Big Business Must Step Up – Mohale

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Business Leadership SA’s CEO, Bonang Mohale says Corporate South Africa should take the lead in bringing about sustainability in the country through what he terms, Shared Value. He made this comment at Konrad Adenauer Foundation over the weekend.

He was quoted in Fin24, Mohale saying, “Gone are the days when business looked at government, saying government must create policy stability and an environment in which business can thrive. There must be wins for shareholders and the broader stakeholder community – including labour.”

Departing from the common mantra from captains of industry, his constituency, Mohale urges big business to “pay decent wages and make goods and services that the labour force can afford.”

He says the corporate sector’s ability to deliver on its promises will improve its standing in society and will translate into a “social licence to operate” in SA. He also implores big business to protect the environment and not harm communities in which they operate.

The corporate sector’s share of voice in the contestations around the direction the country should take depends on its credibility, adding that it was also crucial for captains of industry to take education seriously, instead of criticising from the side lines:  “The surest way to transcend social class if you are born in Alexandra – 4km from the riches of Sandton – is education.”

“SA is the only African country which became free and did not improve the quality of education. A study says 80% of grade 4 learners cannot read with comprehension. So, business must take a leadership role in this regard,” Mohale adds.

Reputed for periodically stirring the hornet’s nest, Mohale ventured into the hot potato issue of land reform, inviting the BLSA members not to sit on the touch line, but actually take the lead to resolve the matter, without surrendering the opposition to the much talked about “expropriation without compensation”. The Constitution already makes provision for a rapid land reform programme in SA. “It is like having the keys to a house in your pocket, but you say ‘no, I will still kick down the door just to show I can’,” arguing that if there was an Olympic sport for development plans, SA would win hands down. “They just do not get implemented.”

Lastly Mohale implores corporates not to be despondent about the current tough economic conditions, but rather “we have to tighten our belts to pull ourselves out of the crisis”.

“Business must lead to create more jobs. There is no glory in being one of 17 million people having to queue for social security. We need a huge, bulging middle class to sustain our economy. Our middle class is not sufficient for that currently,” he concludes.

Minister encourages entrepreneurship

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The minister of higher education, Naledi Pandor is encouraging the youth of South Africa to start following the entrepreneurship culture, starting with the youth of Mitchell’s Plain.

The City of Cape Town has granted land in Mitchell’s Plain in order for a tertiary education facility to be built. According to Cape Talk radio station this facility for a TVET college is going to accommodate 10,000 students in the Mitchells Plain and Strandfontein areas.

Karin Hendricks, the False Bay College acting principal says the campus would be ready to accept its first students by January 2022. “The TVET model, which combines theoretical and practical instruction with workplace experience, would “connect them with critical skills to make them more work-ready,” said Hendricks.

In an interview at Cape Talk, the Mayor of Cape Town, Dan Plato said: “I think a tertiary institution like an FET college for Mitchells Plain is much needed. We are very pleased to make a piece of land available for that purpose… It’s a well-located piece of land in the middle of Mitchells Plain”.

“One of the spin-offs of the project will be a boost for the economy of Mitchells Plain and surrounding areas” he added.

On the other hand, Minister Pandor says the youth should not only aim for a job but they should also think about starting their own enterprise because if they do that it will empower them and also grow the county’s economy. In an ENCA interview she said: “What I really would like to see is a partnership between our institutions and the many artisans that are here in Mitchell’s Plain. I’d like to make better use of the skills set available in this community, and that’s why I’m really excited that government has decided we should establish a campus of False Bay College right here in Mitchell’s Plain.”

Brazil open to SA SME exports

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South African exports to Brazil have increased by 37%, moving from $482 million (over R6.8 billion) in 2017 to $663 million (over R9.3 billion) in 2018.

This steady increase has happened after the preferential trade agreement between the Southern African Customs Unions (SACU) and South American trading block, the Southern Common Market (Mercosur).

