BUSINESS
A publication for progressive business
THE FUTURE OF WORK IN SA Three key scenarios for South Africa’s labour market… and the path we take has the potential to make or mar the country’s economic growth
B-BBEE CODE
TAKING A BRIBE
BUSINESS IN AFRICA
THE GOOD TAX
Unlock the Code to grow your business and boost the economy
The spread of corruption is revealed in the Citizens Bribery Survey
The continent is alive with opportunity… if you do the groundwork
The benefits for every business of being tax compliant
Issue 14 | 2018
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AINE Maine Management and Chartered Accountants is an assurance and advisory practice servicing clients in both the public and private sector. We are 100% black owned Exempted Micro Enterprise (EME), thus making the company a Level 1 BBB-EE Contributor. Being a Level 1 Contributor means our clients will be able to claim 110% of their spend with us for BEE scorecard purposes.
our services ACCOUNTING SERVICES We handle primary books of account, payrolls, VAT returns, levies and all other areas of the accounting function and deliver monthly reports, annual financial statements and taxation reports. AUDIT AND ASSURANCE As our core business, we deem audit and assurance services to be critical to your business. TAX SERVICES Given the complexities within tax, our tax specialists aim to provide you with the best tax advice which is compliant to the relevant legislation. BUSINESS REFORMS We are here to assist your business with solutions aimed at you achieving your strategic ambitions. ADVISORY & CONSULTING SERVICES Our advisory and consulting division mainly focuses on business operation improvements, additional market share identification, profit improvement and cost saving measures which your business can implement.
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Our Members
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Thapelo has over 9 years’ experience in the public and private sector audit and accounting service. He completed his articles with PriceWaterHouseCoopers Inc. (PWC) and thereafter joined the Auditor Genera; and Manguang Metropolitan Municipality respectively, where he was responsible for managing their audits. He is well rounded and experienced in both the public and private sectors and specialises in the improvement of audit reports of public sector clients. One of his notable achievements was when he formed an integral part of the Mangaung Metropolitan Municipality’s team who have improved and maintained the audit opinion from a disclaimer to unqualified audit opinion.
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Terrance is the founder Maine Management and Chartered Accountants. He has over a decade of experience in the public and private sector audit and accounting services. Prior to establishing Maine, Terrance was the Associate Director at PricewaterhouseCoopers Inc. (PwC), where he specialised in assurance work in both the public and private sector. He performed audit and advisory work for NWPG Department of Health, NWPG Treasury, NWPG Municipality and Naledi Local Municipality. Terrance has a passion for people development and is a registered assessor with SAICA.
Qualifications CA(SA) – SAICA Registered Auditor – IRBA (083)-399-4015 terrance@maine-acc.co.za
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CONVENOR’S MESSAGE
Message from the Editor The cover story in this issue focuses on three scenarios for addressing joblessness in our country. Ultimately, the South Africa we all dream of, will be dependent on growing the economy. There is no other quick fix for the triple scourge of unemployment, poverty and inequality. With this in mind, it MUST be all hands on deck to give effect to the National Development Plan. Government, labour and business must work as partners to
bring about cohesion, policy certainty and business confidence. As a platform for dialogue, the Progressive Business Forum (PBF) has as its main objective the facilitation of a conversation between business and government aimed at forging a partnership for growth. We urge businesses in the country to present themselves: be part of the conversation, be part of the solution and be part of its implementation. And in the process, we urge them to be true to the PBF’s principle of promoting the concept of progressive business, that is, that the pursuit of profit be accompanied by the upliftment and promotion of the general wellbeing of the community that their business serves.
This issue of Business Update is once again jam-packed with useful articles aimed at informing, assisting and inspiring our businesses to become good corporate citizens, corporate champions and builders of our progressive society. Enjoy the read!
Daryl Swanepoel
Editor Daryl Swanepoel Managing Editors Alwyn Marx and Simon Lewis Art Director Leo Abrahams Chief Albert Luthuli House 54 Pixley Ka Isaka Seme Street Johannesburg
Copy Editing & Proofreading Gill Lewis Contributors Gary Boruchowitz, Adv Kobus Engelbrecht, William Gumede, Ulrich Joubert, Thapelo Masilela, Theasen Pillay, Renand Pretorius, Prakash Singh, Colin Timmis, Romeo Tsusi and Corne Welman
Publisher Yes!Media Suite 20-207 Waverley Business Park, Kotzee Road, Mowbray, Cape Town PO Box 44383, Claremont 7735 Tel: +27 21 447 6467 www.yesmedia.co.za Printed by CTP Printers
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Project Sales Managers Christa Nel, Crosby Moruthane
Business Update is published by Yes Media. Opinions expressed in Business Update are not necessarily those of Yes Media, the ANC or Progressive Business Forum. No responsibility can be accepted for errors, as all information is believed to be correct at the time of going to print. Copyright subsists in all work in this magazine. Any reproduction or adaptation, in whole or in part, without written permission of the publishers is strictly prohibited and is an act of copyright infringement which may, in certain circumstances, constitute a criminal offence.
Project Sales Nigel Williams, Brian Qaba, Zinigisa Sitole Production Coordinator Ursula Munnik
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Progressive Leader is the official magazine of the ANC Progressive Business Forum (PBF). The magazine has been in existence since 2008 and is an important platform to promote dialogue between the ANC, the business community and South Africa’s progressive citizenry.
Progressive Leader is the primary communication channel between the PBF and the leaders of companies that are members of the PBF, as well as members of the ANC Progressive Citizens’ Forum (PCF). It is the ideal vehicle for companies to speak to these members directly.
TO ADVERTISE IN UPCOMING EDITIONS CONTACT Christa Nel | 021 447 6467 Crosby Moruthane | 067 053 0189
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8 Contents 8 Cover story HR Think Tank shares insight from their recent research into three key scenarios for South Africa's labour market. 14 Economy A fresh outlook on the state of the world economy. By Ulrich Joubert 18 Productivity How businesses can improve their productivity by up to 35%. By Theasen Pillay 20 Book review Master Your Finances by Caroline Marwisa offers financial insight and practical tools to make your money work smarter.
30 Networking Our digital world hasn't reduced the importance of interpersonal networking. By Colin Timmis
48 SOEs SOEs have a vital role to play in South Africa but they face numerous challenges. By Romeo Tsusi
32 Ethics The Ethics Institute's annual Citizens’ Bribery Survey offers some revealing insights into what drives corruption in South Africa at all levels of the economic spectrum.
53 PBF People Meet some of the members of the Progressive Business Forum.
38 Hospitality Booking a table at a restaurant can be more expensive than you think if you're a no-show. By Gary Boruchowitz
22 Africa Before you look to do business in Africa, make sure you do the groundwork first. By Corne Welman
42 Land South Africa needs to urgently address the issue of land redistribution in order to provide its people with the means for growth and prosperity. By Thapelo Masilela
24 Empowerment In order to truly empower black business, it's essential to first understand what empowerment really means. By William Gumede
44 Healthcare Latest news on the Healthcare Amendment Bill which seeks to ensure equitable practices across all medical schemes.
28 Tax Being tax compliant is a major advantage for any business, regardless of its size. By Renand Pretorius
46 B-BBEE The B-BBEE Codes of Good Practice offer great opportunities for businesses of all sizes. By Prakash Singh
54 Small business Productivity is key for small businesses to ensure they remain competitive. By Colin Timmis 56 Human resources Managing your key employees is vital for the growth of your business. By Adv Kobus Engelbrecht 58 CSI Corporate South Africa is playing its part in the education of South Africa’s youth. 60 Social media Be careful what you tweet – it could cost you more than just followers. By Estelle Nagel
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Sharing our land PAUL MASHATILE, Treasurer General of the African National Congress, addressed the Cape Town Press Club about the hot topic of the day: land
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n the early years the issue of land was hampered by what is known as the problem of ‘willing buyer, willing seller’. We also know that it would not be in line with the constitution if there is no compensation for land expropriation and that it is essential that any such transfer of ownership should be done in an orderly manner. This is not ‘land grabs’. In fact, what we are working on with Parliament will avoid ‘land grabs’ or ‘land invasions’, because it will be controlled by the state. Government must identify any land that needs to be expropriated and it needs to go beyond just focusing on privately-owned land. When we start rolling out land redistribution, restitution, security of tenure, we will look at all land, including land owned by government. As we speak, there are government departments that own vast amounts of land in the country, so we need to look at that. There is land lying fallow that is owned by absentee landlords, and we
need to look to that land to make sure the people of South Africa have access to land. It is also important to help farmers to ensure they have access to equipment, and to ensure land doesn’t lie fallow. Earlier in the year when people were making noises about expropriation being bad for the economy and the country, a number of commercial farmers contacted me to ask if they could meet with the President to see how they can help. There are people out there who think this is a positive thing because, when you create access to land for everybody, you minimise conflict and ensure nobody has been left behind because of the past. What people need in the urban areas is a place where they can build their own houses. When I was MEC in the Gauteng legislature, everywhere I went people were saying: ‘Don’t worry about RDP houses, just give us land. We will build our own houses. Give us title deeds so we have security of tenure, so we can go to banks and raise money against our housing assets.’ That’s why, if you look at the issue of land in the urban areas,
people want restitution to build their own houses, so we need to manage it and make it orderly. The same thing applies in rural areas. When we went as the Top Six of the ANC through the country, we found there are people with land in the urban areas who need help to farm. When we deal with the issue of land I think we need to look at all these interventions and especially to look on the positive side of this. The ANC government wants the land to be used productively, so we won’t walk in and say: ‘We see you are running a very productive factory here, but we want your land.’ No! If land is used productively and is employing people, then we will come to give you support. There is a lot of land in South Africa for all of us to share. We need not panic about this – it will be managed in an orderly manner by the government. The debate that is going on with public hearings in Parliament about the need to amend the constitution will continue, but our advice is to identify the land, expropriate it and, if there is a problem, the courts will tell us. We don’t think there is. 7
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COVER STORY
The problem of labour South Africa’s largest obstacle to reducing poverty and inequality is undoubtedly the unemployment rate. HR Think Tank of Knowledge Resources sheds light on three key scenarios for the labour market
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tats SA indicates that 27.7% of economically active working-age South Africans are unemployed – a figure that rises to 36.85% when you add discouraged work-seekers to the count. Supply outstrips demand by a frightening margin: between Q3 2016 and Q3 2017, roughly 696,000 South Africans entered the labour force, but only 358,000 jobs were created – so 49% of job entrants have joined the ranks of the unemployed. Among the country’s youth (age 15-24), things are even worse: officially, 52% are unemployed but, in reality, the number is 64% when those who have given up on finding a job are included. In 2013 a South African Reserve bank forecast detailed three scenarios for employment up to 2025, assuming continued economic growth of between 3% and 4% in its baseline scenario. Since then, economic growth has slowed considerably, and these scenarios no longer hold true. HR Think Tank re-evaluated some of the most important factors influencing employment growth in South Africa, then they released a report setting out three scenarios of future employment growth in the short term, linking them to policy recommendations to stimulate higher employment growth. THE LINK BETWEEN ECONOMIC GROWTH AND EMPLOYMENT Economic growth and job creation are inextricably linked. The National Development Plan (NDP) (2011) sees an
The South African economy is becoming more capital- and less labour-intensive… the ease of substitution of capital and labour is relatively high annual GDP growth rate of 5.4% to 2030 as the key to boost employment and reduce inequality. However, the country’s growth rate has declined steadily since 2011, making this target unreachable. Furthermore, employment growth rarely occurs on par with GDP growth. Since 1995, whereas GDP growth increases have not been met with similarly strong increases in non-agricultural employment growth, declines have coincided with even stronger employment growth declines. The mid-2000s spike in employment growth is largely attributable to the government’s Expanded Public Works Programme. Sharp declines in both rates coincided with the global financial crisis in 2009. Neither has recovered to precrisis levels. The ratio of these two rates – known as the employment elasticity of growth (employment growth/GDP growth) – 9
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COVER STORY
describes what growth in employment coincides with every 1% change in GDP. Between 2011 and 2016, every 1% growth in GDP coincided with a 0.32% growth in employment, suggesting that the employment intensity of South Africa’s economic growth is relatively weak: a GDP growth of 50% over the period (8.5% annually) would be required for all new entrants into the labour market to be absorbed in that period.
Most people who have entered the labour market over the past two decades have limited education and are unskilled, and many unskilled South Africans are unemployed To improve the situation, economic growth must first increase and, at the same time, the labour-absorbing nature of that growth has to be intensified. However, the economic growth forecast remains bleak. In July, the South African Reserve Bank lowered its growth forecast for 2017 to 0.5%; the IMF lowered its forecast to 0.7% in October; while the World Bank kept its forecast at 0.6%. Ongoing revelations of ‘state capture’ and corruption (as well as rising policy uncertainty) also stand to delay a return to economic growth. In the meantime, several things could be done to increase employment and the labour-intensity of economic growth. SECURING MORE LABOUR-INTENSIVE GROWTH AND HIGHER EMPLOYMENT Slow economic growth is not the only factor responsible for South Africa’s disappointing employment growth. Others include substitution of capital for labour; the skills mismatch and oversupply of unskilled labour; the impact of over-regulation, crime and corruption;
declining foreign direct investment; and the high cost of labour and inflexibility of the labour market. Policies have lowered the price of capital without lowering the price of labour, making labour relatively more expensive and, consequently, creating less manufacturing demand.
