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Something different

18 April 2005 Angelo Coppola

Sage Financial hosted a breakfast in Gauteng in conjunction with local radio station Kaya FM and on hand to talk were Sipho Mseleku and Tracy Devonport.

Mseleku is currently the CEO of the Chamber of Commerce and Industry of South Africa of South Africa (CHAMSA), while Devonport is a broker who has produced a book aimed at helping the man in the street, and judging from the foreword – which is written by ex Liberty CEO Roy Andersen – it is a worthwhile read.

Back to Devonport and her book, a quick ‘shifty’ through the contents page and the book looks like a worthwhile read, with chapters covering the basics of financial planning, understanding your lifestyle and spending patterns, personal relationships such as marriage and divorce and money, growing your assets, debt management, tax, and then the all important financial plan.

Chapter 11 looks like a good start for consumers doing their own financial planning. It looks at cover in the event of an incident and Devonport then looks at the investment side of the individual with some straightforward ideas and pointers.

Now back to Mseleku, who says that entrepreneurship is a key issue in SA, when one considers that South Africa comes in behind Uganda on the entrepreneurship ladder.

Mseleku says that the country needs to be vocal about money, business and entrepreneurship. The problem with identifying the correct business opportunities is that it’s almost impossible. There are many issues including timing and persistence, and essentially growing a business is a process.

Downsizing is the trend locally and the economic activity action is not going to come from the formal private or public sector. The alternative sector is where the action has to come from. This is where the employment will happen – the SME sector.

The challenge in the next decade is economic growth and employment, via the SME sector. It has been neglected in most African countries says Mseleku. In the developed economies there is a clear focus on the sector, and in some instances it is contributing more than 60% of developed country’s GDP.

There has to be support for the sector so that poverty alleviation can be addressed. Capacity building should be the norm. People generally start small businesses out of desperation, and without the required skills, and are doomed to remain in the informal sector.

“Entrepreneurs need to be identified and developed that have the ambition and vision to develop competitive products and services,” he says.

He made the point that people – black people - shouldn’t be given ceilings up to which they can perform and generate wealth – there shouldn’t be feelings of guilt heaped on successful black people. “It’s discriminatory, racist and anti constitutional.”

In terms of entrepreneurial development there will be lots more BEE activity for the next decade, and then there will be a saturation point. Then creativity will become the norm – as new products and services will have to be developed. SA is at that stage.

The regulatory environment has to be conducive, and there has been some activity and movement to ‘deregulate’ the sector.

SARS has relaxed the VAT reporting requirements, and the tax regime has been softened to stimulate growth. But enough has not been done, as international studies show that the country’s appetite for entrepreneurship dipped for a couple of years. There are signs that the appetite is returning, but at a much slower rate than several years ago.

Small businesses are less likely to deal with, operate in, and succeed in a tightly regulated business environment. There is also the access to capital issue, which government has tried to address in various guises, with varying degrees of success – but it is yet to be resolved.

One of the issues seems to be a lack of communication. The small business development agency of the dti is an example. The dti has several options available for entrepreneurs to take advantage of.

The problem at the moment is that development seems to be focused on one region – Gauteng and Johannesburg specifically, and this is being addressed by establishing information units around the country, where entrepreneurs can go to for information, assistance and advice.

He also announced the establishment of a trade portal within SADEC, for businesses to trade in Africa. The opportunities are enormous for businesses of all sizes.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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