Finance minister Tito Mboweni recently issued an economic plan for rebooting the SA economy. Its title: Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa.
We took a look through the plan to see where there are opportunities for accountants to get involved.
The plan focuses on several reform plans:
Electricity: The plan calls for modernising network industries such as energy, transport, and telecommunications. The main focus here is on electricity, unbundling Eskom’s transmission from the power generation business, and setting future electricity tariffs in a transparent and predictable manner.
Telecommunications: Government is urged to release more telecommunications spectrum to the private sector by way of auction, with more competition for Telkom in the provision of infrastructure connecting local exchanges to residences and businesses.
Transport: Mboweni wants to finalise the Economic Regulation of Transport Bill and enforce separate accounting divisions or separate financial statements for the various operating divisions of Transnet. This will ensure subsidies across divisions are made explicit. He also proposes granting third party access to the rail network as a way of encouraging private sector participation in in port and rail services.
Water: The water sector suffers from a backlog of infrastructure which needs investment. An independent water regulator can improve the overall efficiency of water provision and improve price setting.
In each of these sectors accountants with skills in business turnaround will have a crucial role to play. Saiba members are encouraged to obtain licences as business rescue and turnaround practitioners in order to ready themselves for this opportunity.
Mboweni’s plan also calls for lower barriers to entry as a way to address distorted patterns of ownership through increased competition. This will require government to consider impacts on competition and market structure before passing any new laws or regulations. In particular, telecoms and banking are likely to see regulatory reform that favour rivals.
The SA Institute of Business Accountants plans to lobby for regulatory reforms that would enhance transparency in these sectors, with various levels of audit assurance such as independent reviews. Again, Saiba members are encouraged to licence themselves (through Saiba’s licencing programme) to take advantage of these opportunities.
Another area of focus in the Mboweni plan is to stimulate labour-intensive growth in agriculture and service industries. This will require easier access to finance for farmers, more affordable agricultural insurance and better market support for emerging farmers.
As you may well know, Saiba offers a specialised licence for conducting accounting services for farmers – this will be a key growth area for accountants in the future.
Government also intends leveraging its public procurement, reckoned to be worth more than R800 billion a year, as a way of stimulating economic growth. Accountants will have a crucial role to play in ensuring service providers meet the qualifying criteria for government tenders.
The main purpose of the Mboweni plan is to get the economy growing again. “Low growth limits the ability of the economy to transform because it threatens the sustainability of critical social spending by government as well as the overall progressivity of tax and fiscal policy,” says the document.
A key point of emphasis is on educational outcomes, particularly early childhood development, which have been shown to improve health as well as earnings.
Some of the more interesting facts highlighted in the document include:
- A 10 per cent increase in fixed broadband penetration leads to a 1.35% increase in GDP growth in developing countries and a 1.19% increase in developed economies
- A one-day reduction in inland transport times in Sub-Saharan Africa can lead to a 7% increase in exports
- The case for greater competition in the economy: A 10% reduction in mark-ups would increase productivity growth in South Africa by 2.0 to 2.5% a year
- In telecoms, the construction of two long-distance fibre links between Bloemfontein and Johannesburg, in direct competition with Telkom’s existing infrastructure, reduced the price of broadband transmission by 87% between 2013 and 2014
- SMMEs are responsible for more than 50 per cent of all employment opportunities in South Africa and the sector contributes more than 45% of the country’s GDP. Though most fail within five years, reducing anti-competitive practices can improve the employment profile of the country
- Between 2008/09 and 2016/17, electricity prices increased by an average rate of 18.2% per year, and will double again by 2030.
- Small businesses spend an aggregate 4% of turnover on red tape and the smallest firms (those employing fewer than 21 people) are the worst affected. For those employing more than 40 people, red tape accounted for 3% of turnover. For firms employing fewer than 21 people, R1 in every R20 goes to red tape. Among those employing more than 40, the equivalent figure is R1 in every R33.
- The estimated demand for water in South Africa will reach 17.7 billion cubic metres in 2030. Supply, by contrast, will equal only 15 billion cubic metres—not including the possible effects of climate change.
Saiba and its members need to take a front seat in this effort to get the economy back on a growth track. One way to do this is by specialising in areas such as school accounting, farming and independent reviews. As the economy grows, so too will the demand for accountants of every stripe. Saiba will be doing its part to make sure the voice of its 8,000-plus members are heard at the very top levels of government. Click here for more information about licences.