Pretoria – South African business women currently hold 27 percent of senior management positions, beating the global average of 20 percent, the Grant Thornton International Business Report (IBR) has revealed.

“The fact that South Africa outperforms the global average can be attributed to the emphasis placed by government on gender equality and employment equity.  However, while the South African government holds an impressive record with many women in senior positions, the private sector business community still has a long way to go, particularly in the roles that women play,” said partner and head of corporate finance at Grant Thornton, Jeanette Hern.

The findings by the accounting and consulting firm were revealed yesterday on International Women’s Day. The IBR provides insight into the views and expectations of over 11 000 businesses per year across 39 economies, including the US and Brazil.

The survey also shows that the percentage of Privately Held Businesses (PHBs) in the country that  have no women in senior management positions at all has declined from 27 percent in 2009 to 23 percent,  in contrast to the global average (which has risen) to 38 percent compared to 35 percent in 2009.

Twenty-one percent of the women in senior management positions are appointed as human resources directors, followed closely by financial positions such as chief financial officer at 20 percent. Sales directors and marketing officers make up nine and eight percent respectively.

Only three percent of South African companies surveyed have a female chief executive officer, which is five percent lower than the eight percent global average.

“Our statistics for the roles that women play in privately held businesses are in line with studies done on companies listed on the JSE. According to a survey done by the Businesswomen’s Association, less than five percent of JSE listed companies have women CEOs,” explained Hern.

Hern said until businesses break the mindset that women are only suited for HR and finance positions, “we will not be able to properly capture the value that women can add to the workplace.”

Eastern Cape companies have the highest proportion of women in senior positions at 33 percent, followed by Gauteng at 28 percent. Cape Town is in third place at 27 percent and Durban at the lowest proportion at 26 percent.

The survey revealed that G7 countries lag behind the global average, with only 16 percent of women holding senior roles. Women have become most successful in increasing their share of senior management roles in Thailand, Hong Kong, Greece, Belgium and Botswana, where the percentage of women in these roles has risen by at least seven percent since 2009.

“We can’t afford to be complacent, relying on the fact that we are outperforming our global counterparts.  The recent economic crisis has highlighted the need for businesses to be flexible and open to change in order to survive.  The different perspective that women can bring is so important in our ever changing and complex world,” said Hern. – BuaNews

Pretoria – South Africa’s mining cadastre system will give enhanced transparency on mining license applications when it goes live, says Mining Minister Susan Shabangu.

The minister was addressing the Prospectors and Developers Association of Canada Convention on Monday, following a moratorium imposed on prospecting applications in order to audit issued prospecting rights culminated with the launch of the system on 7 February 2011.

“This process culminated with the launch of the mining cadastre system on 7 February this year, which is scheduled to go live when the moratorium is lifted later this month. The mining cadastre system will further enhance transparency in the application process and assist us with our intent to simplify and expedite the right application processes,” said Shabangu.

A mining cadastre is the basis of a secure mineral rights system and records the geographical location, ownership and time validity of mining rights, and compliance with the payment of fees and other requirements to keep a concession valid.

The moratorium was imposed last September and comes to an end at the end of March this year.

Shabangu, who is on an international road show on South Africa’s mining investment climate, assured delegates that the country was open for business. She, however, acknowledged that it was disappointing to observe that there were negative sentiments regarding the administrative processes of the Department of Mineral Resources due to their systems not responding accordingly.

“I am encouraged because it helps us going forward to factor in the lessons from the study, while at the same time I am saddened by the fact that the level of non-compliance is still very high,” she explained.

The Fraser Institute’s recent ranking of South Africa in the lower half of 79 mining jurisdictions has also been noted by the department. The report does not say anything new that the department has not already said, Shabangu noted, adding that the department was aware of the challenges it faces.

Mining stakeholders are determined to position the industry along a maximum growth trajectory. The establishment of the Mining Growth, Development and Employment Task Team (MIGDETT) – which is made up of government, business and organised labour – has developed a strategy that analysis the current environment, identifies constraints and proposes ways to mitigate these constraints.

The mitigations were already linked to existing government plans, such as the New Growth Path, which prioritises the mining industry value chain as one of the growth nodes of the country’s economy.