The five countries in SACU are Botswana, Lesotho, Namibia, South Africa and Eswatini (formerly Swaziland). and Southern Common Market (Mercosur) trade blocs.

The purpose of the agreement is to integrate the economies of member countries through gradual and mutual liberalisation of trade and the strengthening of economic co-operation ties among member countries.

Speaking at the 12th Latin American Defence and Security Exhibition (LAAD) on Thursday, a South African Foreign Economic Representative, Shanaaz Ebrahim said: “Part of this was due to the ratification of the SACU/MERCOSUR preferential trade agreement which was ratified in April 2016 where SACU had offered MERCOSUR tariff line items of about 1065 product lines across 16 sectors of which 469 products are zero percent import duty free.”

According to SA news, Mercosur offered SACU 1052 product lines of which 778 products were duty free. “This offers us a window of opportunity to penetrate the Brazilian market through these duty free products. Negotiations of this agreement started in 2000,” said Ebrahim.

These comments by Ebrahim were directed to South African companies which are participating in the LAAD through the Department of Trade and Industry’s (dti) Export Market Investment Assistance Scheme (EMIA).

The dti website defines EMIA as a scheme that develops export markets for South African products and services and to recruit new foreign direct investment into the country. And its’ eligible enterprises are:

  • South African manufactures and exporters;
  • South African export trading houses representing at least three SMEs or businesses owned by Historical Disadvantaged Individuals (HDIs);
  • South African commission agents representing at least three SMEs/HDI-owned businesses; and
  • South African exports councils, industry associations and JAGs representing at least five South African entities.

South African exports to Brazil for the year 2016/17 rose to $43 million, and 2017/18 they further increased to $183 million. 

Due to South Africa being part of BRICS Ebrahim urged South African companies to familiarise themselves with the Brazil market and she says this is because this year Brazil will be chairing the 11th BRICS Summit which will be held in November and working groups and meetings which will take place will be focusing on those agreements.

Brics is multistate organisation including Brazil, Russia, India, China and South Africa. Its main objectives are to cooperate between the member nations for development, provide financial assistance and support various projects, among other things. It has also agreed to provide financial assistance, support to countries other than members.

“I would also urge our companies to interrogate and familiarise themselves with the list of 0% import duty free products as that will orientate them on the viability of their products within the Brazilian market and it would also stand them in best position to draw instant benefits resulting from the SACU/MERCOSUR preferential trade agreement,” said Ebrahim.

Property investment inclusive to everyone

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Newly appointed chairman of the Property Sector Charter Council (PSCC) plans to improve transformation within the property sector and disregard misleading misconceptions.

Appointed on 26 March 2019, Dr Sedise Moseneke, chairman of the PSCC said: “Despite perceptions to the contrary, much is being achieved by business and government transformation initiatives in the industry. Building on this with industry-based programmes will assist entrench transformation and make it systemic in the property sector,” he told Bizcommunity.

Succeeding outgoing PSCC chairperson Saul Gumede, Moseneke says “It is a true honour to be elected and to have the confidence of the property sector. It is a great privilege to follow property stalwart Saul Gumede, who has excelled as chairman of the PSCC for the past decade. I am proud to serve and give back to an industry that has looked after me, and look forward to working with the council to continue to transform the property sector”.

Moseneke also heads the SA REIT Association’s Property Sector Charter Committee and is Executive Director at JSE-listed SA REIT Vukile Property Fund, non-executive chairman of Encha Property Services and a past president of the South African Property Owners Association (SAPOA), writes BizNis Africa.

SA REIT Marketing Committee Chairman, Andrea Taverna-Turisan notes that “Dr Moseneke’s service to the property sector and the country as a whole is another example of the SA REIT sector’s longstanding commitment to working with all stakeholders to drive transformation forward.”

