Tag Archive for: African Economic Growth

Sisipho Ntsabo
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Payin30 – Addressing Corporate Sustainability in The Corporate Sector

Addressing Corporate Sustainability in The Corporate Sector through Payin30

The #Payin30 initiative in South Africa has been largely driven and supported by the private/corporate sector. Corporate Social Responsibility (CSR) is a management concept or a business model, that consolidates topics of social and environmental concerns into their business policies, operations and their conduct. It is a way in which the company becomes socially accountable, not only to itself and the stakeholders but also to the public. Corporate social responsibility is the approach a company undertakes to enact a balance of the Triple Bottom Approach (TPL) – “People. Planet. Profit” while holding itself accountable to stakeholders.

CSR is a conscious effort to address the capitalistic nature of the business but being cognisant of the environment in which it exists – understanding that people, profit and the planet cannot operate in isolation.

The Corporate Social Responsibility (CSR) diagram: Photo courtesy of Getty Images

THE ROLE OF GOVERNMENT IN CSR AND PAYIN30

Although the business sector lies at the centre of CSR, the government as an authoritative power can play a catalyst role – yielding their power and voice to raise awareness of what CSR truly embodies. The government can a vital role in mediating between social agents (business sector and the public).

The United Kingdom (UK) government and the South African (SA) government have been exemplary in calling for action against 90-, 60-, and 45-day payment terms. On the 19th of January, the United Kingdom government announced that it has re-examined the Prompt Payment Code (PPC) to renounce delayed invoices owed to SMEs. Under the new reconstructed terms, companies are obliged to now pay SMEs within 30 days – which is half the time defined by the current Code. The UK government is looking to strengthen the rules, by increasing Small Business Commissioner powers as a post-covid19 economic strategy.

During the South African Investment Conference in Soweto, President Cyril Ramaphosa called for the government to ensure that SMEs suppliers are paid within 30 days. The Public Service Commission (PSC) is an independent and overseeing institution, ensuring the effectiveness and efficiency of public service performance. The PSC aptly states that “The non-payment of suppliers is in contravention of the Treasury Regulations and constitutional principles such as efficient, effective and economic use of resources, accountability and transparency”. The PSC will continue monitoring compliance with 30-day payment terms, announcing that they [PSC] will view non-compliance as financial misconduct.

These two exemplary moves by the respective are indicative of how not only government institutions can set precedence on ethical practices but also yield their power for the good of the greater society. The ability of government institutions to recognise the importance of SMEs as job creators, but also as an integral part of the economic ecosystem. The government is held accountable and is responsible for its stakeholders – the people and acknowledging that SMEs are the microcosm of society and the economy. The government’s role is a prime example of the influence of corporate social responsibility.

THE ROLE OF CORPORATE AND THE PRIVATE SECTOR IN PAYIN30

As the economic and social unit of society, corporate must operate in accord with sustainable strategies endorsed by the economic system in which it operates. The highlight of this is that corporate and business do not exist in isolation and their existence is dependent on the people and planet, there is a responsibility to the planet and the people. In pursuit of a sustainable business strategy, “CSR emphasises on the maximisation of the utility of resources with minimum consumption, exploration of resources without exploitation and maintaining the surplus balance of resources for future generations.”

The #Payin30 initiative in South Africa has been largely driven and supported by the private/corporate sector. Business for South Africa (B4SA), the SA SME Fund, and Business Leadership South Africa (BLSA), and supported by, amongst others, Business Unity South Africa (BUSA), the Small Business Institute (SBI) and the Black Business Council (BBC) have all put their heads together to support SMEs. This serves as evidence that corporates are largely aware of the role and influence in the country’s economic ecosystem.

Paul Hanratty, Sanlam Group Chief Executive Officer, and member of the Risk and Compliance, and Social, Ethics and Sustainability (SES) Committees speaks on the importance of the #Payin30 campaign.

Paul Hanratty, Sanlam Group Chief Executive Office

Hanratty says, that the #Payin30 is a supportive mechanism to SMES navigating the Covid-19 pandemic and will help them become sustainable in the long term. He follows this, highlights how the #Payin30 is also an economic strategy to the pandemic, urging all big businesses to adjust their payment terms in support of SMEs. Hanratty says,

 “Recovery will not happen exclusively through big national initiatives; it will happen bit by bit, in small but meaningful increments. The business sector in South Africa has the opportunity to play a profound role in the recovery of smaller entities.”

We cannot ignore the need for economic development and growth, but we must be cognisant that it needs to be done sustainably. We cannot grow the economy at the expense of the people or the planet. The progression of concepts like that of CSR is dependent on the partnership of the private sector and government.

