Real costs and implications of an unpredictable political landscape for SMEs

IN HIS SECOND of several budget speeches this year, Finance Minister Enoch Godongwana announced two increases in the standard rate of VAT over two years, prompting businesses to spend quite a lot of time and money preparing for their impact.

- ASHLEY LECHMAN

The increase was hotly disputed both in and outside the GNU, with legal opposition against the plan briefly uniting the DA and EFF.

The VAT hike was ultimately reversed just six days before the 1 May effective date. Now there's a third speech, coming up on 21 May, where Godongwana will show how he intends to make up the roughly R75 billion he'd hoped for from the tax.

Meanwhile, businesses are spending quite a lot of time and money reversing their previous work.

Edward Kieswetter, who is having to manage the same reversal at SARS, said he “understands the complexity and confusion that has resulted from this process.”

SMEs in particular will rue the cost of the confusion that resulted in this process, and hope that the uneasy political alliance can find a way to avoid it in the future.

Miguel da Silva, Group Executive: Business Banking at TymeBank, looked at the very real costs and implications of an unpredictable political landscape for SMEs.

International trade is increasingly volatile

South African SMEs, like their counterparts across the globe, are waiting to see how the international-trade cards lie after US President Donald Trump upended the table on 2 April.

Recently released trade data for March showed SA’s balance of trade sitting at roughly R24 billion, somewhat lower than the consensus estimate of R35 billion.

da Silva said, "That doesn’t take into account the spiralling effects of the so-called Liberation Day in the US. With most tariffs currently paused, trade delegations are trying to simultaneously mend relationships with the US and establish new markets that aren't subject to the same volatility.”