Budget Brief: David vs Goliath

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ACCA recently held the 2015 Budget Brief. The round table focused on the 2015/2016 National budget. The key discussion points were the impact areas for SMEs and how these impact areas can be gauged as detrimental or positive for the industry. Panellists, representing Government, Industry and ACCA Membership, collectively agreed that it is a challenging time for SMEs. Factors like rent appreciation; make it difficult for SMEs to function efficiently. Panellists John Benson, Tax Practitioner and Hassen Kajie, SAB&T Representative seemed to agree that government’s effort’s in improving prospects for the SME Sector will help the sector increase overall revenue contribution to the economy. However, Brian Joffe, CEO of Bidvest recently highlighted his concerns on governments focus on SMEs. According to Joffe, big business plays a vital role and is a significant contributor to the economy. South Africa has traditionally relied on bigger business for economic indication and activity.  The question remains, can smaller business float the South African economy? According to the IMF, the SME sector may hold the financial answers for South Africa. Smaller companies can adapt quicker to change in markets and have the ability to employ a significant amount. It is seen to many as the untapped market in South Africa. The counter argument is that SMEs are susceptible to financial problems and the success rate of SMEs in South Africa is estimated to be less than 20%. 1 in every 10  remains operational after 2 years. Manenzhe Manenzhe, Panellist and CFO in Parliament, argued that SMEs can increase chances of success by focusing on benefiting from governments initiatives through compliancy. CFO’s operating in smaller to medium companies need to be aware of state incentives and engage with the revenue service on employee based rebates. It has become vitally important for CFO’s to focus on compliancy in order to reap the financial rewards. The Goliath is no longer fellow competition from other SMEs. Goliath is the struggling economy and it is up to the CFO’s (David’s) to push through by taking advantage of government incentives to ensure a higher success rate. Accountants for Small Business, is a Campaign launched by ACCA in 2013, aiming to raise awareness of the value of professional accountants in SMEs. A report forms the centrepiece of the campaign, which will build partnerships between ACCA and business associations, government agencies, and service providers in order to provide practical resources and support for SMEs. The 2015/2016 South African projected growth rate is 2%. Government has targeted SME contribution to the economy, to increase by a minimal 20%. CFO’s, working in the SME sector would need to navigate the economic downturn and increase compliancy to untimely win the David vs Goliath battle. ACCA SA Blog encourages feedback. Comments are welcome.

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