Letter From Our CEO - September 2020

A very happy spring month to you all. Themes of rebirth and renewal are often the used symbols from spring season. Spring refers to love, hope, youth, and growth. Hopefully, this also brings hope and prosperity to our country. With level 1 Covid-19 hopefully happening soon I thought it was pertinent to look at where our country is this year.


We have all witnessed the Covid-19 pandemic first-hand and seen the great sadness and hardship that it has brought on each, and every South African either financially or via loss of loved ones.


In South Africa, the BER Business Confidence Index which covers 1,400 business people in the building sector, 1,400 in the trade sector and 1,000 in manufacturing, assesses the level of optimism that senior executives in the companies have about current and expected developments regarding sales, orders, employment, inventories and selling prices. The index varies on a scale of 0 to 100, where 0 indicates an extreme lack of confidence, 50 neutrality and 100 extreme confidence in July 2020 it fell to an all-time low of 5 down from 18 in the previous quarter.


Our economy has shrunk by 16.4% between March and June 2020 – that is a massive fall in GDP. Covid-19 and the lockdown has had a devastating impact on our economy. As a nation, over the period, we have lost R512-billion!


Couple this with the loans we have received from the IMF of $4,3 Billion (R70 Bill) and the External Debt in South Africa of 155624 $ Million.


Annual CPI inflation increased to 3,2% in July from 2,2% in June. The official unemployment climbed to 30,1% in June. More than 17 million South Africans are receiving social grants from (SASSA) at R10 billion per month.


Company Income Tax (CIT) collections are below Budget 2020, estimated by R4.6 billion (2.1%), mainly as a result of CIT. Provisional tax payments and Assessment payments were lower than expected by R3.1 billion (1.4%) and R0.8 billion (5.5%) respectively.


Bankruptcies in South Africa increased to 193 Companies in July, many companies did not file for bankruptcy but simply closed their doors and ceased trading which is sad beyond belief.


South Africans are a resilient nation and never give up! We have had tough times in business over the years and always survived. Many companies have remained flexible, restructured, and are printing money.


We also have new EE legislation and stringent BEE regulations.


As business owners we are faced with all these challenges, no one has ever said being a business owner would be easy – or did they?


To put your head in the sand and hope that they will go away is not an option. EE is a legislative requirement by law for companies and linked to punitive action.

B-BBEE is your licence to trade in South Africa and will not change, it is here to stay, it is realistic if you have a plan and drive the process over your financial year. DO NOT ignore your certification or it WILL affect your company’s performance. No, you do not need to give 51% of your company away and replace all your staff with people of color like the doomsayers around the braai will tell you! There are solutions!


Employment Equity and Management Control are serious challenges for companies – why so you may ask?

If you consider that half our population are black South Africans and half this group are under 25 years of age. More than 10 million of this group are unemployed (prior to Covid-19 retrenchments).


Our standard of education has dropped and 90% of Grade 4 learners cannot read. Half this group of scholars do not complete their schooling for numerable reasons.

Less than 5% of all school entrants pass Grade 12 with math and a 50% pass rate, coupled to these stats less than 5,4% of black people have university degrees.

How do we achieve the empowerment policy targets to represent around 80% black Africans in our management structures?


Honest answer – with the current status quo it is highly improbable.

This will not change unless a feeder scheme is built from the ground upwards on education, employment, entrepreneurship, and financing.


It is all a process- your skills target will go a long way educating staff in your company which will add value to your company- but this is not a quick fix solution.


As with everything proper planning prevents poor performance!


I wish you all good health and success for the last quarter of 2020, hang in there, be proactive and be successful.

Sincerely

Hilton Johnson

CEO – Compliance Hub

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