Youth Employment Incentive available

The Employment Tax Incentive (“Youth Wage Subsidy”) encourages employers to hire young and less experienced work seekers. A direct reduction on cost will also attract the small business community. It reduces an employer’s cost of hiring young people through a cost-sharing mechanism with government, while leaving the wage the employee receives unaffected. This incentive came into effect on 1 January 2014.

In  order to qualify the employer

• must be registered for PAYE,
• cannot be part of government, and
• cannot be a public entity.

Youth Unemployment (Photo credit: ProfAlliRich)

The individual must have a valid South African ID and be between 18 and 29 years old. The employee cannot be a domestic worker or connected to the employer in any way (relative of some nature). One cannot access the incentive scheme if you are in a special economic zone or if the employer is operating inside the special economic zone.

From nought to two thousand Rand there is a fifty percent to the monthly remuneration, from two thousand to four thousand, one thousand Rand is given back. Employers must calculate and claim the incentive on a monthly basis and must identify all the qualifying employees for that month. Obviously, employers will be asked to determine each employee’s monthly remuneration and calculate the amount of the incentive per qualifying employee as per the table which will be supplied on the SARS website.

Please find more details here: [SARS leaflet on the Employment Tax Incentive]

Family businesses successful

Studies show that over a complete business cycle family businesses outperform other types of businesses.

The truth is that some of the biggest businesses in the world are family businesses, including: BMW, Walmart, LG Group, Carrefour and Samsung.” Family businesses are so popular that they are estimated to account for between 70% and 90% of global GDP. However, family businesses have their flaws, nothing is perfect, but they are built on common values.

Social Capital

Family businesses have lower employee turnover rates. The ‘family-ness’ extends to customers, the community and society too. Clients are business partners that work through business cycles side-by-side.

Patient Capital

Family businesses are built and run for the next generation. Long-term strategic plans go the extra mile. The emphasis is on resilience and this is prioritised over short-term performance. A Harvard Business Review reported that family business debt averages only 37%, versus 47% for other firms. These lower levels of debt are an indication of the conservative management style found at family businesses. The result is in an inherent stability and sustainability.

Human Capital

The success and misconduct of family businesses Business are attributed to both, almost as if the business is a family member. It is one of the reasons why family businesses tend to be more ethical in their approach. Knowledge transfer between generations is also fast tracked in a family business. There is less a sense of protecting your self-interest and a greater willingness to equip the next generation (and the business) with the skills necessary to excel.

Ownership Structure

Family businesses are run by entrepreneurs. In most cases they remain privately owned, in the hands of the family. There is no pressure from external shareholders that might affect the strategic direction of the company. There’s complete alignment of management and ownership, which allows the company to pursue its objectives without interference.

Risks

Family businesses have to avoid the potential pitfalls of nepotism and internal disputes. They need to find the correct balance of competence and responsibility and it is often good practice to bring external skills in to assist the business’ development.

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Minister accepts business concerns

The minister for Economic Development, Ebrahim Patel, responded to submissions received on the Infrastructure Development Bill. He reported back to the parliamentary Portfolio Committee on Economic Development on 28 January 2014.

Objectives of the Bill

According to the Department of Economic Development (EDD), the Bill pursues  the following aims:

• Empower the state to deliver to the needs of citizens
• Strengthen coordination and alignment across the state
• Avoid unnecessary grounds for litigation and legal review
• Speed up delivery

Concerns raised by business community

Business organisations addressed the following concerns at the public hearing:

• the scope of the bill;
• the bill deals with approvals and authorisations which is already catered for in other pieces of legislation;
• the institutional arrangements; and
• the potential for duplication of requirements

Response by Minister

In his presentation the minister announced to tackle the following issues raised by business:

• To address concerns that private-sector infrastructure may, inappropriately, be included within the Bill and the SIPs, it is proposed that projects that are not public infrastructure should fall under SIPs only with the consent of the owner;
• To add a definition of “public infrastructure” to include (a) infrastructure owned by the state(b) Public-Private Partnerships (PPPs) and (c) concessioned infrastructure;
• To address concerns regarding the implementation of the provisions on expropriation of land for infrastructure; and
• To support relying on the 1975 Act, as several submissions proposed, with appropriate modification.

He made clear that the bill recognises the importance of EIAs (Environmental Impact Assessment) and the framework of NEMA (environmental legislation) and provides for a time frame within which the necessary environmental considerations need to be completed.

Furthermore, the Minister

• categorised the constitutional concerns well-founded and offered changes;
• stated to improve language to make provisions clearer to the ordinary reader; and
• announced to address ambiguity or lack of clarity which would contribute to grounds for disputes, legal action or project uncertainty.

Please find the complete reply here: EDD Presentation on Infrastructure Development Bill

New seed funding instrument for small enterprises

R25 million has been reserved by the Technology Innovation Agency (TIA) for a seed funding programme to boost small entrepreneurs with bright new ideas. However, TIA’s board might allow a further R30 million.

It is the first-such funding instrument in South Africa as the country joins a number of emerging countries that already use small grants to help entrepreneurs fund the initial proof of concept stage for new ideas.

TIA says while the fund is operating at some universities, the agency is still in discussions with other universities as well as provincial development agencies through which it plans to offer seed grants of up to R500 000 per entrepreneur. The seed grants would cover things such as initial proof of concept, prototype development, sourcing of intellectual property (IP) opinions, production of market samples, support of certification activities, piloting and scale-up of techno-economic evaluations, primary market research, as well as business plan development. In very special circumstances, an allocation of up to R1 million will be considered.

The idea is that techno-entrepreneurs that need funding will be able to approach these agencies, which would then forward names to TIA for approval of these grants. For entrepreneurs to qualify for TIA funding, projects must hold significant potential for further investment.

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