Finance Minister Enoch Godongwana delivered this year’s Budget speech and one of the biggest points was the R254 billion allocated to Eskom to allow the power utility to service its mammoth R423 billion debt.
Godongwana explained that the purpose of the debt relief was to create room for Eskom to strengthen the utility’s balance sheet, freeing it up to restructure its operations.
Furthermore, it would allow Eskom to undertake the investment and maintenance needed to establish and deliver a reliable power supply for the national power grid.
He acknowledged the effect load shedding has had on the sustainability of businesses.
“Domestically, load shedding has become more persistent and prolonged, impacting on service delivery and threatening the survival of many businesses,” he said.
Many SMMEs have had to find alternative energy sources in order to be able to operate due to load shedding. Godongwana announced new tax measures which would benefit businesses that invest in renewable technologies.
“I am pleased to announce two tax measures to encourage businesses and individuals to invest in renewable energy and increase electricity generation. From 1 March 2023, businesses will be able to reduce their taxable income by 125 percent of the cost of an investment in renewables,” said Godongwana.
“There will be no thresholds on the size of the projects that qualify, and the incentive will be available for two years to stimulate investment in the short term.”
He went on to announce changes to last year’s Covid-19 “bounce-back” loan scheme to help businesses recover from the pandemic would now be revamped and used to assist them in getting funding for solar power.
“Changes to the Bounce Back Loan Guarantee Scheme are also proposed to incentivise renewable energy, rooftop solar, and address energy-related constraints experienced by small and medium enterprises,” he said.
“The government will guarantee solar-related loans for small and medium enterprises on a 20 percent first-loss basis. National Treasury will launch the Energy Bounce Back Scheme in April 2023.”
It will be interesting to see how the revamped programme fits into the R10 billion fund to assist SMMEs announced by President Cyril Ramaphosa and the recent State of the Nation Address.
With load shedding showing no signs of abating any time soon this move will be welcomed by small business owners. The number of small businesses that have had to close in recent months is a clear indicator that these interventions are vital for the survival of small businesses.
IOL Business