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2Q18 GDP confirms technical recession

South Africa's economy contracted by -0.7% q/q (seasonally adjusted and annualised) in 2Q18, the second consecutive contraction, which confirmed that the country entered a technical recession in the second quarter.

The print was significantly worse than we had anticipated, but can largely be ascribed to historical revisions that stretched all the way back to 1Q17. While these revisions had no impact on the 2017 economic growth rate, 1Q18 growth was lowered to -2.6% q/q from -2.2% initially.

Growth was dragged lower by five of the ten sectors of the economy, underscoring just how broad-based the weakness is.

Agricultural output fell -29.2% q/q, subtracting -0.8 percentage points (pps) from growth, while transport sector growth fell -4.9% (-0.4 pps). The manufacturing, trade and government sectors contracted by -0.3% q/q, -1.9% and -0.5% respectively, shaving a combined -0.4 pps from the headline number.

The only sectors to make any meaningful positive contribution were mining, construction and finance, real-estate and business services, all of which came off a very weak base. We don't expect their positive contribution to last. In short, there were very few, if any, positives to take away from the figures.

Furthermore, government does not have the fiscal headroom to add any impetus to growth, particularly as current spending continues to crowd out infrastructure investment. This was borne out by government fixed investment contracting by -2.1% q/q, and SOE investment falling -10.1%, while compensation of employees for the government sector increased by 7.5% y/y - the average for all sectors was 6.6%.

There is also no support coming from the household sector, as household consumption dropped -1.3% q/q, with clothing, transport and recreation spend bearing the brunt of consumers tightening their belts.

Data at hand thus far, including the August PMI and August vehicle sales, suggest that growth for the rest of the year will continue along these lines, and we believe that growth forecasts will inevitably miss on the low side this year, jeopardising tax revenue and fiscal consolidation targets, and in turn, drawing the unwanted attention of rating agencies.

Customer Service for local neighbourhood businesses

Customer Service is by no means the ambit of only large organisations with dedicated customer care or customer relationship management departments - it's a fundamental foundation-stone that should be applied in any business, no matter what it's size or nature of business. Basil O'Hagan, author of the book, World Class Customer Service for South Africa, shares some of his research with us.

Staff or management who don't care about their customers can be the death of any business, particularly in this age of social media where one bad experience can very rapidly be 'published' on a social media network for all to see and, as we've come to appreciate, sometimes even witness. Even if you are a small business servicing a specific neighbourhood, there are some basic guidelines you should adhere to...

1. Creating a welcoming environment for all customers - existing and new

Over and above a welcome sign or greeting, some businesses find that putting up a sign offering all visitors to their premises a '5-Star Service Guarantee' works effectively. They place five golden stars underneath their promise, which serves a dual purpose. Firstly, it reminds staff to keep service levels high, and secondly, it puts customers at ease. Moreover, if the environment and the manners of the staff make customers feel welcome and comfortable, they're more likely to spend time and money on site.

If you have a waiting area, consider placing a proper coffee machine in sight, with fresh milk and sugar/sweeteners in tasteful containers alongside. Make sure used mugs and cups are collected regularly and never leave used containers in sight of visitors. Likewise, if your reception area is a waiting room, such as in the case of doctors or professional practitioners, get rid of old dusty magazines.

2. Have a distinctive greeting

Train staff, even those who answer telephones, NOT to rattle off your company name or their own name so quickly that it is incomprehensible. It smacks of laziness and gives the impression that your staff are simply 'going through the motions' of tedious daily tasks. A strong greeting that is clear and in a welcoming tone can make all the difference.

3. Never underestimate the value of a freebie

People want value. An effective way to deliver that is to offer a token gift with every purchase. It doesn't have to be something too expensive, sometimes a sweet or chocolate will do the trick. The gesture increases the likelihood of a positive customer experience, just remember that it won't make up for bad or poor service.

4. Apologise or offer explanations when you see queues building

If something goes wrong, and a long queue develops, make sure staff who are able to move around don't hide away behind counters; they should go out onto the floor and address the group of waiting customers. Whatever the reason is, communication is the key to managing this kind of situation.

Diamonds (and ledgers) are forever

In a previous article we likened the wave of interest in cryptocurrencies to the diamond and gold rushes in the previous century. The analogy is close in that cryptocurrencies have both miners and traders, and the mined product has little real value but derives its' value by agreement that it is a store of value and a medium of exchange. What makes cryptos so different from gold or money is the enormous power of the distributed ledger. Cryptos are the first largescale use case for distributed ledgers but cryptos are by no means the only use of this world changing technology.

Few people get excited talking about ledgers. It just feels like accounting 101 all over again. Ledgers are far more than a record of accounting transactions, as a ledger can consist of any data that is governed by rules. At a high level there must be an agreement about what is in the ledger, when the data is allowed to change and a trust that the ledger is accurate.

Speculation is that distributed ledgers will be as big an innovation as antibiotics, fertilizers, GM foods, computers and cellphones. Ledgers form the fundamental basis of market capitalism by defining the value items that we own, our identity, our status as a citizen and even who can make the rules (and their levels of authority). Ledgers currently record everything from your bank account, to your passport, to whether you are married and even to who sits in parliament.


Thanks to RMIT Blockchain Innovation Hub who have given us a brief, 4,000-year history of evolution of ledgers. Ledgers have been around since Babylonian times, when baked clay tablets were used to record a range of items from taxes to live-stock. The next big improvement came in the 15th Century in Italy, with the widespread adoption of the paper based double entry bookkeeping. With this innovation, multiple ledgers or journals could be kept in sync, with detailed and general ledgers. This lead to the first profit and loss calculations and a balance sheet could be compiled to track the value of assets, debts and owner's equity.


The Venetian Merchants in the 15th and 16th centuries were using double entry accounting to analyse the income statements and capital allocation of their fleets of trading ships. The merchants used accounting to invest wisely and only in valid projects. This resulted in overall savings for the society and an economic boom. Along with double entry bookkeeping, the merchants benefited from limited liability partnerships (companies) and merchant courts to regulate trade. Unfortunately for the Venetian's, a risky sea route was found around the tip of Southern Africa, leading to the collapse of the centuries old silk trading route. Traders now had an opportunity to own the supply chain from the East, which lead to the formation of the first large multinational companies (the Dutch and English East India Companies).


This was the start of the rise of large corporate firms and large government bureaucracies. The ledgers are maintained by a central authority and the firm's value depends on how well capital and contracts are managed. The firms needed central structures to maintain contracts with customers, suppliers, employees and regulatory bodies. The management of ledgers required so much of the company's resources that firms grew bigger to benefit from economies of scale. With the development of computers in the 1970's, ledgers were digitized onto databases, but the databases are still only as reliable as the individuals controlling the data within them.


We have seen some spectacular losses in large multinational banks and firms (Enron, Lehman's to Steinhoff). Customers and investors trusted that the central authorities in these firms was maintaining and validating their centralised ledgers correctly. This is exactly the problem that the distributed ledger - blockchain solves. It uses a system of rules (or protocols) that enables developers to ensure trust by programming code. This is a completely new way of working. Trusted transactions are conducted directly between two or more parties, which are authenticated by a mass collaboration of people powered by collective self-interests, rather than by large corporations motivated by profit.


The early internet dealt solely with the flow of information, emails, articles and social media. Blockchain has started what is termed the internet of value, which could record your assets or physical items that have value to you. Especially relevant are cases where the items are connected to the internet (so called 'internet of things'). Combine this internet connectivity to 'smart contracts' and the true power of blockchain emerges.


Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman. Not only does the contract specify all relevant details, but it also can automatically enforce obligations. A typical use case could be that your business supplies a product that goes through many links in a supply chain. At each link the item's data is kept on the blockchain. The final stage a customer agrees the sale and guarantee terms on a pre-formatted digital contract. The contract is validated by hundreds of people, and any changes on the contract would notify all the people. Your business knows instantly to whom the item belongs, when it was bought and even to make a new item. Each party in the supply chain can see the product's secure digital record, which can automate certain tasks and payment. The role of accountants, lawyers, auditors to enforce the contracts will be dramatically reduced.


Blockchains can be used by firms, but they can also be used to replace firms. Management of central ledgers of contracts and capital will shrink, reducing information and transaction costs. Economies of scale will reduce and small businesses will be as efficient as large corporates.

This blockchain revolution has not however, proved to be plain sailing. Smart contracts are limited by what can be specified in the data and algorithms. Creating data that represents physical digitized assets has proved difficult. Firms have proven to be fairly poor at maintaining records of ownership and value of assets.

This is set to change as several financial institutions are experimenting with blockchains to house distributed ledgers for brokers, clearing houses and settling trades. This could change the current structure of financial institutions, by removing a layer of middle men and making trades instantaneous. It's likely that in these developments a large number of similar blockchains will be generated. It will take some time for certain blockchains to become recognised as the standard.

Like the merchant courts in Venice, there will be a lot of work required for trusted advisors to develop and maintain these blockchains. Ledgers are set to be around forever, but the real use case to watch out for, is where the ledger achieves an economic activity that was previously impossible. Blockchain technology is so new that it's ripe for entrepreneurs to match the capability with an economic need.

Do you disrupt or optimise to achieve innovation?

Every 60 seconds, the world creates an average of 98 000 tweets, 695 000 Facebook updates, 11 million instant messages, 168 million emails and over 1,820 terabytes of data. The modern-day business must search through all of this to try to identify trends that can inform product and service development, or it can choose to totally disrupt.

Business analytics appears to be moving away from the "disruptive innovation" fad to a more balanced approach that requires interpreting data in a way that can inform decisions about whether to optimise existing systems and models, or totally disrupt the market with a totally new way of doing things.

It can be shortsighted to perceive disruption as the only form of innovation - sometimes optimisation is the ultimate form of innovation because it looks to solve a root cause of a problem by fixing rather than replacing altogether, so understanding the difference between these two approaches is crucial for businesses.

Disruptive innovations are defined as technological innovations that are often 'ahead of their time'. The first automobile was not immediately mainstream, neither was the telephone that replaced the telegraph, the PC that replaced the typewriter, or Wikipedia that replaced the encyclopedia, all of these fit the definition of disruptive innovation.

Businesses that survive and thrive need to understand what drives their business - not only demand and supply factors, but also what kind of sales conversations they need to have to enhance customer experience. These factors relate to optimisation, and would form a foundation for later disruption, because without extracting insights from the data gathered, and combining this with research that can build new business models and enable the experimentation of new ideas, success might be compromised.

The successful implementation of disruptive ideas comes with viewing data as a flow of information, rather than at a specific point in time, so it's important to avoid viewing each customer event as an isolated incident, and to rather consider the entire lifecycle of that customer to further enhance interactions with them.

Essentially, there needs to be a paradigm shift in the way businesses use data to inform their decisions. Disruption may not always be the most ideal or cost-effective approach, even though it is the current 'buzzword'. Moreover, many businesses lose their way because they see data and analytics as an IT function, as opposed to a business function that requires IT input and support.

Once data is viewed as a tool that can inform all decision making in a business, rather than being confined to a single business function, a business has a greater chance of success. At the core of it all though is that business thinking needs to start moving away from using data to innovate purely through disruption. In most cases, the most effective way to innovate is to use data to understand what is currently not working, and then to focus initially on simply optimising to improve efficiencies.

Insurance trends that will impact business

Technology certainly has disrupted the taxi and car hire sectors, and the insurance industry is by no means immune. We're hearing more and more about insurance cover at the click of a button, robo-advisors and the disintermediation of brokers, so if you're in fintech or the digital sector, how do you spot potential opportunities?

Malesela Maupa, Head of Insurer Relationships at FNB Insurance Brokers, says there are five key trends that are likely to shape the South African insurance industry this year. These developments will affect not only service and product providers, but also their clients and customers, so no matter where you are in the value chain, track the landscape and monitor the changes that are underway...

# 1: Regulatory Amendments

  • For financial service providers, there are two major changes that will impact the regulations they operate under, and their revenue models. They're called the RDR, or the Retail Distribution Review, which essentially boils down to how financial advisors charge clients for their advice, and the Twin Peaks model. The latter introduces a new prudential regulator located in the South African Reserve Bank (SARB) and is intended to ensure that consumers are offered more protection. As part of this Twin peaks model, the Financial Services Board has been transformed into a dedicated market conduct regulator called the Financial Sector Conduct Authority.
  • On 2nd March 2018, the registrar of Long-term and Short-term Insurance published proposed amendments to the Policyholder Protection Rules ("PPR") for comment. The intent is to:
    • align the PPRs with the Insurance Act 18 of 2017,
    • provide for certain conduct and business related requirements, and
    • provide for microinsurance product standards
  • There's also the Protection of Personal Information Act, or POPI, which regulates how client and customer data is managed. It's going to impact collection, storage, and sharing of data that any business holds, and will most certainly impact current marketing and company database practices. Businesses will have one year within which to comply from the date when the operational sections of the Act are proclaimed by the President in the Government Gazette.

And finally, Treating Customers Fairly, or TCF, a consumer protection policy that aims to ensure all financial institutions adhere to required customer treatment standards.

# 2: Climate Change

The increase in frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes, will impact the costs of insurance for the average consumer or business, and the bottom line for insurance providers.

# 3: Underwriting

Predictions are that increasing losses and insurance costs will lead to more stringent underwriting on the part of insurers, and the need for more proactive risk management measures.

# 4: Product Innovation

The race is on to develop new products that are better aligned to our modern lifestyles, and experts predict we'll not only see changes to the way in which insurance is sold, but also to the types of insurance. "For example, as South Africa increasingly becomes a litigious country, more liability-based products like Social Media Liability cover are being introduced to the market," says Maupa.

# 5: Technology

Traditional financial services players are under threat from start-up disrupters who focus intensely on technology and data analytics tools to run their businesses. If businesses don't embrace these new tools they could be left behind.