Urgent education reform
Although access to education has improved since 1994, the quality of public education available to the vast majority of school-goers remains inferior and ranks poorly on the World Economic Forum’s Global Competitiveness Index. Literacy and numeracy skills in grades one, six and nine are extremely poor at basic level. Dropout rates are also extremely high, with only 54% of the 1,139,872 pupils enrolled in grade 10 in 2014 going on to write matric two years later, while only 27% of matriculants qualified to enroll for a university degree. Consequently, most people who have entered the labour market over the past two decades have limited education and are unskilled. Demand for unskilled labour being lower than supply, many unskilled South Africans are unemployed. However, given that demand for skilled workers is healthy, education reform to improve skills provision would help to address this barrier to employment. The kind of education provided is also of particular concern, since in the South African economy capital and labour are substitutes, not complements: capital can largely be used in place of labour, rather than needing to be implemented in conjunction with labour. Consequently, labour needs to develop skills that complement capital instead. Over-regulation and cumbersome bureaucratic procedures are a significant drag on business activity in the country, and this situation appears to be getting worse. Beyond red tape, companies also suffer from transport and telecommunications infrastructure shortfalls. Rail and port transport services are costly and inefficient by international standards, while cellphone telephony and data costs are exorbitant. Low levels of competition in many industries have pushed prices up, throwing a damper on economic growth and productivity. For example, Eskom has repeatedly demonstrated reluctance to
cooperate with independent power producers. Above-inflation electricity price increases over the last years have raised the cost of a key input factor for many businesses. Moreover, the World Economic Forum’s latest Executive Opinion Survey in South Africa found that 14.3% of executives viewed corruption as the most problematic factor for doing business, followed by crime and theft (12.1%), and government instability (10.2%). These conditions all hamper the expansion of businesses and, hence, reduces their capacity to hire more staff.
Declining foreign direct investment
Foreign direct investment (FDI) has been declining since 2013 and reached its nadir in 2015. Since 2014, SA companies have invested more overseas than foreign companies invested in SA. Low FDI means SA is missing out on vital stimulus for both GDP and employment growth, while sovereign credit rating downgrades have also made South Africa far less attractive to investors. In the mining industry, business and investors object that the proposed mining charter would be disastrous for mining operations and jobs in this sector, and have sought a court interdict to prevent its implementation.
Labour costs and inflexibility of the labour market
Rapid job creation depends on unit labour costs remaining low enough to incentivise businesses to hire. Bargaining council agreements often reflect wage outcomes acceptable to large, dominant employers but unsustainable for smaller employers. The national minimum wage has risen significantly to R3,500 from 2014’s median minimum of R2,447 per month. Labour legislation is widely seen as a further hurdle to increased employment, with SA ranking 93/137 countries for labour market efficiency on the WEF’s 2017-2018 Global Competitiveness Index, dipping to 125th in terms of hiring and firing practices, and is in last place (137th) for cooperation in labour-employer relations. The difficulty of hiring and firing remains a major obstacle to job creation. It is also extremely difficult to dismiss any uncooperative unproductive workers, which further discourages businesses from hiring.
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Mrs. Lonnah Baloyi Executive Director: CEO
Mr. Zachea Radipabe Director: Chairman
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Mrs. Stella Mautsana Director: HR
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THREE SCENARIOS FOR EMPLOYMENT GROWTH
GDP growth
The SARB expects GDP growth to reach 0.5% in 2017, 1.2% in 2018 and 1.5% in 2019. The IMF forecasts 0.7% for 2017 but only 1.1% for 2018, and expects growth to remain modest in the following years. The baseline scenario assumes GDP growth will fluctuate by less than half a percentage point from the current 0.7%. The high growth scenario assumes considerable improvement in major barriers to economic growth, including declining investor confidence, so that growth reaches or surpasses current IMF projections. The downturn scenario assumes near-zero growth, with the economy dipping in and out of recession. These three economic growth scenarios are closely linked to the conditions laid out for the various factors below.
Capital-labour substitution – the road to automation
The Fourth Industrial Revolution is rapidly producing new technologies, but little research has been done on the effect on the South African labour market. Labourreplacing technologies in Germany have been adopted at a much slower rate than anticipated, as the labour market has managed to adapt to avoid job losses. If educational initiatives for technological readiness are implemented, the labour force can become more adaptable to technological change. In this context, the relaxation of immigration procedures to allow highly skilled expatriates to work in South Africa and engage in skills transfer would lead to the optimistic scenario of the capital/labour ratio gradually rising. In the base scenario, the substitution of capital for labour is likely to be accelerated by the entrance of new, lower cost labour-saving technologies – a scenario likely to develop sooner in South Africa than in Germany, as SA labour lacks the skills for capital-complementing work. The worst-case scenario sees the deepening skills mismatch, cost of labour, inflexible labour regulation and industrial action pushing businesses to protect themselves by substituting capital for labour wherever possible and, as a result, shedding jobs.
The difficulty of hiring and firing is a major obstacle to job creation. It is difficult to dismiss unproductive workers, which discourages businesses from hiring Educational reform
Educational reform is a long-term project that requires political will and capital. Under the base scenario, the current severe skills gap will persist to hinder growth and employment. The high growth scenario assumes the urgent implementation of radical educational reforms at school, TVET, University and SETA level. These reforms would need to include government action to improve the quality of teaching and the active commitment of business to on-the-job training and other forms of direct involvement. Under the downward scenario, the economy demands more skilled workers, while the brain drain exacerbates the country’s skills shortfall and government immigration policies continue to restrict skilled immigrants from entering and working in South Africa, starving firms and investors of talent.
Constraints on doing business
It is getting increasingly difficult to do business in South Africa, and corruption is more wide spread than previously thought. The base scenario continues on this trajectory, with a small deterioration
in the ease of doing business each year, and rising corruption and businessrelated crime. This trend has to be stopped and turned around for economic growth and job creation to revive. A high growth scenario would require a great deal of red tape to be cut as well as anti-corruption measures and the reinstatement of the rule of law. The low growth scenario would only see the procedures for starting a business and regulatory constraints of running a business become more cumbersome, costly and time-consuming. Corruption would become endemic in business dealings, with unprosecuted officials and businesses acting with impunity. Businesses would struggle and be disinclined to hire staff.
Declining foreign direct investment
The biggest deterrent to foreign investment is high policy and political uncertainty. President Cyril Ramaphosa has been unable to make any significant policy or governance changes due to the need to placate ANC factions and keep the party united. Political decisions continue to be made with little regard for their impact on
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COVER STORY
Cost of labour and labour market inflexibility
the economy, and economic policy is being dictated by political expediency (i.e. land expropriation) further weakening investor confidence. This is the baseline scenario. Under the second, high growth scenario, the ANC will move toward greater accountability and more predictable policy and adopt a pro-business stance. The party agrees to completely or partially privatise corrupt and ailing state-owned enterprises, and commits to restoring the integrity of institutions such as SARS and the National Prosecuting Authority (NPA). Over the next five years, government takes a more limited role in employment creation and instead actively creates a facilitative environment for business to drive economic growth and job creation. This scenario is extremely optimistic. In the third, low growth scenario, the President does nothing to eliminate the existing patronage system or investigate or prosecute ‘state-capture’. Institutional decay (particularly the treasury) continues unabated; corruption and the misuse of state resources thrive with impunity. Tax hikes and land expropriation scares off investors; an insecure ANC may even seek to steal the 2019 election.
The new national minimum wage is likely to accelerate capital/labour substitution; 500,000 jobs could be lost. Individual employers have to demonstrate their inability to pay in order to qualify for exemption. The scenarios here will depend on the efficiency and fairness of exemption procedures. Under the high growth scenario, criteria for exemption are fair and exemptions are granted timeously. Under the base scenario, criteria are fair, but bureaucratic procedures slow the exemption process; employers who cannot afford the minimum wage find it difficult and costly to hire and retain staff. Under the low growth scenario, exemption criteria are neither fair nor clear; exemptions are granted on an arbitrary and very limited basis; procedures are slow and cumbersome. Industrial action may influence labour costs still further. With regard to labour legislation, regulations should be adjusted to make it easier to dismiss unproductive or unsuitable employees, penalise people who bring frivolous cases against employers and former employers at the CCMA, and clarify the procedures to be followed before a dismissal is considered unfair. The high growth scenario envisions immediate changes in this regard would lead to a high growth scenario; the base scenario assumes business as usual. The low growth scenario assumes the continued abuse of dispute resolution avenues; labour court rulings and amendments to labour legislation may make it even more difficult for employers to dismiss staff. COMBINED SCENARIOS If the events outlined in the baseline scenario are accurate, employment is likely to increase slowly, possibly in the range of 0.2-2% per year – much slower than the rate of employment. Under this scenario, the unemployment rate could easily rise to 30% by 2020 and 31-32% by 2022. The high growth scenario sees capitallabour substitution remaining the same; major education reforms are implemented rapidly, corruption and regulatory barriers to business are removed, political
uncertainty is reduced (leading to higher FDI) and labour regulations are reviewed. This, in turn, would buoy up GDP growth and the employment elasticity of growth, resulting in more jobs being created for every 1% of GDP growth. Employment elasticity greater than 1.0 and a positive GDP growth projection close to the IMF’s projected 2-2.2% for the years to 2022 could yield a rise in employment growth of several percentage points – possibly sufficient to create enough jobs to absorb roughly the number of new entrants to the labour market each year (2%-3%). The number of unemployed would stay the same; the unemployment rate would decline slowly to some 25-26% by 2022. Even under this best-case – and highly unlikely – scenario, around six million South Africans would still be unemployed by 2022. Under the low growth scenario, capitallabour substitution accelerates, the skills gap widens, flagrant corruption is rife, doing business becomes difficult, political uncertainty mounts (deterring foreign investors), labour costs spike and labour regulations discourage hiring. New entrants to the labour market would pass directly into the ranks of the unemployed. Assuming a 2.5% annual labour force growth and 0.1% employment growth, joblessness will surge by some 7% per year, with the official unemployment rate reaching 35-36% by 2022, to the tune of nine million people officially unemployed. Solving the problem of high and growing unemployment will require major interventions in various areas; no amount of smaller, ad hoc interven-tions will succeed. The largely structural problems determine that more rapid and more labour-intensive growth will only be achieved subject to a number of policy changes. At the same time, business has to clearly articulate business needs, especially as regards employment, and get more involved in skills development and education provision generally. For the unemployment trend to be reversed, unemployment has to be acknowledged as South Africa’s most pressing challenge, warranting a cohesive, evidence-based strategy with universal stakeholder support.
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A fresh look at the economy ULRICH JOUBERT, an independent economist, shares his insights into the state of the world economy
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ECONOMY
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INTERNATIONAL ENVIRONMENT ince the Great Recession in 2009, the world economy has shown modest growth of between 3% and 3.5% per annum. This reflects a modest recovery in the industrial countries and a growth rate of between 6.5% and 7% in the case of China and India. Indications are that the same pattern of growth will be repeated in 2018. Current forecasts, however, indicate that growth is likely to moderate in the second half of 2018 as well as in 2019 and 2020. At the moment the possibility of a recession in the major industrialised countries in 2020 cannot be excluded.
As inflation remained below target in most of the above-mentioned countries, central banks continued to stimulate growth by way of pumping additional liquidity into the financial markets and by keeping interest rates at very low levels. Given the lowest US unemployment rate since April 2000 as well as persistent economic growth, the Federal Reserve Bank has embarked on a tightening monetary policy since December 2015 in an effort to prevent any serious overshoot of the 2% inflation target in coming months and years. It is anticipated that US short-term interest rates could rise a total of four times or
Current forecasts indicate that growth is likely to moderate in the second half of 2018 as well as in 2019 and 2020 The period of modest, but sustained growth resulted in unemployment declining steadily during the years 2010 to 2018. Currently unemployment is just more than 4% in the UK and less than 4% in the US, Germany and China. In Japan unemployment is approximately 2.5%. Notwithstanding the persistent decline in unemployment, inflation remained subdued in all of the above-mentioned countries during this period. Only now in 2018 inflation has risen above the target level of 2% in the US and in Germany. In the UK inflation has been above the 2% target for the past year due to the weakness of sterling against all major currencies, because of the uncertainty related to Brexit by which Britain wants to exit the European Union by March 2019. In the Euro Area as well as in China, inflation currently remains below 2%. (The Chinese inflation target rate is 3%.)
100 basis points in 2018 and a further three times in 2019. In the Euro Area short-term interest rates are likely to remain unchanged until the middle of 2019 and in Japan until at least 2020. In the UK short-term interest rates are stable after having been increased by 25 basis points in November 2017, but could rise further if inflation remains stubbornly above target in the rest of 2018. Generally short-term interest rates reached their lowest level and are more likely to rise modestly than decline in the period until 2020. The rise in short-term interest rates is likely to moderate growth in the coming months and years and therefore the remark that a recession in the major economies in 2020 or somewhat later, cannot be ignored. The weaker economic growth trend could also result in a weakening of
commodity prices in the months and years to come. This trend could intensify if the current threat of international trade wars between the US and its major trading allies really takes effect in the rest of the year. DOMESTIC Last year the domestic economy benefited from a bumper agricultural crop in the summer rainfall area, as well as some improvement in mining exports at better prices compared to those attained in 2016. Growth was, only 1.3%, but better than the 0.3% of 2016 and in line with the 1.3% of 2015. Forecasts indicate that growth will once again be less than 2% in 2018. In 2018 the agricultural sector will not repeat the good performance of 2017. The summer rainfall area crops will be less than those of last year, while the intense drought in the Western Cape has had a negative impact on production in this area. Mining commodities continue to show healthy price increases. These price trends continue to reflect the persistent growth of the world economy of more than 3%. If world growth subsides in the second half of 2018 as well as in 2019, it is anticipated that commodity prices are likely to moderate. This trend could accelerate in 2019. Furthermore, the RSA mining sector is still adversely affected by the uncertainty caused by the announced changes to the mining sector charter. Unless an agreement is reached between government and the mining sector about this charter and its implementation, it is expected to adversely affect future growth and especially investment in this sector. In the manufacturing sector, the motor industry indicates what can be achieved by cooperation between government and 15
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ECONOMY
the private sector, notwithstanding the fact that this sector is exposed to an international and domestic environment that it cannot control by itself. Can this cooperation be repeated in other sectors of the manufacturing sector and stimulate more investments? If overall growth is to be stimulated, it remains important to limit state intervention in the economy as far as possible. South Africa is likely to show a bigger current account deficit in 2018, which will have to be financed by an inflow of mostly short-term foreign capital. The forecasted further increase in short-term US interest rates in the second half of 2018 as well as in 2019, could limit the flow of capital to developing countries like South Africa. It is therefore of utmost importance that an internationally competitive environment is created to attract foreign capital to our shores. The forecast budget deficit of central government also has to be financed in part by an inflow of short-and longterm foreign capital. It is crucial that government controls and cuts expenditure, wastage and corruption in an effort to limit budget deficits in the current and subsequent fiscal years. These efforts also apply to provincial and local authorities. Special attention must be given to cut the number of employees in the total public sector and to limit
SAPhotog / Shutterstock.com
South Africa is likely to show a bigger current account deficit in 2018, which will have to be financed by an inflow of mostly short-term foreign capital wage and salary increases — even to levels of less than inflation. The financial situation of most municipalities also needs special attention, because these authorities must create the environment in which businesses can be profitable and employ people. Unfortunately, our training and education system is still unable to provide a workforce with the necessary skills to guarantee employment and an improvement in productivity. It also appears as if the problems experienced by the system are unlikely to be solved in the foreseeable future. This limits the growth potential of the economy in the short as well as long term to less than 2% and indicates that unemployment remains at unacceptable levels. Inflation is within the target band of the authorities. Although a rising trend is expected in the rest of the year, average inflation is likely to remain within the target band in the rest of the year and in 2019. Short-term interest rates are likely to move sideways in the rest of 2018 as well as in 2019. Long-term interest rates could rise further, given the anticipated rise of international long-term interest rates. If a slowdown of international growth is experienced, it is likely that international and local long-term interest rates could stabilise and ease in coming years.
