SMEs' growth absent in Budget 3.0. Here's what entrepreneurs expected

The Citizen

22-05-2025

'If SMEs are the future of work and wealth in South Africa, then we need a budget that treats them as central to recovery, not peripheral to macroeconomic stability.'
Finance Minister Enoch Godongwana delivered the third budget on Wednesday for the current financial year, which may have calmed the country's political landscape and ensured fiscal continuity.
However, Shawn Theunissen, founder of Entrepreneurship To The Point (eTTP) and Property Point, says the budget failed to deliver what South Africa really needs: a bold pivot toward inclusive economic transformation driven by small and medium enterprises (SMEs).
'Budget 3.0 offers fiscal discipline, but not bold economic inclusion. Small businesses remain on the sidelines, waiting for support to reach them. The continued absence of direct, scalable SME-focused policies risks deepening inequality, slowing recovery, and failing to unlock entrepreneurial potential.'
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No enterprise funding in the Budget
After the value-added tax (VAT) was rejected in the first two budgets, Godongwana had to find a way to compensate for the shortfall that the VAT hike was going to provide. That came at the expense of the government and businesses.
He announced that additional government spending will be cut by R68 million, and this is primarily aimed at provisional allocations that have not yet been assigned to votes.
However, his mention of benefits to small businesses was absent. The third version of the budget made no mention of new tax relief, grants, or enterprise funding targeting SMEs.
At the same time, he announced a fuel levy increase. This increase will raise input and logistics costs, which might force businesses to increase the prices of their services and products.
Small business support absent in the budget
Theunissen said the third budget was an opportunity to fast-track real SME recovery through targeted tax breaks, working capital relief, and formalised access to state-backed funding. 'Instead, we saw continuity with little urgency.'
The revised GDP growth forecast of just 1.4% for 2025 reflects a subdued economic outlook, which offers little stimulus to small enterprises. '
Despite years of commitments, no new mechanisms were introduced to address persistent credit and working capital gaps, and previously announced SME funding remains largely undisbursed.
'It's not just about what's missing in the new budget, it's also about what hasn't been delivered from the last three,' said Theunissen.
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Where is support for women and the youth?
He added that the government ignored the many calls for inclusion as the budget did not include any measures to support women- or youth-led enterprises, both of which are disproportionately excluded from procurement, finance, and formal supply chains.
'Budget 3.0 failed to introduce or revitalise entrepreneurship training, innovation incentives, or enterprise support, especially for youth and women. This oversight is short-sighted, as these sectors offer high impact for job creation and inclusive economic growth,' Theunissen added.
He pointed out that SMEs account for 98.5% of all formal businesses in the country, provide more than 60% of private sector employment and contribute more than a third of the country's GDP.
What SMEs expected
He outlined the below as what small businesses in the country expected the budget to include:
Targeted tax relief for small businesses on essential inputs: With rising input costs and shrinking margins, SMEs urgently need targeted tax relief on basic goods and services to remain viable in low-growth conditions. Fast-tracked disbursement of existing SME funding commitments: Billions committed to SME support remain undisbursed; this budget should have prioritised fast-tracking delivery to entrepreneurs who can't wait another year. Legal enforcement of the 30-day payment rule in public procurement: Late payments from the government remain a chronic problem; legally enforcing a 30-day payment rule is essential to protect SME cash flow and survival. Clear SME inclusion in Operation Vulindlela and structural reforms: Reform efforts will bypass entrepreneurs without transparent SME procurement targets and timelines in Operation Vulindlela. Dedicated enterprise development for women and youth entrepreneurs: The absence of tailored programmes for women and youth-led enterprises is a missed opportunity to tackle unemployment where it hits hardest. Incentivised formalisation of the informal economy through tax credits and simplified registration: Formalisation must be driven by incentives, not penalties, giving informal entrepreneurs tax breaks and easy registration pathways to enter the mainstream economy.'
'If SMEs are the future of work and wealth in South Africa, then we need a budget that treats them as central to recovery, not peripheral to macroeconomic stability.'
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