April / May 2018

April / May 2018

VOLUME 16       ISSUE 2

Quite a bit easier to run business with market stabilizing

Intention for most convertors is to increase employment

WE WISH to congratulate President Cyril Ramaphosa on his election as leader of South Africa and many if not most of you will agree that, even in the few months since his inauguration, there has been more stability in the market.

This observation is relevant in that it is far easier for business people to conduct activities when trading conditions are more consistent and the country’s currency is not a yoyo. Up till this point we were on a slippery slope with fixed investment into the country having declined for the past four years and if the previous regime had not stopped its activities things could have tipped the wrong way. But it has also been pointed out that the hinted cooperation between the industry and various government departments over the matter of the reintroduced linear tariff was not quite the dance and song scenario sketched in the last issue. For a start, it’s taking longer than expected for the tariff to be withdrawn, but at least the heavies over at the Department of Trade & Industry are cooperating and, we understand, are fast-tracking the process (it has been gazetted that the tariff will be removed).

On this occasion, however, the problem may have lain within: we hear that Plastics/SA knew of the unexpected reintroduction of the LLDPE tariff and at first did not react. It’s not surprising that people were confused as one needs to have intimate understanding of the tariffs system to comprehend that the simple incorrect insertion of a code could have consequences such as, by the time this has run its course, the unscheduled payment of several hundred millions by you, the convertors.

We are happy though that President Ramaphosa (by the way, I used to go to the same gym as him, but that was a while back) is far more business-minded that his predecessor. Politicians, you know, are not businessmen and business people are not politicians either, but it’s refreshing that the president has on a few occasions showed his awareness of the challenges faced by people running businesses. Yes, businesses do wish to employ people and the intention for most convertors is to increase employment, but that’s not because we want to be nice to people – it’s simply because the general aim of running a business is to grow it.

It’s fair to say, I think, that outside of the group of people who are running businesses (the owners and senior management) there is little understanding of the challenges involved, and this is not unique to Africa. Putting a sustainable business model together requires a lot of planning and understanding where just the financial obligations would TKO even the slightly less prepared. Just a few percent of the total number of people in the industry actually steer it, and it’s unintentional but inevitable that those outside of this circle will remain unaware of what’s involved. This is not something that his unique to our industry, and is practised all over the world.

But the one thing I can say is that a lot of the convertors are now, even as we speak, making substantial capex investments and continuing with progress. In fact, the pace is slightly up at the moment – and stories about that will be following.

 

Martin Wells,  Publisher

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