While one’s instinct is to go into a new year with high hopes and good resolutions, this year is one in which we need a much more focused approach. “While the world won’t end this year, whatever the Mayans may or may not have said, there’s no doubt that the world faces a number of pressing challenges,” says Ettiene Retief, a member of the tax committee of the South African Institute of Professional Accountants (SAIPA). “South Africa is affected by these global challenges but can do very little about them. What we can do is put our own house in order, and be ready for the upturn.”
The fallout from the 2008 financial crisis is still with us, the euro is shakier than ever and Greece still can’t meet its obligations. “The trouble is that the crisis has gone on for so long that we have become accustomed to it,” Retief observes. “The danger is that we consider this the new normal and forget we need to invest for the future.”
Gearing for growth
Retief argues that, at the individual level, people are now starting to think that servicing their existing debt means they are in a financially sound position. In reality, though, they are just keeping their heads above water, and remain vulnerable to new developments. Even more to the point, they are not in a position to keep the roof repaired, and that lack of investment will come back to haunt them in a few years.
“The same scenario is playing out at the corporate and national levels,” Retief warns. “In this country, we have seen how a lack of investment in infrastructure (albeit for different reasons) has already severely compromised the ability of our economy to gear up for growth, and create the new jobs we so desperately need.”
South Africa remains very reliant both on foreign investment in the economy, and the health of foreign markets to buy its export goods. Both are in short supply at the moment and so, notes Retief, it is vital that the country does the hard work needed to turn the economy around. “Only then will we attract our share of what foreign investment there is—and only then will we be ready to take advantage of economic opportunities,” he says.
Efficiency is one area in which, Retief believes, South Africa must make significant progress. “It’s not necessarily that our immigration laws or labour laws are too constraining for business—they are essential — but where we fall short is in the efficiency with which they are administered and the uncertainty that shadows such,” Retief explains. “It’s onerous to apply for a work permit both here in other countries: the difference is that in the other countries, such as the UK, you receive it within the stipulated time period whereas here the backlogs are huge. The perception is thus created that South Africa is a hard place to do business in.” “This equally applies to many other registrations and administrative processes, such as registering for a company”.
Key factors for 2012
Aside from improving state efficiency, key factors we need to get right over 2012 include fighting corruption and building a culture of corporate governance. We need to spend our tax monies effectively, and put a stop to the fruitless and wasteful expenditure that is slowly but surely eroding the morale of taxpayers.
“We must use 2012 to reduce the burden of starting and doing business in South Africa, and market South Africa as a stable and efficient economy and government—at the moment, I suspect we are losing the foreign investor, and that is something we cannot afford to be,” Retief concludes.