By Pieter Bensch
In his State of the Nation Address (SONA) on 9 February, President Cyril Ramaphosa declared a national state of disaster with immediate effect to respond to the electricity crisis.
The President’s acknowledgement of the devastating effect of the severe and protracted load shedding on businesses and the public, has been met with mixed reaction, although his outlined goals seem ambitious. With the backdrop of a robust speech anchored on hope, we expect to see decisive action.
We all know the challenges we are facing as a nation. It will require that the President work closely with the Auditor General of South Africa to establish regulatory frameworks. This will ensure stringent procurement processes are in place, which can include sign-off by the President for sound governance over the distribution of funds, and ensure that the plans outlined in the SONA are reached to restore public confidence.
After more than six months of harsh load shedding, small and medium-sized businesses (SMMEs) have struggled to sustain operations. Many started recovering from the pandemic when the power generation crisis deepened, with only a few having access to capital to invest in solar panels, batteries, and generators.
This reality is supported by research we have conducted (the Sage Small Business, Big Opportunity study) where 17% of SMMEs say that access to funding is a barrier negatively affecting their business. Thousands of SMMEs were surveyed to understand their experiences since Covid-19 and their outlook for the future.
The move for small business owners to invest in solar equipment through National Treasury is one step in the right direction to ensure the sustainability of SMMEs, recognising the opportunities and contributions they make in creating a skilled workforce and driving employment.
Furthermore, in addition to tax deductions for investing in rooftop solar, we expect to see what other financial relief efforts are under consideration to reduce the impacts of high electricity costs and frequent outages that threaten an existential vibrant SMMEs sector.
We hope that government will support those most affected more importantly, that the state of disaster will be handled in a way that encourages efficiency and accountability in stabilising South Africa’s electricity grid. We will watch the budget speech to see what kind of assistance is proposed for them.
The President once more acknowledged that SMMEs, co-operatives, and informal businesses would drive growth and the creation of jobs in our economy. The fruition of the Businesses Act to reduce regulatory barriers for SMMEs and co-operatives to make it simpler for entrepreneurs to start businesses by reducing the red tape, will undoubtedly fuel the South African economy. The private sector can work with the government on these efforts, especially on digitising these businesses and through enterprise development programmes.
In conclusion, SMME owners have fulfilled their side of the social contract during the Covid-19 pandemic and beyond. It is time for the government to reciprocate this by creating conditions conducive to growth and job creation. The President has once again said many of the right things, but we need swift, precise implementation if businesses and entrepreneurs are to help South Africa fulfil its potential.
Pieter Bensch, is Executive Vice President for Sage Africa & Middle East.
BUSINESS REPORT