As the domestic economy continues to contract, Finance Minister, Pravin Gordhan has tough decisions to make while curbing spending, accommodating the drought-stricken agricultural sector and ensuring that small businesses continue to grow.
“The National Budget Speech has a direct impact on the bottom line of SMEs and influences long-term business decisions,” says Yudhvir Seetharam, Head of Analytics for FNB Business, as he unpacks reasons why small businesses should make time for the budget speech.
- Tax – this should be watched closely as high unemployment, decreasing disposable income of consumers and the slowdown in economic growth are currently leading to lower tax revenues for the government. Meanwhile, tax relief for small businesses would have a major impact on their profit margins.
- High youth unemployment – the current youth subsidy may be cancelled due to complaints that it is not effective enough. However, scrapping this subsidy, while saving on costs, might also decrease business and consumer confidence as we are effectively doing less to assist in youth unemployment.
- Red tape – in a weak economic environment the government should aim to reduce red tape since it increases costs for SMEs and hinders their growth and ability to create jobs.
- National Development Plan (NDP) – updates provided on the implementation of the programme directly affect SMEs since the government is relying on this sector to meet one of its NDP goals to create 11 million jobs by 2030.
- Infrastructure investment – spending on infrastructure, roads, power plants and water supply initiatives, amongst other projects, creates vast opportunities
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