Legal Assistance for Small, Medium and Micro Enterprises (SMMEs)

South Africa's SMME sector has for several years felt burdened by red tape and regulatory requirements. In his 2018 State of the Nation Address, President Cyril Ramaphosa undertook to "reduce the regulatory barriers for small businesses" - but it cannot happen overnight, and it certainly won't remove the very real possibility that you could, due to non-compliance as an SMME, find yourself in need of legal advice should the need arise, either as the aggrieved or charged party.

If you do run a micro or smaller business you may well have short-term insurance cover for the vehicles and equipment you and your staff use, but legal insurance for civil, labour and criminal matters may not have occurred to you. Nevertheless, whether you employ one or fifty-one employees, you are not immune to actions for unfair dismissal or retrenchment, unfair labour practice, or non-compliance with other regulations.

It's not in the comfort-zone of the first-time business owner, nor is having a lawyer or labour law expert a practical option for most SMMEs whose focus must and should always remain on maintaining cash flow and growing revenues and margins. Bad debt levels are also inclined to rise in the kind of business climate South Africa has found itself in more recently, and these could threaten to send you into an ever-spiraling vortex of reliance on credit that can often be avoided.

That's why legal cover for an SMME is a prudent choice. There is a legal plan specially designed to cater for smaller or medium-sized businesses who simply don't have the budgets to manage attorney fees that can start at around R3000 per hour.

South African law can be divided into three broad categories - Labour, Civil and Criminal matters - and the FNB Law on Call Business Plan now offers one of the most comprehensive legal packages that cover a range of eventualities across all three categories. The Plan also offers guidance about how to comply with the regulatory requirements that govern different types of registered entities, and can assist with debt collections procedures and recoveries. With the Law on Call Business Plan, business owners can rest assured that they will not have to spend thousands on drafting of contracts as the Plan offers drafting of up to 50 legal contracts per year.

The policy provides you access to professional and commercial lawyers, with legal expenses cover between R150 000 and R500 000 per matter. You can also get a face-to-face consultation for any legal matter that is not covered under the policy.

For more information on Law on Call Business Plan, click here

•CCMA, Bargaining Council or Labour Court matters •Contractual disputes with service or product providers •Advice on criminal matters instituted against directors or officers or sole owners
•Unfair Dismissals •Drafting of up to 50 legal contracts per year •Bail applications
•Unfair and inappropriate working conditions •Damage claims involving business-registered vehicles •Appeal or review assistance on matters previously handled by Law on Call
•Assistance with disciplinary proceedings, grievance procedures and hearings •Tenant evictions
•Retrenchments •Rental or lease disagreements
•Discrimination •Appeal or review assistance on matters previously handled by Law on Call
•Wage, strike and lockout disputes
•Restraint of trade agreements

Neighbourhood Marketing to help grow your business

Marketing is not just about huge billboard, print, radio, TV and digital advertising - it also extends to other sometimes very simple tactics that collectively can influence perceptions about your small neighbourhood-based business. Basil O'Hagan, author of the book, 415 Action Packed Neighbourhood Marketing Tips, shares some of his thoughts with us.

Leverage any sponsorships of local school or suburb teams or initiatives

You should use any appropriate opportunity to inform local residents and the community about your sponsorship - ask to write a small notification piece or take out a small advert in, for example, school newsletters. Local signage can also be an effective way to let people know that you're sponsoring a local initiative or sports team.

Give back

As members of a community, there's a social responsibility to contribute where we can. If it cannot be done in cash, it can be done in kind, so in the case of, for example, a catering establishment or coffee shop, donating surplus produce or untouched leftovers might be a great starting point.

Some small businesses make donations based on a percentage of turnover over a particular period, others use their premises to host an event dedicated to a particular cause. It's a way to increase traffic to a local store, and it helps shine a spotlight not only on the cause, but also on your business' support of that cause.

Run Promotions that benefit Not-For-Profit Associations

Browse the internet to find local community, charity and not-for-profit business associations in your area. A good way to link up with these organisations (and to make members aware of your existence) is to offer them discounts, or to pledge a percentage of each sale to their organisation or association.

Invest in some Out-Of-Home locally-based signage

Investigate the possibility of investing in some form of outdoor branding that can raise awareness of your business. This could be a branded gazebo, a branded car, or perhaps even a kiosk. These allow you to have a presence at local neighbourhood events.

Free coffee for visitors in uniform

This kind of promotion is suited to restaurants, coffee shops, petrol-station convenience stores and similar places. A common approach is to offer free, bottomless cups of coffee to police, nurses, paramedics and the like - it's a goodwill gesture that can establish your premises as a core part of the local community; and it can also give customers a greater sense of security at your premises.

The binary art of selling

We often mention that we live in the digital age, where information flows at faster speeds, is more complex and is more accessible. As much as this information can be analysed by businesses to make better informed decisions, the real question is, is there room to alter the sales landscape?

South Africa has roughly 52% of the population that use the internet, with 70% mobile penetration. With more than half the population being enabled to use either the internet or a cell phone, businesses need to ask themselves whether digital retail strategies are the next evolution of selling. A simple, yet startling fact by GSMA is that in 2015, mobile technologies and services were already generating 6.7% of Africa's GDP, amounting to $150bn of economic value and supporting 3.8m jobs.

As more consumer groups become digitally savvy, businesses need to shift both their approach and "shops" from being traditional to being digital. According to a 2016 e-commerce report, South Africans frequently return to their online store, purchasing media, books or travel products. They are primarily based in metropolitan areas, visit social media sites (or check emails) while shopping and are quite at ease with technology. These types of insights and analytics in the digital space are growing significantly to assist businesses target consumers via social media - recall those banner ads you see when visiting Google or Facebook. Around 37% of businesses are currently using social media or viral marketing as their primary marketing driver, however this number needs to grow over the next few years. With 72% of reported online shoppers using price comparison sites, businesses cannot afford to not price their digital store products competitively. Further, around 60% of customers prefer to pay via credit card services rather than on delivery, implying that customers want convenience when completing their shopping. By also shopping online, you allow customers to view reviews of your product, which can help boost your sales through indirect marketing.

What companies must understand about using online platforms to do business is that a firm can use digital platforms to either promote their brand or as a virtual shop. These two approaches are inherently different, with brand promotion being the more rewarding approach - Brand promotion is rewarding simply because many South Africans are on social media sites throughout the day. By increasing brand awareness, you are able to drive customers to your store in a more cost effective manner compared to traditional advertising.

When promotions are then paired with offering the convenience of shopping online, enabling a high level of customisation or personalisation of your products and even delivery of your products, you enhance the customer's experience leading to loyalty and a much higher lifetime value.

What this then establishes as a first point of call is that businesses need to assess the feasibility of branding and/or selling in the digital space - many businesses tend to focus on the creation of a virtual store, without promoting the business itself.

The branding argument is much simpler to make - it is more cost effective and can reach a wider and more diversified audience. To sell online requires the business to evaluate whether their products are suitable for online selling - products that rely heavily on tactile sensation (touch and feel) are not ideal if the customer is viewing them on a screen. Once feasibility is established, you can then proceed to create an online catalogue along with payment mechanisms - elements of which are available from banks.

The advocacy here is not to imply that traditional stores are not suitable, but rather that businesses need to understand whether their products can be seen as more attractive to their customer, if their customer are digitally savvy - taking the product to the customer in a manner that is attractive to them.

The digital revolution and the trending themes in 2018

The digital revolution is beginning to make real headway in how work is done in corporate South Africa. The current trends suggest that 2018 will start to see policy catch up, regulations fall into place, and in essence, countries such as South Africa will start to come to terms with the rise of the 4th industrial revolution.

"2018 rotates around strategic action - being aware of your surroundings yet narrowly focused on doing what you need to do. I also expect 'digital' to be the new 'analytics' - the capability of businesses to harness data in a customer-centric way will be the key to thriving this year," says Dr. Yudhvir Seetharam, Head of Analytics, Insight and Research at FNB Business.

Seetharam shares 5 broad themes that will drive analytics in 2018:

Regulating the rise of alternative currencies - With the rise of cryptocurrencies, many countries have had to start working on ways in which to regulate them. In many cases regulators have been slow to react in publishing a framework for managing this digital revolution. The South African Reserve Bank (SARB) has started investigating a number of regulations with the view of creating a framework to govern cryptocurrency. Governance here is crucial to ensure mainstream adoption, which could ultimately benefit the financial system.

Implementation of POPI - 2018 will see the impending implementation of POPI - where personal information protection becomes a priority. In 2017, we saw large scale data security breaches, which hurt the confidence consumer's place in the digital competency of businesses. Businesses, especially those that rely on data, need to be aware that security and protection of personal information is paramount. Further, usage of this data needs to be justified in advance. Purchasing contact information to cold-call customers is a good example of the misuse of data; and a violation of the POPI act for both the buyer and seller.

Cashless environment - Along with cryptocurrencies, consumers are moving towards a cashless environment. We are most inclined to pay for what we buy digitally as opposed to cash these days. We've seen an increase in this trend as these payment solutions are often coupled with banking apps. It's often easier and more convenient to pay using your smart phone or via a card swipe that does not require pin authentication.

Improved competition - Competition is also heating up, with fees and value propositions being at the forefront of the customer's mind. Businesses and customers want value for their money and ideally this comes in the form of lower fees (or an increased perception of value). With many new start-ups in the banking space, we are likely to see more competition on rates and fees - all being driven by a digitally offered value proposition.

The 4th Industrial revolution - Last, businesses of all sizes are moving towards the "4th industrial revolution" - where automation in the form of robotics underpins higher efficiency and lower costs. Software vendors offer many of these solutions which can assist your business in producing more for less.

"At the end of it all, the use of data and analytics is becoming more prevalent in running a business than we previously thought possible. Data-driven decision making is required for companies to succeed in a time where volatility and uncertainty run high. Going digital is not just about keeping up with the Joneses, but about keeping up with the times," concludes Seetharam.

2018 Budget Review

21 February 2018

Consumers to bear the brunt of a tough budget

Key takeaways

  • VAT rate raised by 1 percentage point to 15%.
  • R36bn in tax increases and R26.4bn expenditure cuts in 18/19.
  • R12.4bn allocated for fee-free higher education in 18/19
  • Should be enough to delay a Moody's downgrade, but action on structural reform needed before midyear reviews to stave off a downgrade completely.

Macroeconomic outlook

The economic environment has improved markedly since the 2017 MTBPS, largely on the back of accelerating global growth and an improvement in local sentiment. The better domestic backdrop was highlighted by Treasury's slight upward revision to their 2018 household consumption forecast (1.7% from 1.2% in the MTBPS) and a much larger 1.4 pps increase in their gross fxed capital formation expectation. These two drivers saw the GDP growth forecast lift from 1.1% to 1.5% this year, rising to 2.1% in 2020 (Table 1). The increase in VAT necessitated a modest upward revision to the infation forecast (5.3% this year).

Table 1: Macroeconomic forecast revisions

Source: National Treasury, FNB Economics


Tax increases worth R36bn were proposed in the 2018/19 budget speech. The bulk (84%) of the revenue will come from a higher VAT rate and limited fscal drag. The value added tax rate (VAT) was raised by 1 percentage point to 15% which adds R28.7bn to revenue. Treasury acknowledged that raising personal income tax rates further would have negative consequences for growth, and instead opted to provide limited relief for fscal drag (income categories not adjusted for infation) which will add R6.8bn. R6.3bn relief was apportioned to tax payers earning less than R750,000 per annum.

Medical aid tax credit refunds will also be adjusted by less than infation and is expected to net R700m for the fscus. An increase in estate duty from 20% to 25% for estates worth R30m or more will add only R150m, but a 52c/l increase in the general fuel levy, higher excise duties on alcohol and tobacco, as well as the introduction of the sugar tax (health promotion levy) will add a combined R4.5bn. An increase in the ad valorem excise duty from 25% to 30% will be imposed on motor vehicles, which could blunt some of the recovery expected in new vehicle sales. The scale of the tax increases are likely to be growth and infation negative, but we expect some of the pressure to be offset by more accommodative monetary policy over the short to medium term.


Over the medium, expenditure is expected to grow by 7.6% to R1.94 trillion in FY20/21. The budget once again did not do much to address the expanding public sector wage will. The wage bill is still expected to grow by 7.3% over the medium term. The budget notes that additional measure may be required should the outcome of the pending wage negotiations not reach a sustainable agreement.

Expenditure has been reduced by R85.7bn over the medium term - the government aims to achieve this by reducing spending on capital transfers by R39.7bn, goods and services by R16.5bn and currents transfers by R27.4bn. National treasury recognizes the reductions will shift the composition of spending away from capital and towards consumption expenditure. This in our view is not sustainable in the long-term (Figure 2).

Additional spending:

  • R57bn towards fee -free tertiary education
  • R4.2bn for National Health Insurance
  • R2.6bn to social grants, to partially offset the impact of tax increases on the poor
  • A provisional allocation of R6bn set aside in 2018/19 for drought relief in several province
  • Additions of R5bn in 2018/19, R3bn in 2019/20 and R2bn to contingency reserve

Table 2: Revenue measures

Source: National Treasury, FNB Economics

The expenditure ceiling has been lowered marginally over the medium-term; it nonetheless, expects a R2.9bn breach in FY2017/18 due to the recapitalization of SAA and SAPO.

Figure 2: Consolidated expenditure by economic classification

Source: National Treasury, FNB Economics

Figure 1: Revenue and non-interest spending forecast

Source: National Treasury, FNB Economics

A narrow deficit, stronger currency and lower borrowing costs is expected to stabilise government debt. Gross national government debt is expected to rise to 56.2% of GDP in FY 2021/2022 and gradually decline to 55.3% of GDP in 2025/26. This is notably better than the 60% rise in debt that was projected in

Figure 4: Government debt

Source: National Treasury, FNB Economics


The government is back on the fscal consolidation path, while the rate is slower than what was proposed in the BR 17, it is considerably better than what was proposed in the MTBPS. The proposed tax increases, expenditure cuts and improved growth outlook are expected to reduce the consolidated budget defcit to 4.3% in FY 17/18. Over the medium term the defcit is now expected to stabilise at 3.5%

Figure 3:Consolidated budget deficit as % of GDP

Source: National Treasury, FNB Economics

Risk to the fiscal outlook

The biggest risk to the fiscal outlook are uncertainty around the growth forecast, the contingent liabilities of state owned entities and the public sector wage bill.

