The Automotive Industry- South Africa’s premier employer

South Africa has one of highest unemployment rates in the world, sitting at a high of 26.5% at present. High levels of unemployment put pressure on the general efficiency of an economy, affecting even the employed. When there is diminutive money to spend, a cyclical economic problem forms. Businesses and employees are affected by a decline in the number of goods consumed.

Despite all these factors, South Africa is still considered one of the Top 10 most developed countries in Africa, it has an economy that is ranked the second largest in the African economies. This is mainly because South Africa has multiple industries contributing to its economy, the Automotive Industry being a giant amongst these.

The Automotive Industry contributes over R210bn in the South African annual GDP, placing over 660,000 jobs and R84.5bn in wages. It is largely based in the Eastern Cape, Gauteng, and Kwa-Zulu Natal.  Populaces in these provinces rely largely on this industry and its sub-industries, according to the AIEC’s report, it is estimated that each direct automotive job supports at least five other indirect jobs. The modern automotive industry in South Africa was launched in 1995 and has since continued to advance.

The financial responsibility for unemployed persons in South Africa falls largely on the government, with this realisation, the Government has put in place the Automotive Production and Development Program (APDP) which is designed to support and grow one of the country’s premier employers. The APDP hopes to achieve local production of 1.2 million vehicles annually by 2020 thus increasing employment opportunities.

The Automotive Supply Chain Competitiveness Initiative (ASCCI) was launched in 2013 as a measure to enhance localisation, production and supplier capabilities. Competition in this industry has significantly grown, more activity within an industry is always positive for the economy. However, global competition has also increased, thus creating difficult and challenging circumstances for the local Automotive Industry. Manufacturers are required to enhance quality, increase organisational efficiencies and drive innovative features into their products while keeping manufacturing costs minimal.

This prolific industry requires a wider source of investment, the Automotive Investment Scheme (AIS) has facilitated more public sector incentives purposed to develop and assist in the manufacturing of automotive components.

The Automotive Industry is a crucial financial contributor in the South African economy, it is responsible for a significant decrease in unemployment. Expectedly, the government has put immense drive and effort into the advancement and success of this industry, ensuring thrive and profitability. Undoubtedly the programs and initiatives put in place have contributed to the increasing growth of the local Automotive Industry.

Read more on the Automotive Industry SA

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Global uncertainty marks drop in business confidence

The South African economy has recorded its fair share in business confidence declines since the 2008 market global crash. Recently, in the 4th Quarter of 2016, the RMB/BER Business Confidence Index declined to 38 from 42 points. This would be equal to levels last seen in the 1970’s and 2010’s.


The latest Global Economic Conditions Survey from ACCA (the Association of Chartered Certified Accountants) and the IMA (the Institute of Management Accountants) point to a similar global business confidence drop in Q4. The findings of the survey highlight businesses and economic forecaster’s sentiment towards 2017 and a new age of uncertainty.



Fall in Government investment; changes in political landscapes and economic isolation are all contributing factors to the decline. The survey of over 4,500 finance professionals and business leaders worldwide has found that while the economic outlook has improved slightly in the US and China over the last quarter, the Eurozone has hit its lowest confidence levels since 2012. In South Africa, business confidence levies are lower than last seen post-2008.


44% of respondents expressed concern over falling income due to low levels of government expenditure, with another 43% reporting worsening business confidence.


Across the Eurozone, the resignation of Italian Prime Minister Matteo Renzi in December 2016, combined with a series of upcoming national elections, has led to a downbeat mood while UK business confidence fell sharply ahead of Brexit negotiations.


 “Current political uncertainty is clearly having an impact on global business confidence. In the US the Trans-Pacific Partnership is unlikely to be ratified while likely restrictions on trade with key markets including China and Mexico are also major factors here. In Europe, uncertainty over the outcome of elections in the Netherlands, France and Germany – which could lead to major policy shifts for regional trade and the future direction of the Eurozone – all contribute to a gloomy outlook going into 2017.”findings Faye Chua, Head of Business Insights at ACCA



Despite this and the slowdown in manufacturing worldwide, the global economy may be on course for growth in 2017, supported significantly by China’s growing response to its economic stimulus programme and the US maintaining a partial recovery.