“We are pleased to confirm Dr Moseneke as Chairman of PSCC. He is a passionate and vocal proponent of transformation in South Africa and the property sector, and the ideal candidate to take the PSCC into the future,” adds Portia Tau-Sekati, CEO of the Property Sector Charter Council.

To achieve this, alongside other council objectives, Engineering News writes that Moseneke saw scope for greater collaboration between the SA REIT sector, other private property stakeholders and the government at all levels.

“This collaboration should always be defined by good governance and ethics. We must be transparent and corruption-free in all interactions between the sector, government and all its departments,” says Moseneke.

According to the South African Institute of Black Property Practitioners, transformation can be implemented in the property industry to benefit the growth of the economy and be inclusive of economic participation of groups previously marginalised by our apartheid past.

Maintaining an appreciation of the spirit and intention of the Codes of Good Practice embedded in the B-BBEE Act, Moseneke notes that the answer lies with enterprise development. However, he feels that the codes stand no chance in enacting transformation if the chief focus continues to be change in ownership patterns.

Moseneke believes that the push for ownership has limited chances of success because to be a property owner deep pockets are needed, making it hard for many black entrants. “At ownership level very few people get in and even if they do become property owners, their emergence doesn’t create any jobs. Job creation lies in your small business entities being able to work with your more established companies,” he argues.

In his opinion, the whole exercise will, in the future, result in a strong chain of corporates helping others – even beneficiaries of enterprise development will, once grown and more financially stable, help other smaller enterprises. Therefore, “you will end up with a chain of companies that help one another to get into the mainstream economy,” Moseneke says.

The PSCC will continue to issue its research that shows the impact the sector has on the economy.

Top 10 tips to becoming a financially savvy SMME

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Businesses are failing all around us, and this can happen when entrepreneurs are not equipped with the necessary financial skills that would enable them and their businesses to flourish.

SAICA Enterprises Development’s Programme Manager, Puseletso Modimogale offers entrepreneurs her top 10 tips on how to become financially savvy and run an effective business.

  • Open a separate business account
    • Don’t confuse your finances by having your private and personal account together.  You will be more tempted to spend if it is in your private account, as subconsciously, you and the businesses are not separate. If it is separate, there is more accountability for how finances are spent, and this is a healthy financial approach to have.
  • Set clear financial goals
    • You will be more likely to work towards achieving financial goals if you actually set them. These should be set annually, along with plans on how you are going to achieve these goals.
  • Identify short term expenses
    • Tracking your short term expenses is one of the key factors in making your budget work for you. You need to know how much you have spent each month so you can tell when you have overspent and why.
  • Minimise your fixed costs
    • Examine your fixed costs and see where you can be prudent and save.
  • Hire a finance coach
    • Never underestimate the value of a finance coach who can give you clear insight and direction on how to understand and improve your financial skills. Even if you have an accountant or bookkeeper, you need to know what to look out for, what to analyse and understand in order to keep your finger on the financial pulse.
  • Know your cash flow
    • There are so many SMMEs who go out of business due to cash flow issues. Don’t be one of them. Plan ahead, ensure you are aware of potential risks, and follow up on outstanding payments timeously.
  • Build your money consciousness
    • Understand your relationship with money, know your fears around money, understand your limiting beliefs about money and how your upbringing conditioned you regarding making money. Be the money magnet by being the energy you want to attract.
  • Be financially wise
    • Make wise decisions with your finances. It is very easy and tempting to go out and buy your dream car after securing a big contract, but is this wise? Don’t make big decisions on a whim. Stay focused, and look at investing back into your business. This may also require you to look at your spending patterns as an individual BEFORE you went into business, and be honest with yourself. It may be your money, but if you make poor financial decisions, you may be out of business sooner than you think.
  • Know the value of your time
    • What are you spending most of your time on? Have you actually done an audit of your time to see where you are spending most of it. Time is money, and you need to ensure that you spend your valuable time on activities that will yield the best return on investment. This also speaks to prioritizing your day, and shifting your non-core activities to another staff member.
  • Give back when you can 
    • Money is energy, the more you give towards good courses, the more you will attract it. There is power in supporting others monetarily and non-monetarily.

