Finance Minister Enoch Godongwana's 2025 Budget Speech, delivered on March 12, 2025, introduced several measures impacting small and medium-sized enterprises (SMEs) in South Africa:

Economic Outlook

The government forecasts a GDP growth of 1.9% for 2025, an improvement from 0.8% in 2024, indicating a gradual economic recovery. Household consumption is also expected to rise by 1.9%, suggesting a potential increase in consumer spending that SMEs could leverage.

Tax Adjustments

The budget proposes a 1% increase in the value-added tax (VAT) over the next two financial years. To balance this, personal income tax brackets and medical aid tax credits will not be adjusted for inflation. These changes may affect consumer spending power, potentially influencing SME revenues.

Infrastructure Investment

An allocation of over R1 trillion is planned for infrastructure development over the next three years, targeting improvements in electricity, roads, rail, and water supply. This investment aims to create a more stable business environment and offers SMEs opportunities to participate in government contracts and tenders.

SME Support Programs

The budget includes R2.1 billion to support approximately 120,000 small businesses, focusing on those owned by women, youth, and individuals with disabilities in townships and rural areas. An additional R313.7 million is allocated to establish SME hubs to assist entrepreneurs in scaling their businesses.

Energy Sector Initiatives

The government has committed R1 billion to support local production of electric vehicles (EVs), batteries, and related manufacturing projects. This initiative aims to transition the automotive industry towards EVs by 2035, presenting new opportunities for SMEs involved in manufacturing, supply chains, and related services.

Digital Transformation

The budget emphasizes digital transformation, encouraging SMEs to integrate digital tools into their operations. This focus aims to enhance efficiency, competitiveness, and access to broader markets for small businesses.

In summary, the 2025 Budget Speech outlines several initiatives that could positively impact SMEs, including infrastructure investments, dedicated support programs, and a push towards digital and energy sector advancements. However, tax adjustments like the VAT increase may pose challenges, requiring SMEs to adapt their strategies accordingly.