Minister of Higher Education Manamela warns of R15 billion funding deficit for NSFAS

Finance Minister Enoch Godongwana announced that the government is considering options for allocating funds to combat gender-based violence and femicide (GBVF). These details are expected in the Medium-Term Budget Policy Statement (MTBPS) after the ANC Women's League (ANCWL) demanded dedicated resources.

ANCWL presented the Godongwana memorandum to the National Treasury in Pretoria on Tuesday. The League argued that the government has failed to provide resources to address the GBVF issue, despite President Cyril Ramaphosa classifying this crisis as a national catastrophe.

The League insisted that such a classification should lead to improved access to services for victims, emergency support, prevention programs, monitoring, reporting, and oversight. Godongwana responded to the memorandum by acknowledging the validity of ANCWL's concerns and noting that there was a legitimate expectation that the GBVF classification would lead to practical action.

Godongwana noted that 1956 marked a significant moment in South African history when women played a leading role in the country's struggle. He also emphasized that the terms 'classification' and 'declaration' should not be confused, as they have different meanings within the government.

He clarified that the government has established working groups to determine the practical meaning of the GBVF classification and ways to solve this crisis. Furthermore, the National Council on Gender-Based Violence and Femicide (NCGBVF) has been established—a statutory body responsible for strategic guidance and coordination of the implementation of the National Strategic Plan on GBVF across various departments.

Godongwana acknowledged that some ministries are already contributing to solving the GBVF problem through their current budgets, but he noted that coordinating and controlling these efforts remains a complex task. He agreed with the possibility of consolidating disparate efforts from different departments, as suggested by the Women's League.

ANCWL sought the creation of a dedicated fund to strengthen the country's response to GBVF, including support for victims and prevention programs. Godongwana stated that the possibility of creating such a dedicated fund would depend on government priorities, adding that some measures could be financed from existing departmental budget allocations, such as placing social workers in police stations.

The Minister reported that the government's work on GBVF funding will be reflected in the MTBPS, although he could not specify an exact amount. He also distanced himself from reports of a proposed R5 billion emergency response fund, stating that he had never mentioned this figure. He concluded that large funding requests must be considered in the context of the government's ability to effectively utilize resources, and the relevant working groups have not yet submitted a consolidated budget proposal.

According to the latest SME Confidence Index from Business Partners Limited, nine out of ten small and medium-sized enterprises in South Africa have faced operational pressure due to the recent rise in fuel prices, highlighting short-term financial difficulties in this sector.

Furthermore, the survey indicates a growing number of companies that are forced to shift focus from expansion to ensuring short-term survival. For business owners, this reaction is understandable: when costs suddenly increase, cash flow shrinks, or sales come under pressure, the primary task becomes stabilizing the business as quickly as possible.

Risks of Financial Decision Making

Although securing short-term financing is often critical and can provide necessary support, the urgency of solving short-term financial problems sometimes prompts SMEs to make financing decisions that unintentionally create more serious future problems.

Three Common Mistakes

Although every company's situation is unique, there are three typical financing mistakes to avoid. Firstly, it is using an inappropriate type of financing to solve a specific problem.

Secondly, it is taking on long-term obligations to cover a temporary cash shortfall, which can burden the business with unnecessary expenses for years to come. Before seeking funding, business owners must clearly determine whether the difficulty relates to working capital, equipment, expansion, or a temporary lack of cash. Financing should support a specific need, not just provide access to extra money.

Business Model Issues

The third mistake is taking on debt before addressing core operational problems. Financing can provide a reprieve, but it cannot fix an unsustainable business model. When financial pressure arises, many SMEs focus solely on attracting new capital without first examining the factors causing the problem. Increased costs, reduced margins, inefficient inventory management, slow payments from debtors, or pricing issues can cause a cash deficit that financing alone will not resolve.

Additional funds may temporarily alleviate symptoms, but if the root causes are not addressed, the businesses will face the same problem again in a few months, but with higher repayment obligations.

Strategic Approach to Fundraising

Moreover, one of the biggest mistakes made by SMEs is waiting too long when seeking financing. Paradoxically, many entrepreneurs view financing as a last resort and only approach lenders after exhausting reserves and reaching a critical situation. At this stage, the business may have fewer financing options, and management has to make hasty decisions under intense pressure.

The strongest funding applications are usually submitted when the company still has enough time to plan, evaluate different solutions, and demonstrate a clear action plan. Therefore, access to finance should be part of a broader sustainability strategy, not just an emergency measure. In conditions where factors such as fuel costs, inflationary pressure, and general economic uncertainty continue to influence, short-term financial pressure is becoming an increasingly common reality for many business owners. The key lies in adopting a balanced and strategic approach to fundraising, carefully assessing the business's needs, its ability to repay, and its growth objectives. With alignment to a clear goal and sound financial planning, financing serves as a valuable tool to support sustainable business development.