The rand remains volatile. It reflects poor growth of the domestic economy, international and local interest rate movements, changes in commodity prices, uncertainty regarding expropriation of property without compensation, any changes in the credit rating and the movement of the dollar. In the longer term the interest rate differential between local and international interest rates is likely to support the rand to some extent.
ULRICH JOUBERT Questions? ulrich.joubert@gmail.com
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2018/09/19 11:00 AM
How businesses can improve productivity by up to 35% THEASEN PILLAY, a Litigation Attorney and Debt Counsellor at TPA Debt Management, highlights the importance of employees being free from debt and the impact this can have on their working lives
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PRODUCTIVITY
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n what is undoubtedly one of the more economically challenging periods in South Africa, during which businesses are investing extensively to ensure maximum productivity, there may be a simple (yet uncharted) solution that could immediately increase productivity by a phenomenal 30% or more. The “magic answer” is to merely establish a practice within the business to proactively guide its employees out of their personal debt. This will be achieved by the business facilitating or encouraging its employees to consult with a competent Debt Counsellor, should the employee be in financial difficulty.
Consumer are, to the majority, largely unknown. Here are some of the astonishing and disturbing truths: • More than half of credit consumers spend 75% or more of their monthly income no creditors, leaving little or no money for basic living expenses. • Approximately 23% of South Africans don’t have any money left at the end of the month. • Most (76.58%) South Africans are simply “flat broke”. • More than 11 million are described as over-indebted. Conservative estimations indicate that two out of every five credit consumers are overindebted.
It was reported by Alexander Forbes that “South African employers are wasting a staggering 35% of their payroll bill due to staff productivity” It was reported by Alexander Forbes that “South African employers are wasting a staggering 35% of their payroll bill due to staff productivity”. Momentum is reported to have estimated that the cost of lost productivity as a result of absenteeism in South Africa is in the region of R70-billion, which equates to around 2% of GDP. It also estimates that the cost of lost productivity as a result of “presenteeism – the hours when you are present at work but not focused on your job as a result of financial or other stress – to be four times as much”. The serious realities relating to the true status of the South African Credit
• People who have either exhausted or have no further access to loans, are applying for divorce out of desperation, purely as a way to access 50% of their spouse’s Pension Fund. • According to data from the World Bank, South Africa was the world’s number one country for people needing loans. Businesses are likely to have two-thirds of its employees suffering to get by, as they are overwhelmed in debt. As a result, company executives are now beginning to see the value of helping their employees to manage their finances. Businesses are thus persuaded to take a greater interest in their staff’s
personal finances, as doing so is likely to have significant impact on their bottom line. With the rating of the rand being downgraded, by S&P Global Ratings, to “JUNK”, it was recently reported that the “rand expected to be hammered as investors pull out”. This means that South African businesses must prepare for more challenges and must proactively strategise on actions to counter the factors that could jeopardise productivity. Facilitating and promoting Debt Counselling for their financially troubled employees is not just an inexpensive exercise but also an extremely effective means to promote optimal productivity. The iconic Richard Branson said it best when he noted: “If you look after your staff, they will look after your customers. It is that simple.”
THEASEN PILLAY Questions? info@tpadm.co.za
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BOOK REVIEW
Master your finances Caroline Marwisa’s book on the art of building wealth offers invaluable financial insight for all South Africans
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outh Africans are among the most indebted citizens on earth, with high levels of personal debt and a poor culture of savings. This lack of financial insight was the inspiration that drove Caroline Marwisa to write her recently published book, Master Your Finances – the Art of Building Wealth (Knowledge Resources). “While personal finance impacts on all important areas of life, most individuals lack the knowledge and the tools to assist them to manage their finances and grow their wealth,” she says. “Sometimes even when the knowledge is available, certain behaviour attributes inhibit individuals from making the choices that will grow their wealth.” A qualified Chartered Accountant with over 13 years of work experience in the financial services industry with top financial institutions in South Africa such as Standard Bank and Barclays, through her daily work Caroline was constantly aware of the impact this lack of financial know-how was having on South Africans, as well as the social and economic effects it was having on a broader scale throughout South Africa.
“My intention with Master Your Finances was to deliver financial education with simplicity and to assist individuals to become more self-aware of the impact that their choices were making on their ability to become financially stable and to accumulate wealth,” she says. Central to the book achieving this aim was ensuring that she provided readers with practical tools that will enable them to better manage their finances, so that they are in a position to start accumulating wealth. Having worked with Standard Bank London, Stanbic Bank Zimbabwe, Stanlib Ltd, Absa Ltd and Absa Wealth, as well as Investment Management and Insurance, Caroline has a wealth of financial knowledge and insight at her fingertips, which she has shared within the pages of her book. During her career, she has worked in banking, asset management, investments, insurance and wealth management, as a professional in finance, auditing, leadership and learning, as well as operations, but it is her passion to inspire others to find their purpose and lead lives of significance (without being limited by the availability of financial
resources) that was the real catalyst behind the creation of the book. The book is designed to help readers unravel the mechanics behind their finances and to help them become more aware of their own behaviour and how it impacts their financial net worth. Caroline has made the content accessible to a wider audience while still offering higher level insight that wealthy individuals will also benefit from. The book provides actionable steps that will empower individuals to take charge of their finances and to design and implement a strategy to get the financial results they are looking for in their lives. ORDER INFORMATION
Master Your Finances can be ordered from Knowledge Resources Ground Floor, Yellowwood House, Ballywoods Office Park 33 Ballyclare Drive, Bryanston Contact: 011-706-6009, orders@knowres.co.za Available online at: www.kr.co.za
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We pride ourselves in selling movable goods by means of well structured and organized auctions. With equipped facilities such-as trucks, storage space and personnel for any salvage parcel in an extensive range of movable goods: • Heavy moving vehicles • Earth moving equipment • Farming equipment • Tools & machinery • Exclusive furniture • Branded appliances & electronics Whether by means of cargo, goods in transit, smoke and water damaged goods or any other insurance claims, we pride ourselves on our
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professionalism and expertise in the industry. Mogale Auctioneers is a family-owned business that strives to enrich the community with our social responsibility. Mogale Mega Transport is a South African company based in Gauteng, Krugersdorp. A great central point in Gauteng offering transportation services regionally and nationally. Mogale Mega Transport is managed and directed under the full supervision of its owner and director, equipped and supervised with efficient and headstrong personnel. We transport any load within South Africa with professional services and integrity. Our mission is to ensure prompt, speedy delivery
while loading efficiently and safely at any time, any where. Our fleet offers and specialises in recovery, abnormal loads, abnormal lowbeds, and road assistance, but we have a large, flexible fleet of trucks, trailers and axles that can accommodate your specific needs. Our professional and comprehensive range of transport services ensures that your loads will be delivered safely and reliably.
7 Reseda Street Krugersdorp Tel: 011 660 3254 www.mogaleauctioneers.co.za info@mogaleauctioneers.co.za
2018/09/19 1:50 PM
Three priorities for doing business in Africa CORNE WELMAN, Head of Compliance, PaySpace, details some key boxes companies need to tick when setting up shop in Africa 22
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AFRICA
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n pursuit of new and lucrative business opportunities, companies from all over the world are setting their sights on Africa. A growing number of international businesses are expanding their operations across the continent, opening new offices in cities like Lagos, Nairobi, Kigali and Port Louis. Compared to other regions, Africa is still considered relatively uncharted business territory for many. While this does perhaps suggest easy pickings, nothing could be further from the truth. Doing business in Africa can be challenging. Multinationals, accustomed to working a certain way, often trip over local languages, customs and legislation and come out worse for wear. Their roughshod behaviour is perhaps unintentional but nonetheless, it doesn’t win foreign businesses any favours and can upset or delay their expansion plans. To navigate Africa’s ways and means successfully, these companies need to improve their people skills and pay attention to where they are – it is, after all, a continent of 54 countries. Here are three priorities for any business looking to work – and be successful – in Africa.
approach to doing business is fast and to the point. There is very little time for – or interest in – small talk and pleasantries. In parts of Africa, there is always time for a short (or sometimes long!) chat. This is because relationships are really important. You need to always acknowledge the people you are meeting with and who you end up working with. Ask them how they are and show a real interest in who they are. 2. STAY IN LINE WITH THE LAW It’s absolutely crucial that your business adheres to local legislation from the getgo. Ignorance is no defence, so make sure your operations are 100% compliant. There is no special treatment given to foreign companies, no exemption, no turning ‘a blind eye’. Make sure your tax and payroll processes are always up-todate with regulatory requirements. Failure to do so could result in some crippling penalties. There have been many instances of companies misinterpreting or ignoring legislation and having to pay severe fines – or worse. What’s more, it could significantly curtail your growth plans. It really is just not worth the risk.
A handshake might work in Johannesburg but what’s the standard business greeting in Kinshasa? And how good is your Lingala? 1. RESEARCH THE PEOPLE AND PLACE A surprising number of companies simply send a salesperson over to investigate local business opportunities without even giving the country in question a quick google. It’s a sink or swim approach that may work for some but, to up the chances of success, it absolutely pays to research the place and its people first. No two countries are identical; each one has its own social norms, religious customs and historical mix of cultures. A handshake might work in Johannesburg but what’s the standard business greeting in Kinshasa? And how good is your Lingala? Just in case the meeting slips in and out of French or English – hire a translator who is comfortable in all the local languages. In a Western boardroom, the typical
Businesses have a few options to help them maintain compliance. They can employ the services of a local service provider in each country in which they operate to help them access all the tax and legal information they need. Or, they can choose a global service provider with a multi-country footprint. The latter does help to reduce a company’s administrative workload, and one contract is easier to manage than a multitude. Another option is to eschew any assistance and go direct. While this is a daunting prospect, it is not impossible to get right. Just remember that getting the information you want requires patience. Don’t expect a complete stranger in the tax department to help you out immediately.
It will take many phone calls and polite conversations and always remember that you’ve got to give to get. 3. COMMUNICATE CAREFULLY What is the best way to communicate? Email? Text? Or a phone call? And, once you’ve chosen your channel, how are you going to word the message to ensure you get the best results? Communication is key to doing business successfully in any country. However, what works in the UK (for example, a short, to-the-point email), won’t necessarily have the same effect in Rwanda. The sender and receiver may both be fluent in English, but the email’s style and tone of voice is easily misinterpreted when two or more cultures are involved. When communicating in Africa, always keep the importance of relationships front of mind. If you fire off an email without making any personal enquiries and fail to emphasise deadlines upfront, you’re unlikely to get much response. Instead of emailing from the start, you could break the ice over the phone. Mobile penetration across Africa is extremely high and most city-dwellers have at least one cellphone. To do business successfully in Africa, international businesses need to do some groundwork. Respect, patience and an interest in people still count for a lot on this vast continent. Demonstrate these qualities and your business will navigate the various regulations, languages, and cultures with ease – and enjoy sustained success.
CORNE WELMAN Questions? support@payspace.com 23
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Empowering black business South African businesses have a long way to go when it comes to empowering black businesses… but first they have to understand what empowerment truly means, writes WILLIAM GUMEDE
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outh Africa’s big business needs a new empowerment model for blacks, a model which brings black business into their supply chains, provides corporate welfare to employees and strikes cooperation pacts with organised labour and communities. South African business has been criticised for not adequately empowering blacks, after depriving them of employee benefits during the apartheid era – while advantaging their white counterparts – and not doing enough to transform the
post-apartheid national economy into a more equitable one. South Africa will do well to learn from the example of how big business in East Asian developmental states – as well as a number of democratic welfare states in Western Europe – have been able to empower their employees while, at the same, growing their businesses and boosting the overall national development and economic growth. Corporates in the successful East Asian developmental states such as Japan,
South Korea and Singapore practice a form of company welfare, providing employees and their families with shares, housing and education. Companies in many Western European democratic welfare states partnered with employees to jointly agree on productivity, incentives and training. In return, the state would provide them with subsidies, protection against unfair foreign competition and securing markets for their products abroad. Aspects of the East Asian developmental states’
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EMPOWERMENT
company welfare model have valuable lessons for South African companies. As things currently stand, South African companies are under obligation because of their past complicity in apartheid – or their current success based on any advantages and social capital acquired during apartheid – to make amends through redistribution to blacks. Apartheid deliberately stunted blacks and their offspring’s ability by giving them poor education, barring them from property ownership and breaking their confidence in order to succeed in business in the past or the future.
they deliberately set higher goals for them than they would for a candidate who is white… and then proceed to not provide them with sufficient support. In the late 1980s the percentage of company welfare to individual employees in South Korea was 77% of public welfare spending, while in Japan it stood at 31%. The South Korean government entered into numerous partnerships with familyowned conglomerates, including the likes of Samsung, LG and Hyundai, to foster an export economy. South Korean companies fostered company welfare to ordinary employees.
