Minister Ndabeni-Abrahams vows to energise SMME sector, unveils R2.4bn budget plan

The minister said this when she delivered the department’s Budget Vote in Cape Town on Friday, 12 June.

“One of the main contributing factors to the low [economic growth is that too many of our citizens are unable to participate in productive economic activities.

“So in addition to championing reforms that will address energy supply constraints, logistics and crime - which are the focus of Operation Vulindlela - we must also direct our energies to reforms that unlock the potential of SMMEs and the cooperative sector.

“This must be the core priority of the seventh administration, and one for which we bear responsibility as the Department of Small Business Development portfolio. We want to assure all members and society that even though we are young and still developing, we are up to the tasks that lie before us,” she said.

The department has been allocated a budget of some R2.4bn.

Priority areas for market access

The Minister said the department is focussing on five areas related to market access and localisation, which have proven to be barriers for SMMEs.

“Firstly, we will support 200 SMMEs through our Small Business Exporter’s Development Programme to participate in ten trade events in the 2024/25 financial year. In this regard, R20m has been allocated to exploit our AFCFTA, BRICS partnerships and various global trade agreements.

“Second, we will enhance our Market Linkage Programme to ensure the placement of SMME products in strategic warehouses of wholesalers and the shelves of retailers. Through our partnership with Proudly SA, we are developing an e-commerce platform that is likely to go live in the second of this financial year.

“Third, we are working with the public sector in order to exploit opportunities which will be presented by the Public Procurement Bill (once signed into law). We are working with corporates through Community of Practice to influence Enterprise and Supplier Development (ESD) programmes and procurement of products from small enterprises and cooperatives,” she said.

Furthermore, there are plans to “actively build supplier capacity to meet and sustain the market requirements”.

“Here we provide quality improvement, product testing and certification, as well as productivity improvement through the Small Enterprise Development Agency (Seda).

“Through the Small Enterprise Manufacturing Support Programme (Semo) at the Small Enterprise Finance Agency (Sefa) we have allocated an amount of R266.8m which deepens the black industrialist programme and ensures more participation of small enterprises in the manufacturing sector.

“Fifth, priority is also given to new growth drivers with low barriers to entry. In this financial year (2024/25), we will focus on the energy sector and tech industry – while also implementing our Cannabis Support Programme that will look both at the industrial hemp value chain as well as how to mainstream small indigenous cannabis growers for lucrative markets,” Ndabeni-Abrahams said.

Financing small businesses and cooperatives

The minister highlighted that financing “remains one of the key constraints for small businesses and cooperatives”.

In this regard, the department has developed an SMME and Co-operatives Funding Policy to expand access to financing and early-stage investment.

“This policy will be a game changer as it also proposes an establishment Fund of Funds, which we are currently designing. The fund will de-risk and leverage investment from the private sector and institutional investors for startups amongst other things.

“We will also prioritise the development of a Startup Policy and legislation as required. This will be done in collaboration with relevant departments.

“We will also continue to build on the work we have already undertaken in the previous administration to invest more in under-served SMMEs and co-operatives.

“In this regard, Sefa disbursed R2bn funding facilities against a target of R2.18bn to 80,040 SMMEs and co-operatives which led to 98,378 jobs,” Ndabeni-Abrahams said.