Additional lending and cutting of red tape can promote growth and curb job losses
In the Business Beyond Covid series, CEOs and other business leaders and experts in their sectors look to the future after Covid-19. What effect has the pandemic and resulting lockdown had on their industries and the SA economy as a whole? Which parts will bounce back first and which will never be the same again? Most importantly, they try to answer the question: where to from here?
Increased infrastructure development — a key enabler to deliver inclusive growth — is the recurring conclusion across the recovery plans released. This surely means all sectors of our business sphere, our people, society and geographic locations must be included in any economic reset. Our analysis found that parts of the informal sector have proved resilient during the past few months. Many of these microenterprises adapt quickly — partly because they are largely outside the regulatory net.
Our view is that the financial assistance provided is insufficient relative to the need: 30%-50% of SMMEs have applied for government relief, and 68% of those that applied were unsuccessful, while 71% of SMMEs will require further funding post-lockdown. As at the end of June 2020, about R10.6bn had been lent to nearly 7,500 businesses under the loan guarantee scheme. However, there is recognition that this scheme needs to be tailored further to become more relevant to SMME needs.
Reducing red tape is an imperative to accelerate growth. We must identify, amend or simplify the top regulatory implementation challenges to SMME growth to ensure lower costs and improved ease of doing business.
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