Business balances applause with concerns

Business has had mixed reactions to President Jacob Zuma’s State of the Nation address saying that while it welcomed the continued focus on infrastructure development, there were areas of concern.

The SA Chamber of Commerce and Industry (Sacci) said they would have liked to have seen more focus on small and medium enterprises in the State of the Nation speech.

Photo: Elmond Jiyane. Credit: Independent Newspapers

Sacci’s chief operating officer Peggy Drodskie said the organisation applauded Zuma’s tackling of the health, education and skills development issues. But she said, it would have liked more detail on small and medium enterprises. “We would have liked to have seen some statement on how the environment in which they work would be improved.”

One of the areas the organisation had hoped Zuma would focus on was the issue of violent strikes that have dealt a heavy blow to business confidence over the past year.

Drodskie said they welcomed Zuma’s focus on violent strikers. In his speech, Zuma said he had “instructed the Justice, Crime Prevention and Security Cluster to put measures in place, with immediate effect, to ensure that any incidents of violent protest are acted upon, investigated and prosecuted. Courts will be allocated to deal with such cases on a prioritised roll. The law must be enforced and it must be seen to be enforced – fairly, effectively and expeditiously.

“We fully stand behind the rights of labour to protest but some of the protests over the last year, particularly since Marikana have been very damaging to South Africa’s reputation, particularly for foreign investment.”

In response to Zuma’s confirmation that mines would not be nationalised but that the government was investigating royalty agreements, the SA Chamber of Mines’ chief executive Bheki Sibiya carefully noted: “In the spirit of stakeholder partnership we look forward to being invited to contribute towards this research to ensure that its outcomes are fully informed to improve the tax regime.

“The mining industry is already making significant contributions in taxes and makes further contributions through royalties on super profits. We are hopeful that the research will make recommendations that will ensure an equitable tax system for all sectors of the economy.”

Sibaya also praised the government for the R860 billion committed to infrastructure projects, saying they were particularly positive about the move from road to rail transportation for coal. “We are pleased that the Majuba rail coal line will begin soon and hope that its construction will be completed within targeted time frames.”

Adcorp labour economist Loane Sharp said the threat of rising taxes and the possible impact on small businesses were his greatest concerns stemming from the speech.

“My first reaction is to the threat of rising taxes. The president indicated that expenditures and taxation would be looked at and, if necessary, taxes would need to rise. That is very concerning because 1 percent of taxpayers shoulder 25 percent of income taxes at present and any further increases in taxes for this group would lead to widespread tax evasion,” he said.

“Already small businesses are disappearing into the informal sector at an alarming rate – 440 000 of them stopped reporting their incomes to the authorities after 2006, so that is a very concerning development.”

He also questioned the ANC’s continued political alliance with trade union Cosatu.

“That alliance is the biggest single obstacle to job creation in the country. Cosatu-aligned trade unions have usurped authority in the health, education, policing and municipal sectors with disastrous results,” he said. “The public sector unions represent a grave risk to South Africa’s long-term employment prospects.”

Founder and chairman of the Sekunjalo Group Iqbal Survé described Zuma’s State of the Nation address on Thursday as a nuts and bolts approach that would take the country “back to basics“.

Detailing the positive aspects of the speech, Survé said it was clear that infrastructure development would continue, “which is good for business”, and that it had been clearly established that mining would not be nationalised.

He said the speech acknowledged the difficulties of the past few months, such as Marikana and the farmworkers’ strike, and was a “good way of tackling the root causes of these problems”. However, he said he would have liked to have seen more support for entrepreneurs, and how the jobs fund would be used to ensure growth in entrepreneurship.

Recently appointed on to the government’s Jobs Fund Committee, Survé said this was an area he would be focusing on. He would also liked to have seen more on growing the green economy and sustainability, he said.

“In business we tend to see the government as solving problems but we as business also need to come to the party.

Survé said on his visit to Davos for the World Economic Forum he had come across many South Africans from the business and government sphere who were saying the same thing. “What we’re saying to people is that South Africa is good. We’re not as bad as it looks on TV; we’re not a basket case. We’re saying don’t just come to South Africa as a tourist, rather partner with us.” Bianca Capazorio and Sue Segar