Many companies and business leaders have increasingly shifted their funds offshore through buying into industrial country companies, not always necessarily to expand, but rather to transfer capital Many companies and business leaders have increasingly shifted their funds offshore through buying into industrial country companies, not always necessarily to expand but rather to transfer capital. Others are sitting on large cash piles which they are reluctant to invest locally. Many companies again have pursued token black economic empowerment and affirmative action programmes. Some have used politically connected individuals as BEE partners or as senior executives, rather than employees, or creating genuine black companies or empowering local community groups. Others deliberately appoint weak black candidates to set them up for failure or, if they do appoint competent individuals,
In return, the South Korean government provided low-interest loans, tax subsidies and protection for these companies against foreign competitors. Hyundai provided technical training for their employees in the 1980s, as well as introducing housing benefits for all its workers and bursaries for their children. South Korean companies also introduced cultural programmes and hobbies such as photography, football clubs and travel outings for ordinary employees. South Korea’s Pohang Iron & Steel Company Limited (POSCO) built houses and apartments for its staff. It also built altogether 14 educational institutions, which included a nursery school, primary and high schools, and they even built a university, where its
employees and their children were able to study in order to develop themselves. In Japan, companies provided medical aid benefits, housing and education to their employees. Japanese companies also provided corporate savings plans, insurance and often offered family allowances for their employees. The Japanese company welfare model has played a large part in expanding the post-Second World War Japanese middle class. The Japanese company welfare is based on the idea that, in return for increased productivity, the company provides social benefits to its employees. Singapore specifically adopted and adapted Japan’s model of company welfare. However, Singapore set up a Central Provident Fund that was managed by the government, to which employees and employers each contributed 20%. This became the vehicle for company welfare as well as for statedriven infrastructure development. When it was first introduced, the government rewarded companies who successfully participated by allowing them to take 10% of their contribution and put it into a company welfare fund for employees. In Singapore, employees can draw a certain amount from the Central Provident Fund for housing, health, education and investment purposes. Part of the funds of the Central Provident Fund can be used by government for infrastructure, strategic investments and development projects. Germany’s social partnership between trade unions and employers, where both parties cooperate to set productivity targets, determine employee benefits and participate in determining marketrelevant training, is another example which South African businesses can draw lessons from. 25
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Of particular interest is how companies in the East Asian developmental states (and democratic welfare states such as Germany) provide both on-the-job and classroom industry-relevant vocational and technical training to their employees. In their company welfare model, the East Asian developmental states have, in some cases, encouraged workplacebased trade unions, while in others they have bypassed trade unions entirely. This is because they provide corporate benefits directly to individual employees.
training, bursaries and housing funding as part of compensation for past exclusion. South African companies should also make sure that they find black former employees and their families, who have not received their pension payments. There are a number of pension funds predating 1994 which did not pay black South Africans their contributions because they claim they cannot locate them. Under no circumstances must such funds be handed over to companies for their use while hundreds of thousands of black
A new BEE policy must be centred on six new pillars. It must be based on giving current and past black employees and their families shares in companies In South Africa’s democratic conditions, a South African company welfare model should include trade unions and employees as stakeholders, not unlike the Western European democratic welfare states. Kathleen Thelen, the Princeton university researcher, argues that the cooperation between German company management and employees has made German companies more agile to agree on strategies to deal with competition, as well as market and customer changes. In certain German companies such as Volkswagen, there are works councils which have plant level management and employees co-deciding on strategy implementation, productivity targets and even providing employee suggestions for new innovations. Pressure is mounting on South African companies to be seen to transform. South African companies often provide housing, education funding and insurance for their employees, but they should also provide industry-relevant vocational and technical training. South African companies in certain sectors could establish vocational and technical training colleges open to nonemployees. Companies should also give opportunities to former employees and their families, who were excluded from company benefits during the apartheid era, access to vocational and technical
former employees and their families live in abject poverty, not aware that money owed to them as a result of their blood and sweat is being used by unscrupulous companies. South African companies should also jettison opportunistic BEE and affirmative programmes. They should include trade unions on boards rather than token, politically connected politicians. They should offer all their employees, former employees and their families, who were excluded from company benefits during the apartheid era, shares in these companies as a form of compensation. A new BEE policy must be centred on six new pillars. It must be based on giving current and past black employees and their families shares in companies. Former employees who lost out on benefits during the apartheid era should also be given priority in getting shareholding as BEE beneficiaries. Secondly, they must give local communities surrounding mines and factories shares in these companies. Such communities could form social enterprises where each community member has a share. These community social enterprises will then become the BEE shareholders in these whiteowned companies. Thirdly, they must provide industrially-relevant vocational and technical training to both current and former employees and their families.
Fourthly, they must provide housing, funding for education as well as health insurance to their employees. Fifthly, companies must bring genuine black small- and medium-sized businesses into their supply chains, to provide goods and services. Sixthly, companies must compensate former employees or their surviving families for outstanding employee contributions not given during apartheid. Many black employees died or suffered disability from illnesses such as tuberculosis, asbestosis and work accidents, but neither them nor their families never received the appropriate compen-sation they were due. Companies still affected must compensate such former black employees. The South African government must also shelve its BEE policy of focusing on fostering big, black entrepreneurs. More specifically, it must outlaw the idea that political capitalists, deal facilitators and go-betweens are genuine entrepreneurs. They must focus on supporting small- and medium-sized black businesses and social enterprises, secure them state finance and provide them with education to get them into the supply chains of the public sector as well as state-owned companies. South African trade unions will have to be far more pragmatic in order to partner constructively with business and government. The South African government must govern honestly, more efficiently and with less corruption in order to secure the credibility, believability and persuasive power to secure the buy-in of all stakeholders.
WILLIAM GUMEDE Questions? william.gumede@wits.ac.za
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2018/09/19 11:13 AM
Tax clearance at your leisure RENAND PRETORIUS, an Associate at Schindlers Attorneys, offers some key insights into being tax compliant
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TAX
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ARS has recently gone live with a new Tax Clearance System (TCS) which stands to replace the traditional Tax Clearance Certificate (TCC) procedures. This TCS system offers taxpayers the flexibility of viewing their own tax compliance status through their e-filing profile while also allowing other authorised users to view the taxpayer’s tax clearance for verification purposes.
PERSONAL TAX COMPLIANCE This TCS function sheds more light on the taxpayer’s personal affairs by segmenting compliance into various categories, namely registration, submission of returns, debt and relevant supporting documents. Each category is marked either green or red with a brief description as to compliance or noncompliance. It goes without saying that the taxpayer must be registered for e-filing and have an income tax reference number in order to make use of this function. The system has gone further in allowing the taxpayer to receive a detailed indication of which period their non-compliance arises and allows the taxpayer to rectify any shortcomings efficiently before making their status
South African taxpayers abroad will also enjoy the functionality of the system and will no longer need to complete power of attorneys to have their tax clearance certificates collected from a SARS branch available to others. This function proves to assist taxpayers who are unaware of outstanding returns or penalties which have become difficult to monitor of late. South African taxpayers abroad will also enjoy the functionality of the system and will no longer need to complete power of attorneys to have their tax clearance certificates collected from a SARS branch. THIRD PARTY VERIFICATION The TCS system will in due course replace clearance certificates as a whole by allowing third parties to view the
taxpayer’s compliance status when the authorisation pin and tax reference number are made available. The pin is entered on the third parties’ e-filing profile, which in turn confirms or denies compliance within the various SARS categories. This ensures the taxpayers compliance can be monitored by the authorised third party on a real-time basis ensuring that the taxpayer’s security is maintained. Additional security functions have been added to ensure the taxpayer is able to monitor which third parties have viewed their profile. Any suspicious third party viewings can be avoided by the taxpayer simply changing their pin and redistributing the updated pin to trusted third parties. The TCS is a welcome fixture to third parties, who no longer need to concern themselves with the clearance certificates expiring, and will be enjoyed by taxpayers who will avoid frequent visits to their nearest SARS branch to collect documents which will inevitably expire. The new and improved system is also guaranteed to streamline commercial transactions and credit applications by eliminating the notorious delays in obtaining tax clearance certificates.
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2018/09/19 3:48 PM
Reach out and touch base: three essential networking tips The importance of networking cannot be underestimated, and the digital world offers a whole new way to meet people and build relationships, writes COLIN TIMMIS, Head of Accounting, South Africa, Xero
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“I
t’s not what you know, it’s who you know”, is simultaneously a cliché and a harsh truth. Your product might be brilliantly innovative; your business model may be flawless; your employees the best in their respective fields… but if you can’t form the right connections then you can’t form a successful company. The concept of “networking” is, in itself, a business cliché… but that doesn’t mean it’s unimportant. On the contrary: the bigger and deeper your network, the brighter your prospects of success. If that seems like a straightforward enough sentiment, it’s often more complicated in practice. Networking is about confidence, personal charm and expertise, to be sure, and having an abundance of these things will only help. However, networking is also about strategy – and this, more than anything, is the tricky bit, because anyone who sells you a universally applicable networking strategy is either supremely overconfident or – put bluntly – lying. So how can you approach it? There may be no grand, one-size-fitsall approach, but there is best practice to follow, and to build on with experience as you pursue customers, investors and partners. WHY WE NETWORK We network because it’s important and because it works. Nielsen research found that 92% of customers take recommendations from friends and family more seriously than conventional advertising and marketing. It’s not hard to see why. After all, it’s much easier to buy into something – or, indeed, to buy from someone – if it comes with a favourable word and a smile from a trusted source. Networking is partially about becoming that trusted source, but it’s also about creating them: convincing people that your product, service or idea is worth their time, and – whether they buy or not – convincing them to talk about it. And the only way to get people to talk about you is to get talking to people.
Don’t get in touch just to get in touch. It’s vital that you have something to offer them FIRST CONTACT Of course, that’s easier said than done. Making contacts can be a frightening proposition, not least because it’s hard to know where to start. Look for relevant corporate events in your local area through sites such as EventBrite and via social networks such as LinkedIn. The atmosphere at these events is perfectly balanced: professional enough to ensure that discussion stays on topic, and informal enough that your potential investors, customers and partners will be relaxed and relatively receptive to hearing about your company. Naturally, there’s more to it than showing up. You’ll want to approach it strategically, and that means you have to think about what you want to get out of it. That can mean sharing your elevator pitch with 5-10 new people; it can mean seeking out potential mentors; it can mean scoping out the competition. The substance of the goal matters less than the fact that you’ve set it, and simply pursuing it will do much for your confidence. Whatever you do and whatever conversations you have, be sure to write them down so you have something to refer back to. Events are transitory, but relationships don’t have to be. BUILDING A STRONGER CONNECTION You don’t stop benefiting from an event once it’s over. Connect with the people you’ve met on LinkedIn and Twitter. Invite them to coffee or lunch. Don’t hesitate: there’s a small window of time in which people will remember you in the aftermath of an event, so touching base as soon as possible is essential. That said, don’t get in touch just to get in touch. It’s vital that you have something to offer them. If you have a contact who can help them realise a business goal or bring a project to
fruition, put them in touch. If you’ve come across some interesting research or other educational resource, share it. Don’t look at your contact as a well to be drained, but a relationship to be cultivated. ONLY CONNECT Networking in 2018 is a multifaceted phenomenon: alongside conventional methods of socialising such as, well, convening socially, the digital space has opened up simple, accessible means of getting in touch with the people who matter to your business. Facebook, Twitter and LinkedIn are now accepted as standard means of deepening your professional relationships, and doubtless there are enterprising individuals out there who use SnapChat and Instagram. Industry forums such as SpiceWorks may represent another opportunity to build partnerships. But the way you network is less important than the simple fact of networking itself. The connections you forge will define your business. Get out there, make yourself known, and touch base with whoever might make a difference.
COLIN TIMMIS Questions? xero@toplinecomms.com 31
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ETHICS
Citizens’ Bribery Survey Now in its third year, the Citizens’ Bribery Survey is conducted annually by The Ethics Institute with the aim of understanding how ordinary South Africans perceive and experience bribery in their daily lives… along with the socio-economic factors that influence bribery.
