Finance Minister Tito Mboweni’s Medium-Term Budget Policy Statement today highlighted the many challenges South Africa faces in rebuilding its economy beyond the Covid-19 crisis.

By Pieter Bensch, executive vice-president at Sage Africa & Middle East

While grim numbers around GDP growth, tax collection and government debt were expected, it is disappointing that the Minister did not add much flesh to President Cyril Ramaphosa’s recently announced four-step economic recovery plan.

It was encouraging to hear that the government is aiming to rekindle business confidence and create a stable policy environment. Given the enormous dormant potential in intra-Africa trade, I look forward to learning more about the plans to make cross-border business easier and support South Africa’s growth as an investment and financial hub for the continent.

The Minister said the government aims to make it cheaper and easier to do business by removing needless complex red tape. It is a pledge that the president and minister have made in several addresses over the past three years – small business owners and entrepreneurs are anxious to hear more about the details and to see implementation. Now is the time for decisive action.

I also hoped that the government would extend the TERS (temporary employer/employee relief scheme). Even though we are now under less severe lockdown restrictions, many smaller employers are still battling. A TERS extension would have helped them and their employees to weather the storm, which is not over as yet.

We are pleased to hear; however, that government regards technology as key to rebuilding the economy and creating a new future of work. As a technology company, we are keenly aware of the opportunities of the digital economy; for the country to seize them, we need a focus on digital enablement of our people and businesses as well as on educating a workforce that is ready for the next industrial revolution.

The emphasis on driving recovery through infrastructure investment could bode well for small and medium businesses —we hope that government will ensure that smaller enterprises benefit from some of this spending. Well-targeted infrastructure investments, particularly around transport and electricity, could boost productivity and performance in the private sector.

It’s concerning that government will be looking to increase tax revenues by R5 billion in the next financial year with further increases to follow until 2024/25. Corporate and personal taxpayers are stretched to breaking point already; tax increases could serve as a disincentive to investment. We would prefer that the government focuses on driving growth, which in turn will increase tax revenues.

With record unemployment and GDP expected to contract nearly 8% this year, we believe that it is more important than ever for government to make small business and entrepreneurs a policy priority. Small businesses have endured a challenging year, but with the right support and policies in place, they could lead South Africa’s economic revival next year and beyond.