Business builders and entrepreneurs can heave a sigh of relief that the Budget Speech for the 2017/8 tax year has not brought with it increases to corporation tax or VAT, but instead brings with it a few measures to boost the growth of the SME Sector.
Under the circumstances, I think the Minister has done a good job of balancing competing priorities, though there are a few measures that government could consider to turbocharge entrepreneurialism and business growth. Here are some of the highlights and what they will mean for the country’s Small & Medium Businesses:
1. GDP growth – 1.3% for 2017
GDP growth in South Africa has been relatively slow since the financial crisis of 2007/8; Minister Gordhan expects to see it increase from 0.5% last year to 1.3% in 2017. He acknowledged the role of Small & Medium Businesses in driving economic growth, although I think if we were to be truly ambitious we could boost GDP growth even more by nurturing entrepreneurs.
2. Support for small businesses
Government has earmarked R3.9 billion for small, medium and micro enterprises over the next three years and plans to provide 2,000 companies in this category with support from the Black Business Supplier Development Programme.
Meanwhile, the National Informal Business Upliftment Scheme aims to develop more than 5,000 informal businesses and cooperatives through financial and other support. It is a great idea since it will help these organisations grow from survivalist enterprises to sustainable, growing and competitive companies that could contribute towards employment and tax revenue.
These developments are welcome, though 7,000 companies are a small fraction of the estimated 2,8 million Small & Medium Businesses in South Africa. There are many steps government could take in future years to support this larger community of small companies—for example, an increase in the R1 million threshold for VAT registration is long overdue.
3. Increased budget for the Small Business Department
It’s also positive to see an above-inflation increase to the Department of Small Business Development’s total Budget allocation up to 2019/20. We think that small businesses are vital and it needs strategic focus from government; this department could play a pivotal role in mentoring small businesses and serving as an interface between small companies and the public sector.
In the meanwhile, it’s interesting to note that the department plans to review the National Small Business Act and develop a National Small Business Amendment Bill. Its aim is to create a more accurate definition of a small, medium and micro-enterprise, which will, in turn, support more appropriate policy and support interventions. This sector is poorly understood in South Africa, so we welcome any effort to come to grips with its needs and its imperative role in the economy.
4. Streamlining government procurement
Minister Gordhan once again reiterated that suppliers who have met their delivery obligations are entitled to payment within 30 days. Slow payment is a pain-point for small businesses, so this is good news. Government remains committed to using its procurement spend to help small and black businesses to grow—which is a wonderful way to support emerging businesses.
An issue that should be top of mind for Small & Medium Businesses as new tax laws and compliance requirements fly at them fast is using technology to automate and streamline their processes. It is especially important as businesses stay ahead of changes to schemes such as the Employment Tax Incentive and the possibility of a payroll levy or tax for the planned National Health Insurance. We believe that by 2020 admin-free businesses will become a reality for our customers by using technologies such as the cloud and artificial intelligence.
Our customers in the Small & Medium Business sector are working hard for South Africa’s prosperity. It is pleasing to see that they are getting more attention in the Budget with each year that passes. We believe that entrepreneurs hold the key to a more equal and prosperous South Africa, and that it is important for their voice to be heard as government makes economic policies and regulations.
Samsung unleashes the beast
Most new smartphone releases of the past few years have been like cat-and-mouse games with consumers and each other. It has been as if morsels of cheese are thrown into the box to make it more interesting: a little extra camera here, a little more battery there, and incremental changes to size, speed (more) and weight (less). Each change moves the needle of innovation ever-so-slightly. Until we find ourselves, a few years later, with a handset that is revolutionary compared to six years ago, but an anti-climax relative to six months before.
And then came Samsung. Probably stung by the “incremental improvement” phrase that has become almost a cliché about new Galaxy devices, the Korean giant chose to unleash a beast last week.
The new Galaxy Note 9 is not only the biggest smartphone Samsung has ever released, but one of the biggest flagship handsets that can still be called a phone. With a 6.4” display, it suddenly competes with mini-tablets and gaming consoles, among other devices that had previously faced little contest from handsets.
It offers almost ever cutting edge introduced to the Galaxy S9 and S9+ smartphones earlier this year, including the market-leading f1.5 aperture lens, and an f2.4. telephoto lens, each weighing in at 12 Megapixels. The front lens is equally impressive, with an f1.7 aperture – first introduced on the Note 8 as the widest yet on a selfie camera.
