The department of small business enterprise development is investing millions of rand to boost micro, small and medium enterprises (MSME), especially those from townships and rural areas.
The department is bringing more MSMEs into the mainstream economy to unlock economic growth and reach the medium term development plan (MTDP) target of above 3%.
The department has been allocated R2.918bn for the 2025/2026 financial year.
Tabling the budget vote before the National Council of Provinces, minister Stella Tembisa Ndabeni said the department would provide 500,000 MSMEs and co-operatives with financial and non-financial support over the medium-term expenditure framework.
This budget is primarily directed towards transfers and subsidies, which account for 84% ,or R2.450bn, with the remaining 16%, or R468m, spread between compensation of employees at R265m, with goods and services accounting for R197m and capital at R6m.
Of the R2.450bn for transfers and subsidies, the Small Enterprise Development and Finance Agency (SEDFA) receives R1.908b (77.9% of the transfers and subsidies).
The department manages the remaining R542.6m, accounting for 22.1% of the total transfers.
Ndabeni said the department’s contribution towards achieving above 3% growth was to support more than one-million MSMEs and co-operatives.
“We will do this through SEDFA’s development fund and commercial fund and through a range of other programmes and instruments,” Ndabeni said.
Over the medium term period, the department will:
• Finance just under 620,000 MSMEs through SEDFA’s development fund;
• Finance a further 34,000 MSMEs through SEDFA’s commercial fund, targeting high-growth scalable MSMEs;
• Finance just under 7,000 MSMEs through credit guarantees with banks and nonbank financial intermediaries;
• Provide just under 560,000 MSMEs with pre-investment support, including entrepreneurship support, training, incubation support, formalisation support, as well as assistance in the financial application process; and
• Provide just more than 180,000 MSMEs with post-investment support, including coaching and mentoring, business skills training and contract management to ensure the investments are safe.
This means the department will support 1.1-million MSMEs and co-operatives over the medium term period.
Ndabeni said the development fund would be focused on micro and small enterprises, including informal businesses transitioning to formalisation.
This year, the department is targeting to disburse R792m in financial support through the development fund.
Over the medium term, this will amount to R2.95bn.
This includes R300m for women entrepreneurs and R300m for youth entrepreneurs.
Rural provinces such as the Eastern Cape and Limpopo are targeted to each receive R118.8m for 2025/2026; KwaZulu-Natal R102.96m; the North West R95.04m; Mpumalanga and the Northern Cape R79.2m each; the Western Cape R71.28m; Gauteng R71.28m and the Free State R55.44m.
These disbursements will support 94,500 MSMEs across the country during 2025/2026.
Over the medium term, the department will support 53,000 MSMEs in each of the Eastern Cape and Limpopo provinces; more than 42,000 MSMEs in the North West; and more than 35,000 each for the Northern Cape and Mpumalanga.
“No-one can say we are under-targeting the poorer, underserved provinces.
“The SEDFA commercial fund on the other hand will target more established small and medium enterprises, with high commercial viability and prospects for scalability,” the minister said.
The commercial fund will this year disburse R261.36m, and just under R1bn over the medium term, supporting a total of 19,600 MSMEs.
Gauteng and KwaZulu-Natal receive the highest disbursements of the commercial fund because of their advance pipelines for funding-ready MSMEs.
Credit guarantees will also be used to leverage capital from banking and nonbank financial institutions for both the development and commercial funds.
The township and rural entrepreneurship programme will empower local businesses to drive economic growth and job creation in historically disadvantaged areas.
The department hosted a highly successful StartUp20 Engagement Group meeting attended by 350 entrepreneurs and representatives from the entrepreneurship support ecosystem, from SA and other G20 countries.
It also hosted the inaugural Global SME Ministerial Meeting in partnership with the International Trade Centre, attended by ministers, deputy ministers and senior officials from 62 countries, including 28 from Africa.
Ndabeni said these international platforms provided a useful mechanism to benchmark where we were at as a country, with regard to MSME and start-up policies and support measures.
“What was evident across both meetings is that many of the challenges our MSMEs face are common across most countries, as are many of our policy instruments — blended finance, credit guarantees and the like.
“Almost all countries have prioritised MSME development at the centre of their country’s growth strategies, recognising them to be more resilient, adaptive and innovative than large corporates.
“This is especially important in the current moment of trade protectionism and the rise of unilateralism.
“Most countries reflected that we still have some way to go to where budgets reflect this prioritisation.”