Bottom line

Today's budget has put government finances back on a trajectory that attempts to consolidate the fiscal position over the next few years. We believe it will be enough to delay a downgrade by Moody's next month. However, we are concerned by the drastic shift in expenditure which now leans more to consumption rather than capital expenditure. If maintained the government could potentially be setting itself up for further downgrades down the line. Furthermore, the budget was light on detail regarding structural reform, but we are mindful that such policies are not part of National Treasury's mandate. Lifting the structural constraints will require policy responses that involve all state departments and also align the country's policy trajectory with that of the National Development Plan. With an increased tax burden, it is vital that

Disclaimer: The information in this publication is derived from sources which are regarded as accurate and reliable, is of a general nature only, does not constitute advice and may not be applicable to all circumstances. Detailed advice should be obtained in individual cases. No responsibility for any error, omission or loss sustained by any person acting or refraining from acting as a result of this publication is accepted by FirstRand Group Limited and / or the authors of the material.

It's the festive season - but also for burglars!

Don't let your business premises become a target over the December holiday period. Statistics show that business burglaries during this time of the year increase exponentially, especially in empty offices and buildings.

Taking out business insurance can certainly help small businesses recoup financial losses incurred from theft or burglary, but the inconvenience and potential impact on operations pose a serious threat that financial compensation cannot always make up for. Festive season losses are quite large and happen over a relatively short period. Taking precautions requires a twopronged approach.

Firstly, you need to make sure you have appropriate business insurance cover, which means insuring all valuable assets and understanding the replacement values of those assets. It's a good idea to contact your broker and make sure all monetary values for your business assets are up-to-date.

Business interruption cover is something that all businesses should consider, but it can be very technical and business owners should contact a trusted broker to discuss the most appropriate option.

Secondly, there are some practical measures you can take to protect business premises and property during the holiday season - always remember that thieves do not only steal physical assets, but can also steal electronic data:

Switch off appliances. Turn off lights, servers and appliances that do not need to be operational during the festive season. Not only will you avoid accidental fres, but you will also save on your business' utility bill. Conduct a thorough inspection for potential fre hazards. Make sure you dispose of newspapers and store all fammable material away safely.

Lock all valuables: Burglars will target computers, laptops, devices and stock. These items should ideally be placed in a secure room or safe, and should not be left lying on desks or in the line of sight.

Activate alarm systems: Test your alarm systems and make sure they work properly. It's always a good idea to activate new and stronger passwords and alarm codes from time-to-time. Alert your alarm company of the period over which your business will be closed, and supply them with at least two emergency contact people.

Burglar bars: Secure burglar bars and place them on the inside of any windows, this acts as a deterrent and can slow burglars down. Make sure your surveillance cameras are working, if you have them. Signs warning of the presence of CCTV cameras can deter crime, so place them in plain sight.

Keep records of all movable assets: Take an inventory of computers, stock, keys, and gate remotes. Also, list all serial numbers for equipment - this helps to speed up the insurance claim process in the event of theft.

Safeguard essential documents and information: Ensure that the documents that are essential to your business, such as loan agreements, insurance policies, business contracts, shareholders agreements and most importantly, documents containing client details, are safely stored away and backed up. Where you have client details in electronic format, it is essential to ensure that this is safely stored.

In these tough times, when businesses are struggling to survive, the last thing you as a business owner want is to be caught off guard by a robbery. If you don't take the necessary precautions and put tighter security measures in place, or make sure you are not underinsured, you're laying yourself open to the threat of festive season crime

To make sure that your business assets are adequately covered or for any questions, contact one of our FNB Insurance Brokers ( ) and quote Business Insurance as a reference.

Grow your business with the FNB Business Directory

Running and growing a business is not always easy, especially in these tough economic times. Business owners need to keep their existing clients happy, manage their staff and attend to all administrative, marketing, financial and accounting needs. They also need to constantly adapt their product and service offerings to stay relevant (more so now than ever before) and of course they need to carefully manage costs to ensure maximum profitability.

One area that small business owners often fnd challenging is growing their business and attracting new clients. This is understandable as there are only so many hours in a day, and these hard-working individuals have much to do in running their business. Marketing your business can be done very smartly nowadays, largely due to the growth of digital marketing platforms such as websites and social media networks, and having the know-how to use these platforms in conjunction with conventional methods such as print, fyers and brochures, and face-to-face meetings with prospective clients. Online advertising across premium websites or through advertising networks like Google Display Network has become a must-have part of the marketing mix, but there are also other ways of tapping in to the power of online advertising.

FNB understands all of this and recognises that it can be very hard and often expensive to grow your business. With this in mind FNB has developed the FNB Business Directory, a portal that can expose your business and its products and/or services to the entire FNB banking customer base. The Business Directory lists and displays the information of participating FNB businesses and can be viewed on and on the FNB App. Your business's details are displayed in Google map view making your business easy to find. Additional functionality includes the ability to upload a company logo as well as digital versions of documents such as product lists, catalogues and menus.

FNB Customers browsing the Business Directory will be able to call or email you from the FNB App once they have selected your profile. The Business Directory is FREE to all FNB Business Banking clients - all you need to do is register and populate your business's details using your Online Banking profile or through the FNB App

For more info on the Business Directory or to register,email and quote BTBD as a reference or call 087 730 5790 .

FNB Increases Support for SMEs

FNB Business is taking proactive steps to increase and diversify existing levels of support for SMEs in line with the objectives of the National Development Plan. The bank is implementing strategy that supports government's national imperatives to accelerate transformation and inclusive economic growth

FNB is well positioned as a leading business banking franchise. We continue to focus on understanding the needs of entrepreneurs - something we call "businessism" - basically understanding the challenges that businesses have, and trying to help solve for this. FNB has made great strides in increasing access to digital banking offerings enabling young businesses; facilitating quicker and effcient access to credit and fostering inclusivity in lending activities, ultimately supporting the development of the SME ecosystem.

FNB's strategy encompasses four primary objectives:

  1. Providing innovative and market leading solutions across all business segments with a strong focus on fast growing niche areas such as Agriculture, Franchising, Medical Businesses and Education
  2. Providing real value to customers through the provision of non-traditional banking solutions like Instant Accounting, Payroll and BEE accreditation; cloud based document management solutions; CIPC registrations and maintenance, to mention a few
  3. Enabling, growing and supporting financial inclusion and access to market for SMEs through Structured Lending, Enterprise Development, Supplier Development and Preferential Procurement initiatives
  4. Development of value propositions for underserved markets yielding economic and social impact

The public-private sector partnerships have proved to be highly effective within SME ecosystems in emerging markets. He points out that FNB Business is no stranger to working with the public sector and has a number of active initiatives already operational, including:

  • FNB's Vumela Enterprise Development Fund partners with the Jobs Fund to mobilise funding to early stage, scalable SMEs with the primary aim of effcient job creation. The Vumela Fund has committed in excess of R200m, supporting 1591 jobs to date;
  • Working closely with the Gauteng Provincial Government to incubate and mentor their SME suppliers, aiming to reach 1,000 entrepreneurs through this engagement;
  • FNB Agriculture has risk sharing initiatives with both Khula and SEFA totalling R220m, and is working together with the Banking Association and the Department of Rural Development and Land Reform to facilitate land reform transactions;
  • Furthermore, FNB has established an academy which provides technical assistance and training to Public sector

FNB will continue to seek partnerships to access alternate funding sources, risk sharing relationships and business development support platforms. An example of this is the additional funding FNB has accessed from the IFC for deployment into the SME sector. A progressively deeper engagement could stimulate opportunities for FNB to play a leadership role in currently under-banked and underserved markets. Our commitment to empowering SMEs includes helping businesses navigate the legislative and regulatory requirements in setting up a business, which we facilitate through FNB's CIPC business registration partnership, as well as Instant BEE certifcation offering.

FNB Business Instant Solutions includes a suite of offerings including an accounting system, which also affords payroll administration, invoicing functionality, cash management and budgeting. This offering is provided free of charge to the entrepreneur. These offerings are making a signifcant difference, with 185,000 businesses availing of Instant Solutions and more than 3,000 CIPC applications being facilitated monthly.

Our ongoing contribution to the national agenda remains a priority to us and we are excited about the opportunities and latent value we believe our strategy will unlock.

For more info, visit:

The FinTech Gold Rush

Legend has it that a young boxer and entertainer had a conversation with an old Australian miner in Kimberley, South Africa, in the 1870's. The young man learned that Kimberley's volcanic pipes were made from two types of rock. The top layer was yellow and easy to mine, while the blue rock underneath was harder to mine, but had a far higher diamond yield. The young boxer bought as many concessions as he could from miners selling when they hit blue rock. Twenty years later, Barney Barnato would become one of the richest men in South Africa's history.

Like young Barney Barnato, we are nowadays faced with yellow and blue rock decisions each day - some could help us become wealthy. It all boils down to our knowledge of the trends, timing and having the capital to invest.

The emerging industry now is not mining, but rather the FinTech sector, where financial services are provided using software and technology. For many the FinTech era can be likened to the diamond rush - if you have the knowledge, you can turn it into wealth. So if you had bought $1,000 worth of the cryptocurrency Bitcoin in 2010, when it was trading at around 6 cents for most of the year, you would today have an investment worth $81 million

Aside from cryptocurrencies, there are other forms of non-physical digital currency that demonstrate our pursuit of a cashless society. In East Africa, M-Pesa is a good example - it's gained traction by enabling money transfer using cellphones. M-Pesa did not succeed in South Africa, in part due to the success of competitors like FNB's eWallet. With an eWallet you can get cash from any FNB ATM or selected retailers for up to R5,000 a day without opening a bank account. A recent cashless trend is where a physical card number is converted to a digital token, further securing sensitive card information. You can then use the token to make payments in apps such as Google, Apple Pay and FNB's Banking App. Cashless has now moved virtual, and a virtual currency is issued and usually controlled by its developers. It can be used and accepted by members of a virtual community.

Blockchain controlled virtual currencies, are pegged as the innovation 'to watch'. It was developed in 2008 by an unknown group of developers and can be described as an incorruptible, decentralised public ledger of all transactions (such as Bitcoin) that have ever been executed. Think of Blockchain as thousands of data spreadsheets linked or chained together on the internet that cannot be copied. The spreadsheets are all regularly updated, so that all existing spreadsheets ultimately share the same information. A single version of the spreadsheet can be viewed by all participants simultaneously. Cryptocurrencies recorded in blockchains are being described as the new digital 'gold'; with the granddaddy of them all, Bitcoin, currently having clocked up around $67-billion worth of currency value

Bitcoin users are issued with a bitcoin address called a public key, and the Bitcoin is issued with a private key. This key is the 'password' that allows an individual to spend his or her bitcoins, and they can keep their bitcoins in a digital wallet or vault. Like the diamond and gold rushes of old, Bitcoin also has miners. Instead of shovels they use graphics cards and computers, and they literally sell computer processing power in return for payment in fractions of the cryptocurrency. The fraction is pre-set in the crypto's algorithm and can be seen as an inflation rate that is kept steady in the same way gold is mined at a relatively steady rate hence maintaining its value. Simply put, the miners validate a transaction and its price, and put this information into a data block. The speed at which they are first to put a valid block into the chain is called the hash rate, and the faster the miner's hash rate, the more cryptocurrency they earn.

Cryptocurrency FinTech is disrupting the traditional notions of a central bank controlling physical money flows and it is raising interesting debates about legal status, money supply, exchange controls, and tax reporting requirements. Japan and South Korea have already approved Bitcoin as a legal tender, with Russia and India braced to follow. In other countries, like South Africa, to withdraw Bitcoin you have to transfer your Bitcoin back to your local currency bank account. You can, however, use Bitcoin to buy at a number of online retailers such as Takealot and Bidorbuy.

These Fintech 'rushes' are the more valuable to learn - they may be more complicated than the mining of old, but their supporters argue it's far less labour-intensive than digging in a deep hole in Kimberley.

Invest your cash reserves wisely

Managing your SME business' cash fow is not just about maintaining revenue levels and ensuring that money owed is collected timeously, it is also about managing your cash reserves and balancing the risk of any investments you might make

Ancley Jacobs, CEO at FNB Savings & Cash Investments, maintains that there are three key considerations to bear in mind regarding investing any cash reserves on behalf of your business. Apart from the obvious desire to make sure the invested capital is fully guaranteed, you should ensure that you uphold the main principles:

  • Determine what percentage of your cash reserves you require instant access to, for unexpected expenses or cash fow management and then deposit into an account which gives you instant or quick access to your savings; (e.g. the Money on Call, 48 Hour Cash Accelerator or 7 Day Notice)
  • Make sure some of the cash reserves are invested for the longer term for planned future expenses such as tax or staff bonuses; (e.g. the 32 Day Flexi Notice or our range of Fixed Deposits
  • Ensure that the savings or investment account gives you a return that curbs the effects of inflation.

If you are uncertain of future cash flow needs, then an account such as the FNB 48 Hour Cash Accelerator will balance the need to have quick access to savings, without compromising on healthy growth. "The solution is developed with the specific cash flow and growth needs of businesses in mind and, as such, it combines a very competitive interest rate with an appealing 48- hour notice period to access cash invested, coupled with the assurance that the capital and quoted returns are fully guaranteed," says Jacobs.