So far, so S9. However, the Note range has always been set apart by its S Pen stylus, and each edition has added new features. Born as a mere pen that writes on screens, it evolved through the likes of pressure sensitivity, allowing for artistic expression, and cut-and-paste text with translation-on-the-fly.
(Click here or below to read more about the Samsung Galaxy S Pen stylus) Samsung Galaxy S9 Features)
SA ride permit system ‘broken’
Despite the amendments to the National Land Transport Act, ALON LITS, General Manager, Uber in Sub Saharan Africa, believes that many premature given that the necessary, well-functioning systems and processes are not yet in place to make these regulatory changes viable.
The spirit and intention of the amendments to the National Land Transport Act No 5 (NLTA), 2009 put forward by the Ministry of Transport are to be commended. It is especially pleasing that these amendments include ridesharing and e-hailing operators and drivers as legitimate participants in the country’s public transport system, which point to government’s willingness to embrace the changes and innovation taking place in the country’s transport industry.
However, there are aspects of the proposed amendments that are, at best, premature given that the necessary, well-functioning systems and processes are not yet in place to make these regulatory changes viable.
Of particular concern are the significant financial penalties that will need to be paid by ridesharing and e-hailing companies whose independent operators are found to be transporting passengers without a legal permit issued by the relevant local authority. These fines can be as high as R100 000 per driver operating without a permit. Apart from being an excessive penalty it is grossly unfair given that a large number of local authorities don’t yet have functioning permit issuing systems and processes in place.
The truth is that the operating permit issuance system in South Africa is effectively broken. The application and issuance processes for operating licenses are fundamentally flawed and subject to extensive delays, sometimes over a year in length. This situation is exacerbated by the fact that it is very difficult for applicants whose permit applications haven’t yet been approved to get reasons for the extensive delays on the issuing of those permits.
Uber has had extensive first-hand experience with the frustratingly slow process of applying for these permits, with drivers often having to wait months and, in some cases more than a year, for their permits.
Sadly, there appears to be no sense of urgency amongst local authorities to prioritise fixing the flawed permit issuing systems and processes or address the large, and growing, backlogs of permit applications. As such, in order for the proposed stringent permit enforcement rules to be effective and fair to all role players, the long-standing issues around permit issuance first need to be addressed. At the very least, before the proposed legislation amendments are implemented, the National Transport Ministry needs to address the following issues:
- Efficient processes and systems must be put in place in all local authorities to allow drivers to easily apply for the operating permits they require
- Service level agreements need to be put in place with local authorities whereby they are required to assess applications and issue permits within the prescribed 60-day period.
- Local authorities need to be given deadlines by which their current permit application backlogs must be addressed to allow for faster processing of new applications once the amendments are promulgated.
If the Transport Ministry implements the proposed legislation amendments before ensuring that these permit issuance challenges are addressed, many drivers will be faced with the difficult choice of either having to operate illegally whilst awaiting their approved permits and risking significant fines and/or arrest, or stopping operations until they receive their permits, thereby losing what is, for many of them, their only source of income.
As such, if the Ministry of Transport is not able to address these particular challenges, it is only reasonable to ask it to reconsider this amendment and delay its implementation until the necessary infrastructure is in place to ensure it does not impact negatively on the country’s transport industry. The legislators must have been aware of the challenges of passing such a significant law, as the Amendment Bill allows for the Minister to use his discretion to delay implementation of provisions for up to 5 years.
Fair trade and healthy competition are the cornerstones of any effective and growing economy. However, these clauses (Section 66 (7) and Section 66A) of the NLTA amendment, as well as the proposal that regulators be given authority to define the geographic locations or zones in which vehicles may operate, are contrary to the spirit of both. As a good corporate citizen, Uber is committed to supplementing and enhancing South Africa’s national transport system and contributing positively to the industry. If passed into law without the revisions suggested above, these new amendments will limit our business and many others from playing the supportive roles we all can, and should, in growing the SA transport and tourism industries as well as many other key economic sectors.
What’s more, if passed as they currently stand, the amendments will effectively limit South African consumers from having full access to the range of convenient transport options they deserve; which has the potential to harm the reputation and credibility of the entire transport industry.