The ongoing power cuts have a detrimental impact on businesses, both large and small as some small ones were forced to close down because of the unaffordability of alternative energy solutions, which will have a detrimental effect on the South African economy, says Institute of Directors South Africa (IoDSA) CEO Parmi Natesan.
On the other hand, she said that larger businesses, that were able to afford alternative power solutions to keep running, have an increased cost of doing business which will ultimately be passed on to the consumer.
Natesan said the continued economic pressure impacts the discretionary spending of both corporations and individuals. “We expect this to continue into 2023, with news of possible FATF greylisting, which will make doing business with South Africa even more difficult.”
On Tuesday, John Dludlu, SBI CEO said ahead of the national budget to be tabled on Wednesday, the SBI called on Finance Minister, Enoch Godongwana, to support small businesses and their employees, households and families battling the high cost of living and load shedding.
“We appeal to the minister to spell out how the government will be supporting South Africans from the effects of the 18% tariff increase which was granted by the regulator to Eskom. This increase, if effected, will worsen the hardship of households which are suffering from high food prices especially of sources of proteins,” Dludlu said.
IoDSA said that while there was certainly a growth potential for the South Africa economy, however political instability continued to have a detrimental effect.
It said that apart from the lack of service delivery, wasteful expenditure and unethical behaviour seen in the past, the country was now also seeing increased levels of emigration at a time when South Africa could ill afford this brain/skills drain.
The organisation which represents directors and professionals charged with corporate governance and governance said last year was a challenging year from an economic point of view as increased pressures on corporates and individuals continued to impact on their discretionary spend.
Despite this, the IoDSA said it had a successful year, which spoke volumes about the increased relevance of corporate governance.
“Corporate governance was in the spotlight more than ever, with the findings and recommendations from the Zondo Commission being published, some of which pointed directly to the role of directors. A business like ours was also able to get back to previous levels of physical engagement with the lifting of the lockdown regulations, which was welcomed as networking is a key need for our members.”
Natesan said they thus began this year on a strong foundation. “We expect challenges in the economic and political landscape, but are hopeful that business can be innovative and agile to overcome these challenges.”
The representative body lamented the fact that there was currently no minimum criteria to serve as a director.
It said people could get appointed to serve as directors on board without having served before, without understanding their legal duties, without being members of the professional body for directors.
“There is no minimum skills or education or qualification required. We believe that directorship needs to be professionalised like any other profession.”
The IoDSA owns to SAQA-recognised professional designations for directors. It said that through a rigorous process, candidates are assessed and awarded the designations as a symbol to the market of their competence to serve as directors. It also added that if individuals were required to be Certified Directors or Chartered Directors in order to serve, the benefits will be that they have been assessed against the director competency framework, they have to keep up to date via continued professional development, they have to retain their membership of the IoDSA and their designation can be removed if they transgress the Code of Conduct.
IoDSA said that it was good that South Africans seemed to be seeing more accountability of directors, be it through director delinquency cases or the JSE censuring listed company directors. Natesan said that the country needed to see more of this. “Directors have a serious and onerous role to play in companies and need to be held to account. Director appointments need more due diligence to ensure that the people being appointed have the necessary skills, knowledge and experience to be effective in the role, as well as the necessary moral compass to do the right thing in the best interest of the company.”
BUSINESS REPORT