E
ach year new questions are added to the survery… however, the core indicators remain the same. Over the years, during the course of the ethics training sessions conducted by The Ethics Institute, they have observed a strong narrative regarding the influence that leaders have on the ethical environment, and specifically the fact that people look to leaders to role model desirable behaviour. In the context of bribery and corruption, The Ethics Institute wanted to find out whether people truly care about the commitment that leaders show to combating corruption, and also which leaders they see as showing the strongest commitment. Key findings of the 2017 South African Citizens’ Bribery Survey include: • 37% of respondents know someone who has been asked for a bribe in the past year (up 4% from 2016) • The largest proportion of bribes (57%) are traffic related (up 6% from 2016) • 14% of bribes are for jobs (down 4% from 2016) • The average bribe amount is R1,550, down by R650 from last year • The average bribe amount for a tender is R82,282
• 35% of respondents have said “no” to paying a bribe in the past (up 8% from 2016) • Almost half (47%) of all people who have said “no” to bribes did so because of moral or religious reasons. The survey had two distinct sections. In the first section, people were questioned about their experiences and perceptions of bribery. The second section related to leadership and corruption. Respondents were asked questions such as “How frequently are people asked for bribes? What are these bribes for? Which political party is most committed to combating corruption? If the political party you supported was enabling bribery and corruption, would you change your vote?” The survey was conducted through face-to-face interviews with 4,962 respondents across South Africa. The sample represented people from five of South Africa’s nine provinces, mostly in major urban centres around the country. The areas targeted cater to people from a wide socio-economic range. EXPERIENCE OF BRIBERY Almost 2 in 5 people (37%) reported that they knew someone who had been 33
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Almost 2 in 5 people (37%) reported that they knew someone who had been asked to pay a bribe in the last year asked to pay a bribe in the last year. There seems to be an incremental upward trend over the three years: about 11% more people reported that they knew someone who was asked for a bribe than in the 2015 survey. Of the 37% of participants who said they knew someone who had been asked to pay a bribe, 65% said that the bribe was paid. This means that the majority of people who were approached for a bribe ended up paying it, thereby showing a low resilience to refuse bribe requests. This figure is up 6% from last year, but still well below 2015, when three quarters of people said the bribe was paid. According to survey respondents, the top five most common types of bribes are to avoid traffic offences (39%); to obtain a driver’s licence (18%); to secure a job (14%); to receive a public service (8%); and to avoid police or criminal charges (7%). This is the first time that bribes for police matters and criminal charges are in the top five. Avoiding traffic offences has been the most common type of bribe for three years in a row. Participants who indicated that they knew someone who had been asked for a bribe were also asked about the bribe value. The average bribe amount mentioned was R1,548. This is quite a bit lower than the R2,201 average of last year, and even below the R2,005 of 2015. More than a quarter of bribes reported (26.1%) were below R100, while 90% of bribes were reported to be below R5,000, indicating that very high bribe values were rare. This should, however, be
viewed in the context that the survey is conducted in relation to the everyday life experiences of private citizens, which suggests that this amount could be considerably higher if it was conducted in relation to organisations. Among other things, the survey also compared how the different income groups experience bribery. The results show that 45% of lower-income respondents (with annual household income of less than R200 000) thought it was impossible to navigate daily life without paying a bribe, while only 29% of the higher-income group (with annual household income of R800 000 or more) believe the same. Bribery for drivers’ licences was 13% higher for lower-income respondents, while higher-income respondents experienced 21% more bribery related to avoiding traffic offences. A new addition to the 2017 survey was a section on leadership. The survey results show that 71% of respondents (7 out of 10) would change their vote if the political party they support was enabling corruption. Respondents also perceive the DA as the party that is most committed to combating corruption
(45%), followed by the EFF (28%) and the ANC (19%). Julius Malema and Mmusi Maimane were identified as the leaders most committed to combating corruption, with 18% and 17% of mentions respectively. No other leader got more than 10% of mentions. MAIN TAKE-OUTS FROM THE SURVEY Results reveal that there seems to be an upward trend in the number of bribes solicited‌ and the number of bribes paid. The percentage of people who know someone who was asked for a bribe increased from 26% in 2015, up to 37% in 2017, amounting to an increase of roughly 40% over the three years that the survey has been conducted. Even more alarming is the normalisation of bribery instead of justice. In 2017, bribes for police and criminal matters have made it into the top percentile. However, it seems that all is not lost as, in a more positive light, about half of South Africans believe that it is possible to get through everyday life without paying bribes. While it appears that we are at a tipping point, there are still a significant number of committed people who choose not to pay bribes.
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Mining Services
Construction Services
Logistics Services
Acquisitions & Investment
• Open Cast & Underground Mining Services • Topsoil stripping, Load and Haul, Rehabilitation & U/G Mining • Professionally led by mining engineers with extensive contracting industry background and experience
• CIBD 1CEPE & 1GBPE Registered Company • Emerging 100% Black youth owned Civil Contractor Company
• Advanced driving qualified truck drivers • Safety first and zero tolerance to negligent driving
• Acquiring Shareholder status in well established entities for long term partnerships • BBBEE level 1 investment company
1 Katoog Street, Ext 18, Middleburg, 1055, Mpumalanga Tel | 083 588 6195 Web | www.jste.co.za Email | mikem@jste.co.za
CM S
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• Manufacture and supply of mechanical equipment for newly constructed water and wastewater treatment works . • Refurbishment of existing water and wastewater treatment works. • Supply and installation of new water and wastewater pumps. • Refurbishment of damaged water and wastewater pumps. • Design, supply and installation of stainless steel, mild steel and UPVC pipes and associated valves. • 24-hour rapid response team for emergency repairs throughout the year. • Corrective and preventative maintenance teams. • Supply and installation of MCC’s. • Refurbishment of existing MCC’s. • Supply and installation of transformers. • Supply and installation of standby generators. • Supply and install telemetry. • Sole distributor of BIOLAK®, BIOLAK® GAS and BIOLAK® COMBI systems in Southern South Africa. • Sole distributor in South Africa of Napier-Reid Water and Waste Water Treatment Equipment. Address: Ena Murray 2, Orkney 2619. P.O. Box 68 | Tel: (018) 473 3236 / 473 3279 | Fax: (018) 473 3374 Cell: 082 871 9639 | Email: rudolf.cms@gmail.com
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PROFILE
The leading supplier of floor and wall solutions Kirk Marketing is dedicated to be the industry leader through commitment to its products, clients and staff, with integrity and without compromise
K
irk Marketing formed a B-BBEE Trust in late 2017 / early 2018 in order to achieve compliancy as a B-BBEE supplier. Kirk scored 23.20 out of 25 points available in the ownership category of the B-BBEE rating. The beneficiary of the Kirk B-BBEE Trust is the not-for-profit organisation Learn to Earn. Learn to Earn exclusively focuses on the unemployed in South Africa through their principle of offering “a hand up, not a hand out” to the unemployed in underprivileged communities for almost 30 years. With campuses in Khayelitsha, Hermanus and Claremont, the initiative provides a number of skills development courses – from basic computer and office training, graphic design, basic handyman skills, call centre skills, basic hospitality, barista, sewing, woodwork, bake for
profit, business essentials, cashier skills, retail training programme and home management are some of the courses they offer the unemployed. Learn to Earn have trained over 13583 people over the past 30 years, helping to reduce and upskill the unemployed. Michael Kirkland, MD of Kirk, met some of the team behind Learn to Earn – Aleks Jablonska, Roche Van Wyk and Barbara Lipp and was very happy with their general enthusiasm and passion for the organisation. Kirk’s upcoming dividend contributions to Learn to Earn will be towards the skills development courses. Kirk is passionate about getting as many unemployed, employable as soon as possible. Some of the principles of the courses are as follows: • Learn to Earn objective on every course is to train and equip unemployed in
• •
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various market-related skills so that they may become self-supporting and independent To train all students in basic financial and life skills To enhance the quality of life of people from disadvantaged communities and facilitate the restoration of self-respect and dignity To promote and model principles of tolerance, competitiveness without reprisal, self-sustainability and responsibility To work with local churches and other organisations to address issues of poverty and hunger.
KIRK MARKETING Unit 5, Atom Park, Neutron Rd, Belville Triangle 021 949 2226 | www.kirk.co.za 37
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Restaurants are entitled to request a refund for cancelled bookings GARY BORUCHOWITZ, Candidate Attorney at Schindlers Attorneys, and Samuel Rosseau oer a legal perspective on empty seats at restaurants
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HOSPITALITY
T
he Consumer Protection Act 68 of 2008 is set to become an ever more prevalent piece of legislation and, therefore, both service providers and consumers need to ensure that they are compliant when entering into agreements.
RESTAURANTS AND THE CONSUMER PROTECTION ACT In terms of the Consumer Protection Act (the “CPA”), restaurants are entitled to ask patrons to make payment into their account of a non-refundable deposit when making a reservation in the event that the patron does not arrive to honour the booking. This is because the restaurant, as the service provider (as defined in the CPA), stands to lose business in circumstances where it holds a table open for the consumer; turns other potential patrons away; is met with a cancellation by such consumer; and, as a result, is unable to utilise this table to produce revenue for the restaurant. The deposit requested serves three purposes, namely: 1. To secure the reservation 2. It stands as financial security to cover a portion of the restaurant’s loss in the event of a cancellation (without adequate notice) or a no-show and 3. It serves to penalise the patron for their conduct as aforesaid. Not only does Section 17 of the CPA allow a restaurant to call for a deposit, but the restaurant can charge a cancellation fee when the consumer decides to cancel the booking without adequate notice (as agreed) or if the consumer is a no-show. This does not, however, give the restaurant license to abuse the patron, as both the
The cancellation fee would need to be commensurate with the minimum loss suffered by the restaurant deposit and the cancellation fee have to be “reasonable”. There is quite a bit of conjecture as to what exactly a “reasonable” cancellation fee is. In terms of Section 17(5) of the CPA, a charge is reasonable if it does not exceed a fair amount in relation to the goods and services that were reserved, the length of notice of cancellation provided by the consumer, and the reasonable likelihood that the service provider will find an alternative consumer between the time of being notified as to the cancellation and the time of the cancelled reservation.
In this regard, the cancellation fee would need to be commensurate with the minimum loss suffered by the restaurant, and in such circumstances the restaurant would be required to mitigate such loss by filling or replacing the cancelled booking or no-show with another patron (even at a substantially reduced rate). The CPA requires an actual loss of revenue, not a theoretical loss of revenue. It is, therefore, strongly suggested that restaurants draft a clear cancellation policy (dealing with the manner in which the deposit will be utilised/retained in the event of a cancellation) and that they need to communicate this to patrons at the time when each booking is made and a deposit is paid. Be aware, however, that when a restaurant asks you for a deposit which is likely to exceed the cost of your meal, that this is not a reasonable deposit. Furthermore, patrons should ensure that they don’t cancel the booking with 39
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HOSPITALITY
inadequate notice (given the cancellation policy of the restaurant concerned), as in such circumstances they will likely be required to pay a higher cancellation fee than they would ordinarily have become liable for in circumstances where they furnished an adequate notice. Consider also the restaurant’s position: if you were, for example, to make a booking for yourself and 20 of your friends for your birthday, and the restaurant is unable to resell your tables, then the restaurant will be left substantially out of pocket and will have suffered an opportunity cost. It will legitimately be entitled to charge a cancellation fee that is reasonable and fair given the loss it has suffered. It’s important to note that the CPA requires restaurants to attempt to resell the tables and states it is unreasonable and unfair to charge a cancellation fee in the event that the tables were re-sold or were able to be re-sold. A factor for restaurant owners to consider is that, in terms of Section 51 of the CPA, restaurants are not permitted to ask a customer to provide his or her credit or debit card, bank account, ATM card, or any similar identifying document or device or provide a personal identification code, or number to be used to access the account of a consumer. The deposit must strictly be a cash deposit made, preferably,
The restaurant must not treat that deposit as being the property of the restaurant and will be liable to the customer for any loss relating to the deposit by Electronic Funds Transfer (EFT). Furthermore, the restaurant is obliged in terms of Section 65 of the CPA to take reasonable care and exercise diligence in looking after a consumer’s deposit. A restaurant will be liable for any loss where they have not taken reasonable care. The restaurant must not treat that deposit as being the property of the restaurant and in the handling, safeguarding and utilisation of that deposit, must exercise the degree of care, diligence and skill that can reasonably be expected of a person responsible for managing any property belonging to another person; and will be liable to the customer for any loss resulting from a failure to comply with the above. In conclusion, it is also important to note that, in terms of Section 47 of the CPA, it is not only incumbent upon the consumer to honour a commitment to the restaurant for the booking, but that the restaurant must also honour the reservation taken. In failing to honour the reservation, the restaurant could be
liable to compensate the customer for costs directly incidental to its breach which would be, for example, the costs of travelling to the restaurant.
GARY BORUCHOWITZ Questions? boruchowitz@schindlers.co.za Gary Boruchowitz is a Candidate Attorney at Schindlers Attorneys (www.schindlers.co.za); Samuel Rosseau is an attorney at SWVG Inc (www.swvginc.co.za).
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INGCWETI CELEBRATES 20 YEARS
IN ENGINEERING CONSULTING Ingcweti’s clients include national organisations, such as SANRAL and the National Departments, as well as a number of KZN Provincial Departments and District and Local Municipalities. In other provinces, they are represented by their strategic partners, sharing a solid working relationship.
Ingcweti ACE Technology (Pty) Ltd, formerly Ingcweti Project Management CC, was established in 1998 in Durban, South Africa. Mduduzi Ntuli started the new company in 2014, incorporating a wealth of expertise in response to the latest challenges in the built environment industry.
Ingcweti has formed alliances and partnerships with established companies in order to share in their success, experience and technical know-how. The alliances provide Ingcweti with access to unique resources, best practices and methodologies, which ensure delivery of high-quality services for its clients. The firm is also handling multiple projects in the housing, schools, industrial building, roads and irrigation schemes arenas.
Key focus areas • Architect Department • Quantity Surveying • Civil and Structural Engineering Department • Electrical Engineering Department • Project Management Department (including Management Services) • Health and Safety Department • Administration Support (HR, Marketing, IT, Finance and Office Services)
13 Bauhinia Drive Umhlanga Rocks 4019 Tel | 031 569 1818 Email | info@ingcweti.co.za admin2@ingcweti.co.za www.ingcweti.co.za
NEWCASTLE • • • • • • • • • •
42 upmarket climate controlled rooms Can sleep 160 people on upmarket beds Microwave in every room Fridge in every room 14 channels of T.V. in every room Under cover parking for forty two cars at your rooms Five fully equipped function rooms Can hold up to 250 P.A.X Ample free off road private parking for conferencing vehicles Full wi-fi available
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reservations@majubalodge.net
majubalodge
2018/09/21 9:37 AM
Slice of the pie Land is the big issue in South Africa at the moment, and finding an equitable solution is vital for the country and its people, writes THAPELO MASILELA
S
outh Africa is going through a lot of political change with the new ANC leadership following the December 2017 conference in Nasrec. This has resulted in the appointment of the fifth president of the democratic Republic of South Africa, Cyril Ramaphosa. With the new dawn of political leadership comes a lot of pressure for change in the economy of South Africa. None of the issues are new; however, the pressure is piling up. Three of the hot political and economic topics are the issues of a black-owned bank to help with transformation of the economy, and the minimum wage, which looks to improve the living conditions and address the inequality in South Africa.
