The recent Medium-Term Budget Policy Statement from Finance Minister, Tito Mboweni, offered an unsparing view of the challenges that public finances and the wider economy continue to face.
By Pieter Bensch, executive vice-president at Sage Africa & Middle East
We believe that one of the most important steps government can take to catalyse growth in this environment is to focus on igniting the development of the small and medium enterprise (SME) sector.
With record unemployment and GDP growth expected to languish at just 0.5% this year, helping entrepreneurs should become a policy priority for government. Against the backdrop of a troubled public sector that needs to trim its wage bill and the unemployment figure not declining, government should be looking at the SME sector as the engine for job creation.
For that reason, we welcome the commitments in the policy statement to step up short-term reforms such as lowering the cost of doing business by automating registration and filing processes. International experience in countries such as New Zealand and Singapore indicates that small businesses flourish when red tape is swept away.
The promise to support tourism by reducing the cost of travelling to South Africa and removal of red tape for small business in the tourism industry is also positive. We would be excited to hear about similar initiatives for small businesses in areas such as retail, software development and business services in future policy statements.
One of the major challenges our customers tell us about – large businesses as well as SMEs – is the difficulty of operating in periods of load shedding. We are pleased that the Finance Minister committed to energy security as a priority. We hope that efforts to restructure the energy market will be accelerated in the months to come.
We also note that the Minister attributed the declining growth trend in part to poor education outcomes. It highlights just how important it is to focus on education from primary school to tertiary institutions to create a workforce that is ready for the Fourth Industrial Revolution (4IR).
As a technology company, we are watching our world change at a high speed as the 4IR accelerates, and we want to help ensure that South Africa is a key player in the digital economy.
We need to think about how we create an entrepreneurial workforce that is ready for a new world as the pressures of automation continue to threaten many traditional jobs.