Cyril Ramaphosa

Credit risk ratings, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, ECONOMIC POLICY AND STRATEGY, Investment/Divestment, State Owned Enterprises (SOEs)

Turning ad hoc-decisions into “add havoc” decisions: Updated prospectus shows SA has much “emerging” to do…

If the Ramaphosa quest for pursuing economic growth and restoring full investment status for South Africa was packaged as a new venture in January it would have received substantial interest. In light of the tsunami of promises about FDI since then, it may be time to look at an updated “prospectus”.

Indicator: Economic growth is the highest priority

In his “New Deal” Ramaphosa promised to keep “an unrelenting focus on growth”. He stated: “We must be bold and determined. We should be targeting 3 percent GDP growth in 2018 rising to 5 percent growth by 2023.”

Prospectus update:

Screen Shot 2018-07-26 at 6.01.54 PM — The Messenger (25 July 2018)

Continue reading “Turning ad hoc-decisions into “add havoc” decisions: Updated prospectus shows SA has much “emerging” to do…” →

Black economic empowerment (BEE), Black-owned businesses, Developmental state, ECONOMIC POLICY AND STRATEGY, Enterprise dynamics, Enterprise regularities, Enterprise research, data and statistics, Population size, Predictive capabilities, Religion and economics/Ideology and economics, Small and medium enterprises (SMEs)

Are our enterprise policies shaped by obsessions? Paradigm paralysis (2)

Ramaphosa’s Manifesto – “A New Deal” – envisages the “massifying” of black enterprises to promote growth and job creation. It is shaped – like the National Development Plan – by the paradigm of SMEs as prime agents for growth and jobs. As the belief in the curative effects of bloodletting – it was the general consensus – acted as a barrier that prevented the consideration of alternative treatments, the belief in SMEs obscures evidence that net job creation is largely independent of firm size.

Convictions, one must remember, do not necessarily yield to evidence.

Masaai Mara crossing

For the creation of several hundred thousand successful businesses (or would “massifying” – Ramaphosa’s term – imply businesses by the million?) there needs to be at least a similar number of entrepreneurs with effective business skills and plans for these businesses to have a chance of survival.

But for a business to succeed one needs other ingredients than mere entrepreneurial aptitude and astute management: it requires support from customers and clients. Successful “massifying” of new businesses would therefore depend on a prior (or at least simultaneous) mushrooming of the spending power of existing consumers and/or the “massifying” of consumers.

On that, the New Deal is silent… Could a 2016 warning about economic transformation hold the explanation?

Continue reading “Are our enterprise policies shaped by obsessions? Paradigm paralysis (2)” →

Business and economic indexes, Company tax, Demographic-entrepreneurial relationships, ECONOMIC POLICY AND STRATEGY, Enterprise profitability, Enterprise research, data and statistics, Entrepreneurial activity, Investment/Divestment, Job creation and unemployment, Large enterprises, Medium sized enterprises, Population size, Small and medium enterprises (SMEs)

Investment ambassadors can try, but SA company losses exceed taxable income

Johannes Wessels
@johannesEOSA1

Pres Ramaphosa’s announcement that four special ambassadors – including well respected Trevor Manuel – are to roam the globe in an aggressive pursuit of foreign investment “… like a pack of lions”, appears to be premature. It would have helped these ambassadors if they could have had a better story to tell than one of a business environment with stagnating profitability and growing losses where:

only 25% of firms have earned sufficient to be liable for company tax;
firms with a taxable income below R10 million decline at a rate of 31 per week;
a mere 635 companies are responsible for 77% of company tax;
from 2009 to 2015 company losses as submitted to SARS increased by 85% and for the last two years were higher than the taxable income assessed.

SARS data for tax years 2009 to 2015 (for the latter 95.4% of company tax returns have been assessed) as indicators for the health of the South African enterprise landscape, show the business devastation of the Zuma administration (5 with Motlanthe and 4 with Ramaphosa as deputy). This administration, responsible for mismanaging the macro-environment and overseeing the collapse of the police force and education quality and a rise in crime and corruption, critically damaged the enterprise environment.