“Even after a century of active mining, South Africa remains the wealthiest mining jurisdiction, with a minimum non-energy in-situ valuation of $2.5 trillion, with an economically exploitable lifespan in excess of a century. The mining skills developed in South Africa’s mining industry in the past 100 years have contributed immensely towards building and strengthening the global mining industry,” said Shabangu.

The loss of life in the sector was also cause for concern. “Although there has been a substantial improvement on accidents with the lowest fatalities ever in 2010, our health and safety track record continues to be a matter of great concern. The social and economic impact to the country and families as a result of the unacceptable loss of life cannot be over-emphasized.” – BuaNews

Pretoria – The official rate of interest for calculating fringe benefits will be reduced by 50 basis points to 6.5 percent, with effect from today.

The South African Revenue Service said on Tuesday the reduction was due to amendments to the definition of the “official rate of interest” in the Seventh Schedule to the Income Tax Act, 1962, by section 90 of the Taxation Laws Amendment Act, 2010, coming into effect.

The amended definition of “official rate of interest” provides that the official rate, in the case of a loan denominated in Rand, is equal to the South African repurchase rate plus 1 percent with effect from 1 March 2011.

The current repurchase rate of 5.5 percent plus 1 percent will therefore result in an official rate of 6.5 percent. – BuaNews

Pretoria – Finance Minister, Pravin Gordhan, has mapped out his plans for infrastructure development, job creation, skills upgrading, health, education, housing and welfare grants and while the plans mapped out in his budget speech have received much applaud from business, youth formations and civil society, economists remain fairly cautious.

The 2011 Budget totals R979.3 billion – an increase of 9.1 percent over last year’s budget.

The lion’s share will go to social services, which is to be allocated R577.3 billion (an increase of 11.8%) and is broken down as such – R189.5 billion to be spent on education, R121.9 billion on housing, R112.6 billion on health and R146.9 billion on social protection.

R150 billion will go towards the country’s jobs creation package, which many have labeled unrealistic. The R9 billion jobs fund, mentioned by President Jacob Zuma in the state of the nation address two weeks ago, would co-finance innovative public and private-sector employment projects over the next three years.

Tax incentives have been renewed for manufacturing investment of R20 billion, with a focus on investments that have job-creation potential and small enterprise development initiatives would be strengthened, including a focus on employment creation activities by the National Youth Development Agency.

Initiatives are also under way to promote rural employment, and provide stepped up support for agricultural producers and funding is allocated for renewable energy, environmental protection and “green” economy initiatives.

Chief Economist at Efficient Financial Holdings, Dawie Roodt, says for South Africa to create jobs, it needs economic growth.

“The Minister’s only expectation for economic growth is that the South Africa’s economy will grow between four and five percent over the next couple of years and that is not good enough to make a significant dent in terms of creating employment.

“What we need to do, is target economic growth because only through economic growth can we create sustainable jobs,” explains Roodt.

PFK chartered accountants and business advisers Tax Director, Eugene du Plessis, says although there has been a lot of talk about job creation, it was not clear, from a tax perspective, how this would be achieved.

He says that previous efforts to encourage skills development and job creation had not paid off, adding that he would have liked to have seen new thinking on the subject, more concrete steps outlined and faster implementation being planned for.

“For example, the R5 million youth employment subsidy will not take effect for nearly a year since it still has to go through a lengthy legislative process. Even then, it’s not certain that the subsidy will make much difference. The targeted employment growth of around two percent is unlikely to make a meaningful impact on the current unemployment crisis,” explains du Plessis.

Gordhan also announced various tax incentives for businesses particularly small and micro enterprises.

Roodt says that while a lot of emphasis has been placed on trying to create an environment that is conducive for small business, a lot more can still be done. He says that there are many issues that make it difficult to help small business, a lot of red tape and a lot of labour legislation that makes it difficult to run and to start a new business.

“Small business is responsible for about close to eight percent of all jobs in the economy and I think that the emphasis must be on small businesses. What we need to do is not only lower the tax burdens on small business but also see if we can do something about the red tape and also the hassles involved in starting or trying to start a small business,” he says.

