Government will be rolling out a Power Purchase Package to cushion Small, Medium and Micro Enterprises (SMMEs) against the crippling effects of load shedding.
“We have designed packages to cater for all segments of our sectors. In rolling out these packages, SMMEs need to capitalise on opportunities presented by this transformation of energy production,” the Minister of Small Business Development, Stella Ndabeni-Abrahams, said on Tuesday.
Eskom has been battling to keep the lights on for the past few months, leading to increased stages of load shedding and a devastating impact on lives, livelihoods and businesses.
The President has also declared a National State of Disaster on Energy, which will assist in the speedy resolution of energy supply challenges, whilst minimising its impact and contribute to the rebuilding process.
Addressing Tuesday’s debate on this year’s State of the Nation Address (SONA) delivered by President Cyril Ramaphosa, Ndabeni-Abrahams welcomed the announcement by the President that R1.4 billion will be allocated towards financing entrepreneurs through the Small Enterprise Finance Agency (Sefa).
“We will be doing more to provide financial support to small businesses. This amount is significant, however, nowhere near what is required to address the SMME credit gap, which the International Finance Corporation estimates at upward of R350 billion. There are a number of interventions we are making to address this,” the Minister said.
She said the future must not replicate the past in terms of racial patterns of economic ownership.
“Economic reforms must embed transformative outcomes that are meaningful and measurable. This requires that we are bold and courageous in changing the old structures of our economy. The state must fund the developmental dividend.”
Ensuring SMME growth
She noted that the country’s Economic Reconstruction and Recovery Plan (ERRP) identifies a number of strategic areas around which the growth of SMMEs can be enabled.
“We have heard complaints that our application systems are outdated and that we have inadequate offices countrywide.
“To address this, ease of application will be better enabled through the digitalized systems we are working on. We intend to use advanced analytics supported by modern financial technology solutions to improve our delivery model.
“We have been engaging with established players in the SMME finance ecosystem and we are partnering to extend our reach and loan approval time,” Ndabeni-Abrahams said.
The Department of Small Business Development is also increasing its footprint as a portfolio at local level, to improve access to services.
The second strategic focus area identified is to reduce red-tape and remove regulatory blockages.
“We are making strides as government in this direction. We have identified various red tape constraints that hobble the success of SMMEs and cooperatives.
“We will also be paying attention on measures to curb illegal trade that operate in the shadows of criminality and is a source of violent tensions in many communities. It is important that trading activities happen within the parameters of rule of law and fair competition,” the Minister said.
Support mechanisms
Through Department of Agriculture, Land Reform and Rural Development (DALRRD) the department has an array of financial and other support instruments, which include among others the following:
- The Comprehensive Agriculture Support Programme (CASP) to assist new entrant farmers with infrastructure.
- AgriBEE, which is a fund, aimed at supporting farmers and agripreneurs to acquire equity in existing; and the Blended Finance Scheme (BFS) that is a combination of loan (60%) and grant (40%).
“Currently this is in operation with the Land Bank and IDC [Industrial Development Corporation] , and soon to be expanded to commercial banks and agribusinesses.
“Through the Department of Mineral Resources and Energy (DMRE), we have also designed measures to enable new entrant black, women and youth-owned enterprises in the mining sector.
“While there have been noticeable efforts to include the previously marginalised groups in this sector through issuing of licence permits, however, these efforts have been thwarted by lack of finance. It is for this reason that Cabinet has approved an initial budget of R500 million to establish an exploration fund to be administered by the IDC in support for junior exploration in South Africa,” Ndabeni-Abrahams said.
She welcomed the announcement by the President of a possible R2.5 billion to be committed to the SME Fund to leverage a further R7.5 billion of private sector support. She called it a step in the right direction “if matched with good investment on business development support”. – SAnews.gov.za