In South Africa, there is an overall consensus that the Rands strength could beat 2015 levels. A stronger Rand equates to economic stabilisation, steady inflation, and stronger GDP figures. What South African economists are now looking towards is the level of uncertainty brought on by rapidly changing domestic and international economies, politics and trade figures. However, the State of the National Address  will give clearer guidance locally to the year ahead and market analysts can have more concrete views on how we emerge on international trade pacts.


To view the survey visit


Fieldwork for the Q4 2016 GECS took place between 24th November and 13th December 2016 and attracted 4,551 responses from ACCA and IMA members around the world, including more than 350 CFOs.




Reflecting on SDG’s in Relation to the WEF Resolutions



World Economic Forum (WEF’s) theme for the year of “Mastering the 4th Industrial Revolution” presented some of the challenges that developing countries face, although opportunities of creating new markets, re-engineering on the existing business strategies seemed to be the focus. A shift in mind set and capacity building to support national plans stemmed up as an engine for building towards a positive socio – economic activity in the near future. The core of the conversations aligned directly and indirectly to the Paris agreement and the Sustainable Development Goals (SDG’s) of supporting responsible business practises, narrowing the gap between the developed and developing countries and “making the world a better place”.

Progress Review

As an emerging market, South Africa (SA) is currently not yielding the expected growth prospects. Progress has been uneven in whether it is in ensuring access to internet connection or in being innovative in the prevention of illnesses instead of treating diseases. Limitations to internet connectivity impede transfer of knowledge, business expansion and creation of small businesses – while the latter tends to decrease the rate of production and adversely having a ripple effect in the economic activity of the country. Entrepreneurship has been cited as the driver of change for the African economies. However, gender imparity, quality education, access to finance, data sharing, sound governance structures, bridging human capital and infrastructure gaps are the keys to unlocking the full realisation of a transformative, inclusive and sustainable economic growth path. SA has taken great strides in addressing gender equality and women empowerment in both corporate and public enterprises, but there is still some rhetoric that needs to be transformed into action. Authentic support thereof for entrepreneurship through industrialisation still needs to be re-invented.

With climate change revolutionising the way business is done, SA and Africa at large have an opportunity to turn the renewables market into a massive growth area. According to the World Bank “one investor characterized the renewable programme as the most successful public-private partnership in Africa in the last 20 years. Important lessons can be learned for both South Africa and other emerging markets contemplating investments in renewables and other critical infrastructure investments”. The role of regional infrastructure development is critical in building a continuing socio and economic development.

Like many of the developing countries SA has the world’s youngest population to train and develop in building agile and robust sustainable business and government strategies in the future.  With climate change threatening food security and exacerbating slow economic growth. The emergence of new technology, as in biotechnology can be further developed in building a resilient and sustainable agriculture. Each country has to consider the ethical issues that this new wave of technology also brings forth as it develops its policies and regulations.

Whilst the prime responsibility to deliver rests with the government, according to PwC 87% of SA businesses are aware and understand that company responsibility lies beyond profit and that its performance is interlinked to the triple bottom line. The accountancy profession has a critical role to play in supporting the building blocks of a

What is occupying the Minds of CFOs?


ACCA’s market position as leader in support and research provides assistance to members and industry, drawing on current and future trends. ACCA as an association calls on members to provide feedback from the industry in order to assist with the correct support and research data.

The financial landscape brings a fair share of stress. CFO’s are required to juggle multiple tasks in order to remain loyal to a prescribed objective. This juggling “effect” is found in majority of local and international companies as they go about their day-to-day duties. In a recent networking, CFOs and Finance Directors shared what is occupying their minds and also the challenges they face in trying to find success in their roles.

CFO SA director Melle Eijckelhoff kicked the discussion off, asking guests what’s keeping them occupied at the moment. Amanda Albäck, Financial Director at Tongaat Hulett, replied – “the margin squeeze” as the biggest consumer of mind focus. The paradox of balancing ever-increasing operating costs against keeping customer price increases reasonable, and showing satisfactory profit growth is a reality that businesses find themselves having to deal with every day.”

Peter Walsh, Group CFO at Servest, mentioned “expanding into Africa” as one of the most stressful parts of his work. “There is a lot of pressure to get it right, but people we deal with quite unashamedly ask for facility payments, as they call it. There are massive opportunities in the continent, but there are also plenty of headaches.” Domestically, Walsh sometimes senses distrust for his company, because it can provide an integrated package of many different services, ranging from security to lawn mowing. “When we manage a property, there is one point of contact. If any part, regardless if it is security or landscaping, does not do well, it brings risks for the whole development. That is certainly a risk that we face.”

