Small businesses are beginning to take their place as the engine of the economy but are catching up from generations of being left out in the cold, Minister of Small Business Development Lindiwe Zulu said on Wednesday.

Last year at least 18 000 small businesses submitted their tax returns for the first time last year, contributing to the record R1-trillion that the South African Revenue Services raised, she said.

Enterprises such as these are driving economic growth across the economic continent and creating a new middle class.

But the black population was still generations behind wealthy whites because their legal participation in the economy is only 22 years old, said Zulu.

''The banks won't lend without a credit record. And all those who have credit records are those who were enriched five generations ago,'' she said during debate on the department's R4.3-billion budget.

What South Africa needs urgently is a black-owned bank that understands the needs of a developing country, she continued.

Zulu quoted from a Goldman Sachs report that the South African economy could grow by five percent over the next five years if the government and private sector invest R12-billon into 300 000 small businesses.

She encouraged small business to start forming connections on the African continent, but Economic Freedom Fighters MP Thilivhali Elphus Mulaudzi believed there was little hope of this bearing fruit with current trade patterns.

''The South African government has opened to many markets from India and China so that the small business cannot make a transaction,'' said Mulaudzi.

Democratic Alliance MP Toby Chance said Zulu was not helping by being a ''Sleeping Beauty in a fairytale land', who provided political cover for President Jacob Zuma, instead of doing her job.

Instead of helping to build small enterprises, she was focusing on poverty alleviation, he charged.

But he welcomed the announcement on Monday that Discovery would set aside R1.5-billion to fund small business development, saying his party had been calling for a fund like that for three years.

The announcement was made after a meeting with business leaders and Zuma at the Union Buildings on Monday.

Deputy President Cyril Ramaphosa hopes that the fund will grow to at least R10-billion to support small businesses.

Many of the MPs lamented the harassment of spaza shop owners and street vendors, saying they dealt with constant harassment by police and did not even have water or toilets at their trading sites. The traders needed to be treated better because they were providing for their families, the MPs said.

Parliament itself was urged to use co-operatives for its day-to-day supplies and services instead of enriching one company.

African National Congress MP Xitlhangoma Mabasa set the cat among the pigeons when he delivered a booming speech tracing Cecil John Rhodes and Jan Smuts' roles in the oppression of black South Africans and their current struggles to get their businesses off the ground.

''The wrong seeds delayed our progress,'' he said.

But black people had made their own plan, forming successful stokvels and burial societies as a solution to being locked out of financial systems, said Mabasa.

''And by the way. That land? You know who stole it...,'' he said, referring to the Natives Land Act of 1913.