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The new-ish Finance Minister Mthuli Ncube finally presented his maiden budget and there are a lot of things to unpack from his speech. One of the more interesting bits that jumped out to me was when the Finance Minister spoke about SMEs:
In addition to macroeconomic consolidation, the TSP gives emphasis to investment and support to the SMEs sector, which absorbs a growing number of our people as entrepreneurs and workers. Investment includes infrastructure for use by SMEs.
This Budget seeks to contribute towards the establishment of Venture Funds, targeting the game changing SMEs sectors. The Venture Funds will augment the role of the Empower bank and Women’s bank.
Mr. Speaker Sir, inclusive growth presupposes support towards establishment of companies and viable income generating projects, not only in cities and towns, but in our Districts and Growth Points.
What exactly caught my eye in the passage above?
Well, the establishment of Venture Capital Funds is obviously a very big deal. For years we’ve seen startups, SMEs and business owners, in general, grumble about funding or lack thereof and it seems the government is ready to dedicate a portion of their budget to the cause of smaller business looking to grow.
What is venture capital fund?
Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential. Our neighbours down south have a much healthier venture capital culture and I’m sure we can take some lesson from them. Western startups have also been in the venture capital game for a while and I that’s where the obsession with funding has come from. Though it’s great there will be a fund available, it’s also important for startups to understand that sometimes funding is not the key; especially in the earlier phases. Anyway, that’s not the gist of this article…
Is there real commitment yet?
The declaration of intent was made but in terms of actually committing funds, I didn’t see any mention of how much will actually be dedicated to this venture capital fund. I’m not sure if the Minister has ever heard of putting your money where your mouth is but as of right now, to me this sounds like another one of those ‘we need to support the youth declaration.’ Until I actually see the establishment of a venture capital fund I won’t be expecting much. The two subheadings surrounding this SME section in the budget both have numbers attached to them.
That’s how the budget works (or at least that’s what I thought); you announce a thing and allocate money to it. For SMEs and the venture capital section, there’s no allocation of funds so it could be a pipedream. But if it’s that, then the finance minister will be judged on his word a year from now, I guess…
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