Following the upcoming budget speech Government is being petitioned to support SMEs in a tangible way by funding a voucher system for start-up business owners to receive critical advice free of charge.
The Southern African Institute for Business Accountants (SAIBA) has delivered a memorandum to Minister of Trade and Industry, Mr Rob Davies, with the concept in an effort to secure the support so badly needed by new businesses to stay afloat.
In light of government’s stated commitment to local business entrepreneurs and particularly the support displayed by Minister Davies at the Proudly South African Buy Local Summit and Expo held earlier this month, SAIBA believes the path to ensuring the early success of SMEs is clear.
President and Chair of the Board at SAIBA, Professor Dovhani Thakathi, says he has requested discussions with the Ministry to table the SME Growth Voucher Initiative that SAIBA hopes will earn favourable consideration by government.
The call to implement a voucher system for SME's is supported by Associate Professor in the Department of Economics at Stellenbosch University, Professor Neil Rankin. Rankin was involved in the research of the Youth Wage Subsidy and believes that a voucher system could be tested in a pilot study. “Any initiative that is useful in helping smaller businesses survive in their early stages would be welcome,” he said.
“The data certainly shows that smaller businesses are not contributing as much to job creation in South Africa as they do in other countries. I sincerely hope SAIBA’s approach to government elicits the desired outcome”.
In terms of the scheme, government would provide qualifying SMEs with a voucher to be redeemed with accredited business advisers, accountants, tax practitioners, marketing consultants and attorneys.
“The United Kingdom recently launched a similar scheme through which the vouchers are redeemed through a marketplace, developed and run by a small business network,” explained Thakhathi. “In the UK scheme, the platform allows business owners to select the right adviser to address their specific business issue. Small businesses pay the supplier direct and then claim back up to £2,000 from the UK government.”
SAIBA believes that initiatives such as these – taken from first-world economies and proven to work - would serve to demonstrate the South African Government’s commitment to a vibrant SME sector that would contribute to the alleviation of poverty and create opportunities for the unemployed.
“The issue of jobs is at the forefront of every political and socio-economic debate taking place right now. This is the time for government to accept the challenge to create an enabling environment for sustainable job creation,” Thakathi said. “It is through initiatives like these that we can all add impetus to economic growth.”
One of the biggest challenges facing SMEs is the lack of expertise in starting and growing their businesses. “Early start-up advice is critical to the long-term sustainability of any new business. Getting the right support and advice increases the success rate of new enterprises which would then be able to employ more people, deliver quality products and services to consumers and contribute to the development of the nation by broadening the tax base.”
This proposed scheme would see government assisting start-up, micro and small businesses with obtaining development advice at the stage that they need it most.
Thakathi pointed out that government commendably provided a host of learnerships and subsidies for young people. “What one wants is for those skilled and trained young people to start their own businesses, which is daunting to say the least. Gaining the right kind of advice at the right time is the biggest difficulty, often sporadic and without substance. A new small and inexperienced business owner may well be unable to differentiate between what constitutes good or bad advice. This very lack is often the reason for new businesses failing to make it.”
Thakathi envisages new businesses registering with a professional body like SAIBA and become eligible to get the advice from the accredited members of SAIBA. The business would pay for the service with their voucher, which would, in turn, be redeemed from government by the advisor.
“In the end, it’s a give-and-take situation. Those businesses helped by government, as well as the professionals who take the role of advisers, would contribute increasingly to a growing tax base which boosts the economy and benefits everyone.”
Thakathi is hoping his memorandum will open the doors for discussion very soon.