Small Business Development Minister Lindiwe Zulu said research has been commissioned to see how South African can cushion small businesses against the shock of downgrades by rating agencies.

"Our hypothesis is that the downgrades will negatively impact small businesses and our cooperatives and their ability to absorb or recover from the potential shocks is limited," Zulu said while tabling her department's budget in Parliament. ".We have commissioned research and we will conduct stakeholder consultations in order to craft an appropriate response to the potential impact of the downgrade in this sector."

The minister said despite the downgrades, her department has set a target for small, medium and micro enterprises (SMMEs) to increase its contribution to GDP (gross domestic product) from 40 percent to 45 percent. Other ambitious targets for this financial year include boosting the number of SMMEs from 2.15 million to 2.56 million and increasing the number for jobs created through SMME's from 7.33 million to 9.09 million.

Zulu said the majority of the R1.46 billion allocated to her department would be spent on transfers and subsidies. They subsidies include R743.1 million to the Small Enterprise Development Agency (SEDA) R256.8 million to the Black Business Supplier Development Programme (BBSDP R78.7 million to the Cooperatives Incentive Scheme (CIS) R49.7 million to the Enterprise Incubation Programme.

R99.4 million to the National Information Business Upliftment Scheme (Nibus) R139 million on compensation of employees R80.1 million for goods and services and R2.6 million on capital assets Zulu said the Small Enterprise Finance Agency (Sefa) has a budget of R223.8 million. Sefa was launched in 2012 and aims to disburse loans of up to R3 million to small businesses.

- African News Agency (ANA)