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On March 27, the rand reached a 20-month best level of R12.31 to the dollar but fell to 13.9528 on Monday morning.
Despite the ratings downgrade and the slipping rand, the business mood remains largely upbeat.
At a recent AHI economic conference with the theme “Creating jobs against all odds” experts acknowledged that the cost of doing business in South Africa will become more costly but that the country remains lucrative for investment.
“South Africa is a screaming buy, as the rand is undervalued, our bond markets are liquid and efficient and offer a great return,” chief economist Dawie Roodt, of the Efficient Group financial services company, said.
Former Deputy Finance Minister Mcebsi Jonas was equally upbeat, saying that South Africa had all the policies and plans in place to grow the economy, even though he was personally outraged by the manner of his firing, which he learnt about through the media.
“The main reason for the ratings downgrade was our poor growth record of the past few years, but I am optimistic that growth is now on an upward trend. Once we have growth then a lot of our problems are easier to deal with,” he told an informal media briefing after he gave his keynote speech.
In his speech, Jonas highlighted four constraints on small businesses in South Africa. The first was market structure as South Africa’s economy suffered from a high concentration in certain sectors. That meant that it was highly unequal and concentrated resulting in South Africa being stuck in a low-growth trap.
The second was the poor education and training outcomes. This meant that small businesses were unable to source the skills they needed, while many people who been trained were unable to get a job, as they did not meet employer expectations.
“What needs to happen here is that businesses need to be more engaged in designing the education and training curriculum so that we can match skills provided to those required,” he said.
The third was government support for small businesses. In particular Jonas noted that where government support for small businesses worked around the world there was active engagement between government and business.
The fourth constraint was the lack of network support, as small businesses lacked the resources to become part of the value chain.
“Small businesses should not underestimate the energies and activities of business organisations. It was very powerful to be better organized, so when I worked with the jobs fund it was eye-opening to see how powerful the franchise network was. In that respect the AHI has a great advantage as it brings small and large businesses together,” he said.
AHI President Bernard Swanepoel said the mood was upbeat because entrepreneurs are born optimists.
“We must lift our heads and get out of despondency,” Swanepoel said.
“Be vocal. Be loud. Big business and government must pay their invoices! We will name and shame late-payers,” he said as small businesses struggled to get their invoices paid within 30 days which threatened their survival.
This sentiment was echoed by entrepreneur Marnus Broodryk who said entrepreneurs looked for solutions in adversity, not handouts.
“International entrepreneurs see opportunities here, but we don’t create enough of them for ourselves,” he said. He added that South African small businesses should be services exporters to the world.
Entrepreneur Annie Malan said entrepreneurs were resilient and adaptable.
“Entrepreneurs jump off the cliff and make their parachutes on their way down,” she noted.
Helmo Preuss in Centurion, South Africa for The BRICS Post