Wednesday, October 9, 2013

SACCI Convention 2013 - Business in a New Africa Paradigm

SACCI Convention 2013

Business in a New Africa Paradigm
by Sisa Sishona, ABSA
SA spends the highest dollars on education on the Africa continent
Education a key driver, but education system has failed
Lowest results in numeracy ability in Africa

25% unemployment rate

Tax base:
15 million citizens on welfare, but only 6 million taxpayers - unsustainable

Amendments to BBBEE scorecard - 2013
Consists of 
ownership 20%
Management (Board/Exco) - consolidated with EE
Employement equity 15%
Skills development 15%
Preferential procurement 25%
Enterprise development 20%
Socio-economic development 5%

  1. Compliance elements reduced from 7 to 5
    1. Introduction of priority elements - ownership, skills development etc
  2. EME increased to R10m turnover p.a. - default Level 4 100% contributor
  3. QSE R50m
  4. Fronting to be a criminal offence - 10 years imprisonment

Is BBBEE relevant?
 South African context:
poverty and unemployment

Europe - Africa's primary trading partner
SMEs are among the major drivers of the economy
Top 4 economies in the world share a passion for entrepreneurship: US, China, Japan and Germany
SMEs drive innovation and productivity
SMEs employ in excess of 60% labour force in SA

Africa window of opportunity:
Booming population - electricity need
Rising incomes
Rapid urbanisation
Opening trade

Demand will create itself
The Economist: the changing sentiment: The hopeless continent in May 2000, to Africa rising in Dec 2011
Does SACCI have network with other chambers of commerce in other African countries?

Intra-Africa Business: low and slow, more likely to find Kenyan products in London for example
Need to remove visa barriers and infrastructure challenges

Addressing the three key challenges of small businesses
  1. Access to Markets - if have a certain market, the money will find you
  2. Access to Funding - each province has its own development agency
  3. Access to Business Support

Do not have an entrepreneurial culture in SA - rather study, work your way up, and become an important person one day
Banks traditionally want collaterialised lending. But many people have no assets, on the other hand also need responsible lending
People who are technically good are lousy businesspeople.

ABSA Procurement Portal: A virtual market place for SMEs and Corporates - supply chain network, to be launched in January 2014
Big businesses want to do business with SME, but can't find them
12,000 SMEs onboard at the moment, want to grow to 100,000

Access to markets, makes SMEs visible; company information
Buyers can advertise tenders
Suppliers receive notifications of new tenders by E-mail
Access to Non Traditional Funding, to bridge the gap, as government pays eventually, in 6 months
Australia has strict 30 day policy to pay SMEs
ABSA offers procurement finance

Why small businesses fail:
34% poor financial management
16% lack of management competence
12% poor book keeping and records
11% sales and marketing problems

ABSA offers access to non-financial support:
ABSA entrepreneurship centres, with access to computers, softwares and coaches

Globally, businesses are started by 3F's: families, friends and fools!!!
Venture capital or equity lending is in short supply in Africa. Stellenbosch is such incubator

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