SMEs and the nation now wait for a final decision on the 2025 Budget after parliament votes to adopt the fiscal framework by a thin margin

Johannesburg, 3 April 2025: The tough decisions tabled by Finance Minister Enoch Godongwana’s second stab at the National Budget Speech in Parliament on 12 March, reflected a constrained National Treasury and many urgent, competing priorities.

While the Minister made it clear that the budget’s focus would continue to prioritise those living on social grants and public-sector employees, SMEs did receive some attention. The Department of Small Business Development allocated R2.1 billion over the medium term to support about 120 000 competitive small businesses, particularly those owned by women, youth and persons with disabilities in townships and rural regions.

Additionally, government allocated R313.7 million to the establishment of SMME hubs to support business expansion, while the R1-trillion allocated to infrastructure will be a positive for SMEs due to its impact on the infrastructure supply chain, and because all businesses will benefit from investment in roads, water management and railways. And there was a significant 51% reduction in the cost of a 1.5 gigabyte data bundle, which is good news for small businesses and individuals.  Let’s hope that all these commitments remain intact when the budget finally makes it through the legislative process.

In the meantime, Miguel da Silva, Group Executive: Business Banking at TymeBank, takes a closer look at what will affect SMEs most in April and beyond.

Transformation Fund proposed

President Ramaphosa, in his 2025 State of the Nation Address on 6 February, announced the much-discussed R100-billion Transformation Fund. The aim: over the next five years, black-owned small businesses will be able to access financial support through this fund, which is expected to be largely financed by the private sector.  The reality: there are significant, valid concerns raised about this proposed fund. There is heavy critique that the fund is mainly focussed on the contributions from big business rather than the desired outcomes, which leads to worries about it being yet another fund ripe for looting.

The Minister of Trade, Industry and Competition, Mr Parks Tau, published the Draft Transformation Fund concept document on 19 March, with a deadline for public commentary of 7 May. We encourage members of the public and interested parties to send their inputs to transformationfund@thedtic.gov.za. Let the tussles commence. 

While fuel prices are down, load-shedding returns and VAT increase looms

The latest fuel price decrease is good news for SMEs that rely on vehicles for deliveries and logistics.  Effective 2 April, the price of 95 unleaded petrol decreased by 72c/l and  93 unleaded petrol decreased by 58c/l, while diesel prices dropped by between 84c and 86c/l.

Unfortunately, after months of no load-shedding, the dreaded power outages have returned. To add insult to injury, as of 1 April, Eskom direct customers are now paying an extra 12.7% – well above the inflation rate – while municipal customers will see prices go up by at least 11.32% from 1 July.

The impact of these cost increases on SMEs will be substantial. Businesses may try and absorb them initially but will eventually need to either up their prices or find innovative ways to reduce them. It’s clear that exploring energy alternatives is not just a matter of ensuring stable supply – renewables in particular look more and more appealing from a cost-saving perspective as grid electricity continues to get more expensive.

SMEs will take another knock when the 0.5% VAT hike tabled for 1 May 2025 comes into effect. The proposed 2025 increase, which at this stage can only be stopped by a legislative intervention, will take VAT up to 15.5%,. Unless an SME is VAT registered and works only with other businesses that are VAT registered, they will have to pay more for their supplies. Consumers will have to shoulder the burden of the higher tax, although government is planning on expanding the basket of zero-VAT-rated food items, among other measures.

The SARB firm on the repo rate – for now

At least it did not go up! But by holding the repo rate firm at 7.5% on 30 March, the South African Reserve Bank has ensured there will be no relief for those who use credit. This decision makes the prime lending rate 11%. The SARB cited rising inflation risks, global economic uncertainty, and the effect of fiscal policy changes as reasons for its cautious approach. What is certain is that continued high rates will keep the screws on households and SMEs alike.

Spaza shops face onerous registration effort

According to research by Trade Intelligence, there are approximately 150,000 spaza shop owners across the country, collectively valued at around R197 billion in 2023. Recently government has sought to make shop owners register their businesses to ensure better safety, compliance and regulation.

The registration is onerous to say the least. Shop owners need to assemble a mass of supporting documents, and the process is laborious and expensive.

Tens of thousands of spaza shops have already been found non-compliant, and hundreds have been closed. Consider the effects on a sector estimated by the 2021 South African Township Marketing Report to employ 2.6 million people and contribute 5.6% to GDP if these closures continue.

April’s SME environment is anything but a joke. While government departments profess their desire to help SMEs, we must still contend with regulations, red tape and a repo rate that keeps SMEs and citizens from gaining even the slightest financial relief. Add in the depressive effects of a looming VAT hike and turning our sluggish GDP growth around becomes a really tall order.

Ends

Notes to Editors

About TymeBank

TymeBank is currently one of the world’s fastest-growing digital banks and the first digital bank to reach profitability in Africa, with more than 10 million customers since launching in February 2019. The bank is founded on simplicity, transparency and affordability and is designed to make digital banking accessible and affordable to all South Africans across the economic spectrum. TymeBank has no monthly banking fees, it takes less than five minutes to open an account and in most cases transaction costs are 30 to 50% lower than what customers would pay at other local banks. Through a distribution partnership with Pick n Pay, Boxer, and TFG stores, TymeBank has over 1,000 kiosks and 15,000 retail points across the country. Retail Capital, a division of TymeBank, is the largest SME funder of its kind in the sector.

For more information visit www.tymebank.co.za

About Tyme

Tyme is a multi-country digital banking group focused on serving consumers and SMEs in emerging markets. Headquartered in Singapore, with a technology and product development hub in Vietnam, Tyme designs, builds, and operates digital banks, with a particular expertise in emerging markets. In December 2024 Tyme Group reached unicorn status with a US $.1.5 billion (~R26.7 billion) valuation after securing US$250 million in its latest capital raise.

Tyme recognises the unique challenges of banking in emerging markets, and leverages technology innovatively, through a high tech-high touch approach, to meet the needs of emerging market customers. It launched its second digital bank, GoTyme, in the Philippines, in partnership with the Gokongwei Group, in October 2022. Across the Group, Tyme now serves over 15 million customers.

For more information, please visit www.tyme.com.

Issued by Aprio on behalf of TymeBank

For queries please contact: 

Cecilia Pinto Taylor - 0833259169 or cecilia@aprio.co.za Pontsho Ramontsha - 0724717357 or pontsho.ramontsha@tymedigital.com