Financial PlanningGovernance

Sturdy leadership key to unlocking business opportunities in SA

By: David Morobe, Executive General Manager at Business Partners Limited (BUSINESS/PARTNERS)

Following the recent successful general elections, what South Africa needs now is sturdy leadership to ensure that the populace realises the promises that were made in the lead up to this sixth administration. Top priorities now include policy certainty, a credible economic recovery plan, curbing of government debt and sustained restoration of institutions of accountability.

This is according to David Morobe, Executive General Manager at Business Partners Limited (BUSINESS/PARTNERS) – one of the leading risk financiers that has consistently approved over R1 billion rands in business loan finance per annum over the last five years – who was commenting in light of President Ramaphosa’s Cabinet announcement. “President Cyril Ramaphosa has already shown that he is capable of such leadership, which is critical to establishing an economic environment conducive to business growth.”

Morobe lists some of the key deliverables that he believes should be a priority in this regard:

Invest in and empower SMEs

The National Development Plan aims to significantly reduce inequality in South Africa by 2030 “through uniting South Africans, unleashing the energies of its citizens, growing an inclusive economy, building capabilities and enhancing the capability of the state and leaders to work together to solve complex problems”.

One of the surest ways to grow an inclusive economy is by investing in business owners in the small and medium enterprise (SME) sector, who are critical to the development and well-being of any society. The allocation of R3.2 billion to operationalise the small business and innovation fund over the MTEF, and the R19.8 billion allocated to industrial business incentives mentioned in the last 2019 National Budget speech, must be implemented as envisioned to empower deserving business owners.

There has also been mention of Government looking at establishing special economic zones (SEZs) that are dedicated to producing specific types of products, such as clothing and textiles. Government should implement this goal effectively as it will help attract investment to the identified areas. Small and medium business owners operating such SEZs stand to benefit from reduced corporate tax rates, as well as certain VAT and Employment Tax Incentives, provided that they meet the stringent requirements.

Another important issue to be addressed is late payments to business owners by Government, which has caused many small and medium businesses to suffer or close down completely. It would bode well if there was an instruction from the president for a common thread through each Government department about how small, medium and micro enterprises (SMMEs) are treated and the need for them to be paid on time, or risk their department being sanctioned. The same message needs to apply to large businesses, as they are not without guilt.

A strong partnership between the private sector, government, and civil society that works cohesively to increase the prevalence and success of small and medium business owners is required in this regard. The real employment in our economy is happening in the SME sector and we need to build on that.

Create opportunities for the country’s youth

There are millions of young people that are unemployed in South Africa and it is a crisis that must urgently be attended to. Statistics SA announced that the youth unemployment rate in South Africa stood at an unacceptably high 55.2 percent in the first quarter of 2019. Consequently, many young people turn to entrepreneurship because of the lack of job opportunities resulting from the mismatch between the skills distribution in the society and the skills distribution that our economy needs.

Initiating development programmes that feature skills training and apprenticeship is one mechanism that can be deployed to address this youth unemployment crisis. The Youth Employment Service (YES) programme launched by President Ramaphosa in August last year is an example of opportunities that help expose young people to the business environment. These programmes are absolutely vital to empower and hopefully inculcate an entrepreneurial spirit amongst our youth.

Ease of doing business to be improved

President Ramaphosa has already set a target to move South Africa into the top 50 (from their current ranking of 82nd) in the annual World Bank Ease of Doing Business Index.

The ranking is derived from a score, which in turn is composed of 10 criteria: starting a business; dealing with construction permits; getting electricity; registering property; getting credit, protecting minority investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency.  South Africa is still lagging behind in many of these areas, and the focus therefore should be to urgently address the fundamentals such as fixing the electricity supply and the regulatory framework. Such steps will help improve confidence and spur investment.

In closing, Morobe says that bold leadership is vital to realise the above objectives, and stimulate the return to economic growth rates that will yield the democratic dividend that the South Africa citizens expect.

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