The challenges of Jobo Moshesh, CFO of SITA, are different. His parastatal company consolidates and coordinates the State’s information technology resources, leading to some unique issues. “A significant majority of our clients get money from National Treasury.  My role at SITA requires consistently maintaining a creative balance between ensuring the financial sustainability of the organisation, while effectively lowering the cost of delivering ICT services and solutions to our clients. This environment is governed with laws such as the Public Finance Management Act (PFMA), a piece of legislation that requires a combination of sound fiscal management and a commitment in practice to implementing effective governance” ( )

The mark that truly sets successful CFOs and Financial Directors from those that fail is the ability to; handle the challenges that exist currently and ensure that sound solutions are crafted to turn them to success; and further to look at the future and see the trends that may have direct or indirect impact on the business and the operations.

The upcoming ACCA event titled the Future of Finance Leadership Summit on the 20th August 2015 will look at future challenges on the horizon that will affect the way finance professionals in South Africa do business. Borrowing from the findings of the ACCA research reports titled, Future Pathways to Finance Leadership, one of the subjects discussed will be the twin peaks model of regulation. This regulation that will be monitored by the SARB and the FSB will modify the methods of operation that finance practitioners are used to.

The summit will also delve into the issue of Generation-Y (Report: Generation Y: Realising the Potential) and the motivations that drive this market. The need to understand this market needs no emphasis; this cohort will in the years to come be the backbone that the country leans on. The transfer of skills from the old generations to Generation-Y cannot be ignored by HR Specialists. This market is important to employers and also to the industry.

The rapid speed that the financial sector is evolving requires constant learning and re-learning. The ability to learn from the past, manage the present and anticipate the movements of the future will be the difference between efficient finance practitioners and those that struggle to confirm.

Employees’ Personal Projects


In our previous blog posting we discussed crowdfunding as a way CFOs and team leaders can use to finance employee projects. Crowdfunding is a web-based funding platform that allows project owners to showcase their projects and raise small amounts of money from a pool of prospective investors. But should CFOs and companies allow employees to engage in personal projects?

A business’s most valuable asset is no doubt its personnel, so it is important that the most investment is made in these. Managers everywhere are always coming up with ways to get the best out of their employees. In the current age, mutualism seems to be the way to go if any company desires to meet its objectives. The daily routine can be draining overtime for employees and some can be left feeling burnt out. So it is very important for managers to lookout for ways to keep their employees motivated.

Encouraging employees to take part in personal projects is a great way to help them stay motivated. More and more companies are allowing employees to chase their own dreams. Apple Inc. recently launch a program called Blue Sky where employees can use their time off work to engage in projects that are close to their hearts. The initiative gives some employees 2 weeks out of their normal work schedule to work on special projects.

Google has long offered a version of this called ‘20% time’ which allows workers to devote 20% of their work time to their own projects or hacks. Many of those have turned into full-on products like YouTube for Good.

It is only natural for some form of resistance to emerge from business managers in adapting such systems. Many fear that they might lose good employees should these personal projects become successful. But those that have been running with this systems have a different thinking. “Promoting intrapreneurship, or entrepreneurship within a company, keeps ambitious employees happy”, says Matt Britton, the founder and CEO of MRY, which has close to 500 staff members. “And for employees who like the security of working for a larger corporation, giving them the opportunity to venture outside of the routine of their day-to-day activities to experiment with entrepreneurship is a talent draw and keeps the company as a whole competitive and hungry”.

Konstantinos Konstantinides says that there two types of projects employees can engage in:

Work related: These are projects you think your employer should be doing, but does not. So, you need to prove a proof of concept, do a small prototype, etc., so you can prove to management that these are projects worth pursuing.

Non-work related: A new start-up or invention.

While this trend has boomed in more developed countries like the USA and UK, it might take a little longer for it to find fame in South Africa. It is only after CFOs and managers are exposed to its benefits that their reservations will thaw. However long it will take though, this is an innovative way to keep employees motivated. For CFOs and team leaders that wish to expand their knowledge on the subject of crowdfunding or peer-to-peer finance, ACCA has released a report that goes deeper into the subject called Technical Factsheet 186 Alternative forms of finance

Investment: climate change briefing paper

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As of late, it is almost impossible to overstate the grave threat of climate change. Several South African businesses are directly affected by weather and will, without doubt, be affected by climate change. However, in the face of compelling scientific proof, organisations as well as governments have been slow to respond.

