CREATING JOBS AGAINGST ALL ODDS
THE CHALLENGES AND OPPORTUNITIES FACING SMALL BUSINESSES
5 APRIL 2017
Let me take this opportunity on behalf of BUSA to thank you for convening this important dialogue.
We welcome the AHI initiative in creating a platform for strategic engagement on role and conditions for small businesses to be a driver of job creation. This requires an enabling environment in which to do business – something that is more important than ever given the recent events. This is an important conversation that must be had.
As BUSA we believe we believe the country is in a very grave situation:
The events of the past 10 days, starting from the recall from an international investor roadshow, the extensive cabinet reshuffle, the destabilisation of National Treasury and the downgrade by S&P, and Moody’s review to downgrade place us all at risk.
Notwithstanding the remarks by the President that the changes were made with a view to making cabinet more efficient in its pursuit of radical economic transformation, the consequences have been both immediate and profoundly damaging to the reputation and economic situation of the country as well as our joint prosperity.
Every South African will be effected from the poorest to the most wealthy. It will:
• Increase the cost of borrowing and decrease available capital for the country
• More money will be spent on servicing debt, with less for social services
• With expected rising inflation and devaluation of the rand, and given that half of our consumption is imported, the cost of food and fuel will rise.
• Economic growth will decline, unemployment will increase, and our opportunity to grow the economy inclusively and deracialise the economy will become that much harder.
Many South African’s are feeling powerless. BUSA will do what it can to exert pressure, to get this on the right track. We are calling to meet with the ruling party and will ask them to act in the best interests of the country. We have asked to meet with the new Minister of Finance, to engage on critical issues facing business from the CEO initiative, to RET. We are actively engaging with organised labour. We are co-ordinating and aligning the businesses efforts together with labour and civil society.
We have strong tripartite relationships (met will union federations yesterday), we have an independent media, we have a very strong court system and a rule of law. Most importantly, we have a strong shared value to make South Africa work for the benefit of all South Africans.
Our vision for South Africa is one of prosperity, inclusivity, constitutionalism and ethical, accountable leadership.
• We need to secure the conditions for businesses to thrive and create jobs, and transform the structure of our economy.
• We need to ensure ethical accountable leadership that acts in the best interests of the country.
BUSA is a confederation of industry associations and represents business of all sizes and formats on cross-cutting issues across many different sectors of the economy. We have 4 categories of membership – unisectorals, corporates, professionals and chambers.
BUSA Strategic Plan
BUSA’s Strategic Plan for the period 2017-2019, sets the following strategic priorities to achieve an enabling environment for inclusive growth and employment in South Africa:
Enabling Environment for Inclusive Growth and Employment in South Africa
1 Transformed, Inclusive Economy that Creates Sustainable Employment
2 Small & Medium Enterprises Thrive
3 Predictable, Certain and Enabling Regulatory Environment
4 Affordable, Reliable and Sustainable Energy to Meet Current and Future Needs
5 Productive and Stable Labour Market
6 A Progressive Tax System that Supports Inclusive Growth Objectives
7 Trade Regime & International Co-operation that enables South African Business
8 Education and Skills Development for Current and Future Work
9 Affordable Comprehensive Social Security Framework for Future Generations
10 Co-operation and Influence in SADC, Africa and Globally
The events of the past week have highlighted the importance of BUSA’s objectives in creating the right conditions for inclusive economic growth to occur.
Radical Economic Transformation
BUSA, together with its members has embarked on an intensive process to identify the key barriers and necessary actions that must be taken in order to fundamentally, structurally, and radically transform the economic structure of South Africa.
• Recognition that we cannot grow our economy if we do not include 6.9mil unemployed into businesses of all sizes and formats and across many different sectors.
• We need to deracialise our economy and make sure that it is inclusive of black people, women, people from poor households, people from rural areas and the like.
• In order to do this BUSA, is identifying key areas where policy needs to shift.
