Hennie Ferreira, small business expert and CEO of Osidon, reflects on turning the economy around in a post-Covid-19 world.
How do we turn the economy around after the pandemic?
Government cannot fix the economy but they can create a deregulated environment for businesses to prosper unhindered.
If such an environment is created, we need entrepreneurs and business owners to do what they do best – which is building and growing businesses.
This is the only way to turn the economy around in a post-Covid-19 world. The rest of the world is also going through similar situations and some countries, like the United States, have rebounded due to their healthy business environment.
What role can small businesses and entrepreneurs play in rebuilding the economy and creating jobs?
In times like these, entrepreneurs are the most important drivers of change.
All businesses, including small and medium enterprises (SMEs), are at the centre of rebuilding the South African economy. Businesses are the only force that can create real and sustainable jobs.
Which red tape can we do without to fast-track economic recovery?
Red tape is the most important challenge to be addressed at the moment. Red tape was a burden before Covid-19, but now the situation is much more desperate.
If government doesn’t come to the party in terms of deregulation now, in the worst economic state we’ve ever seen, they never will.
Firstly, government can lower business taxes (currently 28%) to be more competitive in comparison to other countries.
Secondly, government must improve the ease of doing business in South Africa.
The country is 84th out of 190 economies on the World Bank’s influential Ease of Doing Business report (2019). Government must focus on making it easy to register a company, open a bank account and remaining compliant with the tax and business authorities.
The biggest inhibitor to economic growth we face in South Africa is our labour environment – it is easier to get divorced than it is to dismiss an employee who doesn’t do what they should. Businesses cannot flourish in an over-regulated labour environment.
Unions have too much power and prevent effective labour market reforms, making business prosperity a pipe dream. As an entrepreneur, I propose small businesses be exempt from certain labour regulations.
How can digital transformation help create jobs and boost growth in an age of social distancing?
One of the positive side effects this pandemic had is the acceleration of digital transformation. Social distancing has forced people to think differently about how they do business. This is a very exciting time and business owners should embrace digital transformation in their business strategies.
The Fourth Industrial Revolution has kicked into a new gear and digital transformation had reach a next level. This means new jobs will be created and certain skill sets will be reinvented and reshaped, creating opportunities for growth.
How can we encourage investment in SA, as the world opens up again?
In my opinion, the worst of the pandemic will be over by the end of the year.
Investment is connected to red tape – no one wants to invest in a country with too much red tape and too many inhibitors to economic growth.
As the world returns to normal, investors are looking for solid opportunities to bring economic growth. Entrepreneurs stand at the ready to make these opportunities work. It is the government’s responsibility to transform South Africa into a business friendly country, through deregulation. If you look at India, which is a developing nation and growing economy, investment is pouring in because of their efforts to deregulate. We have to follow their example.
If government listens to investor, entrepreneur and business owners’ concerns, we can attract large-scale investment and move closer to economic prosperity, which in turn will address other societal ills, such as the slow rate of transformation, unemployment and high crime levels.