Today, government announced that it plans to cut the red tape and make it easier to do business in South Africa by setting up a national one-stop shop to assist with investment approvals, reforming BEE codes and simplifying forms and procedures faced by small businesses.

The campaign to minimise red tape for small businesses includes the roll out of an initiative to assist certain municipalities to cut regulations that effect small enterprises, following the conclusion last year of a pilot focusing on several municipalities.

Reducing the red tape for business owners and entrepreneurs faced involved tackling four areas, namely:

– Speeding up the time it took for businesses to process documents at government agencies.
– Reducing the number forms of business owners have to fill out.
– Creating a more co-ordinated system so that business owners wouldn’t have to be sent from pillar to post.
– Setting up one-stop shops so that businesses wouldn’t have to go to various places to get the same thing.

For du Plessis, the most positive element in the whole budget speech was the very favourable upward adjustment to transfer duty thresholds on house purchases.

“I believe this could go a long way towards encouraging home ownership in South Africa, especially amongst first-time home owners.”

On the issue of education, healthcare and social security, Roodt says the emphasis in the budget has always been on social expenditure, the most important being education.

“Unfortunately if you compare South Africa’s education outcomes to many countries in the world, we really don’t compare that well,” he says. “What we need to do is not spend more money on things like education for example, but we need to spend money much better.”

Explains du Plessis: “Every year people will say that there needs to be more money spent on infrastructure, education and healthcare. I think if you can create people that look after themselves; it will be a lot easier to balance your budget.”

At present close to 15 million South Africans receive social grants with the budget amounting to R147 billion in 2011/12, rising to R172 billion in 2013/14.

Roodt says the only way that the government can address the social issues affecting the country, is by growing the economy.

“…  Only through economic growth can we do something about unemployment and poverty in South Africa. A successful social security system is with fewer people, not more people and we’ve increased the number of people that are dependent on state grants to 15 million, that’s about a third of the population.”

On the issue of the National Health Insurance, Gordhan said the phasing in of the National Health Insurance (NHI) will require substantial reforms to address imbalances across the public and private sectors. “The financial and organisational implications of these reforms are being jointly addressed by the Department of Health and the Treasury.”

Over R8 billion from the Health Department’s budget of R113 billion towards boosting hospital facilities that will lay the foundation for the phasing in of the NHI.

Du Plessis says he expected to hear further details about the health scheme would work.

“We’ve been given little clarity on how it will work,” he says. “What has been hinted at is taxes to be levied either on payrolls, through a higher VAT rate or even a surcharge on individual’s taxable income, which means that people in the payroll net, who pay most of the country’s taxes, will be funding this health scheme.”

“The NHI will be implemented as of next year, but I went through his numbers and I did not see a significant increase in the health expenditure. So what we are probably going to see is a significantly watered down version of the original NHI because that is what the numbers tell me,” explains Roodt.

Overall, Roodt says he found the minister’s speech balanced. “He presented a pretty neutral although a slightly more left-wing budget. He balanced the political and financial realities in SA quite well.

“The reality is that there are certain social, political and economic and financial realities in South Africa and the minister of finance has to find a balance and I think he found that balance.”

Says du Plessis: “Pravin Gordhan expressed many fine sentiments in his speech, but, a lot more substance needs to be forthcoming if those ideas are to result in substantial gains for the economy.” – BuaNews

Pretoria – Finance Minister Pravin Gordhan’s 2011 budget has been well received, given the little room there was for flexibility.

“There was little room for maneuver, considering that the economy is still recovering from the recession,” Professor Johan Marx chair of the Finance, Risk Management and Banking Department at UNISA said on Wednesday.

Minister Gordhan announced a tax relief of R8.1 billion (compared to last year’s R13 billion) when he tabled the budget before Parliament.

“There was lower tax collection from business and as a result, the minister moved tax around because of inflation,” said Marx.

Standard Bank senior economist Dr Johan Botha described Gordhan’s speech as a balancing act that requires long term sustainability, while at the same time meeting the demands on the spending side.

“We have seen that revenue will come in lower than initially expected  in 2011/12, with the result that the deficit is projected to be 0.7 percent higher than expected in October (in the mini budget). There are questions on whether we should have not reduced it more than that,” said Botha.