For more information, e-mail us at

eWallet Pro helping the recycling industry

Sadly there aren't yet enough businesses with women at the helm, but those who are making their mark have done so not only through their business acumen and attitude, but also with a little help from using appropriate cash management solutions

Monique Van Niekerk runs a business called Gauteng Metal Recyclers. She has seen the company grow from two to thirty six employees since 2006. Much of this growth took place when she joined as financial manager, which lead to her fnally taking over the helm and buying the company in 2014.

Smart financial management and using cash management solutions and services has helped the business through some tough times, "from one vehicle to a small feet of nine skip trucks, bakkies, other vehicles & machinery."

The company focuses on processing and recycling scrap metals, and runs a network of skip bins dotted around various locations, as well as relying on collecting metal from suppliers, some of whom are small vendors who bring in scrap metal from off the streets. Monique pays these suppliers in cash, which for many years meant holding fairly large quantities of notes on her premises. Following an armed robbery, the business explored alternatives that would be safer and more cost efficient. Monique started using FNB's eWallet Pro, which enabled the digital transfer of money to vendors, and the purchase of scrap metal from smaller suppliers who have no formal bank account - their payments can be made to cellphones or reloadable eWallet Pro cards.

eWallet Pro is a solution that is available to all FNB customers who have access to its Online Banking Enterprise platform. It enables businesses to make payments without the risk and cost associated with handling cash. Many FNB customers use eWallet Pro to pay wages to staff who have no bank accounts, issue eWallet Pro cards for allowances and even petty cash. For more information please contact the eWallet Pro team at and quote BTWP as a reference.

Surviving tough times requires a survival strategy

Every entrepreneur has heard the adage "cash fow is king", and they know that effective cash fow management is essential for business survival. For your business to stay on route, it requires a strategy for dayto-day management as well as razor sharp focus on the specifc financial areas of your business. This is especially true in tough economic times when external factors out of your control will impact your business.

Through understanding a business' working capital cycle, it will assist an entrepreneur in identifying those specifc areas of the business to focus on. If you can reduce the number of days it takes to collect money from your debtors, or stretch the terms you get from creditors when the pressure is on, you automatically enhance your business' cash fow.

In an uncertain economic environment, there are added pressures on your debtors and creditors, which in turn can have a knock-on effect on your business if sound financial principles are not applied. The right banking partner can be your survival guide in tough times and help you find the right financing solution, to get your business back on route

Great examples of survival tools are our Debtor and Stock financing solutions that help businesses pay suppliers while they wait for their debtors to pay them. Our working capital experts will tailor a funding solution using your debtors and stock to meet your unique financing needs. For more information e-mail and quote BTDF as a reference

Reduce business costs through cashless payment solutions

There probably isn't a business that isn't considering how to reduce costs as it navigates its way through the frst few months of a technical recession and South Africa's credit ratings downgrades. One area to explore is how you handle cash payments.

Instead of carrying cash on your premises or issuing countless cheques, or paying staff who have no bank account in cash, consider using a digital payment solution - more commonly referred to nowadays as a mobile or digital wallet payment. FNB offers companies a digital payment solution called eWallet Pro, through its Online Banking EnterpriseTM platform, allowing affordable payments to anyone, without their need for a bank account.

Withdrawing of cash and issuing of cheques cost businesses at least R570 and R950 respectively for just 10 people, while eWallet Pro will only cost R110! These kinds of solutions are gaining in popularity and are particularly relevant in our African context, where large numbers of the workforce are not necessarily formally banked. It's not only a practical solution, but it can also save on costs that can rapidly multiply and add up to signifcant charges.

There are a number of options - so you can choose to pay anyone with a valid South African cellphone number by 'transferring' a payment directly to their cellphone, or you can issue them with a reloadable eWallet Pro VISA card, and simply load the amount due to them onto the card using the bank's Online Banking Enterprise platform.

There are three kinds of digitally reloadable cards; an eWallet Pro Generic card and Gift card, used for employee solutions such as salaries, wages, allowances or incentives and business solutions such as loan payouts, aggregator payouts or petty cash. There are also the Merchant Restricted cards, which are used by many companies, for example, the Medical Aid, Insurance and Retail sector, and you can choose to have the card co-branded with your company logo on it. The card holder uses the card at any pre-selected pre-approved outlet of your choosing.

eWallet Pro removes the risks and costs associated with handling cash and cheques, and using eWallet Pro will make payments simpler, safer and more efficient.

For more information on eWallet Pro go to or to be set up with eWallet Pro, please contact the eWallet Pro team at and quote BTWP as a reference.

The Rebellion

Saryx Engineering Group (SEG) wins FNB Business Innovation Awards 2018

The FNB Business Innovation Awards, supported by EndeavorSA, is a programme that aims to recognise true innovation excellence, whilst emphasising the importance of business scaleability - a significant driver of employment.

Saryx Engineering Group (SEG) was announced as the winner of the 2018 FNB Business Innovation Awards (FNB BIA) on 7 June 2018.

Founded by two female entrepreneurs, Ingrid Osborne and Julie Mathieson, Saryx offers an affordable hosted software service called HSEC Online, that digitises company safety and compliance. This helps companies of all sizes track document compliance (for company, people and equipment), share these documents securely, and provides a transparent, collaborative workflow platform to do so, accessible on any platform at any time.

"Being chosen as a winner among the nine great businesses fundamentally affirms our business model. We have done some amazing work and continue to evolve while moving the needle in the industry using new innovate and technological tools," says Ingrid Osborne.

"Winning this award is a step in the right direction to access global markets. We are very excited about the future and the opportunities that this accolade will afford our business," adds Julie Mathieson.

FNB Business will sponsor Ingrid Osborne and Julie Mathieson to participate at the coveted two-day Endeavor International Selection Panel (ISP) in Argentina this year in September 2018. The ISP brings together high-impact entrepreneurs to present their business to world-leading business personalities for a chance to be part of an exclusive global network.

Mike Vacy-Lyle, CEO of FNB Business says the FNB Business Innovation Awards is an incredible platform that showcases business excellence and the potential of South Africa's entrepreneurs. Since the launch of the awards in 2015, we have seen winners and finalists go on to become thought leaders and employment creators in their respective industries. This attests to the ability of the initiative to enable businesses with the highest potential to scale to access global markets. Congratulations to (SEG) for winning this prestigious award and to all the businesses that took part in this year's competition."

"The FNB Business Innovation Awards is a celebration of the remarkable journeys of some of our country's entrepreneurial role models. These founders are committed to building successful local businesses that drive much needed economic growth and job creation," adds Catherine Townshend, Managing Director of Endeavor South Africa. "Congratulations to Ingrid Osborne and Julie Mathieson on a remarkable journey in founding and building the business to this point. Through Endeavor and the exposure at the ISP, we are confident that they will be even more motivated to think bigger and engage with a network of like-minded ambitious entrepreneurs that are driven to build a local business with a global footprint".

What was the selection criteria this year?


  • Leadership Potential: Leaders with the vision, energy and skills to take their business (and themselves) to the next level.
  • Commitment: Entrepreneur must be willing to participate in a high-impact, detailed programme.
  • Ecosystem Impact: Will become role models by giving back (both financially and non-financially) to the broader entrepreneurial ecosystem.


  • Turnover: Business must have a minimum annual turnover of R10-million.
  • Ownership: Founder-led business.
  • Scale and acceleration: The business is scalable, in other words it has the potential to grow and become a market leader.
  • Unique Business: It cannot easily be replicated.
  • Inflection Point: Business at a key inflection point in growth trajectory.

Factors such as brand and reputation, stakeholder relations and goodwill, environmental sustainability, social responsibility and quality of governance were all taken into consideration during the process of selecting the winner. For a comprehensive list of the finalists, judges, and background on the competition, please visit

Ensure you comply with new minimum wage requirements

Parliament has passed two bills that work hand-in-hand - the National Minimum Wage Bill and the Basic Conditions of Employment Amendment Bill. All that remains is for the bills to be sent to Parliament's upper house for ratification; they will then be signed by President Ramaphosa and become law...

It has been a much-debated topic and continues to be so. However, the first step towards a 'blanket' national minimum wage has been taken. For now, the category of worker who will benefit from the National Minimum Wage Bill is every worker not classified as an agricultural worker, farm worker, domestic worker or expanded public works programme worker. These categories are still governed by what are called "sectoral determinations". The sectoral determinations work on cycles of a few years at a time and will also be subject to review over the coming years.

Compliance for all workers not governed by sectoral determinations will require a minimum wage of R3500 a month, or R20 an hour.

The National Minimum Wage Bill also establishes a national minimum wage commission, whose task it will be to review the national minimum wage every year. The intention is that this body will ultimately also take responsibility for the current commission that advises the minister on sectoral determinations - this will happen once sectoral determination wage minimums are phased out.

The sectoral determinations that fall outside of the parameters of the National Minimum Wage Bill include farming and agriculture, where the minimum wage is currently set at R18 per hour. Domestic workers are entitled to a minimum wage of R15 per hour, while expanded public works programme workers are guaranteed a minimum wage of R11 per hour.

It is important to note that these minimum wages should be calculated to exclude any amounts paid to cover extras such as transport, equipment, tools, food or accommodation allowances, or any gratuities such as bonuses, tips or gifts.

Provision is made for an employer or an employers' organization (registered in terms of section 96 of the Labour Relations Act or any other law), acting on behalf of its members, to apply for an exemption from paying the national minimum wage.

Please be aware, however, that settling on your own definition of the type of worker you employ does not guarantee compliance. You may inadvertently be breaking the law, so you do need to check the definitions for different types of workers in the Basic Conditions of Employment Act, and make sure that you are not governed by one of the sectoral determinations. You should also check the definitions pertaining to hours of work and, more specifically, the definition of 'ordinary hours'.

You will also be required to keep records of payments (to be used in the event of a dispute or inspection).

Explore New Financing Options To Help You Grow

Running into cash flow problems because debtors aren't paying their bills can be the single most cited reason for many businesses closing their doors. It's not about reflecting the growing revenue, but rather an ability to collect the revenue timeously that is the challenge, but there are formal financial solutions to the problem, so it's worth educating yourself about some of the options available.

If you're the kind of business that has to invest in carrying stock, or you're finding your debtors falling foul of paying you on time, Invoice Discounting (where you can use your unpaid Accounts Receivable as collateral for a facility) is worth exploring, and now it comes with more flexibility than some of the more traditional Debtor Finance facilities.

FNB's Debtor Finance Lite is a variation on a more traditional Invoice Discounting facility, and bridges the gap between a traditional overdraft and an Invoice Discounting facility. Benefits include:

  • Borrowing more against your capital base than traditional working capital facilities, which means less pressure on your business' investors
  • unlocking up to 65% as an advance of the amounts owed (traditional overdraft products typically unlock up to 55% of your debtors book)
  • and including invoices that are outstanding for up to 120 days (overdraft products typically cut off at 60-days)

Debtor Finance Lite also reduces the admin related to standard Invoice Discounting - you submit financial information and the limits remain static for a month at a time, which gives you certainty in planning your cash flow.

Should you wish to find out more about this innovative working capital solution, please contact your banker or email us at

Summer crop area down on last year but better than earlier market expectations

After a slow start to the 2018/19 summer crop season with severe dryness during December 2018 in the growing areas particularly in parts of the North West and the Free State, conditions rebounded early in January 2019 as good rains provided the much-needed moisture for planting. Farmers proceeded to plant and although some have reportedly planted beyond the planting window in the west which put them at risk of frost damage.

The latest National Crop Estimates Committee (CEC) report indicates that farmers have planted 2.27 million ha of maize this season, which is slightly down by 2.2% year-on-year (y/y). Of the three major producing provinces, the biggest decline is in the Free State (FS) with a 5% drop in planted area. Surprisingly, the North West (NW), which accounts for 21% of the total country area under maize, has surprisingly raised its area planted by 1% year-on-year (y/y) to 487,000 ha. Both the FS and the NW experienced severe dryness during December 2018 which raised fears of a significant drop in output for the 2019/18 production season.

As expected, the Mpumalanga (MP) planted area estimate came in 2% higher y/y mainly due to a 7% increase in white maize area. Yellow maize area for MP is up 1% y/y and still accounts for the biggest share (70%) maize area in MP. Oilseed crops were however the biggest losers with soybeans and sunflower area falling by 5.5% y/y and 26% y/y respectively at 444,00 ha and 743,600 ha.

While the drop in maize area was expected given the bad conditions towards mid-season, the figures were much better than earlier market expectations. This might bring a total crop of closer to 12 million tons of maize, enough to meet the country's annual consumption if conditions improve further in the near term. Considering the huge carryover maize stocks of 3.2 million tons, supplies will remain adequate for the year ahead. The implications are for a further limited upside for grain prices and positive for inflation outcomes in the months ahead.

The short to medium term weather outlook still calls for rains across the producing areas which bodes well for the developing crops and a good finish to the 2018/19 summer crop season.

FNB announces the 7th Franchise Leadership Summit

FNB is hosting the 7th Franchise Leadership Summit at Montecasino on Tuesday, 13 November 2018. The summit is a well-attended industry discussion amongst high calibre franchisors and industry stakeholders. The Summit is aptly themed "Equipping you to future proof your franchise". The discussions will include exploring the impact of technology on the franchising industry.

To this end, Morne Cronje, Head of Franchising at FNB Business explains that "the rise in online applications in franchising means we need to find innovative ways on how to continue to grow and improve this new dimension to this already robust industry."

The South African Fast Food Landscape Report of 2018 backs the position that Cronje speaks to as it revealed that a growing number of consumers are opting for the convenience of online delivery services when purchasing fast food, this has a far-reaching impact that the Summit will begin to talk to in this year's leg.

