The South African Council of Shopping Centres (SACSC) recently invited Daniel Silke, one of the country’s leading political analysts and futurists, to speak to South African retailers and property management teams at a recent networking breakfast.
Silke shared about his insights for the 2017 economic year, highlighting that South Africa’s near-term future remains in the balance.
“This is a year in which South Africa will either emerge from the bonds that have held us back, or it will be a year that will continue to provide concern and even possibly set the scene for a fairly combustible near future in advance of the 2019 general election,” Silke says.
Silke also adds that South African retail was changing and retailers need to “buck up” and accommodate these methods of retail.
“Previous warnings and predictions about retail going online are becoming true. The use of technology across the board, not just in retail, in every aspect of society is changing the bricks and mortar offerings of retailers.
“In South Africa, we are behind in terms of Internet connectivity. When we do embrace this technological wave like the United States has, we will see how dramatic technology affects every aspect of business in the country. The shopping centre and retail industries in SA need to ‘buck up’ and realise that internet-based retail such as Amazon is going to enter the country in a very big way. Retailers need to tailor their products for the future.”
Speaking about the recent Budget Speech, Silke said that Gordhan’s speech didn’t offer anything stimulatory for the economy with regards to retailers.
“Many were hoping for leniency; unfortunately more money is going to be taken from not only the wealthy, but from all citizens earning within the tax bracket. Middle class income earners will also see their contributions to SARS upped this year simply because the tax brackets have not kept up pace against rising inflation; we call this ‘bracket creep’. This means subtly that the middle-income earners will contribute, if not more, than the ‘super rich’. This will certainly have a dampening effect with regards to their retail spend. The good news is that there was no VAT increase this year-if there was, then I would argue that it would be a very poor year for retail in South Africa.”
Silke believes that the country needs to become investor-friendly again if the economy is to improve and unemployment is to decrease.
“We need both domestic and international investors. Domestic investors are ‘sitting on piles of cash’ and are reluctant to invest that cash because they are uncertain about the policy framework within the country. We have also seen a reduction in foreign investment over the past 18 months or so. With regards to making the country viable for investors, I get concerned about the reliance on the State to get things right. The history of the country mentions that the State is in charge of making South Africa equitable.
“I do not have a problem with that. I have a problem with the fact that State-owned enterprises and the like have proven to be inefficient and they have proven to sap money out of the pockets of the South African tax payer. We need a de-regulation on State-owned enterprises. We need to make these enterprises efficient in order to free up spend and curb the current government’s ‘heavy hand’ with regards to spending and make South Africa investor-friendly again.”