Last, but not least, the land is a topic from which no one can run away, while unemployment also remains a stubborn challenge which will require a combination of efforts. The banking sector in South Africa is the most complex in Africa and is right up there as one of the best in the world. The finance industry accounts for 20% of the GDP and employs over 300,000 people. The big five banks – ABSA, Standard Bank, FNB, Capitec and Nedbank – account for the majority of the multitrillion rand industry. Despite the spread and size of the industry, a quarter of South Africans do not have access to banking, and the
majority of those are black people living in rural areas. How will another bank solve this? Why a black bank? What’s the difference? The call for a black bank comes from a market which has been neglected and has the opportunity to change the economic conditions for millions of South Africans. The big five banks consider SMMEs – and black SMMEs in particular – to be high risk, so the needs of black people are not catered for, with issues such as collateral being a requirement for assistance. Where does a young woman graduate born in Soweto, who has a great idea (but also has student loan debt) get collateral for a loan to grow her business?
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Secondly, there is the issue of the supply chain and the circulation of money within a community. When a small black development company wants a loan for a project, banks require audited books, a property valuation report, legal advice and so on from a list of accredited suppliers. Naturally, those checks and balances are required, however, when those accredited companies are not part of the local community then that money has left the community, and the opportunity for inclusive growth and employment has left the black community and is directed towards more traditional, centrally-based companies. Having a black bank will assist in catering for the needs of blacks and help to grow township economies which, in turn, will grow the overall economy and the participation of black businesses in the economy. Minimum wage is the next hot topic. The Gini coefficient has ranked South Africa as the most unequal country in the world, with a score of 0.66. The calculation is flawed on the basis that not all countries are measured and that grants have been excluded from the calculation. That does not take away from the fact that South Africa has a huge disparity in income, with 90% of income inequality coming from wage disparity. Real wage growth above productivity wage growth is the ideal manner in which research suggests implementation. Economics 101 supply and demand principles will tell you that if you increase wages, you will lose jobs. However, this has been proved not to be the case. Yes, there would be some loss in jobs, but not as many as believed. The reason for this is that through a minimum wage there is a transfer of resources from the profits of high net worth individuals (who have a propensity to save) to individuals with a propensity to consume. What this means
A black bank will cater for the needs of blacks and help to grow township economies in practice is that money that would have been excess profit sitting in one person’s bank account, will instead become disposable income which will be spent in communities and township economies. This will help to build the economy, as it positively stimulates demand which, in turn, increases the GDP. There would be more money spent, thereby increasing market size, growth of SMMEs and making it possible for more people to be employed. The circle continues and will become self-sufficient. However, this circulation and growth of the economy will only be possible if locals are employed; when foreigners are employed they tend to send money back to their country, which becomes an economic withdrawal from the economy. The hottest topic in South Africa has been the land. The Republic of South Africa has a land size of 123 million hectares. If you divide that by the estimated population of 56 million, that means that, on average, there is enough land for each person to own 2.2 hectares. This is not the case, as the majority of the land is in the hands of the minority. In 1994, 87% of the land was held by 13% of the population. There has been redistribution of land, which means that now 25% of land is held by both government and black people. Land is seen to be a means to production and dignity to the people of South Africa. The issue of whether or not the land should be expropriated seems to already have been answered, but there are two main
issues: expropriation with or without compensation‌ and who must the land be taken from and who must it be given to? At the time of writing, the public consultation on land was taking place. The big concern should be what happens after the land has been redistributed? Do the people whom the land is given have the means or skills to develop it? This needs to be addressed. My personal view is that land should be expropriated but with no compensation. However, there should be compensation for skills transferred, as this will ensure our food security, so that the country may continue to grow. It is essential that the bigger picture is understood, especially with regards to the economy. The aim of transformation is not to create a Robin Hood approach of taking from the whites and giving to the blacks. Rather, it is the process of bettering the living conditions of the people of South Africa by growing the economy and creating more opportunity for everyone; the end goal is to grow the economy, where the economy will reflect the demographics of the country.
THAPELO MASILELA Questions? tmasilela@anc.org.za 43
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Good health for all O
Healthcare Amendment Bill to ensure equitable practices in medical schemes
n 22 June, Health Minister Aaron Motsoaledi announced the introduction of a Bill to amend the Medical Schemes Act 131 of 1998. The changes are intended to ensure that the Act is aligned with National Health Insurance (NHI), when the latter is eventually rolled out, and the National Health Insurance Bill. Given that NHI will be implemented gradually, the aim of the Medical Schemes Amendment Bill is to introduce the necessary amendments to ensure a smoothe transition that does not disrupt the healthcare system unduly. As Motsoaledi commented, “[T]he implementation of NHI is not going to be a once-off event, but it will take place in a phased-in approach. While this is happening, the population of medical schemes beneficiaries need immediate relief from serious challenges experienced
in the current medical scheme regime. The nature and magnitude of the challenges is that it will be undesirable for medical scheme beneficiaries to have to wait for long-term changes.” Affordability is another important reason for the amendment. In this sense, the amendment seeks to restore equity to the healthcare sphere. “As it is now generally accepted, the cost of private healthcare is out of the reach of many citizens, even the well-to-do ones. The only argument that persists is what are the reasons for that. Because of this persisting argument, former Chief Justice Sandile Ngcobo has been appointed by the Competition Commission to conduct a Public Market Inquiry into the cost of Private Healthcare,” said Motsoaledi. The changes envisaged by the Medical Schemes Amendment Bill are far-
reaching and can be grouped in ten categories. CO-PAYMENTS AT AN END People with medical aid schemes are used to co-payments, whereby they pay a portion of medical bills, with the scheme paying the balance. The first big change is to abolish this practice. Major amendment includes the abolishment of co-payments – which effectively means that medical schemes will be required to pay for the full amount charged to a patient. “The amendment means that every cent charged to the patient must be settled fully by the scheme and the patient should not be burdened with having to pay,” said Motsoaledi. “There are people who will scream that this amendment is outrageous and calculated to destroy medical schemes
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and leave beneficiaries with nothing. “I wish to assure you that this was well thought of. The load of complaints received from the public by us in the Department of Health as well as by the Council for Medical Schemes (CMS), i.e. the medical schemes regulator, justifies this amendment,” he said, adding that data at the department’s disposal indicated that medical schemes are holding in reserve an incredible sum of almost R60 billion in unused funds. NO MORE BROKERS Under the Medical Aid Scheme Amendment Bill, the role of brokers will be a thing of the past. Currently, he alleges that as many as two-thirds of medical scheme clients pay unnecessary broker fees amounting to R2.2 billion, frequently without their knowledge. “We want this money to be made available to pay for direct health expenses of members rather than serving brokers who are actually not needed in the healthcare system,” said Motsoaledi, adding that, “most of the work supposedly done by brokers is actually done by the Council for Medical Schemes – the statutory body.” PRESCRIBED MINIMUM BENEFITS TO GO Comprehensive service benefits are set to replace Prescribed Minimum Benefits (PMBs). He said that comprehensive service benefits would include services such as family planning, vaccinations and screening services, which are not necessarily paid for by schemes under the current system. EQUAL BENEFITS Some medical schemes subject their members to a variety of unequal and even unfair benefit options. Now, any benefit option will first have to be approved by the Registrar of the Council for Medical Schemes, who “will have to determine first that such an option is in the best interest of the member”. PENALTIES FOR FAKES The amendment takes aim at the scourge of fly-by-night businesses that falsely purport to be medical aid schemes,
“The amendment means that every cent charged to the patient must be settled fully by the scheme and the patient should not be burdened with having to pay.” - Motsoaledi declaring “the carrying on of the business of a medical scheme by a person not registered as a medical scheme to be a specific offence”. “This relates to various health plans and cash plans that purport to be selling health products like medical schemes do, whereas they are not registered with the Council for Medical Schemes but opted to register with the FSB (Financial Services Board) now called Financial Sector Conduct Authority (FSCA). The FSCA has amended its rules to exclude such entities from registering with them,” said Motsoaledi. CENTRAL BENEFICIARY REGISTRY The amendment provides for the creation of a central beneficiary and provider registry, which will be managed by the Registrar of the Council for Medical Schemes, in order to enable the Registrar to understand medical scheme members’ behavioural trends in selecting medical schemes or options, together with their age profile, disease profile, and geographic distribution. “Presently, medical schemes are reluctant to give this valuable information and there is no act to compel them,” said Motsoaledi. INCOME CROSS-SUBSIDISATION In Motsoaledi’s view, a just healthcare environment would be one in which the poor, old and sick are subsidised by the rich, young and healthy – quite the opposite to the present state of affairs. “The present contribution table charges the same rate for a lower-income earner and a high-income earner for the same
benefits. This practice completely negates the principles of income crosssubsidisation,” he emphasised, with specifying how the current system will change. PASSING BACK SAVINGS Current industry practice is to save money by compelling medical aid scheme members to use designated service providers in order to save money. The amendment seeks to make medical aid schemes pass these savings back. “This is a good practice to be encouraged but, however, the problem is that these savings are taken over by the scheme or the administrator instead of being passed on to the member in the form of premium reduction,” commented Motsoaledi. CANCELLATION OF MEMBERSHIP Under NHI, there will be no penalties related to late joining or age. Consequently, the ninth amendment provides for the cancellation of membership and waiting periods between joining a scheme and accessing benefits. “This is further to protect the interest of living spouses after the passing of the principal member or after retirement prior to payment of their benefits,” says Motsoaledi. GOOD GOVERNANCE The rules for the governance of medical schemes will be amended so as to require a member of a Board of Trustees or a CEO of a medical aid scheme to have a minimum level of education and expertise. “We are aware that some Trade Union members do sit in the Medical Aid Trusts and we are not opposed to that,” said Motsoaledi. “All we are saying is that the Union has a right to appoint anybody with the requisite skills and qualifications to represent their interest if amongst their members there is no such person. This is in line with what we would be proposing for the future of NHI,” he concluded.
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The basis of B-BBEE Prakash Singh (General Manager, IAC) offers an overview of the B-BBEE Codes of Good Practice
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ll measured entities must use the Broad-Based Codes of Good Practice as amended as a basis for measurement. The threshold to determine if an entity qualifies as an Exempt Micro Enterprise (EME) or a Qualifying Small Entity (QSE) has also been amended. WHAT IS B-BBEE? Broad-Based Black Economic Empowerment (B-BBEE) is an initiative launched by the South African Government to address the restrictions that exist within the country for black people to participate fairly in the economy. According to the B-BBEE Act 46 of 2013 Section 1(b), the definition for “black people” is a generic term which means Africans, coloureds and Indians: a. Who are citizens of the Republic of SA by birth or descent b. Who became citizens of the Republic of SA by naturalisation:
I. Before 27 April 1994; II. On or after 27 April 1994, if entitled to acquire citizenship by naturalisation prior to that date. The B-BBEE Act allows for the existence of the B-BBEE ‘Codes of Good Practice’, which provide the structures for the BEE Scorecard, along with certain rules associated with claiming BEE points. Customers can claim BEE points on their BEE scorecard by buying from companies with a recognised BEE status . BEE status’ range from level 8 to level 1, depending on what contributions have been made to support the integration of black people into the economy. The better level of BEE status you have, the more BEE points you can claim. AMENDED BEE CODES A practical application of this table would be interpreted that, for every R1 spent on a Level 1 Company, a recognition status of
R1.35 is gained. For a level 2 Company, for every R1 spent, a recognition status of R1.25 is gained, etc. The amended codes apply to Exempt Micro Enterprises (EME), Qualifying Small Enterprises (QSE), and Generic-Sized Entities (GSE). EXEMPTED MICRO ENTERPRISES (EME’S) It is unrealistic to expect a start-up or micro business to contribute to BEE as there are likely to be few employees. Most businesses that are vulnerable try to limit their overhead costs in the first few years. For this reason, any business that turns over less than R10 million is exempted from being measured against any BEE Scorecard. EMEs are required to produce a sworn affidavit declaring their qualification as an Exempt Micro Enterprise. EMEs automatically qualify as Empowering Suppliers, so their customers are all able to claim BEE Points for purchasing from them.
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B-BBEE The new codes state that the verification under the new amended codes of an EME is only required to obtain a sworn affidavit on an annual basis confirming the following: • Annual total revenue under R10 million • Level of black ownership. Any misrepresentation in terms of the above constitutes a criminal offence as set out in the B-BBEE Act as amended. Under the new codes any enterprise with an annual turnover of R10 million or less qualifies as an EME. EME’S • An EME is deemed to have a B-BBEE status of level 4. Contributors have a B-BBEE recognition level of 100%. • A 100% black-owned EME qualifies for elevation to a level 1 contributor, having a B-BBEE recognition level of 135%. • An EME that is at least 51% black owned qualifies for elevation to a level 2 contributor, having a B-BBEE recognition level of 125%. • However, an EME is allowed to be measured in terms of a QSE should they wish to maximise their points and move to a higher recognition level. They are then verified under the QSE scorecard, and QSE rules will apply. An Accounting Officer may issue a client with a sworn affidavit for an EME. As from 1 May 2015, EMEs are able to submit a sworn affidavit attesting to its EME status. This affidavit must be taken in front of a Commissioner of Oaths. QUALIFYING SMALL ENTERPRISES (QSE’S) Under the new codes, any enterprise with an annual turnover between R10-R50 million qualifies as a QSE. The enhanced B-BBEE recognition level for a QSE: • A 100% black-owned QSE qualifies for level 1 B-BBEE recognition level. • A QSE that is at least 51% black owned qualifies for level 2 B-BBEE recognition. These QSE’s must obtain an annual sworn affidavit confirming they have, a) Annual Total Revenue of R50 million or less, b) their level of black ownership. Any misrepresentation in terms of the above constitutes a criminal offence as set out in the B-BBEE Act as amended. If black ownership of a QSE is below 51%, it is required to be measured in terms of the QSE scorecard to confirm its B-BBEE Status Level, and a certificate must be issued by a SANAS-approved
QUALIFICATION ON THE GENERIC SCORECARD ≥ 100 ≥ 95 but < 100 ≥ 90 but < 95 ≥ 80 but < 90 ≥ 75 but < 80 ≥ 70 but < 75 ≥ 55 but < 70 ≥ 40 but < 55 > 40
BEE STATUS
BEE RECOGNITION LEVEL
1 2 3 4 5 6 7 8 Non Compliant
135% 125% 110% 100% 80% 60% 50% 10% 0%
* BEE Point requirements for each of the B-BEE Status Levels and how much customers can claim on their BEE Scorecard as a result.
