Govt Takes Action to Address Barriers to Finance for SMMEs and Entrepreneurs: Zuko Godlimpi

R78 Billion in New Business Investments and Policy Reforms Aimed at Overcoming Financial Challenges for SMMEs.

The South African government is fully aware that access to finance remains a major barrier for small, medium, and micro enterprises (SMMEs) and entrepreneurs, but efforts are underway to address these challenges, according to Deputy Minister of Trade, Industry, and Competition, Zuko Godlimpi. Speaking during Financial Inclusion Week in Johannesburg, Godlimpi acknowledged the need for more effective financial solutions for SMMEs and emphasized ongoing reforms.

“The government's inability to accelerate economic transformation over the past 30 years has resulted in stagnant economic growth, high unemployment, widening inequality, and market concentration," Godlimpi said. Despite progress in dismantling apartheid structures and improving living standards, these changes have not sufficiently translated into widespread job creation.

R78 Billion in Investments to Support New Ventures

Godlimpi highlighted that the Department of Trade, Industry and Competition (dtic), along with its agencies like the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF), is actively working to attract new business projects. These efforts have led to R78 billion in investments for upcoming ventures. The dtic also aims to streamline the payment processes for SMMEs, ensuring that bureaucratic delays do not contribute to financial difficulties for smaller enterprises.

Tackling Financial Barriers for SMMEs

On the policy front, Godlimpi recognized that SMMEs face challenges accessing finance, particularly in securing debt financing. Many are hindered by strict credit checks and are often penalized by credit bureaus for delayed payments, a situation worsened by late payments from clients, including the government itself.

"These issues create an unsustainable credit market structure in South Africa, which focuses more on consumption than on fostering developmental and investment-oriented finance," Godlimpi explained.

According to the Small Enterprise Development Agency's (SEDA) SMME Quarterly Report and Stats SA, SMMEs contribute about 59% of total employment in South Africa, further underscoring the importance of making financial systems more accessible to these enterprises.

New Approach to Economic Data Sharing

To better support SMMEs and align with the government’s industrial policy objectives, Minister Parks Tau has introduced a "wall-to-wall" approach, which involves enhanced data sharing within the dtic. This aims to improve the government's understanding of economic conditions and ensure more coordinated and complementary use of tools to support SMME growth and economic transformation.

By addressing these financial challenges and promoting investment in new businesses, the government hopes to remove some of the key obstacles that have held back the SMME sector and to foster greater economic inclusion and growth.