SAICA Enterprise Development offers financial excellence to entrepreneurs. Our vision is to play an active role in economic transformation in South Africa through advancing the sustainable growth of entrepreneurial Black businesses. 

The Mpumalanga Development Programme to boost local SMMEs

Mpumalanga entrepreneurs and SMMEs have a chance to improve their entrepreneurial skills and win a price of having the needs for their businesses being met.

This can happen by attending the Local Community SMME Development Programme taking place on March 4 and 5 2019 from 9am – 3pm at the Fortis Hotel in Mpumalanga.

“South African SMMEs and entrepreneurs need education and the event is bringing the education that will help them” said Sam Apata who is the Convener and Programme director for 67CEOs Foundation in a Khwebo online interview. 67CEOs Foundation convene CEOs to mentor, educate, inspire and invest in young people, start-up entrepreneurs and SMMEs.

67CEOs Foundation was so named because of the Nelson Mandela Day campaign message: “Nelson Mandela has fought for social justice for 67 years. We’re asking you to start with 67 minutes.”.  Apata says “I believe in the servant leadership principle of Late President Mandela, CEOs are enjoined to portray the same leadership style”.

CEOs volunteer their time, expertise and resources as a form of their individual social responsibilities through active participation in 67CEOs Foundation’s programmes. Their programmes are educational, socio-economic and enterprise development inclined.

Their mission is to actively impact 10 000 SMMEs in South Africa by 2022 through mentorship, education and enterprise development programmes.

He also said: “The purpose of the event (which is sponsored by Exxaro Resources) is to educate, inspire and support SMMEs and entrepreneurs. On this two-day event there will be key note speeches and panel discussions, masterclass and Business Model Competition and Pitching

“SMMEs and entrepreneurs will get a chance to pitch their businesses to CEOs and other top entrepreneurs and three winners will be awarded with a chance to have their business needs met” said Apata.

Fund SME’s with money and skills

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SMEs should be funded not only with money, but with skills that will help them in the running of their business and longevity according to online magazine, SME South Africa.

This view adds to the findings of the Inaugural South African SMME Access to Finance Report released in January 2019 which found that skills shortage was responsible for the high number in the failure to access funds.

The South African SMME Access to Finance Report said many SME owners lack the skills required to find the right funders and to identify the appropriate finance product that matches their particular funding need.

Many struggled to prepare the relevant business documentation required by finance providers, and lack the know-how needed to present their business funding case in a way that will enable them to access the finance.

To achieve this, a supportive environment must be created to bolster small business survival and facilitate growth.

SME South Africa recommends that sponsors should conduct assessments of the level and adequacy of skills existing within new or developing enterprises, and evaluate what further skills development or training is required to ensure a firm business foundation and sustainable growth.

Finance Minister Tito Mboweni’s announcement during his budget speech that R481.6 million would be allocated to the Small Enterprise Development Agency to expand the small business incubation programme, should be seen as a positive contribution in increasing the skills level of SME owners.

The private sector should play a role in post investment business support and build capacity.  Technical skills as well as overall business management skills should be built from the onset.

SME South Africa further sates that, in an economy where growth has crawled to a near halt, SMEs “cannot be expected to be the holy-grail for job creation”.

The publication said making an impact in increasing potential salary earnings or employable workforce is key and skills development requires a multi-faceted approach in the following:

1. From early education phase – emphasis must be placed at school level for entrepreneurship training and opportunities. Entrepreneurship should therefore become a career option to consider.

2. Innovation must be incubated. The world is changing and so are the skills required to be productive.

3. Clear regulations and commitment to quality interventions should be stipulated at policy level to incentivise skills development/skills transfer from large corporates to small businesses.