  • Opening address
  • Mike Vacy-Lyle - CEO of FNB Business
  • Marcel Klaassen - Executive Head at FNB Business
  • The state of the economy and what it means for entrepreneurs.
  • Mamello Matikinca-Ngwenya, Chief Economist at FNB
  • Panel discussion on future proofing franchise
  • Morne Cronje - Head of Franchising at FNB Business
  • Eric Parker - Franchising Consultant at Franchising Plus
  • Stephen Walters - GIS Specialist and Co-Founder at Fernridge Consulting
  • Tony da Fonseca - MD at OBC Chicken
  • Beware of the Fox, a look at the actual impact of Artificial Intelligence (AI) on business.
  • Richard Mulholland - Founder of Missing Link
  • Will E-commerce replace traditional retail? - How to adapt your business model.
  • Andy Higgins - Founder of Bidorbuy and Managing Director of
  • Pivoting your skills for the second wave of disruption.
  • Dion Chang - Trends Analyst of Flux Trends
  • Check ins and check outs - how franchises can use social media to build their businesses.
  • Dr. Sarah Britten - Independent shopper marketing and social media strategist
  • Social Franchising - Is this the future for Healthcare?
  • Dr. Rosy Ndhlovu - Founder of Innovo Mobile Healthcare

Cronje says the great line-up of industry experts will go beyond the digital discussion and the subsequent challenges it presents, each speaker will offer workable solutions on how to improve and navigate the move to the 4th Industrial Revolution as a business.

Franchising is a healthy and resilient industry in South Africa. However, we need to continuously improve it and keep adapting to the ever-changing landscape. Therefore, unpacking online applications and trends in franchising is at the centre of this summit amongst other things.

As a specialised business unit, FNB franchising provides the know-how when dealing with franchisors, franchisees and other franchising industry stakeholders. FNB Franchising provides innovative, tailor-made financing solutions that are designed to provide franchisors and franchisees with the necessary financial and operational tools that can help accelerate and support the growth of their business.

To find out more, visit:

FNB Franchise Leadership Summit:

New ways of working

Never trust a revolution - (Terry Pratchett).

Unless you have chosen to live off the grid, I am sure you can feel we are in the 4th industrial revolution and that the business world is changing. It's an uncertain time and very hard for us to trust that all will be fine if we just keep doing what we have always done. This article is not about what will be the next big technology, that has proven way too hard to predict, but rather what are the new ways of working that will help ride the wave of change from this revolution.

Changes in Organisations

Your mind and body are perfectly designed to live on the African Savannah about 100,000 years ago. According to anthropologist Robin Dunbar we only have the mental capacity and time to manage around 150 primary or 'I care, you care' relationships at any one time. If they are not primary relationships, they are impersonal, secondary relationships that are based on formal rules. You may belong to many organisations, and the bigger the organisation's size the more likely you have a secondary relationship with other parties. You might not have been the one that set these formal rules (i.e. an employment contract) which may leave you suspicious on who exactly benefits from these rules. This leads to a power struggle in impersonal relationships rather than the social cohesion of the strong primary relationships.

Jeff Bezos, founder of Amazon, has used this principle to come up with the 2-pizza rule, meaning that teams in any organisation should be able to have a meal of 2 pizza's. Amazon clearly keeps its teams hungry as the team size is limited to a maximum of six people. This is to help form these primary relationships and make it easier to keep everyone informed. Teams are then arranged in a format known as 'team of teams', where the members of teams change over time and these are all arranged around a central 'executive' team.

What motivates people

The last 60 years has seen a number of theories evolve on what motivates people, from hierarchies of needs to behaviour being driven by reinforcements and punishments. New motivation theories have taken human motivation further. According to the psychologist Frederick Herzberg, people are motivated by what he calls the hygiene factors (pay, work conditions, rules etc.) but this is only to a point. As Dan Pink states, 'pay people enough to take pay off the table'. Not that easy in a low growth emerging economy, but his findings showed that increasing pay only works as a motivator for people doing a mechanical, single answer tasks. In the 4th Industrial Revolution jobs are going to require more thinking and creativity, where increasing pay based on output actually reduces performance. Pink found that what really makes people satisfied at work for the long term is being able to determine their own path, the urge to get better skilled and the desire that one's role is meaningful or has a higher purpose. Most people don't just want to chase profits, they want to contribute to society too by belonging to a what Peter Senge calls a 'learning organisation'. A group of people working together, to collectively improve their skills to create results they really care about.

Humans have glitches, understand and compensate!

The Nobel Prize for Economics in 2017 was given to Richard Thaler for uncovering that the economy surprisingly was made up of humans (his own words). We are not rational beings trying to make the best decisions with limited resources. We constantly make poor decisions based on emotion and bias. All have laughed at that relative or friend that makes a strange decision about their money or health, but what we don't realise is that some of these decisions are caused by the persons attitudes and feelings whether they are aware of these thoughts or not. The 4th Industrial Revolution rewards innovative and disruptive thinking, while our human bias on a whole (with the exception of Elon Musk) is pushing you to de-risk and keep within the safety of your comfort zone. Being overly cautious is definitely not as helpful now as it was to our ancestors surviving on the savannah all those years ago.

We have an optimism bias - we believe we are less likely than everyone else of suffering a negative event. This bias causes us humans to grossly overestimate what we can do and underestimate the time it will take. This is what Daniel Kahneman (a friend of Richard Thaler's) calls the 'planning fallacy'. We start a big project, we stop looking at what competitors are doing, we believe our work is better than everyone else's and eventually we get ourselves in a situation where we just have to finish the project because we have sunk so much into it (called the loss-aversion bias).

This does sound negative but rather than not starting new projects, the 'new way' is to do things better. A clever group of people generated 'The Agile Manifesto' for this reason. Valuing people above process, collaborate rather than negotiate, get something working rather than a concept in a big pack of documents and be able to change rather than religiously follow a plan. Agile has a few tricks or ceremonies, like scrum's (should be popular with South Africans). A scrum is generally where people stand-up and say what they did yesterday and what they will do today. This allows the team to inspect progress and self-organise their workloads to meet their goals. There is an angle here of healthy competition and confidence built through transparency. It is important to find any issues early, to only provide what is needed by the customer and to realise you always have to be willing to change.

Another human bias is that we favour what is known over the unknown. We don't enjoy ambiguity, and for us the easier it is to see the goal, the closer it seems and the more we are motivated we are to finish it. Ever wondered why people complete a task in the last minute, turns out we just can't visualise finishing big complex tasks as we need these tasks broken into small manageable steps. This is also a big tenant of both Agile and a 'new way' called Lean. The recommendation is to make sure each step can be seen (sometimes on big boards), make sure people are rewarded for reaching each step and most importantly ensure that each goal adds value to ultimate customer. The last point is a key tenant of 'Lean' manufacturing but its applicable to all industries. The best people to tell you the value of a step are the people at the coalface, customers or customer facing. If a step or process does not add value to the customer you have to question why. If value is not being added then this is a waste. Removing waste from a system, ensuring a smooth flow of work without bottlenecks and continuous improvement is why Japan has the world's most profitable vehicle manufacturers.

We all know humans make mistakes. Designing to prevent these mistakes is a big part of the 4th Industrial Revolution. Pokayoke is the Japanese name for techniques that prevent mistakes from happening. Whatever is designed and built needs to try in all ways to prevent poor quality and improve reliability. Autonomous vehicles are an example, they may not go fast but they are reliable and are designed to avoid the huge consequences of a crash. But wait there is also a human bias here too - pro-innovation bias is where new innovations are viewed as inherently good ignoring the negative impacts

The 4th Industrial Revolution is starting and it will bring a time of massive change. The way we get ready for this time is to understand ourselves, what motivates us and our failings. By doing so we can get ourselves ready to succeed in this revolution and as Eric Ries states: 'The only way to win is to learn faster than anyone else'.

Business-related announcements in the recent budget give way to government spending and SOE emphasis

Finance Minister Tito Mboweni began his budget speech by setting the scene in the context of renewal and growth - supported by specifics that are aimed at driving and encouraging business expansion.

There were some clear moves to attract foreign investment, among them the relaxation of visa requirements to make it easier for tourists to visit and invest in South Africa. The income eligibility thresholds for the employment tax incentive scheme (ETI) have also gone up - enabling eligible employers to reduce the amount of employee's tax due to them from the ETI amount claimed. From 1 March 2019 employers will be entitled to claim the maximum value of R1 000 per month for each employee earning up to R4 500; this amount was R4 000 previously. The maximum monthly income earned by employees to qualify for the scheme has also increased from R6 000 to R6 500 per month. A total of 1.1 million jobs for young people are supported by this programme, which has now been extended for another 10 years.

Government has also allocated R19.8bn for industrial business incentives; R600m of which has gone to the clothing and textile industry's competitiveness programme. It is expected that this will support 35 500 existing jobs and create about 25 000 new jobs over the next three years.

The Jobs Fund was a further recipient of support. It has, to date, disbursed R4.6bn in grant funding and created some 200 000 jobs since its inception. The government set aside R9bn for the fund, which is intended to co-finance projects by public, private and non-governmental organisations that contribute to job creation. The minister announced that the allocation to the fund would rise to R1.1bn over the next three years.

While there was once again an acknowledgement of the administrative burden on small business, no concrete changes have been made yet. However, R481.6m has been allocated to the Small Enterprise Development Agency (SEDA) to expand its small-business incubation programme.

Optimising Cash Flow Improves Chances Of Sustainability

Failure to optimise cash flow remains the number one reason for start-ups shutting their doors within their first two years of operation. In order to increase your chances of sustainability, you need to focus not just on how much money you turnover as revenue, but also on how you are managing the inflows and outflows of that money.

One of the most cited causes of cash flow problems is the time it can take for customers to pay their bills, and one of the simplest but often overlooked precautions is to review your business's payment terms.

Issuing an invoice that reflects valid payment terms and conditions is not a legal or SARS requirement, but it is good practice and can go a long way towards helping you manage your cash flow. It's as simple as including a section labelled PAYMENT AND CANCELLATION TERMS on every invoice, where you can capture agreed terms and conditions, or, if you have not discussed terms, it affords you an opportunity to propose terms that you know suit your cash flow demands.

In principle, the aim should be to match the time frames between when your business gets money in, and when it pays money out for overheads, expenses and supplier costs. If, for example, you pay weekly wages, you ideally need to have shorter payment terms in place with your customers. If you pay monthly salaries or have monthly stock and debt payments to honour, offering payment terms longer than 30 days can result in a gap between the time at which money is coming in, and the time at which your business is obliged to make payments out. It’s good business practice to match these payment terms, or, even better, to ensure that client payment dates fall before cash outflow payment dates that apply to your vendors. You may want to consider negotiating a 45 to 60-day grace period with your vendors and suppliers.

By collecting money before you're due to pay out money, you have a better chance of achieving what is called a positive "net cash flow" - the difference between the cash inflows and cash outflows during a specific period. It optimises how you're managing turnover and gives your business a better chance of surviving tough times, and can also leave you with reserves that you can invest.

Vaughan David, CEO of Business Savings and Cash Investments at FNB suggests that "when you are in a positive net cash flow position, consider opening a separate savings account where you can transfer any extra cash, and earn interest on that cash. This cash reserve can then start to serve as a savings buffer for any future unforeseen expenses, or to keep money aside for planned expenses like provisional tax. Remember to check which fees are charged (if any) and the type of access you will have to those funds".

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The legal status of your business can impact its longevity

All companies might be businesses, but not all businesses are, in the legal sense, companies. It's an important distinction, with several implications for business owners, implications that can affect how you optimise revenues and ensure longevity.

The prospect of the administration involved when setting out to start a business can be a daunting one, but it's not simply the sheer volume of documentation required that matters. You should carefully consider the type of business you register, as it can have both cost, tax and legal implications down the line.

Sole Proprietors

Many small and service-oriented businesses choose to operate as sole proprietors; it's the simplest kind of business structure, and does not need to be registered. As an owner you would be the sole proprietor, and can trade under your own name, with no separation between personal and business assets and liabilities. This means that as a sole proprietor you benefit from all the profit and assets accumulated through the business, but you are also liable for any debt that the business incurs.

Private Companies

A private company is its own legal entity that is separate to the owner. Therefore, by choosing to register a private company, you, as a business owner, take less risk than if you were trading in your own name as a sole proprietor. A registered company can also trade in the formal business sector and bid for government tenders.

A private company is eligible for numerous tax benefits/deductions such as business expenses, auto expenses, medical aid, office space and lower income tax rates. Smaller private companies do not pay audit fees. Together with the savings that can be made through tax and VAT, private companies often end up being the cheapest and most suitable legal format for a business. Private companies can have several or even only one director, so decisions can be made quickly. There is also no need to publish financial accounts.

If you decide to start a private company and not operate as a sole proprietor, you will need to register it at the Companies and Intellectual Properties Commission, commonly known as CIPC. First National Bank, in partnership with CIPC, provides a free facilitation service to register your company and get a business account in the same process.

The cost of registering a company at CIPC is R125, and company registration with name reservation costs R175. ID documents of all directors and proof of address of the business is required. The process can be completed online and registration takes up to 10 days provided all documents required are submitted. The documentation required for business registration at CIPC includes:

  • Disclosure Certificate
  • COR 14.1 Notice of Incorporation (Incorporator Details)
  • COR 14.1A Notice of Incorporation (Director Details)
  • COR 14.3 Registration Certificate
  • COR 15.1A Memorandum of Incorporation

You will also receive a new business account Welcome Pack with FNB, enabling your company to begin trading immediately. For more info or to register, please click on "For My Business" above and then select "CIPC + BEE" or call 087 736 2247.

Inadequate Short-Term Insurance Can Impact Business Sustainability

One of the most commonly overlooked priorities when starting and running a business is taking out adequate short-term insurance cover to cater for unforeseen risks.

Theunis Fourie, Head of Insurance Brokers at FNB, says business owners who overlook having adequate insurance in place could find themselves facing liquidation. There are numerous risks that need to be considered, so it's important not to assume that a 'one size fits all' policy necessarily covers all eventualities.

