In the Budget Speech, Minister of Finance Tito Mboweni reiterated government’s vision of start-ups igniting the local economy. While this is a step in the right direction, can more be done to support SMMEs to boost growth and create jobs?
“SMMEs run by entrepreneurs are a beacon of light to our economy. They provide job opportunities and contribute significantly to the economy, which is why, as a collective in both the public and private sector, we must support them through targeted interventions,” says Sylvester Albanie, Group Executive: Risk at Novus Holdings.
He adds that Treasury’s commitment to supporting SMMEs through various tax interventions, such as with a preferential small business tax regime, the VAT registration threshold and turnover tax, is positive. Furthermore, Minister Moboweni announced in his Budget an allocation of R6.5 billion for small business incentive programmes of which R2.2 billion will be transferred to the Small Enterprise Development Agency.
While Albanie welcomes this move by the government, he also says that it is an industry responsibility to support start-ups, and not solely that of government.
“We must remember that SMMEs continue to face a difficult business environment, which is why we think big business has a responsibility to help start-ups make a positive contribution to the economy through Enterprise and Supplier Development (ESD), giving them entry to market,” says Albanie.
Data revealed by Africa’s Public Service Delivery and Performance Review shows that the failure rate of SMMEs is exceptionally high at over 70% within the first 5–7 years of inception.
Novus Holdings has assisted relevant SMMEs that are not part of the Group’s supply chain by providing financial assistance (e.g. loans) and non-financial support required for them to operate successfully (e.g. equipment, skilled staff etc). Beneficiaries of the Enterprise Development (ED) programme include Songo Africa, which is run by two passionate young entrepreneurs; a leading provider of draught beverage and fountain services, Drinks Dispense Services (DDS); and seven more SMMEs through a specialist intermediary service provider.
The Novus Holdings ED programme has helped create employment opportunities: A contribution by Novus Holdings to Songo Africa was in the form of an interest-free loan provided in 2017 to expand their business. To date, Songo Africa has grown significantly, employing 18 people. DDS has also grown over the years, servicing in excess of 20 000 pubs, restaurants and retail outlets throughout Africa. Also during 2017, Novus Holdings provided DDS with an interest-free loan, which has helped them to buy their own vehicles rather than leasing.
Novus Holdings’ Supplier Development (SD) approach involves a significant investment in business development, market opportunities, equipment/manpower and financing, where it is of direct benefit to the Group’s supply chain. The Group’s SD beneficiaries include: Pem Finishing – a magazine insertion and bagging company; Rodco Finishing – a supplier of hand-finishing services to the Group; and Van’s Bookbinders – a 100% black-owned bookbinding and print-finishing company.
“Through our ED and SD programmes we aim to help create a business environment that supports the growth and sustainability of SMMEs, enabling them to prosper. The end-goal is that in time, our beneficiaries become valuable partners in our Group’s supply chain.
“ESD is neither a Government problem, nor a box-ticking exercise. As the private sector, we must show our commitment to helping to grow sustainable, successful businesses. Businesses and entrepreneurs, such as our beneficiaries, are key to building the prosperous South Africa we all dream of,” concludes Albanie.