Mid-term budget review – what it means for SMEs
Finance Minister Nhlanhla Nene presented to Cabinet his much anticipated inaugural 2014/15 medium term budget policy statement on Wednesday. The statement has been received with confidence by the markets and business, but has received mixed reactions from opposition parties.
The medium term strategic framework (MTSF) will guide the budget decisions that will contribute towards making the National Development Plan’s goal of having 90% of jobs come from the SME sector a reality.
In his address the minister said when Treasury tabled the 2014 Budget in February, the expectation was that the economy would grow by 2.7% this year. But due to slow growth and an uncertain economic outlook in the global environment and our own development, this has been revised to an estimated 1.4%.
The minister said government would focus on developing mixed-use precincts to help catalyse economic activity and that it would also target the upgrading of informal settlements.
“Over the next three years, government will roll out a new approach to local government infrastructure financing,” said Nene.
Nene said government would also work with private investors and development finance institutions to expand debt financing for municipal infrastructure. Alongside these priorities, there will be real growth in spending on local development and social infrastructure.
In November, Treasury will release a Public Procurement Review which clearly outlines reforms to be implemented over the next five years.
Facts and figures SMEs should care about
Government has made certain investment commitments which will go a long way towards assisting SMEs in many spheres of development, including infrastructure investment, competitiveness and tax incentives, and skills development. This means that small businesses will continue to benefit from government contracts to render services.
These include government efforts to:
1.Support cities to improve living conditions, modernise transport and communications infrastructure, expand the urban economy and promote trade and investment.
2. Work with development finance institutions to increase investment in the urban landscape and expand the municipal debt market.
3. Reinforce support for export competitiveness and job creation. This includes over R18 billion for manufacturing incentives, the establishment of special economic zones and the employment tax incentive.
4. Expand the skills base: R800 billion is proposed over the MTSF period for education and skills development. Post-school education and training has received the fastest-growing share of the budget over the past three years, and will continue to expand.