A broker can offer comprehensive advice based on several factors including the type of business you conduct, the cash flow risks, physical location, whether you are impacted by currency fluctuations, the list goes on and on. Asking about different types of cover is important, so consider the following:

  • Protection in the event of a complete shutdown - uninsured businesses face a higher risk of being shut down if they don't have short-term insurance cover against certain events like riots and strikes, or they could be forced to close their doors because they're unable to meet their debts
  • Protection that covers amounts owed to creditors - a business owner can still be held liable for money owed to creditors in the event of a shutdown
  • Theft cover - this is a common risk for all businesses, particularly retail businesses, and nowadays, cyber theft and customer data theft has also begun to feature
  • Insuring property - cover against fire and other natural events such as flooding
  • Key person insurance - if the survival of the business is dependent on its partners being available, it is essential to take out key person insurance to protect against the absence of a key staffer or partner in the event of death or disability
  • Protection against the loss of profits - business interruption cover can be used to protect the business against the loss of income following an insured event and ensures business continuity To make sure that your business assets are adequately covered or for any enquiries, please contact one of our FNB Insurance Brokers at and quote Business Insurance as a reference.

Getting Your Business Tax Affairs In Order

The end of February marked the end of yet another tax year (March 2018 - February 2019) for companies, trusts, close corporations and all individuals, but the end of one year also means it's time to prepare for the new tax year.

If you accept that 'sustainability' is not just about revenue, then getting your tax affairs in order should be part and parcel of your annual planning and administrative preparations.

To start getting your tax house in order, you will need to first determine the type of tax returns you will be required to file. This is dictated by the legal structure of your business, for example, sole proprietors report business income on a personal tax return or ITR12, whereas Close Corporations and Companies must complete an ITR14.

Surveys conducted by accounting professionals throughout the years show that businesses often only remember to file tax returns or other required submissions, or apply for document renewals such as Tax Clearance Certificates, just before the deadline date, or, in some cases, after an expiry date. This places undue stress on the business and can cost you revenue if your line of work relies on tender and RFP submissions.

It can, in some cases, also threaten sustainability. An example would be non-submission and payment of annual returns by companies as required by the Companies and Intellectual Property Commission (CIPC). Thousands of companies face potential deregistration each year because they are unaware that their 'annual return is due and payable in the month of incorporation each year'.

Be aware of all taxes you need to register for, and their deadlines

Are you an employer? SARS expects all entities with employees to register for Employees Tax (PAYE, UIF, SDL) and to withhold and pay over collected tax not later than the 7th of the following month. FNB's free Instant Payroll system is a tool designed to help employers create payslips, calculate tax and provide relevant reports like the EMP201 and EMP501. SARS publishes tax types and due dates for each tax type on their website . Your business may also be subject to other deadlines throughout the year; earmark those dates to avoid having to pay fines or interest penalties.

Use cloud/automated systems

The method you use to record and track your business transactions will determine how difficult it will be to prepare for tax season. Using manual systems or spreadsheets can cause confusion when it's time to reconcile accounts, so consider using online software with automated functionality, such as FNB's Instant Solutions, which is linked to your FNB business bank account. Without automation, you are likely to waste time calculating and reconciling spreadsheets and job cards. Each year SARS imposes penalties and interest on businesses for incorrect employees' taxes. Employees too, can bring lawsuits against your business if you have made mistakes in relation to their pay. Using manual methods to record information required for tax returns is risky. The penalties for incorrect information can have a serious and negative impact on your business.

Whatever automated software you use, make sure that your business systems are integrated with it to provide accurate and ideally real-time information.

Collect and keep relevant records

Keeping accurate records of your financial operations will be invaluable in helping you prepare statements that inform and support your tax return. Your records need to confirm all income, expenses, assets and liabilities declared on your returns. You must be in a position to provide evidence to support all entries, deductions, and statements, and you need to keep these documents, including invoices and receipts, for a period of not less than five years.

Surviving a tax season does not end after filing and making relevant payments - the information needs to be kept (in a safe place) and to be made available for inspection on request. SARS provides a list of documents and the length of time you are required to store such information for. Hard copy documents should ideally be stored electronically using document scanning apps. Scan documents monthly throughout the year to avoid any last-minute rush.

For help in getting started with FNB's Instant Solutions Products, contact the Support Centre on 0860 22 22 55 / .

Tap in to emerging trends in the tourism industry

According to the World Travel and Tourism Council (WTCC), if you run a business in the tourism industry, things may be looking up because it is the fastest growing industry in South Africa (SA). It contributes about 9% to South Africa's GDP and provides employment to over 1.6 million people. So, what are the trends that shape this promise of growth?

Trend #1: Tapping into 'Bleisure Travel'
A high growth potential for our tourism businesses in RSA is 'Bleisure Travel' which is a combination of business and leisure which has a huge role to play in the next phase of the tourism industry. From international conferences, strategic breakaways or executive retreats, and the range of local vacation destinations in RSA, our local market is able to accept foreign payments. Being in a position to accept payments from outside the borders of RSA is important if you want to attract this kind of clientele, as is the flexibility in offering them many methods of payment as they might be accustomed to abroad.

Trend#2: Digitising your services
Google Travel claims that 74% of travellers plan their trips on the internet. This move towards self-service extends beyond researching and planning a trip, with prospective travellers expecting to make bookings and transact on advance payments online, in many instances at the time of planning the trip. They also research customer reviews online before making their final decision, and rely on using mobile phones and tablet devices more than ever before. This has implications not only for your marketing efforts as a player in the tourism industry, but also for the online booking and payment functionality services you are able to offer prospective customers. 3D secure payment facilities and online merchant solutions will no longer be a 'nice to have'.

Trend#3: Gearing up for three-generational holidays
Extended families of grandparents, parents and children are increasingly booking holidays away together. Marketing an appropriate venue or a destination to these family units requires allocating funds to stand out in a very competitive landscape, as does access to funding to perhaps grow or renovate facilities to be able to cater for extended families.

Understanding the different types of loans and funding options you can tap in to is crucial; this is where it makes sense to speak to a bank consultant before making any decisions to apply for such funding. FNB considers three key factors when assessing loan applications:

  • Financial track record in terms of a healthy bank account turnover and behaviour, credit history, timeous bill payments and a clean bill in terms of any judgements;
  • The ability to fund repayment of debts, including realistic projections on a business plan and audited financial statements; and
  • Assets that can be offered as surety against a loan, and a healthy balance sheet.

Trend#4: Tapping into medical tourism
There has been a significant increase in the number of tourists coming to RSA for medical treatment. The average tourist stays in the country for an estimated six days. This means hospitality services, tour operators, transport, retail, wildlife and seaside attractions, spas and wellness centres all have an opportunity to appeal to a medical tourist. FNB offers a special focus on tourism and healthcare industry clients, and as such is in a unique position to spot potential synergies between clients in each industry.

Make sure you choose the right banking partner to help your business leverage emerging tourism industry trends.

For more information on these solutions or to open an FNB Business Account, email

FNB Business Innovation Awards 2019 entries open

Two new categories added to the program

Following overwhelming responses from entrepreneurs, the FNB Business Innovation Awards (FNB BIA) have been extended to include two more categories, and now represents the entire business landscape in South Africa.

Adding to the Endeavor global category, FNB has further partnered with 10XE and the Township Entrepreneurs Alliance (TEA) to introduce SME and township entrepreneur categories, respectively.

Entries for all three categories were officially opened from 01 April 2019.

Mike Vacy-Lyle, FNB Business CEO, says South Africa currently faces several challenges in terms of economic growth and the creation of sustainable jobs. FNB firmly believes that with adequate support from both government and the private sector, businesses, both big and small, have the potential to help the country achieve sustainable growth and development.

"FNB BIA celebrates entrepreneurship and recognises business owners who go the extra-mile to constantly innovate, think out of the box and reinvent themselves to remain relevant. Despite testing economic circumstances, these entrepreneurs continue to take risks, while remaining optimistic about growth," adds Vacy-Lyle.

The FNB Business Innovation Awards are aimed at all businesses, regardless of size, that can demonstrate real innovation with the potential to change the way their respective industries operate. Businesses must exhibit high growth potential and have the capacity to add substantial socio-economic impact on the South African economy. This, partnered with job creation, outstanding business ethics, and goodwill are all among the many factors that will be reviewed by the selection panel.

Successful entries in each category will go through a selection process where the qualifying businesses will be reviewed and assessed by a selection panel, in each of the three categories, before they are shortlisted as FNB BIA Finalists for 2019. Finalists will get an opportunity to present their businesses to a final judging panel, where a winner per category will be selected.

The winning businesses will each get business development support to the value of R1 million, to help them take their businesses to the next level. The winners will be announced and celebrated as the FNB Business Innovators of the Year 2019 at an esteemed award ceremony.

Entrepreneurs have until 31 July 2019 to submit their entries and they can do so on

FNB Supports National Entrepreneur Workshops

As part of a long-term commitment to help educate, develop and stimulate the small business sector in South Africa, FNB is extending its partnership with I AM AN ENTREPRENEUR for another three years.

I AM AN ENTERPRENEUR caters for all classes of entrepreneurs, from start-ups to well established businesses, as well as anyone who wants to start a business. The format includes training workshops and masterclasses from experts in business disciplines such as sales, finance, and marketing, and attendees also get the opportunity to hear first-hand from successful entrepreneurs, who share their insights on lessons they have learnt on their journeys to success.

Summits are held around the country each year, and it's their impact that has contributed to the renewal of the FNB and I AM AN ENTREPRENEUR association. Jesse Weinberg, Head of the SME Segment at FNB Business says "the impact of the I AM AN ENTREPRENEUR summits hosted last year, in select provinces across the country, exceeded our expectations. Not only were we afforded the opportunity to have insightful dialogue with SMEs across all walks of life, we further acknowledge the amount of work that still needs to be done to nurture and stimulate the spirit of entrepreneurship amongst SA communities".

Weinberg goes on to acknowledge the importance of growing the SME sector in the country, a sentiment that's echoed by Andile Khumalo, who founded the national workshop series. One of the big drawcards for FNB has been the platform afforded to SMEs to share their stories and experiences - delegates who attend are able to come together to get guidance from industry experts, share knowledge, learn from each other, and generate meaningful dialogue.

The 2019 summits kicked off in Johannesburg in March 2019, and there will be a special youth entrepreneurship summit held in Polokwane on 22 June and in Durban on 20 July. That'll be followed by a series with a focus on women entrepreneurship - in East London on 17 August, Cape Town 14 September, and closing the year in Nelspruit on 19 October.

For more information visit:

FNB launches initiative to scale social entrepreneurs

FNB in collaboration with Fetola Business Growth Professionals recently announced the launch of the 'Social Entrepreneurship Impact Lab', a SME development initiative to help grow social entrepreneurs in South Africa.

This two-year programme will empower 25 existing 'for profit' businesses who already operate in the social entrepreneurship space and have genuine potential to scale. Entries for the 'Social Entrepreneurship Impact Lab' officially opened on 02 September 2019.

Heather Lowe, Head of Enterprise Development at FNB, says the launch of this programme forms part of FNB's broader strategy to provide meaningful support to SMEs as productive drivers of inclusive economic growth and development in South Africa. Social entrepreneurship is one of our best chances to bring about a positive impact on the lives of ordinary South Africans. As a nation, we face a plethora of struggles every day; we aim through this programme to scale some practical and sustainable solutions to address our most pressing social and environmental issues.

The programme is looking for entrepreneurs operating in the social enterprise space who are passionate about making South Africa better. These should be social entrepreneurs who can solve community-based challenges in areas such as education, food sustainability, healthcare, safety, and environmental sustainability, amongst others.

Catherine Wijnberg, CEO of Fetola says, "We are excited to partner with FNB on this journey and cannot wait to interact with phenomenal businesses whose sole purpose is to make a meaningful difference in people's lives. Corporates in South Africa have an important role to play in nurturing and growing small businesses through Enterprise Supplier Development (ESD) programmes, and collaboration with like-minded stakeholders. It is only through such initiatives and strategic partnerships that we can truly make an impact in solving some of the major societal issues facing the country.

The prospective businesses should be eager to change the landscape of South Africa, improve lives and create a real impact through the work they do - while still being profitable. The businesses should be further dedicated to tackling the country's problems and finding solutions to pressing social, environmental, and economic issues.

Successful applicants will receive personalised, practical business acceleration support, access to powerful peer networks, market access linkages and access to growth finance to help them reach genuine scale.

Entries for the 'Social Entrepreneurship Impact Lab' can be submitted online via the website

FNB launches initiative to scale social entrepreneurs

According to the latest survey from the Franchise Association of South Africa (FASA), 39% of franchisors have businesses in Africa, outside South African borders. This is equivalent to 1 775 stores in the SA franchise population. Most of these franchises are found in the neighbouring countries of Namibia, Botswana, Zambia, eSwatini, Lesotho and with growth noted in Ethiopia and Kenya.

Riaan Fouche, Chief Operating Officer for Franchising at FNB Business says, "More than 90% of franchise businesses in Africa are homegrown South African brands. There is huge appetite for bigger franchise brands in the retail, fuel and fast food sectors."

  • Due diligence - understand if there is a need and market for the products and services that you are planning to offer. A one size fits all approach is certainly not ideal, as what works in South Africa may not necessarily work in-country. Therefore, greater emphasis should be placed on understanding the different dynamics of a country such as culture, attitude and the needs of locals, amongst other factors.
  • Local partnerships - consider partnering with companies or consultants that truly understand and have a proven track record in successfully helping businesses to expand into African markets. They will help you understand the market, competition, pricing strategy, supply chain, sourcing of local suppliers, payment methods and infrastructure etc.
  • Choose the right location - location is the heart beat of a thriving franchise, choosing the wrong location would not only have a negative impact on your profit margins, but could potentially lead to failure. It is crucial that you consult area experts while taking into account information such as demographics, psychographics and living standards etc. This information can help you in making an informed decision.
  • Minimum Viable Product (MVP) - test your business concept in your chosen country and see if it works before opening a fully operational franchise store. This process can prevent the business from losing a lot of money, while trying to understand the market.
  • Get the backing of a funder: approach a bank or any other financial institution that can advise and assist in expanding your franchise. Banks will generally look at why you think this franchise will work in-country and whether you have a track record to prove it, etc.
  • Government rules and regulation - partner with a local lawyer to understand government processes and rules on franchising in that country. What is the general business conduct for foreign brands and what are the costs involved.