Gordhan announced that a budget deficit of 5.3 percent is projected this year.

Botha said the 0.7 percent rise may impact markets, while Marx said he expects the markets to remain “fairly stable”.

Botha expressed concern at the doubling of the wage bill since 2005.  “Projections, however, indicate a far slower growth in the wage bill.”

The National Association of Automobile Manufacturers (NAAMSA) President, David Powels, said the budget represented an appropriate response to the challenges faced by South Africa.

“NAAMSA welcomed the emphasis on creating an environment conducive to higher levels of investment as a means of boosting South Africa’s economic performance and employment creation capability,” he said.

An amount of R120 million was allocated to the National Tooling Initiative, which will serve to increase the automotive industry’s local content, improve its competitiveness and assist in automotive employment creation.

On the issue of tax relief to the tune of R8.1 billion, Powels welcomed this, saying it would have a positive effect on consumer demand and sentiment.

Minister Gordhan announced an ad valorem tax on new motor vehicles with a purchase price of above R900 000, which NAAMSA said came as a surprise and would affect about 1.5 percent of new cars sold.

“Whilst the increase in the tax would affect a relatively small segment of the domestic market, it did reinforce industry concerns about the rising tax burden on buyers and users of new motor vehicles in South Africa as a result of ad valorem excise duties, increases in fuel levies, the recent introduction of CO2 emissions tax on new cars and double cabs light commercial vehicles and the impending introduction of toll fees for motorists using Gauteng freeways,” said Powels.

The South African Chamber of Commerce and Industry (SACCI) President, Chose Choeu, welcomed incentives that were outlined to support business and job creation, including the youth employment subsidy.

The budget made provision for R10 billion for job creation, small enterprise development and youth employment.

However, the chamber said it would have liked to see greater sensitivity regarding the cost of doing business through increases in levies, such of those of fuel and other administered prices, as well as improvement in the business registration process.

“SACCI regards the budget as comprehensive in coverage, but is concerned at the increase in the public sector wage bill and at the rising cost of debt. Implementation of the strategies and projects envisaged will be a challenge,” said Choeu.

Manager of the Budget Unit of Idasa’s Political Information and Monitoring Service, Len Verwey, said: “The budget is consistent with the 2010 MTBPS and confirms we are out of the worst of the recession, but the real work must now begin to create jobs and improve service delivery.”

Business Unity South Africa (BUSA) said it was encouraged by the business friendly components of the budget.

“We  share sentiments implied in his speech that our rates of investment and exports must be promoted in order to support an environment in which such higher job-rich growth is possible,” BUSA spokesperson, Masego Lehihi, said.

The emphasis on infrastructural spending was also welcomed by BUSA, adding that if it is to be maximized in the economy, it will be essential to expand the use of public-private sector partnerships. – BuaNews

Budget parameters likely to stay unchanged: Idasa

Pretoria – The Institute for Democracy in SA (Idasa) believes the broad parameters of the 2011 Budget are likely to remain unchanged over the medium-term.

Len Verwey, manager of the budget unit of Idasa’s political information and monitoring service, said he expected there to be a continued focus on social allocations, such as social grants, and the continued large allocations going to education and health.

“We can, however, expect further emphasis on the social contracts associated with these allocations. Thus, for example, the minister is likely to follow the President in requiring more commitment and discipline from teachers, and there may be more emphasis on linking child support grant eligibility to school attendance and other requirements,” he said.

Finance Minister Pravin Gordhan will deliver the 2011 Budget Speech at 2pm today, which is widely expected to focus on jobs and infrastructure development.

Verwey said the 2011 Budget will be released against a more favourable economic backdrop than the 2009/10 Budgets, which were drawn up amid the recession and job losses.

“The current degree of economic recovery and the slightly more favourable fiscal position we are in should not blind us to the continuing unemployment crisis in the wake of the recession,” added Verwey.

He further said active industrial policy has to be a cornerstone of the effective developmental state, but that the country lacked the required common front between government, labour, business and civil society to achieve it.

“After a contraction in output of around 1.87 percent in 2009, available information suggests that the South African economy grew by a little less than 3 percent in 2010. In recent remarks, the Governor of the Reserve Bank indicated that the Bank anticipates growth of around 3.5 percent for both 2011 and 2012,” Verwey said.

