Small businesses not expecting relief in budget speech

Joanna Chetty

Joanna Chetty

Economists are not predicting new benefits for small businesses when Finance Minister Pravin Gordhan announces this year’s budget, saying the current super-cycle of mediocre growth and associated policies are set to continue for some time to come.

As has been the case for the past few years, South Africa continues to experience slow economic growth, declining tax revenue and higher debt levels.

The problem is being exacerbated by the weakening of the rand against the U.S. dollar, with it already pushing the R11 mark.

For economist Rejane Woodroffe, one of the key industries where small businesses are affected is tourism.

“I think the finance minister will put a lot of emphasis on growing sectors such as tourism, bed and breakfasts and lodges, especially in terms of the introduction of the tax review committee last year,” she says.

Small businesses currently have to register for Value-Added Tax (VAT), and many believe that they should not have to. In a revised system, companies would only pay over VAT when a customer has paid.

“The tax review committee is intended to look at ways of assisting entrepreneurs and small businesses, and so I think Gordhan will have to look deeply at this tax situation,” Woodroffe says.

However, economist Neal Bruton says both big and small businesses would be affected by the bigger picture.

“It is not good for small businesses, or any business, for that matter,” says Neil Bruton.

“Pravin Gordhan is between a rock and a hard place. We can look at all the smaller areas of focus, but the main thing is that South Africa is short of money and the debt level is increasing.

The finance minister has to generate money, but that is very difficult when there is poor business confidence.”

Bruton says the major concern was that business confidence was instilled by confidence in the country’s leadership, and currently investors were not sure where the country was headed, particularly in an election year.

“It’s a knock-on effect. If the country is in a strong position then naturally the small business sector will benefit from this,” says Bruton.

Shahid Latif, owner of Cell Zone cellphone repair shop, says “the economy is very bad, and I fear that the minister will raise taxes soon. Everything is going up, and I am sure we will also see an increase in rates and electricity as well.”

According to, Joanna Chetty, manager of Hollywood Hair, for things to improve we need to see more investment.

budget, Neil Bruton, Pravin Gordhan, Rejane Woodroffe, Shahid Latif,

We welcome comments and point out that the views of those who comment are not necessarily our views at Small Business Connect, its publishers, sponsors, or the dti. We invite debate, but insist on civility. We will not post personal attacks, name calling or foul language. If you wish to report inappropriate comments for our moderator to review, please use the Flag as inappropriate function provided.