"Before expanding your franchise it's important to clearly define and understand the competitive advantage that will make your brand successful in-country. Lastly, you must be in this for the long haul as success will certainly not be achieved over night," concludes Fouche.

Food inflation outcomes on the downside for September 2019

Comment by Paul Makube, Senior Agricultural economist at FNB Agri-Business

South Africa's consumer inflation came in on the downside at 4.1% for September 2019 and has remained within the SARB's target range of 3-6% for the 30th consecutive month.

The food sub-component was also decelerated to 3.7% from August's 3.8% driven by the disinflation in bread and cereals, milk, eggs and cheese, oil and fats, and sugar categories all of which fell by 8.5%, 2.1%, 4.1% and 5.2% respectively year-on-year (y/y).

Although the fruit and meat categories were a bit higher at 5% and 1.1% y/y, the monthly trend shows a slowdown with fruit in deceleration for the sixth consecutive month.

Bread and cereals inflation declined as expected as the harvest outlook turned positive after an early year scare due to poor rains and reduced planting. This saw maize prices edging closer to R3,000/ ton prior to the harvest before falling by about R116 and R200 per ton to the current level of R2884/t and R2796/t for white and yellow maize respectively.

Although falling by 11% y/y, the 2018/19 maize harvest was better than expected at just over 11 million tons and together with a carryover stock, this ensures enough supplies for the year. The wheat season also started with a bang with good rains improving crop prospects, lifting production and limiting further upside for prices.

The weather however turned negative as the season progressed, but the huge global supply outlook and the fact that SA is a net importer will somewhat offset the impact of contraction in output. The focus now turns to the 2019/20 crop season and weather has become a critical factor in price direction with the wobbly start to the season already providing upside support. This might upset the inflation outlook which has been relatively tamed in the past few months.

In the meat market, we saw some increases in prices particularly in pork due to the African Swine Fever (ASF) induced culling in Asia which raised import demand. Nonetheless, the subdued consumer disposable incomes help limit further gains in the meat complex with inflation just up 1.1% y/y. Seasonal demand trends will however help lift prices in the medium term.

Looking ahead, the recent long-range forecasts call for some rains during the summer of the 2019/20 crop season. The limited rain received thus far is a cause for concern as it might constrain farmers from planting in time or even reduce the planted area. This together with the strength/ weakness of the rand exchange rate will influence grain prices in the short to medium term.

Entrepreneurship Day in East London Celebrates Women

Book a ticket for the I AM AN ENTREPRENEUR Summit in East London on Saturday 17th August, and gain invaluable advice and insights from successful businesswomen, financiers and sales experts...

Speakers at this year's East London I AM AN ENTREPRENEUR Summit will talk about a range of topics - Yolanda Mlonzi from Google South Africa will share insights about connecting with customers, Nocwaka Joka from the Small Enterprise Finance Agency (SEFA) will talk about how SEFA can help SMMEs access finance of up to R5-million, and sales guru Mark Keating will offer a masterclass on how to sharpen sales techniques.

In addition to the Summit's educational flavour, Dr Thandi Ndlovu, the Founder and CEO of Motheo Construction Group, a leading provider of Social Housing in South Africa, will share her inspirational story.

The predominantly female line-up will be bolstered by Anrie Spangenberg, who'll share insights about FNB's funding opportunities, and co-hosts TV/Radio Presenter Hulisani Ravele, as well as the Founder of I AM AN ENTREPRENEUR, Andile Khumalo.

Book your seat for the full-day event on Saturday 17th August in East London at

Unlock the Power of Data

The businesses that will be able to count themselves amongst the most successful in coming years will likely be those that successfully harness the power of data. They're certainly investing in the technology required to get there, but what about fostering an equally important data-driven organisational culture?

While company owners, managers and executives may not be able to tell you exactly how data analysis works, they can tell you what they hope to get out of it. Sadly, the same isn't true of their understanding of a data-driven culture - all too often handed off to the organisation's Chief Technology Officer, Chief Data Officer or HR executive.

The business challenge is further compounded by the reality that most staff would be unable to iterate what the concept of 'culture' actually means in a company, let alone what a data-driven culture looks or feels like.

While there is no simple answer to this question, it's likely that companies embodying data-driven cultures will have a few things in common. For one, a data-driven culture will be built on a mutually shared recognition by everyone in the business that data is a vital, strategically essential business asset. Data should also be viewed as a tool for all employees, one that can empower them to perform their tasks and functions more effectively, and lastly, a data-driven culture would enable a business to identify and align its technical and business challenges and leverage data to solve both together.

If one accepts that these would be desirable characteristics of a data-driven culture, it becomes obvious that being data-driven is not solely about technology or hiring data scientists; it would be essential to consider how one embarks on a cultural transformation too. Executive buy-in is a crucial ingredient and can pave the way for the much-needed educational drive to convey and share a common understanding of the meaning and value of being data driven, both for the company and its employees and customers. The next step is to commit to democratising data. When employees have access to data, its impact becomes obvious. Break down silos and protectionism. Make data, and its analyses, readily available, understandable, and transparent across the organisation.

Obviously, it's dangerous to just give everyone in the organisation unfettered access to all data, since they probably don't have the skills or tools to make use of it. That's where the real culture shift needs to happen. Businesses need to focus on building collaborative, multi-functional teams. While tech experts may understand the technology and systems, data is first and foremost a business asset, so a data-driven culture has to be driven by the entire business.

Since it's unlikely that you're going to find too many employees with a balanced combination of business and data skills, you need to build your data-driven culture on collaborative teams in which every team member is willing to acknowledge what he or she doesn't know, and work closely with teammates who do. This approach should also inform all future recruitment decisions. In a data-driven culture, you don't recruit just for a vacancy, you recruit to make teams stronger. If the cultural change is taken seriously, an organisation stands a much better chance of unlocking the real power of data.

By Dr Yudhvir Seetharam, Head of Analytics, Insights and Research: FNB Business

FNB revamps eBucks Rewards for business

FNB's eBucks Rewards programme for businesses will be changing from 01 September 2019.

Businesses will be required to meet a new set of criteria based on the specific business accounts they hold, which includes having a specified minimum regular deposit in the account, performing at least one financial or non-financial transaction, ensuring that all accounts are in good standing and updating their details through online banking, App or

Additionally, the more solutions and products that businesses use, the higher they will move up reward levels and earn greater discounts.

Jesse Weinberg, Head of the SME Customer Segment at FNB Business says, "the eBucks Rewards programme for business has come a long way as a strategic enabler to reward our customers by encouraging them to change their banking behaviour for the better. As our customers evolve in line with changing market dynamics, so does our strategic focus to ensure that we continuously add value to their world while offering unique and superior customer experiences".

"We conducted extensive research prior to making changes to our programme, including in-depth customer surveys with our base. The outcome of this translated into the changes we are now launching which we feel cater for the diverse customer needs as well as encouraging customers to evolve their banking behaviour toward more secure, digital approaches," adds Weinberg.

Businesses can now move up reward levels simply by taking up relevant products with FNB, within the categories of, FNB Connect, Receipts, Payments, Business Solutions, Specialised Products, Short-Term Lending, Fixed Term Lending, short and long-term savings.

Weinberg says the current changes are aligned to the behaviour of many of our customers who already use two or more products. As a result, we will immediately see several businesses who are currently on tier one moving up a reward level.

For example, a Gold account holder (typically with an annual turnover between R0 - R5 million per annum) can move up to a higher reward tier each time they take up a product in a different category.

As part of our new discounts feature businesses now also have the potential to earn up to 40% OFF on vouchers and other products from the eBucks Shop.

"Apart from the simplified generosity rule changes, we have also decided we need to use the programme to engage our customers better in order to provide them with better insights and customer experience. To this end, the new programme will also require customers to tell us about their businesses, for example what type of business it is, how many employees it has and the size of the business. We see insights like these as critical to ensure our value propositions and engagements with customers are more relevant, useful and effective" says Weinberg.

Businesses with existing eBucks balances earned from the old programme will still be able to spend them as they have been with any of our in-store or online spend partners, as well as through various FNB channels such as buying prepaid airtime on the FNB App or shopping on

Business Credit Card mistakes to avoid

Although a business credit card is a great source of revolving credit for short-term business needs, it may also pose significant disadvantages for a business if not used and managed properly.

Valentine Jingura, Head of Pricing at FNB Business, says business credit cards have gained prominence as convenient transacting and financial management tools for small businesses. They can also be used to allocate expenditure limits to specific users/employees according to their needs. With proper use, they can be an invaluable tool to help a business manage its day to day affairs. He unpacks common business credit card mistakes to avoid:

  • Limiting use for emergencies - business credit cards should not only be used for emergencies, but also as a daily transactional tool. Businesses also have an option to pre-fund the credit card and earn more rewards.

    For example, SMEs can save on fuel, travel insurance and earn rewards points, simply by using their business credit cards.
  • Failure to check statements regularly - it is essential for businesses to check their statements regularly to track expenses, and check for incorrect billing or charges.

    This becomes critical should there be more than one person with a business credit card. Although it is common practice to delegate employee spending, by having more than one linked credit card as the business grows, the onus is on the business owner or financial manager to constantly monitor the use and management of the business' credit cards.

    Checking statements regularly can also help businesses to swiftly pick up suspicious transactions in the event that a lost or stolen credit card has not yet been blocked or suspended.
  • Only paying the minimum amount - if possible opt to pay more than the minimum amount required on the credit card monthly. Moreover, if the business pays the full outstanding amount due on or before the due date on their monthly account statement, then often no interest will be charged on the credit facility. Lenders usually give businesses up to 35 days interest-free to repay debt.

    If you don't repay the full amount by the due date, the interest-free period is often deferred and interest continues to be charged from the date of each transaction until you pay in full.
  • Avoid cash withdrawals and transfers - not only are cash withdrawals expensive, they accrue interest immediately. It is essential that employees are also made aware of this. Transfers from your credit card to your current account are also treated as cash withdrawals.
  • Long-term debt - businesses should avoid using a credit card for long-term credit needs, as it often becomes expensive and unsustainable to service the debt. Depending on the needs of the business there are other alternative credit products that banks offer, i.e. Business Loan.
  • Personal expenses - failure to separate business and personal expenses can lead to complications in the long run when tracking and accounting for business spend.

"Using and managing your business credit card appropriately is not only cost effective, but will also help you build a good credit profile. Financial institutions will also take your business credit card profile into account, should you apply for further or alternative credit in the future," concludes Jingura.

Optimising Cash Flow improves chances of Sustainability

Failure to optimise cash flow is one of the key reasons that could lead start-ups to shut their doors within their first two years of operation. In order to increase your chances of sustainability, you need to focus not just on how much money you turnover as revenue, but also on how you are managing the inflows and outflows of that money.

One of the most cited causes of cash flow problems is the time it can take for customers to pay their bills, and one of the simplest but often overlooked precautions is to review your business's payment terms.

Issuing an invoice that reflects valid payment terms and conditions is not a legal or SARS requirement, but it is good practice and can go a long way towards helping you manage your cash flow. It's as simple as including a section labelled PAYMENT AND CANCELLATION TERMS on every invoice, where you can capture agreed terms and conditions, or, if you have not discussed terms, it affords you an opportunity to propose terms that you know suit your cash flow demands.

In principle, the aim should be to match the time frames between when your business gets money in, and when it pays money out for overheads, expenses and supplier costs. If, for example, you pay weekly wages, you ideally need to have shorter payment terms in place with your customers. If you pay monthly salaries or have monthly stock and debt payments to honour, offering payment terms longer than 30 days can result in a gap between the time at which money is coming in, and the time at which your business is obliged to make payments out. It's good business practice to match these payment terms, or, even better, to ensure that client payment dates fall before cash outflow payment dates that apply to your vendors. You may want to consider negotiating a 45 to 60-day grace period with your vendors and suppliers.

There are several software solutions on the market that are designed to help you track money inflows and outflows. The software offers you a choice of different views so that you can spot trends and anticipate if your cash flow might be running into problems that are unsustainable. FNB's Instant Cashflow is one such tool, which is part of the Instant Solutions suite of tools.

By collecting money before you're due to pay out money, you have a better chance of achieving what is called a positive "net cash flow" - the difference between the cash inflows and cash outflows during a specific period. It optimises how you're managing turnover and gives your business a better chance of surviving tough times, and can also leave you with reserves that you can invest.

Vaughan David, CEO of Business Cash Investments at FNB suggests that "when you are in a positive net cash flow position, consider opening a separate savings account where you can transfer any extra cash, and earn interest on that cash. This cash reserve can then start to serve as a savings buffer for any future unforeseen expenses, or to keep money aside for planned expenses like provisional tax. Remember to check which fees are charged (if any) and the type of access you will have to those funds".

For more information, send an e-mail to

Franchising - is it for me?

Almost every entrepreneur - at some point in their journey - considers going into franchising as a guaranteed route to attaining business success.

"Despite the sector having a higher success rate compared to its counterparts, franchising has its pros and cons and will not necessarily be suitable for every entrepreneur. Entrepreneurs who are considering or have decided pursuing franchising as a business opportunity should perform due diligence to avoid making costly mistakes," says Morne Cronje, Head of Franchising at FNB Business.

He shares key factors that entrepreneurs should consider determining if franchising suits their needs and business endeavours.

