Sage, the leader in accounting, financial, HR, and payroll technology for small and medium-sized businesses (SMBs), has welcomed the heavy emphasis that President Cyril Ramaphosa has placed on addressing climate change and the just energy transition in his State of the Nation Address (SONA) for 2024.
Pieter Bensch, Executive Vice President & Managing Director for Sage Africa & Middle East, says that it is encouraging to see President Ramaphosa recognise that reducing carbon emissions goes hand-in-hand with resolving South Africa’s longstanding power crisis.
“We believe that environmental sustainability and the drive towards net zero will be as important for the nation’s competitiveness as digital,” says Bensch. “Renewable energy, green hydrogen, green steel, electric vehicles, and other green products all have scope to drive enormous investment in our economy. The adoption of technology also remains critical for SMB success, as our ‘Small Business, Big Opportunity’ report found that nearly half (47%) of South African SMBs intend to increase their technology investment during the next three years, such as 5G (23%), artificial intelligence (21%) and robotics (19%).
“As the President notes, a strategically sound transition towards a greener economy has the potential to catalyse economic growth and create jobs for our people. However, exploring further how small and medium businesses (SMBs) can contribute to this significant transition would be beneficial. SMBs are too often left out of the conversation when they are disproportionately affected by power outages and climate change-related weather events.”
Bensch says that SMBs can play a significant role in the greening of South Africa’s economy but require more support in doing so. “We would like to see the government enable smaller businesses to get involved in the supply chain for renewables to support entrepreneurship and job creation. And when the finance minister tables his budget speech later this month, it would be good to hear about the future of the current tax rebate for solar investments, which is due to lapse next year.
“The solar incentive plays an important role in relieving pressure on the national grid now and helping SMBs to manage the costs of managing load shedding. But into the future, enabling SMBs to embrace solar energy at large scale could help us to move the needle in our national commitment to reduce greenhouse emissions.”
Bensch notes that the SONA could have given more prominence to the role of SMBs and businesses in general. “As President Ramaphosa said in this address, more people are entering the job market each year than jobs are being created and unemployment is unacceptably high,” says Bensch.
SMBs make up a large share of the economy of South Africa, contributing two-fifths of GDP. The sheer number of SMBs and their role in supply chains mean they have an instrumental role to play in reaching the government’s green goals. And, amid the energy crisis and a just transition from fossil fuels to renewables, SMEs are working hard to become more energy efficient and tap into cleaner, alternative power sources. But the fact remains that our reliance on coal-fired power is a barrier to SME sustainability.
“This is not a challenge government can solve on its own. While the commitment to investing in transport and electricity infrastructure is important, we urgently need reforms that make it easier to do business. We hope to learn more about how the government will incentivise entrepreneurs to invest and cut red tape in the Budget Speech, and provide a comprehensive suite of fiscal interventions that can support SMEs to take more ambitious climate action and invest in net zero emissions technologies,” concludes Bensch.