4. A holistic approach to skills development should include mentorship, networking and overall business acumen – which are skills that often distinguish between those who do well and those who don’t in business.

The important factor of new business is the responsibility to use development interventions and activities in a thoughtful and focused manner so that the skills levels of small businesses can move upwards and ensure the longevity and success of growing enterprises.

The Inaugural South African SMME Access to Finance Report released in January 2019 summarised the challenges faced by SMMEs and recommended solutions.

  1. SMMEs struggle to find funders and to choose the right funding products. Lack of knowledge about the funders and the finance products available
  2. Many do not know who the funders are, or that there are different types of funders; they are commonly only aware of banks and some government agencies.
  3. They have little or no knowledge about the different types of finance products, making it difficult for them to determine which finance product best suits their funding need.
  4. They don’t know where, or how, to start to find funding, most resort to Google searches.
  5. Searching is difficult, time consuming and yields poor results.
  6. Waste a lot of time engaging funders and applying for funding they do not qualify for.
  7. Publicly available information about funders and their products is limited, vague, hard to find, difficult to understand and often out of date.
  8. This adds to the challenge of determining funding matches and to compare competing funder offerings. Recommended Solutions Practical funding guides specifically developed for SMMEs n Simple funding information guides that are easy to understand, available via mobile devices, accessible from anywhere at any time.
  9. Step-by-step instructions on how to choose the funding products and how to apply for funding.
  10. Summary information on the finance products – who they fund, funding amounts, application process, qualifying criteria, what documents are needed, contact details.

Khwebo Online CyrilEskom

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The business world will along with the rest of society wait in anticipation to see what will be in President Cyril Ramaphosa’s package to shore up state-owned Eskom.

“In the coming few days we will be announcing a package of measures to stabilise as well as to improve Eskom’s financial, operational as well as structural position, and to ensure security of energy supply for the economy,” Ramaphosa told a mining conference in Cape Town on Tuesday.

“We will not allow Eskom to fail,” he added.

President Ramaphosa is trying to turn around the ailing company – which supplies more than 90% of South Africa’s power.  The power utility is struggling under a debt of over R400-billion.

“The other important infrastructure challenge is the security and affordability of energy supply. We have been giving detailed attention to the crisis at Eskom. Eskom is currently facing significant operational, financial and structural challenges,” the president said.

“Eskom’s contribution to the health of our economy is too great for it to be allowed to fail. It is too important and is too big to fail. And we will not allow it to fail. Restoring and securing energy security for the country is an absolute imperative.”

Petrol Price rising again

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The head of SMEs at FNB has warned owners of small businesses to brace themselves for tough times ahead as the petrol price is increasing.

The price of petrol was expected to go up on Wednesday.

Head of SME at FNB Business, Jesse Weinberg says the “substantial increase” would present a major cash flow challenge for small business owners, and dampen the effects of the recent repo rate cut by 25 basis points, from 6.75 % to 6.5 %.

“This simply means small businesses will have to keep a firm grip on the management of their finances to get through this period,” says Weinberg.

Petrol propelled car owners can expect to pay 7 cents more per litre for 93 and 95 grades. Diesel will increase by 1 or 2 cents. Illuminating paraffin goes down by 5 cents.

Petrol price increase will increase from R13,80 to R13, 87 for 93 Octave and R14,01 to R14, 08 for 95 Octave. Diesel will cost 13, 15 per litre.

The Rand appreciated against the US Dollar during the period under review, on average, when compared to the previous period. The average Rand/US Dollar exchange rate for the period 27 December 2018 to 31 January 2019 was 13.9476 compared to 14.1778 during the previous period. This led to a lower contribution to the Basic Fuel Prices on petrol, diesel and illuminating paraffin by 9.24 c/l, 10.85 c/l and 10.97 c/l respectively. One of the biggest factors is also the increase in the price of oil in the month of January.