Title: The status, implications and challenges of business vulnerability in South Africa and its potential impact on sustainable business and economic growth

Biography:

Paul Kiyingi Kibuuka is currently the Director Economic and Business Research of the Bureau of Market Research (Pty) Ltd at the University of South Africa (Unisa). Prof Kibuuka worked for a total of almost 30 years for government, nine years of which were served in the Civil Service and 20 years in a Regional Development Finance Institution up to the level of Managing Director. He served as a visiting Academic Research Fellow and Senior Lecturer at the University of Witwatersrand, the University of Pretoria and as an Associate Professor of Development Finance at the University of Stellenbosch Business School respectively. He is a director of the Southern Africa Marketing Research Association, Droids Engineering and the former chairperson of the Liberty Community Trust Fund.

Abstract

The development of entrepreneurship and formal business activities may hold a key to South Africa’s economic growth path and addressing job creation. Although many estimates are available, there is no certainty regarding the size and distribution of formal businesses in South Africa. The University of South Africa Bureau of Market Research (BMR) Business Research Unit (BRU) was established in an effort to conduct in-depth research into the formal business corpographics and dynamics in South Africa. Making use of available secondary data sources (SARS Tax Statistics, Stats SA GDP and GVA numbers, Stats SA QLFS, and Stats SA Liquidations and Insolvencies Statistics) the BRU constructed estimates for the number of businesses in South Africa by economic sector. Expanding on these estimates, the BRU derived estimates for the number of businesses by province and business size for the years 2016 to 2020 and conducted a forecast for 2021. The results of the analysis are presented in this paper with a focus only on the formal business sector, that is businesses registered and liable for some or other form of tax – mainly corporate income tax (CIT – companies) and personal income tax (PIT – entrepreneurs). Value added tax (VAT) registrations are not considered as qualification for inclusion in the business estimates, since it includes other non-business entities such as universities, trust funds, municipalities, etc. Non-registered businesses generally found in the informal economy are also not included in these estimates. In the study the BRU defines a business at an “enterprise” level and not an “establishment” level with the enterprise concept referring to a legal/tax entity while establishment to business activities occurring at a plant, branch, franchise or sub-enterprise level. In the context of the South African formal business sector, the paper most critically highlights trends in global risks and major drivers but also international, national and subnational framework for assessing business vulnerability. Global business vulnerabilities, transmission, causes and implications are discussed in the face of the prevailing global game changers and cascaded to the South Africa retail sector vulnerability in sales, consumption and expenditure. The outcome of the formal sector estimates are presented in terms of the prevailing vulnerabilities trends by sector, size, province and local government. The paper winds with a forecast of South Africa business vulnerabilities potential impact on sustainable business and economic growth.