He said these rates of growth were moderate and remained lower than pre-recessionary ones, and suggested that the now familiar challenge of how to achieve more with less will remain for some time.

Equally importantly, he said, they remain aligned with the growth rates anticipated in the 2010 Budget and Medium Term Budget Policy Statement (MTBPS) for 2011.

“In other words, the 2011 Budget will not have to contemplate further cuts and austerities as a result of unanticipated shocks.

“Furthermore, since the 2010 Budget and 2010 MTBPS were particularly cautious in their assumptions about the recovery of tax revenue, it is likely that government will have some extra revenue at its disposal now, even after allowing for an accelerated reduction of the deficit and therefore a reduction of the future debt burden,” Verwey said.

Verwey believes South Africa is not necessarily in an institutional position to ensure that the use of tax incentives actually leads to decent jobs being created, even though the New Growth Path calls for “solidarity, sacrifice and partnership” in achieving higher and more equitable growth.

“The [shortcomings] of local government, of the National Skills Development Strategy, of small-business support, amongst others, justify a degree of scepticism regarding a new growth path if it is not accompanied by decisive leadership and institutional change.

“These failures are not the fault of government only, of course, and they point to continued problems in achieving the kind of multi-stakeholder consensus which is required if we are to move forward, and which has characterised, without exception, successful developmental states.

“What we may hope for, though, is a renewed urgency in finding solutions, a recognition that the failure to do so will have serious implications.

“The solution must be based on a shared willingness to work at finding a consensus, which in turn requires a degree of pragmatism in economic debates rather than conflict from polarised, entrenched positions,” said Verwey. – BuaNews

Cape Town – Finance Minister, Pravin Gordhan, today announced various tax incentives for businesses particularly small and micro enterprises.

Gordhan also announced plans to overhaul two failed tax incentives in a bid to make them more attractive to businesses.

Presenting his Budget Speech in Parliament, Gordhan also introduced various tax proposals for businesses, which will help boost job creation. These include changes to the turnover tax for micro enterprises.

The turnover tax for micro enterprises with an annual turnover of up to R1 million will be adjusted so that tax will be payable only if turnover exceeds R150 000 a year. This takes effect from March 1. The rate structure will also be reviewed by the National Treasury.

Micro enterprises that register for Value-added Tax (VAT) will no longer be barred from registering for turnover tax. This takes effect from 1 March 2012.

A dividends tax will take effect on 1 April 2012, replacing the secondary tax on companies (STC).

The National Treasury believes that doing away with secondary tax on companies will correct the impression that a tax on dividends is another tax on businesses, as the new tax will be a tax on individuals and non-resident shareholders, rather than on the business itself as under STC.

The learnership tax incentive, designed to support youth employment, will expire in September 2011, but Gordhan said the government proposed to extend this for a further five years, subject to an analysis of its effectiveness with all stakeholders.

The government also proposes to streamline the current research and development tax incentive by introducing an approval process by the Department of Science and Technology before a taxpayer can claim the incentive, with the aim of limiting opportunities for retrospective reclassification of spending.

Another incentive to be overhauled would be the venture capital tax incentive, which was introduced into the Income Tax Act in 2009 but had seen a “poor response” from those looking to set up venture capital companies to doll out the incentive.

“The approach will be refined so as to facilitate greater access to equity finance by small and medium businesses and junior mining companies,” he said.

He said consideration would be given to expanding such incentives for labour-intensive projects in Industrial Development Zones (IDZs). – BuaNews

Cape Town – Jobs, infrastructure development and small and medium enterprise (SMEs) promotion are likely to form the key focus of Finance Minister Pravin Gordhan’s Budget Speech today.

When Gordhan delivers his Budget Speech at 2pm, he is likely to be in a buoyant mood, with the economy having grown 4.4% in the fourth quarter, unemployment having shrunk slightly from 25.3 percent to 24 percent in the final quarter and with an I-Net Bridge poll revealing that economists believe the deficit will narrow from 6.7 percent to 5.3 percent.

However, with the country still laying claim to one of the highest unemployment rates in the world, Gordhan is expected to detail measures to help create more jobs.