BLACK OWNERSHIP
BEE STATUS LEVEL
PROCUREMENT RECOGNITION
100% Black >51% Black <51% Black
Level 1 Level 2 Level 4
135% 125% 100%
* BEE Status Level and Procurement Recognition relative to Black Ownership
PRIORITY ELEMENT
WEIGHTING
CODE SERIES REFERENCE
Ownership Management Control Skills Development Enterprise and Supplier Development Socio-Economic Development
25 15 20 40 5
100 200 300 400 500
* B-BBEE Generic Scorecard, itemising the five elements.
verification agency. Measured entities are to comply with priority elements under the following conditions: Ownership is compulsory… Enterprise and Supplier Development or Skills Development. Measured entities who do not meet the thresholds in priority elements; the overall score will be discounted one level down. Verification of QSEs and GSEs may only be performed by a SANAS accredited verification agency. Accounting Officers may NOT issue verification certificates for such entities.
measured on generic codes. Alignment of sector codes to the Act is critical to prevent fragmentation and confusion. Generic codes set bare minimum; sector codes should enhance or accelerate the level of empowerment. Valid Sector Codes: Tourism, Marketing and Communication, AgriBEE, Forestry, Property, Transport, Financial, Information and Communication Technology, Mining. Construction and Chartered Accountancy sector charters are repealed.
GENERIC-SIZED ENTERPRISES (GSE’S) • Generic-Sized Enterprises are those with a turnover exceeding R50 million. • Generic (Large) Sized Enterprises are required to be measured against all five of the BEE Priority elements. • Large enterprises are to comply with all priority elements.
VERIFICATION AGENCY OPTIONS Verification Agencies issue valid BEE Certificates, and companies can use any SANAS-accredited agency, which are listed on the SANAS website. Pricing and service levels vary as the industry is still establishing itself. Verification Agencies will take some time to work out their pricing models as the requirements involved in the verification process are still being finalised.
THE ROLE OF SECTOR CODES Economic and Industry dynamics have been taken into account with sectors allowed to develop sector codes. Entities in sectors with existing codes may not be
PRAKASH SINGH, GENERAL MANAGER Questions? gm@iacsa.co.za 47
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Where are the SOEs getting it wrong? ROMEO TSUSI, an associate at Herold Gie Attorneys, looks at the role of SOEs in South Africa and the challenges faced by the people who run them 48
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SOE’S
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n South Africa, a state-owned company is defined as an enterprise that is registered in terms of the Companies Act, 2008 (the Act), read the with Public Finance Management Act (PFMA), commonly known as StateOwned Enterprises (SOEs or parastatals). The South African Government is a shareholder and exercises oversight responsibility – visible in the following government departments: • Minister of Public Enterprises, Pravin Gordhan, who is responsible for Eskom, South African Airways (SAA), Denel and Transnet • Minister of Transport, Blade Nzimande, who is responsible for Passenger Rail Agency of South Africa (PRASA) and Airport Company South Africa (ACSA). • SOEs play a pivotal role in the economic advancement, growth and development of our country. Thus, it is imperative that SOEs are well governed in order to perform efficiently. Ineffective governance may harm the economy and, ultimately, the public. CHALLENGES FACED BY SOE’S SOEs have come under fire in recent years amid allegations of state capture, corruption, financial crisis, along with maladministration and general governance challenges. This conundrum has seen Minister Gordhan and Minister Nzimande appoint new Board members in thwarted attempts to restore good governance and the legitimacy of the SOEs. The question then becomes: where are
It is imperative that SOEs are well governed in order to perform efficiently. Ineffective governance may harm the economy and, ultimately, the public SOEs getting it wrong? The answer lies with the exercise of good corporate governance by the Board, which is equally as important for any form of company. When exercising their duties, the Board must do so, inter alia, with requisite skill, care and diligence. This duty, in addition to the fiduciary duties of the Board, as a matter of law, is owed to the entity itself (SOE) other than the Government (i.e. a shareholder who appoints the Board). It cannot be gainsaid that the challenges faced by the SOEs are directly linked to the interplay between politics and good corporate governance by the Board. For as long as Government interferes with the governance and independence of the Board – especially in commercial decision-making – it will result in a defunct Board that lacks autonomy, authority and accountability in the exercise of its functions. 49
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SOE’S
UNDERSTANDING GOOD CORPORATE GOVERNANCE Corporate governance is defined as ethical and effective leadership by the Board towards the achievement of ethical culture, good performance, effective control and legitimacy [King IV]. The Act provides that an SOE should comprise of at least 3 three directors. The Act does not differentiate between executive director and non-executive director. King III defines executive directors as directors involved in the day-to-day running of the company and non-executive directors as directors not involved in the management of the company. The composition of executive and nonexecutive directors form the Board. The Act provides that the business and affairs of a company must be managed by or under the direction of its board of directors, which has the authority to exercise all powers and perform any function of the company. This is a legal duty and responsibility assigned to the Board. It is paramount to appoint highly qualified and competent directors of the Board, who are able to exercise independent judgment with relevant industry skill and knowledge to determine the performance of the SOE. King IV applies to SOE Boards and promotes the following governance principles: • Ethical culture • Performance and value creation • Adequate and effective control • Trust, good reputation and legitimacy. INTERACTION BETWEEN THE BOARD AND GOVERNMENT Like any shareholder, the Government should be concerned with return on investment and financial viability, along with the performance of the SOEs which will, in turn, contribute to economic, social and service delivery. The interaction of the Government with the Board should aim to maximise the SOEs’ economic advancement, growth and development. In doing so, it ensures that the Board is clear and implements Government’s strategic priorities as
The Government should be concerned with return on investment and financial viability of SOEs as they contribute to the country’s economic, social and service delivery decided by the Cabinet in conjunction with the Minister and relevant department responsible for the SOE. Therefore, in the exercise of its fiduciary duties, the Board needs to balance the achievement of commercial viability for the SOE, while delivering on the strategic priorities set by the Government, as the shareholder. Similarly, the Government should not impose nor interfere and seek to assume the ‘executive’ position or authority in running of the SOE by the Board, including through its appointment of the Board; it should appoint members who are capable to exercise their legal duty and responsibility toward the SOE, rather than to fulfil the mandate of a party by whom she/he was appointed. CONCLUSION The Government as a shareholder in its appointment of the Board should ensure that there is transparency along with suitably skilled, qualified and honest individuals that are appointed to the respective SOE Boards. The Board should also exercise its
powers and functions with independent judgment, authority and accountability in order to obtain the effective running of the SOE and to maximise the return on the investments and financial viability. When this is achieved it allows the Government to effectively contribute to the economic, social and service delivery advancement to the benefit of the public.
ROMEO TSUSI Questions? rtsusi@heroldgie.co.za
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M AN O N G CON ST R U C T ION A N D P R OJEC TS WAS E STA B LIS H ED IN 201 1 . The company is 100% owned by Historically Disadvantaged Individuals (HDI). The company was established to play the active role on job creation and black economic empowerment in the construction sector. The company is managed by young and dynamic youth of a small town called Matatiele in KwaZulu-Natal with vast experience in the built environment i.e. electrical technician, project management, etc.
SE RV I C E S • General building works • Civil works I.e. roads • Construction, retaining structures, etc. • General maintenance • Property development • Water reticulation • Hardware materia ls (supply & delivery) • Plant hire
Manong Construction and Projects philosophy is to be associated with projects that will enable the communities in which it operates to be developed and creates more job opportunities. Our main objective is to play a major role in assisting and developing communities to achieve their mandate in a very effective and transparent manner at all times.
BEETA STEEL ENGINEERING
As Beeta Steel we offer a wide range of professional services from FTTH/FTTX to LAN connections, maintenance, fault-fixing and all Fibre-IT consulting installations. To ensure that you are well connected at your home or workplace, we have highly qualified technicians who specialize in various tasks that include: • Underground and Aerial installations • Hauling • DIT Testing • Optical fibre blowing/floating • Slim box presentations • Splicing (all joints, panels, cabinets, Pops) • GPON/MPLS connections • Fibre Testing and Termination
Give us the Chance to make you live in a safe city smart home by connecting you to the World
z_Full page spec.indd 35
1. Civils • Trenching, pole planting, manholes, etc 2. Hauling 3. Floating/Blowing 4. Fibre To The Home (FTTH) -connections include all splicing and installations involving: • Distribution Point /slim box/ wall box/Fosche-400 • Access Terminal Box (ATB) • Patching of ATB to modems
5. FTTX (Industrial connections) • Creation of access points • Ethernet cable installations • Media converter patching to router • Firewall installations • Router to switch connections • LAN access points installations 6. Maintenance and fault-fixing works • It is in our best interest that you continue to experience excellent internet connections, hence we offer regular maintenance and fault-fixing works.
Address 793 Gambry Street Doornpoort Pretoria, 0186 Website www.beetasteel.co.za Facebook BeetaSteelEngineering Telephone +27 (12) 524 3207
2018/09/19 11:26 AM
PROFILE
Ivory Wealth Management Ivory Wealth Management are the new guys in town who want to do things differently
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n the surface we might seem to be ‘just another’ wealth management firm, but if you dig a little deeper you’ll find we are much more than ‘one of the crowd’. With a unique approach and entirely bespoke service offering, we differentiate ourselves in a highly saturated industry. This is our story. Incorporated into Ivory Wealth Management in South Africa two years ago, we already boast a 17-strong team led by our charismatic and highly experienced director, Andrew Holland. Having accumulated years of industry experience through working at Investec and two of the big five accountancy practices, Andrew spotted an opportunity to introduce a niche service to South African tax residents which has proven transferable into Africa and globally. His inspiration came in part from having personally endured a challenging emigration from the UK to South Africa. On his eventual return to South Africa, after having assisted in the setting up of various businesses, his drive and vision led to the foundation and incorporation of Ivory Wealth Management. The company was founded on the core philosophies of technical competence, professionalism and adherence to ethical standards. There is an uncompromising stance on providing total transparency and conveying a level of understanding to
clients so that each is comfortable with their own financial structures and the mechanics of their investment portfolio. While that might sound like a seemingly obvious requirement, it is so often undelivered. Have you been the victim of overcharging, overcomplicated structures which (after the initial sale) seem to have little to no value? Do you know of anyone else who may find themselves in a similar position? When it comes to Ivory Wealth’s more technical delivery of service and the ‘quality’ of service, Andrew’s ‘hobby’ of acquiring professional qualification certificates and achievements has made him highly qualified to create individually tailored solutions in offshore investment structures. While he could be running his operation solo, the modest expansion of Ivory Wealth’s workforce ensures that it is able to leverage off the high-quality directorship and learn through processes derived from experience as opposed to text and, together, form the basis of a highly capable team. There are many blank pages still to be written in the story of Ivory Wealth, with some exciting ‘draft’ chapters already in place but, in the meantime, we welcome the opportunity to meet with and chat to anyone interested in hearing our take on their existing offshore portfolio, or anyone who wants to be introduced to
Ivory Wealth has an uncompromising stance on providing total transparency and conveying a level of understanding to their clients the world of offshore investments. International business owners (for whom IP or importing/exporting is significant) are also invited to chat to us to see if any synergies exist or if we can introduce any value-adds that will improve their portfolios or operations. To those driving growth, business, opportunity, critical skills development and the like, we salute you, we wish you the best of luck and applaud your determination to succeed. To those looking for genuine, competitive, ethical offshore financial structuring services, may I officially introduce to you Ivory Wealth Management.
IVORY WEALTH 021 201 1885 nicholas@ivory-wealth.com www.ivory-wealth.com
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PEOPLE OF THE PBF
CO VALVES AND PIPING
CLINTON CRAWLEY, OWNER CO VALVES AND PIPING
Tell us about your company. I formed the company in February 2003. A year later we opened a retail shop providing HDPE piping, galvanised piping and fittings, gate valve, PVC piping, plumbing fittings and irrigation fittings and pumps. Today, we own three borehole drilling machines, a jetting machine, borehole pump testing equipment and
2 TLB Terex, as well as 15 bakkies, and have a staff of 62. Over the past seven yearswe have penetrated the niche market of electrical and mechanical repairs on all pump stations. We also do welding and pipework fabrication, baseplates and tank stands. We have equipped various boreholes with solar and wind turbines instead of diesel engines, if there is no electricity present, to save clients money. In the last two years, we have also successfully completed a number of drought relief interventions relating to drilling and equipping of boreholes. We’re one of the only 100% HDI B-BBEE companies in the country who can execute a water project from beginning to end. What challenges do you face in the industry? We are continuously undermined because we are based in a small town, whereas
most companies in this field are found in big cities. What is the best business lesson you have learnt? It pays to grow slowly. Keep that vision you had when you first started. Words of wisdom? Don’t ever forget where you started; this way, you will always appreciate and be grateful for where you are. Don’t concentrate on other people’s achievements or mistakes. Rather look at your own errors and try to be a better person. Don’t work for money; do your work because you have a passion for what you are doing, and eventually money will come. And be an example first and people will follow. Lastly, never forget that people are people and not numbers.
INGWENYA MINERAL PROCESSING What is your company’s key focus area? IMP’s key focus is modular processing plants. Modular plants have become a cost-effective way to produce coal. They are flexible, can be built in short lead times and are easy to relocate. We’re currently enlarging our footprint beyond South Africa and moving into other minerals to diversify our portfolio. MPHO PETRUS MOTHOA, MANAGING DIRECTOR INGWENYA MINERAL PROCESSING
Tell us about your company. Ingwenya Mineral Processing (IMP) is a company that specialises in the designing and building of mineral processing plants. Our core business is to design, build, operate and maintain mineral processing plants. So far, Ingwenya has designed and built seven coal plants and performed modifications on a few other plants.
