SONA 2023: State bank on track to assist Small Businesses

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As stated by the president, this year, the government will finalize changes to the Businesses Act that would lessen regulatory barriers for SMMEs and co-operatives and make it simpler for business owners to launch new ventures.

Thursday marked the delivery of President Cyril Ramaphosa’s seventh State of the Nation Address (Sona).

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The president, who frequently refers to small businesses as the backbone of the economy, announced steps to help them during his speech.

“Last year, we launched the bounce-back loan scheme administered by banks and other financial institutions, and guaranteed by government, for companies that need finance to recover from the effects of the pandemic,” Ramaphosa announced.

“The Department of Small Business Development will work with National Treasury on how the scheme can be strengthened to assist small and medium enterprises and businesses in the informal sector,” he said.

“To address the challenge of youth unemployment, the Employment Tax Incentive has been expanded to encourage businesses to hire more young people in large numbers. Last year I announced that we would be seeking to reduce red tape so that we can rid our country of the unnecessary bureaucracy that often holds us back. The red tape reduction team in the Presidency under Mr Sipho Nkosi has been working with various departments to make it easier to do business. It has taken a collaborative approach, working with departments and agencies in areas such as the mining rights system, tourism transport operator licenses, visas and work permits, early childhood development and the informal sector,” Ramaphosa said.

According to the president, the government will complete changes to the Enterprises Act this year that would lessen regulatory barriers for SMMEs and co-operatives and make it simpler for entrepreneurs to launch new businesses.

“Through the Small Enterprise Finance Agency – SEFA – we plan to provide R1.4 billion in financing to over 90 000 entrepreneurs. The government in partnership with the SA SME Fund is working to establish a R10 billion fund to support SMME growth. The government is looking at the possibility of providing R2.5 billion for the fund and for the balance of R7.5 billion to be raised from the private sector,” the president said.

Ramaphosa said that the foundations have already been laid for a state bank.

“The licensing of the PostBank will lay the foundation for the creation of a state bank that will provide financial services to SMMEs, youth- and women-owned businesses and underserved communities. As the National Assembly considers the Postbank Amendment Bill, the Postbank is reviewing its service offerings so that it can provide a viable and affordable alternative to the commercial banks. The most effective and sustainable way to build an economy is to equip people with the skills and know-how to drive it. We have therefore been working to strengthen the link between the skills that we develop and the skills the workplace needs,” the president said.

“This year, the National Skills Fund will provide R800 million to develop skills in the digital and technology sector through an innovative model that links payment for training to employment outcomes. We reiterate our call to companies, departments and SOEs to remove the requirement for work experience for young people seeking entry-level positions,” he said.

The president also highlighted progress made in unlocking the hemp and cannabis sector.

Last year we committed to unlocking investment in the hemp and cannabis sector.

“We are moving to create the enabling conditions for the sector to grow. The Department of Agriculture Land Reform and Rural Development and the Department of Health will address existing conditions for the cultivation of hemp and cannabis to allow outdoor cultivation and collection of harvests from traditional farmers.

This will unlock enormous economic energy in the rural areas of the country, especially in the Eastern Cape, KwaZulu-Natal and Mpumalanga.

Urgent work is being finalised by government to create an enabling regulatory framework for a whole plant, all legitimate purposes approach for complimentary medicines, food, cosmetics, and industrial products, aligned to international conventions and best practices.

This includes the reprioritisation of departmental budgets for sector development and support for traditional, black farmers, and the alignment of South African Police Services enforcement with regulatory reforms. A growing economy must also be an increasingly inclusive economy,” he further said.


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Author: Thabiso Zwane


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