Among these, he is expected to provide more details on the R9 billion jobs fund, as well as the R10 billion the Industrial Development Corporation (IDC) is to set aside for investment in projects with high job-creation potential – both of which were revealed by President Jacob Zuma in his State of the Nation Address earlier this month.

Gordhan is also expected to provide further details of funding for the New Growth Path, which was approved by Cabinet last year and targets six priority sectors, namely: infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism.

Infrastructure spending is also expected to get key coverage in the Budget Speech.

According to a report released this week by Bank of America/Merrill Lynch, Gordhan is expected to detail major spending on roads and rail, following last week’s Cabinet announcement that spending at Sanral and Transnet would be boosted.

“Previously, the government had budgeted for about R125 billion over the next few years. That sum has now been increased to R450 billion. This puts medium-term cumulative spending on road and rail on par with energy at around R450 billion,” said the report.

Gordhan could also spell out details of spending in rural areas, following Zuma’s announcement in his State of the Nation Address that the state would also develop infrastructure to boost the agricultural sector – including the rehabiliation of water reservoirs, windmills and irrigation schemes.

The Budget is also expected to detail further support for informal as well as small businesses, with the announcement by Zuma in his State of the Nation Address that the government’s small business funding agencies (Samaf, Khula and the IDC’s small business funding portfolio) would be amalgamated into one organisation.

Among several tax measures to assist small businesses, Muneer Hassan, the South African Institute of Chartered Accountants project director of tax, called for the R14 million turnover threshold for the taxation of Small Business Corporations to be raised.

Those small enterprises that qualify as Small Business Corporations are taxed at a more favourable rate than other businesses.

“The threshold had last been altered in 2007, so an inflation-related adjustment was clearly necessary,” said Hassan.
The South African Chamber of Commerce and Industry (Sacci) also wants to know more details of the National Health Insurance, the reopening of teaching and nursing colleges to improve skills in these areas and the green economy strategy.

Chose Choeu, the President of Sacci, expects business environment and enterprise support to be a key theme of the Budget.

Choeu said the chamber wanted more certainty on the measures to reduce regulatory bottlenecks and red tape for business generally and small and medium-sized enterprises in particular, as well as what amount the state would set aside to help fund small businesses.

It also wanted details on “tangible” programmes to tackle youth unemployment, funding for the anti-corruption initiatives described by Zuma in the State of the Nation Address, details on the exchange control reforms mentioned and on the progress of the Local Government Turnaround Strategy. – BuaNews

Pretoria – A R10 billion scheme, aimed at facilitating job creation, will provide funding at a rate of prime less three percent to job creating businesses, the Industrial Development Corporation (IDC) said on Tuesday.

Addressing media following a board meeting, IDC CEO Geoffrey Qhena said the IDC was now focusing on realigning with the New Growth Path, which was announced last November.

“It can’t be business as usual,” said Qhena of the funding that will be available to job creation projects. It will be available as of 1 March 2011.

The R10 billion fund was announced by President Jacob Zuma during the State of the Nation Address earlier this month. Furthermore, Finance Minister Pravin Gordhan is expected to shed more light on the specifics of the fund in the 2011 Budget Speech tomorrow.

“This will be across all IDC mandated sectors to businesses which demonstrate economic merit and efficnecy in new job creation,” Qhena explained, saying that the scheme is set to run over a five-year period.

On repayment of funding granted to businesses, the state-owned development institution would be more accommodative, particularly for businesses that are starting out and the drawdown period within a year of approval.

“We want to ensure that people have access to this facility and that it caters for the requirements of a business,” said Qhena.

Existing businesses as well as new start-ups qualify for the funding.

“We want to encourage entrepreneurs,” he said, adding that the IDC wants help in the creation of new industries.

In addition to the R10 billion, R750 million has been set aside by the IDC to assist businesses that were affected by the recent floods and draught. Of this money, R500 million will go to assist businesses that fall within the mandate of the IDC at prime less three percent.

Applications for this fund will start on 1 March and end on 31 March 2012.

“The remaining R250 million will be loaned to the Land Bank to assist those affected agricultural businesses that fall outside the IDC’s mandate,” said the CEO. – BuaNews