There’s a glimmer of hope washing away the despair from the eyes of business leaders. From Accounting Weekly.
South Africa’s problems are legion but relatively easy to fix, according to several guest speakers at the Leaderex convention in Sandton this week. All it requires is political will.
There were some truly amazing stories that never make the headlines: for example, Dr Tashmia Ismail-Saville of Yes4Youth explained how her organisation had created more than 22,000 new jobs for young South Africans in the last nine months, earning them more than R1 billion in salaries and wages, and giving them a crucial foothold in the formal economy. The plan is to create 100,000 new job opportunities over the next year, and ultimately 1 million jobs, by partnering with companies to provide minimum wage jobs at R3,500 a month and building a CV for the new job entrants that vastly improve their chances of finding permanent employment in the economy at the end of the 12 month engagement. Businesses that partner with Yes4Youth can increase their Broad-Based Black Economic Empowerment (B-BBEE) levels by up to two steps depending on their level of participation in the programme.
If one organisation can create 100,000 new jobs – with tax and B-BBEE benefits flowing to the partner companies – imagine what could be done if a dozen such organisations were to take on the challenge of creating jobs for the youth, said Ismail-Saville.
Bonang Mohale, CEO of Business Leadership SA, said business had the ear of President Cyril Ramaphosa, who was determined to leave a legacy of trust in the country’s public sector and a thriving economy capable of absorbing millions of new entrants to the job market.
Tourism is one of the sectors – the “low hanging fruit” – that could quickly ramp up job creation and economy activity, said Mohale. It didn’t help that just down the road, xenophobic attacks against foreigners had broken out in parts of Johannesburg and made its way into the international press.
A key area of concern for foreign investors is the plan to amend the Constitution to allow for expropriation of land without compensation. “There is no need to amend the Constitution,” said Mohale. “The law as it stands allows for this. One way to defuse the situation is for business to get behind land reform by releasing tracts of land for development and housing.”
Adrian Saville, CEO of Cannon Asset Managers, argued that finance minister Tito Mboweni’s master plan for rebooting the moribund SA economy was one of the most cheering documents he had read in years: “For a start, it is a relatively short document and focuses on six or seven ways the economy can be revitalized,” he said. “The government has invited comments and we will be sharing our view. But what is particularly pleasing about this is it shows government is serious in rescuing SA from its low-growth trap. What’s needed now is fast action to implement some of the recommended plans for growth, such as easing restrictions for tourist visas and selling off the broadband spectrum.
A torrent of bad news from South Africa had driven company valuations to bargain territory, especially in the banking sector, and in under-valued companies like SuperGroup, added Saville.
Freeman Nomvalo, CEO of the SA Institute of Chartered Accountants (Saica) – and the recently appointed chief restructuring officer for Eskom – said accountants had a vital role to play in restoring trust and confidence in the economy. He also acknowledged the role some rogue accountants (and not just CAs) had played in corporate corruption scandals, but that the profession had insights that were vital to placing the economy back on the growth track.
Chris Hart, economist and founder of Impact Investing Africa (IIA), believes SA is ominously close to placing itself at the mercy of the International Monetary Fund should it proceed with the proposed National Health Insurance or land expropriation. There are just 8 million taxpayers in SA, with perhaps 1 million of these shouldering most of the tax burden. “SA is over-taxed, and the return on this tax money is poor. The inequalities in the country, between rich and poor, will not go away until we get job creation going on a massive scale,” he said.
Tax incentives under Section 12J of the Income Tax Act were designed to stimulate new business opportunities. “Impact Investing” is a relatively new term used to describe businesses impacting society in a positive way. IIA was in the process of raising funds for a number of impacting investment projects, such as small-scale farming in Botswana, alternative energy and hotel developments in high growth, under-serviced parts of SA.
Craig Comrie, CEO of Profmed (a medical insurance provider servicing professionals), spoke of the National Health Insurance (NHI) and its likely impact on the medical sector and medical insurance providers: “I think what we are likely to see is that the NHI, which is due to kick in in 2026, will be phased in gradually in a way that does not disrupt the sector. Do I see a future for private health insurance? Yes I do, because that is one of the stated objectives of the NHI, to co-exist alongside private health insurers, and because of practical reasons – I don’t see the government will be ready to provide a full suite health model by 2026.”
Also in attendance at Leaderex were a number of representatives from the education sector, such as Jon Foster-Pedley, dean and director of Henley Business School Africa, renowned for its MBA programme. The Henley MBA programme is recognised worldwide. Private education of the type offered by Henley is booming as students from all over Africa and elsewhere in the world seek out real world problems and challenges.
Sharmla Chetty of Duke Corporate Education explained how education in the corporate space was undergoing radical change, away from a purely theoretical approach to incorporate “disruptive learning” that impacts the entire culture of an organisation – such as was required when Duke Global was brought into Standard Chartered Bank. Participants built a culture of mass experimentation, launching innovative experiments and social movements that have changed the cultural fabric of the organisation.
The message from Leaderex is that many of SA’s can be solved without huge capital, but with a political will, lighter regulation and a restoration of trust in the governance structures of the country.