**taps sign**
Consider the following traditional business path for manufacturing :
1. Person with capital identifies a market in South Africa or abroad to manufacturing goods in South Africa
2. They form an organisation, and put the capital into it
3. They buy or rent a property to build a factory on
4. They purchase equipment
5. They hire employees
6. They manufacture said goods
7. They distribute said goods to retailers
8. Profit?
Now imagine every single step the South African government has failed.
1. Person with capital identifies a market in South Africa or abroad to manufacturing goods in South Africa
1. Market size in South Africa is tiny due to decades of zero growth
2. Also, have fun getting capital like a business loan due to the national credit act.
2. They form an organisation, and put the capital into it
1. If your target market is any organisation that abides by preferential procurement policies and you are planning on doing more than R10m a year in turnover, you have to give away a portion of your capital to a Cyril Ramaphosa stand-in.
2. Oh and if your BEE partner sells to a non-BEE partner, you are no longer compliant.
3. Also, don't forget to budget for solar panels because Eskom cannot supply electricity.
4. We also have nice first world things like requiring environmental management plans and all that nonsense.
3. They buy or rent a property to build a factory on
1. Not the worst part at the moment, but have fun if you buy an open piece of land and there are squatters on it
2. Have fun about getting water and electricity to said land if you are developing it yourself
4. They purchase equipment
1. Not sure on this, but knowing retardation, likely tariffs on imported equipment
5. They hire employees
1. You take a massive risk by hiring employees, especially employees in an industry with closed shop agreements, meaning you are not allowed to determine how much your employees are paid
2. That is if you can find employees as we have a skills shortage
3. if you have bad employees, firing them is expensive
4. Even if you need to downsize, labour law make it expensive.
6. They manufacture said goods (operations)
1. Need water for your business? You know for toilets, not even manufacturing requirements? Tough luck if you are not in the Western Cape.
2. Need electricity? Oh have fun with this one, not only is electricity expensive, it is unreliable, and you are asked to turn it off at a moment's notice to save the ANC from embarrassment. But it will still get cut off.
3. You also need to pay for security as the South African police service has much more important things to do than ensure criminals go to prison.
4. Your employees will steal from you, and will get their unions involved when you institute disciplinary actions when they steal
5. Also, they can go on strike at a moment's notice and shut down operations because they feel like it.
6. Oh, and the road to your factory will not be maintained as well. That is racist colonial thinking.
7. They distribute said goods to retailers
1. Want to send goods to the other side of the country? Not going to happen with Transnet.
2. Want to export goods via ports? Not going to happen via Transnet.
3. So you have to ship via road, which is far more expensive, not to mention all the thieves operating in the road industry targeting trucks
8. Profit?
4. Make a profit? Congratulations, you now have to pay a corporate tax rate of 27%, which is higher than countries like France.
5. Want to pay a dividend? Oh that also has a 20% tax rate
6. Oh and if you sell your business, you will be subjected to inhumane amounts of capital gains tax
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