This was highlighted during a post-budget engagement session on Friday (12/9) at Naval Hill in Bloemfontein. The session was hosted by the Free State department of economic, small business development, tourism and environmental affairs (Destea). It featured candid discussions on the challenges facing rural communities. 

Delegates also explored solutions to stimulate local economies, create jobs, and attract investment.“Businesses play a critical role in driving economic growth, particularly in rural regions,” said Nedbank senior economist Isaac Matshego. 

Nedbank senior economist Isaac Matshego. Photo: Facebook

“Established companies must do more to invest in these areas, not only to stimulate development but also to create much-needed jobs.” He noted that while many businesses tend to focus on urban centres, rural areas offer untapped potential for expansion and growth, especially with proper investment and infrastructure.

Matshego also raised concerns about the dire situation in his hometown in the North West province, citing poor local governance and power struggles among councillors and municipal officials that have disrupted service delivery. “Some officials have resorted to using force to take control of municipalities, which has created instability and stymied progress,” he said.

One striking example he cited was the departure of a major company from the Ditsobotla Municipality due to persistent water cuts. He stressed that basic services like water should not be treated as a luxury, adding that such challenges make it extremely difficult to do business or invest in the province.

He also pointed to the deteriorating state of infrastructure, particularly roads riddled with potholes, which further discourages investment and business activity.

Despite these challenges, Matshego remained optimistic, saying there is still hope – provided there is a concerted effort to foster stronger partnerships between government and business to improve the economic prospects of rural areas.

Meanwhile, concerns about the financial hurdles faced by small, medium, and micro enterprises (SMMEs) in townships and rural areas were also raised. Free State MEC for Destea Thabo Makume questioned the reluctance of banks to lend money to small businesses, particularly those seeking to do business with the government.

‘If small businesses had access to capital, they could flourish and contribute’

He argued that access to funding is a crucial element in enabling entrepreneurs to create jobs and stimulate local economies. “If small businesses had access to capital, they could flourish and contribute meaningfully to job creation and economic growth,” said Makume.

However, Matshego explained why banks are often hesitant to provide loans to small businesses. “A major obstacle to lending is the government’s reputation for late payments to suppliers, including small businesses,” he said.

“Businesses often wait up to three months to receive payment for government contracts, which creates significant cash flow challenges. These delays can be detrimental, as interest payments often exceed the profits these businesses expect to make.”

OFM News/Kekeletso Mosbetsi and Zenande Mpame cvs/mvh