged that supporting small and growing businesses is a key ingredient to growth and job creation.

It is hardly credible that this fund will sway the ratings agencies’ assessment of South Africa’s growth prospects, which was the main motivation for setting it up. That government is so tardy in committing funds shows both how cash-strapped it is and how equivocal its position is on supporting entrepreneurs and small business.

With 8.9 million South Africans unemployed, and with a weakened economy, assisting small businesses should be a top priority. It is time for government to stop dragging its feet and to walk the talk when it comes to job creation.

We hope that the fund will commence operations soon, notwithstanding the lack of contribution by government, so that small businesses can get the support they need to thrive and create jobs.  

Issued by Toby Chance, DA Shadow Minister of Small Business Development, 22 September 2016