• BUSA, with its members, will also identify game-changing systemic initiatives. Emerging areas in this regard will be on ownership and control, enterprise development and skills development (mentorship, and business leadership).
• This requires established business to take leadership.
National Minimum Wage & LR Stability
With the right commitment and willingness to compromise, real change is possible. Until fairly recently, a National Minimum Wage across all sectors in South Africa seemed a distant reality, with entrenched interests on opposing ends of the spectrum seemingly unable to be likely to reach agreement.
However, a package of agreements have been reached on the NMW and Labour Relations Stability:
• NMW R20 / hr, particular emphasis on the ability of many SMEs to afford this level. To this end, we have agreed an exemption process, with a specific agreement that the process should be efficient, effective and designed for easy access by SMEs. In this regard, BUSA has engaged with DSBD and is exploring a way in which tax returns or UIF returns can suffice, and accountant letters.
• On LR Stability, we have agreed to change the tone of labour relations to mutual trust and respect.
Significantly, we have built lasting and sustainable social partnerships through the process, that are coming to bear as we face the current crisis.
Whilst recent developments have cast our collective vision to the political realm, it is imperative that we do not lose sight of our other policy priorities. In this regard, the development of SMEs is more important than ever before. Our employment contribution from SME’s is at 65%, well short of the global average of 95%. SMEs are the major opportunity for inclusive growth and employment, and to radically transform and deracialise our economy.
With the right regulatory environment, SMME’s have great potential to grow and provide much-needed contributions to the economy, tax revenue and employment.
BUSA, with the support of the ILO commenced work in 2015 on identifying the constraints to small businesses with a view to boost SME development and facilitate the transitions of informal businesses to formality.
Based on an evidence based analysis with substantial input from SMEs and their employees, BUSA developed an SME Strategy and Action Plan.
Strategy Action Step
1 Entrepreneurship and business support services are under-developed in South Africa.
• Too many procedures to register
• Access to information on financing and market opportunities
• How to manage employment issues (average CCMA case takes 10 days) • Engage with BASA to link access financial information
• Secure funding and commence CCMA BUSA Website project
2 Address regulatory burden
The 2015 Global Competitiveness Report places South Africa in terms of the Burden of Government Regulations at 117 out of 144 countries.
DSBD stats indicate that the average SME spends 255 hours a year on tax compliance.
• Partner with TIPS on research regarding registration and reporting.
• Identify main tax constraints and solutions and then engage with Treasury and SARS
• Influence that SIAS includes deliberate SME impact analysis
• Motivate for a simplified definition of SMEs
3 Strengthen the voice of business.
The concerns and needs of small and informal businesses need to be strengthened in the national policy and social dialogue debates
• Consciously address SME impact in every legislative intervention and lend support to SME organised businesses structures
4 Build skills for SME management and entrepreneurship. Top barrier identified by SMEs to doing business was access to skilled, ready to work staff. • Access to SETA
• Skills landscape for the future where skills are demand led
SMMEs provide a key opportunity to significantly increase labour market participation, thereby impacting positively in addressing poverty, unemployment and inequality.
Evidence gathered worldwide shows that SMEs are the most significant source of new employment in a country.
Under the right conditions, SMEs can enhance competition, entrepreneurship, job growth and spur economy-wide efficiency, innovation and poverty reduction.
To conclude, there is a growing recognition of the fundamental role of SMEs in the economy and in creating employment. As BUSA it is essential that we represent the interests of businesses large and small. That requires your active participation on issues that impact on you.
Synergy and effort will be needed across several different priorities in order for smaller businesses to be able to thrive, grow, and create jobs in and inclusive and deracialised South African economy. We will need to work hand in hand as Business, Labour and Government to achieve our national objectives.
Thank the AHI and Dr Ernest Messina for convening this meeting. It is our hope that the AHI, its members and stakeholders will be able to see beyond the current challenges, be productive, competitive contributors to the economy and employment in the country.