CONCLUSION

In their article, ‘The Truth about CSR’, Kasturi et al note that there is an increasing pressure for corporate companies to “dress up CSR as a business discipline and demand that every initiative deliver business results.”. This takes away the essence of CSR is: “to align a company’s social and environmental activities with its business purpose and values.”. The authors of the article aptly advise that to maximise the positive impact of CSR, companies must depart from poor coordination of their CSR programs and the lack of logic connecting their various programs. Kasturi et al advise that maximising this means companies need to develop coherent CSR strategies by a) focusing on philanthropy, b) improving operational effectiveness, c) transforming the business model. Post the development of these three theatres, companies must develop a unified practice program through a four-step process. Step 1) Aligning Programs Within the Theatres, 2) Developing Metrics to Gauge Performance, 3) Coordinating Programs Across Theatres, and 4) Developing an Interdisciplinary CSR Strategy. Best-practices companies operate coordinated and interdependent programs across the CSR field.

We must understand the world from the triple bottom line: the social, environmental and financial – people, planet and profit. SMEs contribute immensely to the country’s sustainable growth and need the support of both government and corporations to ensure their survival and preservation. The global problems cannot be solved alone. The collaboration with entities like SMEs, NGOs and association can help them unleash the full potential of corporate social responsibilities. Payin30 is an important CSR initiative that serves as evidence of how government and corporate can work together to ensure the sustainability of SMEs.

 

Andrew Stegmann

African Growth at 7-Year High, But Not Thanks to Its Major Economies

Growth in Africa’s two largest economies may be sputtering along but that won’t stop the continent’s gross domestic product from expanding at the fastest pace since at least 2012.

GDP growth for the continent is forecast to accelerate to 4 percent this year, up from an estimated 3.5 percent in 2018, making it the fastest-growing region in the world after Asia, according to the African Development Bank. And that’s despite Nigeria and South Africa, which make up almost half of the continent’s GDP, “pulling down Africa’s average growth,” as the Abidjan-based lender said in its latest economic outlook report.

Nigeria’s GDP will expand by 2.3 percent in 2019, which is below the rate of population growth, as the government struggles to reduce the nation’s oil dependence and attract foreign investment. South Africa’s expansion will be even slower, at 1.7 percent, as the continent’s most-industrialized economy battles to recover from last year’s recession. Both countries are in the AfDB’s list of 10 slowest-growing economies.

While the powerhouses in western and southern Africa struggle to gain meaningful momentum, the continent’s economic growth will once again be driven by East Africa, which will be the fastest-expanding region for the fifth straight year. Ethiopia, Kenya, Rwanda and Tanzania all feature on the AfDB’s list of 10 fastest-growing economies for 2019. Egypt, the biggest economy after Nigeria and South Africa, will also help drive growth. Output in the Arab world’s most-populous country will rise around 5.5 percent this year as the government’s structural reforms attract more investment.

Subdued growth in southern Africa is due to South Africa’s weak output, which affects neighboring countries, the AfDB said. While West Africa’s prospects are more upbeat, they may be clouded by risks including uncertainty in global commodity prices and security concerns in some countries, the lender said.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: EJ Yao [1], [2].

Andrew Stegmann

Rwandan President Kagame Makes a Case for Investment in Africa

Rwandan President Kagame said that Africa is open to business partnerships with the rest of the world and has since improved in openness and was moving as a bloc toward a free trade area.

President of Rwanda, Paul Kagame, has called for increased investment in Africa, saying that countries on the continent understand the importance of foreign direct investments on their economies and have been working to create a friendly environment.

Kagame was speaking on Thursday evening in New York, United States at an NBA Board of Governors meeting that attracted NBA club owners and executives.

The President said that Africa is open to business partnerships with the rest of the world and has since improved in openness and was moving as a bloc toward a free trade area.

“Africans are beginning to understand that there are certain things we have to get for ourselves as they seek partnerships with the rest of the world,” the Head of State said.

Kagame said that the African continent has also been rolling out several integration initiatives further improving the business conditions.

“Africa is open to doing business with the rest of the world, Africa has a lot to offer,” he said.

He added: We are seeing increased openness, we have created a continental free trade area with 50 African countries signing up to that, with a number of them having already ratified the agreement.”

“We have brought Africa together and united it through regional integration. This is of interest to Africa but should be of interest to the United States and other partners as well.”

The President told the American investors in presence that the right moment to invest on the continent would be now because their ventures would grow with the continent.

“This is the moment to invest in Africa. You don’t have to wait, invest now and grow with Africa as it grows,” the Head of State added.

Kagame said that one of the benefits of investing in Africa is the demographic dividend, with a majority of the population being youthful.

The President also shared insights into Rwanda’s recovery following the 1994 Genocide against the Tutsi, which claimed over one million lives.

He said that after the Genocide almost everything was a priority for the country considering the destruction.

“Everything was a priority and the biggest challenge was where do you start from? We started from scratch, we started by putting pieces together, bringing people back together, justice, security, rebuilding schools,” he said.

Over time, Kagame said, the country was able to create its own unique solutions and roll out initiatives which helped promote unity and reconciliation.

“In a period of 12 years, we created a justice system based on our tradition where we tried over one million people. We look back and find that national unity has been holding, justice has taken place, there has been forgiving,” he said.

Earlier Thursday, President Kagame held talks with the United Nations Secretary-General Antonio Guterres at the United Nations Headquarters in New York.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].