What is the secret to your success? Low Capex, tight control of operational costs, our designs have been simplified, and to reduce construction costs. We also have excellent inhouse workshop capabilities, with a 4000m2 engineering workshop, where we fabricate our own steel structures and easy-to-operate tailormade modular plants. What challenges do you or your company face in the industry? As a small miner we are expected to comply with safety requirements just like
big companies, which sometimes is a financial challenge. Local sourcing of equipment from local businesses or SMMEs which very often have not developed the service/product fully, making it expensive or inefficient. The expectations of communities for mining companies to supply services that municipalities should be supplying, such as fixing potholes, or water supply. Labour unrest and some inflexible labour laws. Mining equipment does not come cheap and it really poses a challenge when it comes to financing projects. Policy-related uncertainties such as MPRD and environmental policies that keep changing brings anxiety and uncertainty. Policy-related uncertainties such as land reform and expropriation without compensation, as this leaves investors and miners with anxiety, not knowing what the impact will be. Decisions often have to be delayed for investors to be sure they won’t be affected negatively. 53
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Four steps to small business productivity COLIN TIMMIS, Head of Accounting for Xero, South Africa, shares some key tips for beefing up your companyâ&#x20AC;&#x2122;s productivity 54
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SMALL BUSINESS
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o-one should ever underestimate the effort, investment and intelligence required to get a small business off the ground. That’s only the start. You’ve then got the challenging task of turning it into a profitable business. While a smooth take-off certainly helps, this falls into insignificance if you can’t fly. For various reasons, many small businesses struggle with this. Xero’s State of Small Business Report identified several key challenges – with 68% citing economic instability as a concern for their business in 2018. But how can an entrepreneur succeed in an economy with an uncertain outlook? Productivity is key. By looking for ways to boost operations, small businesses can increase their profitability and growth prospects in the year ahead. Here are four simple ways to drive greater productivity for your business:
contribute to strategically important work. An easy way to boost productivity is to simply stop using spreadsheets. This is a view espoused by Adobe finance chief Mark Garrett, and it’s hard to disagree. Spreadsheets are static, susceptible to human error, and require an investment of employee time that seldom outweighs any insights acquired. In 2018, all data can be effectively digitised – so wasting time on data entry is particularly archaic. It serves as a barometer of typing speed, and little else.
1. MAKE THE MOST OF THE TIME FOR THE THINGS THAT MATTER Think about how you and your employees are spending your time. How much of it is likely to improve your profitability, and how much of it isn’t? The unfortunate truth is that even your most hard-working employees will be spending a great deal of time on work that doesn’t boost your bottom line, increase operational performance or meet your business objectives. This isn’t their fault, but rather is the result of a company that doesn’t take time management seriously enough. A good place to start is to record who’s doing what. Software such as MinuteDock makes filling in timesheets easier than ever, so have your employees log their workdays for a few weeks and see how their time is being spent. You should immediately be able to identify some areas for improvement.
In areas such as accounting, you can use software to capture transaction information in real time. You can digitise paper records with apps such as Receipt Bank – all with a simple phone photograph. Tax calculations for employee salaries can be automated with payroll systems, and invoices can be pursued immediately (and with no user input) by cloud tools. The simple truth is that, today, most administrative work requires little manual effort.
2. ADMINISTRATIVE AUTOMATION Most obviously, it’s essential to lighten your employees’ administrative burden. The less time they spend on spreadsheets, meeting preparation and mundane accounting work, the more they can
The simple truth is that today most administrative work requires little manual effort
3. MOBILISE YOUR BUSINESS Where do you and your employees work? In 2018, the answer is everywhere. The office, to be sure – but also on the bus, by the beach, in a hotel lobby between talks at a major industry conference, and even at home inbetween spending quality time with your partner and your kids. Your business is far more than the four walls of your office, so it should not be contained by them. Mobile apps allow you to work from anywhere in the world, at any time. This can have a dramatic effect on productivity as it effectively turns downtime into uptime.
4. STOP CHASING PAYMENTS Chasing payments is often seen as a frustrating – but somewhat inevitable – part of running a small business. Indeed, Xero’s research indicates that South African entrepreneurs are spending 1.25 days (or 10.4 hours) every month pursuing money that’s rightfully theirs. But if it’s easy to become resigned to a future of chasing payments, it’s worth stressing that, in 2018, it’s completely unnecessary to spend 6% of every workday doing so. Nobody needs the awkward conversations, the frustration, or the (very real) consequences of delinquent payments. Again, technology represents a fine solution to this problem. Cloud accounting apps can include handy ‘Pay Now’ buttons with every invoice, and automated reminder systems can take much of the hassle out of following up. That means less time spent chasing payments, and more time spent on the things that really matter. Boosting productivity is easier than you might think, and these four methods certainly aren’t the be-all and end-all, but they are a great place to start. A business lives and dies according to how it spends its time, and with the aid of modern technology, how it spends its time is often a choice. Choose wisely, and your company will benefit in the short and long term.
COLIN TIMMIS Questions? xero@toplinecomms.com 55
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Can your business thrive without its key employees? ADV KOBUS ENGELBRECHT, Marketing Head: Sanlam Business Market, offers a perspective on the importance of your major human resource assets
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HUMAN RESOURCES
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hen speaking to business owners one often hears the phrase “my employees are my biggest asset”. That is obviously meant in a figurative sense. But have you ever thought about the fact that one or more of your employees can literally be an income-producing asset? Who are these employees? They can be your super sales people, the rainmakers. Without them your sales will slow down to a trickle. They can be your customer service people. Without them your business will take a nose dive in customer satisfaction, and eventually sales. It can be the kingpin in your production process. Without him or her your production process will come to a standstill, and so will your business. You probably know who these key individuals are. And if you don’t, please spend some time to find out. It could even be yourself! So, what may happen to key individual employees? They can resign, but then at least they have to work a notice month, which affords you the opportunity to find a replacement. But what if a key employee dies, or becomes medically unfit to work – which mostly happens suddenly and without warning? The solution to this problem is to insure the lives of key employees. When such a key employee then dies, or becomes disabled, the sum assured is paid out to the business. This cash injection will tide the business over during the period it takes to recruit, train and settle the replacement employee. Once a business owner has identified key employees that need to be insured the next step would be to determine the
Your key employees can literally be an income-producing asset and, without them, your business will take a nose dive in customer satisfaction and, eventually, sales sum assured for each individual. I would strongly advise business owners to consult with a qualified and accredited financial adviser, to ensure that this is done in a professional manner to meet all the requirements of the law, as well as those of the underwriting insurance company.
ADV KOBUS ENGELBRECHT Questions? kobus.engelbrecht@sanlam.co.za 57
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Celebrating World Literacy Day with a world of words Corporate South Africa is playing its part in the education of South Africa’s youth
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ne of the greatest ways to make a difference in the lives of others is through an investment in education and literacy. After all, when you open a book, you open a world – and you unlock the future for a child. Since its inception 100 years ago, AVBOB has been inspired by the guiding principle laid down by its founding father: ‘Look after the people’ and, with the establishment of the AVBOB Foundation, the company has been on a drive to invest in the communities in which it operates. Since the launch of their Container Library Project in 2013, 50 fully-stocked libraries (worth approximately R500 000 each)
have been delivered to schools across South Africa. Powered by solar panels, beautifully crafted and visually appealing, these libraries have been stocked with 3 000 brand new books to grant access to a world of words to almost 50 000 learners and some 1371 educators. Mrs Biyase, the principal of Dr BW Vilikazi Primary School (a recent beneficiary of the project), explained its impact: “The AVBOB library will take our school to another level in terms of literacy and numeracy. My teachers and learners are going to benefit greatly. Struggling with resources is a thing of the past now.” During the handover ceremony of the
50th library at Michausdal Primary School in July 2018, a further 10 container libraries were pledged to the Department of Basic Education by AVBOB CEO Mr Frik Rademan. These libraries will be delivered between 2019 and 2020. Along with this, and to ensure that South Africa’s bright-eyed learners have bright and beautiful learning environments in which to excel, AVBOB announced its investment of R150 million in the AVBOB Schools Infrastructure Project on Mandela Day. The project aims to renovate and refurbish nine underprivileged schools across South Africa, in collaboration with the DBE. This project is well under way already and is
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making a tangible difference in the communities which surround these upgraded schools. And, during an event hosted by the Honourable Minister of Basic Education, Ms Angie Motshekga, and his excellency, President Cyril Ramaphosa in Pretoria on 1 August 2018, AVBOB pledged R15 million to the Schools Sanitation Project, once again adding dignity and value to the lives of learners. Through their sponsorship of a poetry competition in 2017, the company has also helped to grow a multi-lingual community of poets in South Africa. Over 20 000 poems were entered in all 11 official languages in the first year of the competition, and 3 108 were accepted for publication on the competition microsite. The microsite now lives on as a free
The Container Library Project has installed 50 beautifully crafted and visually appealing libraries, stocked with 3 000 brand new books, to schools across South Africa, giving 50 000 learners and 1300 educators access to a world of words online collection of homegrown poems available to all South Africans as a source of comfort and consolation. From there, the first and second winning poems were published in a 100-poem print anthology – 22 in total. A further 77 poems were commissioned from South Africa’s most celebrated poets, in all 11 languages. And, in a bid towards utter inclusivity, the 100th poem – in celebration of AVBOB’s own centenary in 2018 – is in the N|uu language, transcribed from the words of one of the last living speakers of the language, Ouma Katriena Esau. The 2018 AVBOB Poetry Competition was launched on 1 August and, once again, has witnessed the organic – and exponential – growth of a community of poets who are engaged, eager to produce work of a high calibre, and determined to reach as wide an audience as possible.
Most gratifying is receiving feedback from poets who have benefited from the project’s Facebook page, where gentle guidance is given on poetic craft: “Through the AVBOB Poetry Project, I improved my writing skills. I think this project can exist for life. I have been looking for a platform like this for so long,” wrote one young poet. This is a beautiful demonstration of how literacy is cultivated and circulated. And their broader Poetry Project is set to spread its ambit further afield to provide sponsorship to the Schreiner Karoo Writers’ Festival, which ran in July this year. The festival’s organiser, Lisa Ker, sees this sponsorship as a game changer: “The Poetry Project support has launched our youth projects on a new trajectory and enabled the SKWF to initiate a pilot project this year that saw 60 Cradock learners
spend a day with expert poetry coaches. Our dream is to see a book in the hands of every youngster in the Karoo. Thanks to AVBOB, we are now a big step closer to making the dream come true.” Their goal is to put a world of possibility within reach of those who have never been granted access, including increasing their existing commitment to the DBE’s annual national Spelling Bee through a headline sponsorship of R440 000, which will serve to cover the cost of excursions, accommodation, prizes and shirts for the brave young super-spellers. Like the ancient baobab tree chosen as their centenary symbol, AVBOB is intent on standing strong for all South Africans for the next 100 years, and helping to grow a world of words for future generations.
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SOCIAL MEDIA
Does influence come at too high a price? It’s thrilling to ride the wave of being an online influencer, but Gumtree SA’s ESTELLE NAGEL cautions that the hype can hurt
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lon Musk was held up as the poster child for social media management after he attracted a third of a million likes and 90,000 tweets with a few mentions about flamethrowers and zombies, creating a massive buzz online. Then a group of boys found themselves stuck in a cave in Thailand, and Musk offered a solution which was turned down. He proceeded to call one of the heroic rescuers a paedophile, broadcasting the claim to his 22 million followers – and the world. Just like that, public opinion swung the other way. Most recently, he impulsively tweeted that he was considering taking Tesla private… then abruptly took the deal off the table. The Elon Musk conversation cloud that once praised his genius and innovative thinking is now recasting him as mercurial and unstable… even calling for him to step away from the brand.
MiWay CEO Rene Otto recently found himself embroiled in a Twitter war after commenting on the controversial Lost Boys of Bird Island book, while Adam Catzevelos effectively bankrupted his family’s business after a racist video he shot went viral. Personalities can be powerful branding tools: 25% of all social media chatter about electric cars involves Tesla and Musk, even though they are small fry alongside giant brands such as BMW. Steve Jobs, Mark Zuckerberg and Cheryl Sandberg all achieved celebrity status and added clout to their companies’ social media presence, but once you hitch a personality to the brand, their actions are nearly impossible to uncouple from it. Using a personality to tell a brand’s story can be effective as consumers tend to care more about such companies and are more likely to engage with their content.
However, you also run the risk of that personality – and their negative actions – becoming the story. Sponsorships can be withdrawn when an influencer or celebrity’s image takes a nosedive, but it is much harder to remove an employee, board member… or founder. Many companies are eager to turn their C-suite into celebrities, leveraging their charisma to catapult the brand into the public eye, but there’s a thin line between celebrity and notoriety. Every company representative needs to first understand how their online presence can both promote and gravely injure their brand. Rene Otto did not mean to offend Afrikaners when he was commenting on a topical book he had read; Elon Musk probably didn’t think his casual tweet would be seen as deceiving shareholders. If you are going the route of building personal brands within your organisation, then you have to invest in sensitivity and communications training and set clear rules and guidelines for personal posting. Your thought leaders think that there is a distinction between their private and professional opinions… social media does not. It’s time for companies to rethink who and how their employees can talk about their jobs – there is a lot to gain, but also a lot to lose.
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SOUTH AFRICA Sea Rescue is in the business of hope. We do not manufacture or sell a product â&#x20AC;&#x201C; we instead sell the idea that a group of people who offer up their time, funded by a group of people who offer up finances, can collectively help others at their most vulnerable. This brings hope in a hopeless situation. The sincere goodwill of those who volunteer and those who donate, has sustained this organisation for an incredible 50 years.
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Emerge Solutions
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