The effects of climate change can be felt throughout an organisation as a result of new reporting requirements, changing taxation, carbon trading, different management needs, formulating adaptation policies, or changes required in governance. Increasingly, ACCA affiliates need to understand how the climate change crisis will impact businesses. For that reason, ACCA has collaborated with Trucost to develop content for the ACCA Investment: climate change brief paper. Trucost enables investors to understand how environmental issues could affect companies’ future earnings. The briefing paper covers topics such as adaptation, governance and management, investment, mitigation and taxation and provides essential information to assess the changing environment ahead.

Individuals and organisations that are dependent long-term investment are highly likely to have longer impacts because the consequences of climate changes increase over time. More and more investors are beginning to price climate change into investment decisions and allocate capital to companies that are fully integrating climate change considerations into their strategies, values and operations. According to the briefing paper, investors are starting to consider climate change in investments, focusing mainly on opportunities such as energy efficiency, clean technology and renewable energy providers. Climate change will eventually have physical effects on equity markets in the short, medium and long term.

Climate change is an urgent challenge that affects long-term corporate profitability. If climate change impact is not fully understood, organisations will encounter great challenges. Investors have a major role to play in promoting energy efficiency, alternative technology and reduction targets in the emission of harmful greenhouse gases. In the same breath, corporate leaders need to ensure that necessary steps are taken towards appropriate solutions and should steadily integrate climate change into investment analysis. Corporate leaders must rethink their business models, business priorities, and business sustainability, and to consider what climate change may mean for their objectives. The pace of climate change is accelerating. Acknowledging climate change as an inevitable factor, and recognising the need to adapt, involves bold decisions by business.

Wealth and investment management

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Post the global financial crisis, wealth and investment management entities were confronted with industrywide changes that were shaping the new normal. Factors defining this new ‘normal’ granted a number of organisations with the opportunity to reduce costs and allowed businesses to reposition themselves within the industry. Though managers were faced with the challenge of rebuilding trust among stakeholders, several organisations encountered essential changes that produced opportunities for both growth and amalgamation. Never before has the wealth and investment management trade been under such immense scrutiny and the focus of so much change.

Over the years, individuals have searched for means to improve their long-term quality of life. However, a number of people confused the concept of wealth with investing. In actuality, individual concepts of wealth and investment involve a different way of thinking and embody different lifestyles as well as value of life goals. In order to lead a sound and satisfied life, people need to have a complete understanding about wealth and investment. Essentially, investment refers to the process of investing money for a profit while wealth management refers to overall optimisation. Wealth management is not merely about investment. It requires professional knowledge and expertise. Wealth management also takes into account a number of dynamics such as age, lifestyle and physical condition. Although wealth management targets certain demographics, overall fortune is unbiased. During her presentation at the Wealth Management Conference, Nataliya Vovchuk, Head of ACCA Ukraine, Baltic and Caucasus States, stated that ‘wealth management usually goes with long-term well-planned investment.’

The global financial meltdown forced individuals and entities alike to form a solid foundation for a brighter future. The challenges of today’s fast-moving wealth and investment management market create massive prospects for organisations that can constantly provide superior and cost-effective customer service. Cited from the Integrated Approach (Gaining Competitive Advantage in Wealth Management) report, Accenture believe that the ‘ideal relationship management solution for wealth management incorporates the following elements:

  • Client management tools such as contact management, client data aggregation and customer insight delivery
  • Advice and investment engines supporting the needs assessment and financial planning process
  • Execution and monitoring of financial transactions agreed upon with the client, including internal and third-party transactions
  • Client accounting and reporting on portfolio and performance data
  • Compliance and risk management engines to confirm that transaction activity complies with client instructions and risk tolerance
  • Advisor performance management to track financial advisor performance against sales goals, commissions and other rewards, and established service levels’

Comprehensive, tailored wealth management is created upon long-term investment goals. A number of South Africa’s reputable financial institutions give advice to notable families, charities, trusts and foundations in the accumulation and preservation of their wealth. Their areas of expertise include asset management, stock broking and alternative investment solutions. Building wealth isn’t easy. However, wealth and investment management can provide South Africans with essential means of possessing fortune and living a meaningful, secure and productive life.