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Accelerated and Shared Growth Initiative for South Africa (ASGISA), Anti-business, Anti-poor, Black economic empowerment (BEE), Business incubation, Cooperatives, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, ECONOMIC POLICY AND STRATEGY, Enterprise friendly environment, Informal businesses, Job creation and unemployment, Land reform, Preferential procurement

Cyril on a tight-rope: Paradox, not policy certainty the outcome of the ANC conference

Will the honeymoon breathing space of optimism that the worst corruption is over and that more business-friendly policies and better public spending behaviour be utilised or wasted? With new reports of the ANC’s national executive committee setting wheels in motion to recall Zuma as president, it is important to note that acting against Zuma would still not set enterprise friendly policies in place.

South Africa’s post-apartheid ANC policies and strategies dealing with enterprise development have been largely driven by an increasingly unfriendly framework for established businesses as well as an anti-growth premise. In the final gasps of December 2017, the ANC Conference even took unanimously policy positions that makes mockery of Ramaphosa’s utterances of making growth the priority.

The decisions to endorse Zuma’s announcement on free tertiary education and to change the Constitution to enable expropriation without compensation, provide ample proof the ANC doesn’t understand what is required to ensure growth and to step back from the fiscal cliff.

Continue reading “Cyril on a tight-rope: Paradox, not policy certainty the outcome of the ANC conference” →

Accelerated and Shared Growth Initiative for South Africa (ASGISA), Anti-business, Anti-poor, Black economic empowerment (BEE), Black-owned businesses, ECONOMIC POLICY AND STRATEGY, Entrepreneurial activity, Job creation and unemployment, Land reform, Preferential procurement, Processors

Ready to choose a San hunter rather than a Sherpa guide for mountaineering? Dlamini-Zuma on Radical Economic Transformation

When Nkosazana Dlamini-Zuma announced her Manifesto for Change, she reminded me somewhat of the stern Mother Abbess singing “Climb every Mountain” for Maria (Julie Andrews) in The Sound of Music.

Definitely not her voice, but her words… Dlamini-Zuma summoned support for Radical Economic Transformation (RET): “We must know which hills to tackle next. …(t)hese are the mountain of economic transformation, the highland of land redistribution and the summit that must see us educating and skilling our people. If not, the negatives will swallow the gains we have made.”

Mother Abbess

Marvellous libretto…

Continue reading “Ready to choose a San hunter rather than a Sherpa guide for mountaineering? Dlamini-Zuma on Radical Economic Transformation” →

Accelerated and Shared Growth Initiative for South Africa (ASGISA), Black economic empowerment (BEE), Black-owned businesses, Developmental state, ECONOMIC GROWTH/ANTI-GROWTH FACTORS, ECONOMIC POLICY AND STRATEGY, Enterprise regularities, Population size, Pro-growth strategies, Urban economy and growth, White monopoly capital theory

A Cyril Swallow does not make a Summer of Growth: How business friendly is Ramaphosa’s New Deal?

“We need to massify the creation, funding and development of black-owned small businesses, township businesses and co-operatives.” Cyril Ramaphosa’s New Deal for South Africa (14 Nov 2017).

This quote from Ramaphosa’s 10 point plan manifesto to get the economy growing forms part of the action steps under Point 5: “we must accelerate the transfer of ownership and control of the economy to black South Africans.“

At first take the creation of an immense number of enterprises sounds like a pro-business approach. But is this objective realistic? Will it render the desired outcome? Even more basic: is it sound economics?

The New Deal is silent on how this enterprise factory that will mass-produce black-owned businesses would work. Whilst the manifesto was announced in the context of the ANC leadership contest, the “we” that Ramaphosa refers to is clearly Government and its administrative institutions. Continue reading “A Cyril Swallow does not make a Summer of Growth: How business friendly is Ramaphosa’s New Deal?” →