  • Is franchising right for me - acquiring a tried and tested system and business model is not for everyone. You should be comfortable to operate in line with the business licence, rules, procedures, requirements and standards set out by the franchisor.
  • Which industry and brand would be ideal - almost every industry can be franchised, which can be an advantage should the entrepreneur have a certain preference. However, the challenge is finding a brand that is aligned to your core values as an entrepreneur.
  • Am I financially ready - one of the biggest barriers to entry for franchisees is costs, especially if the brand is prominent. As part of the application for funding, franchisors require the entrepreneur to raise a significant portion of the franchise costs upfront.
  • Are existing franchisees satisfied - interview and determine if franchisees are satisfied and whether they are experiencing any challenges. This will give you a good indication if you are the right fit.
  • Does the franchisor approve - the next step would be to approach the franchisor and inform them of your intension to join their network. You will be required to go through a vigorous vetting process to ensure that you are a suitable candidate. Every franchisor has their own requirements.

This is also an opportunity for you to find out more about the business and the type of support you are likely to get from the franchisor.

  • Contractual agreement - should your application be successful you will be offered a contractual agreement. It is advisable that you thoroughly go through the agreement to ensure you fully understand what you are agreeing to. If unsure, seek advice from an expert.
  • How to get funding - as the final step, you would have to approach the bank and apply for funding. Banks will consider several factors before the loan can be granted:
  • Detailed franchise description and system.
  • Business plan.
  • FICA and personal balance sheet of all prospective shareholders and sureties.
  • Contract and franchisor approval letter.
  • Detailed description of all set-up costs and estimated cash flow forecast.
  • Own contribution to purchase the franchise and collateral if required.

Funding requirements may differ depending on the type of franchise and whether it is a new setup, existing business being purchased or taken over from another bank.

"Taking the above factors into account while doing additional research based on the franchise opportunity you want to pursue will go a long way to ensuring that you make a sound business decision," concludes Cronje.

Second-quarter GDP growth comes in better than expected

Second-quarter GDP grew by 3.1% q/q (seasonally adjusted annual rate) following a revised decrease of 3.1% in 1Q19. The second quarter's growth rate was well above Bloomberg market consensus of 2.5% and the strongest growth rate since 4Q17. From the production side, the increase was primarily driven by a surge in the mining sector, which grew by 14.4% q/q, contributing 1 percentage point (ppt) to overall growth. This was followed by finance (4.1% q/q and 0.9ppt) driven by the banking and insurance industries, trade (3.9% q/q and 0.5ppt) and government (3.4% q/q and 0.5ppt). In addition, the 2Q19 high-frequency data already indicated rebounds in the manufacturing (2.1%) and trade (3.9%) sectors following notable contractions in the previous quarter.

Discouragingly, the agriculture, construction and transport sectors remained in negative territory declining by 4.2%, 1.6% and 0.3% q/q respectively. The contraction in agriculture was due to lower production of horticulture and field crops, while construction is in the fourth consecutive quarter of contraction.

On the expenditure side, household consumption expenditure rebounded by 2.8% q/q and added 1.7ppt, following a 0.6% dip in 1Q19. Nearly half of the increase in household spending came from expenditure on food, which rose by 4.2% q/q and added 0.8ppt. Increased spending was also evident across all the remaining categories, with the exception of expenditures in restaurants and hotels which subtracted 0.1ppt from growth. Government consumption continued to increase in 2Q19 (+2.8% q/q, adding 0.6ppt), from 2% previously. The increases in employment and spending on goods and services were likely supported by election-related activities.

It is encouraging that gross fixed capital formation increased by 6.1% q/q (from -4.2% in 1Q19) and added 1.1ppt to overall GDP growth. This positive outcome broke a five-quarter contractionary streak. Asset categories that saw a boost in investment include machinery and other equipment (+5.8ppt), transport equipment (+2.1ppt) and residential buildings (+0.9ppt). On the other hand, contractions were noted in the investment of non-residential buildings, construction works and other assets. These subtracted a combined 2.7ppt from overall fixed investment. After contracting for the past two quarters, private sector fixed investment rebounded by 15.2% q/q and added 10.2ppt. In contrast, the contraction in public sector fixed investment subtracted 4.1ppt from overall investment. Fixed investment by general government plunged by -17.3% q/q, while that of public enterprises fell by 6.7%.

The 0.7% q/q decline in real exports and 18.8% increase in imports resulted in net exports subtracting 5.6ppt from GDP growth. Exports were pulled lower by precious metals - in line with weak external demand. Nevertheless, this is a significant improvement from the -27% endured in 1Q19. Higher imports were largely driven by imports of machinery and equipment, mineral products and chemical products.

The build-up of inventories added 5.1ppt to total GDP growth. This was mostly concentrated in the mining and trade industries and amounted to R26 billion in real terms. Although this was a positive for the quarter in question, we do expect the high base to place a drag on growth over the coming quarters.

In all, the rebound in 2Q19 is likely also reflective of the dissipation of load-shedding and strike-related activity that occurred in 1Q19. While the recovery in overall economic growth does not come as a surprise due to base effects and the more reliable electricity supply, the magnitude surprised on the upside.

FNB partners with Future Females to grow SA women entrepreneurs

In a bid to address the slower pace of women entrepreneurship development in South Africa, FNB has joined forces with Future Females as the main sponsor of all its South African chapters.

The partnership will facilitate the roll out of regional monthly events and workshops where entrepreneurs and intrapreneurs can connect, learn and be inspired by experts and serial entrepreneurs.

"FNB remains committed to growing women owned and led businesses in South Africa. Part of that approach entails entering into strategic partnerships to help female entrepreneurs from all backgrounds and cultures to start, run and grow sustainable businesses. As a result, we found it fitting to collaborate with an international, women focused movement that has strong roots in the country. This initiative will provide us with a reliable platform to connect, collaborate, share information and help a wide range of female entrepreneurs with business development support that goes beyond traditional banking," says Nicole Christopulo, FNB Business, Women in Business spokesperson.

This platform assists women business owners in solving problems relating to but not limited to: skills development, promoting job creation, creating networks and enabling growth.

Lauren Dallas, Co-Founder of Future Females says, "We are honoured to partner with the best business bank in South Africa. Our partnership with FNB will enable us to reach more women in underserved regions and further equip them with the necessary business and finance skills to grow a profitable business. Our broader aim is to create a support system for female entrepreneurs and intrapreneurs, which will include constant inspiration, support, coaching, and funding".

Every month Future Females in collaboration with FNB will host regional topical events focusing on a specific theme in business and personal development. To support the theme, resources will be digitally shared with the community through blogs, videos and newsletters. Offline workshops will also be hosted to go into more detail on specific skills.

"At FNB Business, we strongly believe that supporting women owned and led businesses in South Africa can also contribute significantly in growing our economy and creating more employment opportunities in this tough economic environment," says Christopulo.

Future Females has over 13 000 members, with a digital reach of 85 000. They have held monthly events in 10 chapters across South Africa, namely Cape Town, Durban, Joburg, Khayelitsha, Limpopo, Mahikeng, Port Elizabeth, Pretoria, Paarl and Stellenbosch.

For more information on the upcoming the Future Female chapters visit

Domestic tourism still poised for growth

Despite the prevailing tough economic conditions putting pressure on disposable income, South Africans are still traveling and touring local destinations.

According to the annual review by the World Travel & Tourism Council, travel and tourism in South Africa contributed R425.8bn to the economy in 2018, representing 8.6% of all economic activity in the country. An estimated 44% of the tourism spend came from international travellers and 56% from domestic travel.

Charnel Kara, Tourism Specialist at FNB Business, says although South Africa receives over 10 million international tourists annually, between 50% to 60% of the sector is based on local or domestic tourism. Therefore, domestic tourism remains the leading form of tourism, representing an important tool for stimulating regional economic growth and development.

Kara unpacks key factors that are driving the growth of domestic tourism:

Lower spend on accommodation - domestic travellers are now considering lower to middle tier hotels, guesthouses, B&Bs and AirBnB.

Many are also opting to stay with friends and family when travelling to other provinces, while others stay at home and become tourists in their own cities or provinces (staycation); and look for unique experiences, outings and activities to explore without having to stay away from home.

Flexible travel times - domestic travellers have become more flexible in their travel times and are traveling throughout the year. By moving their travel to a different day, week or month they make substantial savings.

Some prefer to travel less throughout the year, but rather during peak periods with potentially increasing their length of stay. Others travel during autumn and winter as opposed to only during spring and summer.

"Consumers are also increasingly paying more attention to low demand periods where good deals from suppliers can be obtained. By offering discounted rates, it encourages current travellers to travel more often, and stimulates the market so that people who wouldn't have ordinarily travelled, now decide that they should," adds Kara.

Untapped attractions - these contribute to regional revitalisation and promote domestic tourism through the formation of sightseeing routes, attractions with a story/theme or have several distinct features which include natural beauty, cultural traditions, history, cuisine, arts and crafts and unique adventures or activities. For example, eco-tourism, medical tourism, sports tourism, cultural and township tourism.

Technology: technology has contributed extensively to the efforts of promoting domestic tourism in the country. Information now reaches a wider base, offering travellers a multitude of options for a holiday destination, literally at their fingertips.

Social media has further made it easier for consumers to interact with businesses, share their experiences, and offer reviews, which often stimulates interest from other travellers.

"Domestic tourism still has a lot of potential to drive economic growth and job creation. Opportunities exist for SMEs in the sector to innovate and identify unique gaps that cater for the growing needs of domestic travellers - ranging from 'untapped' experiences where travellers become immersed by experiencing a destination, its people, their culture, foods and traditions like the locals would," concludes Kara.

Positive outcomes for agriculture - Budget 2019

Comment by Paul Makube, Senior Agricultural economist at FNB Agri-Business

One lesson from the current Eskom crisis is lack of investment overtime and as with this critical institution for our economy, agriculture is equally facing the same challenge. Infrastructure that support agriculture such as roads, ports and rail need serious upgrade

The unfortunate news is that the fuel levy will increase by 30c/ litre for diesel from 1 April 2019, which with current under recovery in fuel prices add to the woes of producers. One positive however, is that the diesel rebate will increase to R 3.33/ litre for qualifying users. Users of this system needs to protect the integrity of the system in collaboration with SARS to ensure future support from government.

The Minister's announcement of supporting private sector investments in agriculture by emerging farmers is most welcome. The allocation consists of R1.8 billion for the implementation of 262 priority land-reform projects over the next three years, and the R3.7 billion to assist emerging farmers seeking to acquire land to farm. On this point, the details of implementation are necessary as implementation has been a nightmare. This include a clear programme for the implementation of the blended finance model by the Landbank. The outbreak of the Foot and Mouth Disease (FMD) has elevated the importance of biosecurity and the allocation to beef up laboratories and development of vaccines is a positive step. In this regard it is positive that the Minister made R 456 million provision for the employment if newly graduated veterinarians within rural areas as part of their compulsory community service.

There is however no clear mention of the current drought affect parts of the NW, FS, and NC and this is a missed opportunity. Overall, positive budget from the agriculture perspective but we need to closely watch implementation.

Factors To Consider When Applying For Business Credit

Getting your business to the point where you're braced for growth can often require funding and while getting any form of credit is not something one should rush into, it may be needed if you're looking to expand your business and have a solid plan for how you believe additional financing can help you achieve this.

There are several types of credit options offered by banks; from overdrafts and conventional business loans that may be secured or unsecured with a fixed or variable interest rate over a fixed or variable period, to credit cards and revolving loans. While some forms of credit are more suited to specific needs, each comes with terms and conditions that need to be carefully weighed up before taking up a credit facility.

An FNB Business Overdraft: A Business Overdraft allows you to use more money than the available balance in your transactional account, up to an approved limit. You pay interest on the amount used until it's repaid, and you may have to pay fees for access to the facility and charges as well. The great feature of an FNB Business Overdraft is you only pay when you use it which allows you to have the safety of the facility without incurring interest.

FNB Business Booster Loan: A Business Booster Loan is a new credit product that allows you to qualify for credit if you have minimum of 6 months' turnover. This allows businesses to access credit earlier in the business lifecycle and fixed monthly repayments over 6 months allows you to budget effectively. With loans varying from R10 000 to R100 000, you can get a loan that suits your business's needs.

FNB Business Revolving Loan: An FNB Business Revolving Loan is an agreed credit limit that allows you access to credit once 15% of the original amount has been repaid. This is subject to you meeting specific credit criteria. You'll only pay interest on the amount used and monthly fees do apply.

FNB Business Loan: An FNB Business Loan allows you access to credit over a set period which can extend up to 60 months. The longer repayment term allows you to reduce your repayment amount and as the loan amortises, you pay less interest over the period of the loan.

It's a good idea to understand the differences between the different lines of credit to ensure you're applying for the one most suited to your needs, and to understand the impact the loan terms may have on your business and finances. Other factors to consider include minimum loan amounts (FNB's Business Revolving Loan starts at R20000), and the term of the loan (at FNB this could be anything from 6 months up to 60 months).

A further consideration might be the amount of information needed to make a decision about your loan application, and it will more likely depend on whether you are an existing client or new to FNB. New to FNB clients, can be requested to provide additional information to help FNB make an informed decision regarding your credit. This may include:

  • up to 6 months' bank statements
  • signed annual financial statements and year-to-date management accounts
  • financial projections such as cash flow statements, income statements and balance sheets, and
  • a business plan to demonstrate the viability and sustainability of the business
  • it's also likely that you could be required to open a Business Account if your loan application is successful

For more information on funding needed to grow your business, you can simply apply online or speak to your banker if you are already an FNB banked client

Q3 numbers lift South Africa out of technical recession, but it's not yet a turnaround

GDP for 3Q came in at 2.2% q/q (seasonally adjusted and annualised), just a touch below our forecast of 2.3%, and signalling an end to the recession. The second quarter was revised slightly higher from -0.7% q/q to -0.4%.

The primary sector contracted 5.4% q/q, dragged lower by a 8.8% q/q drop in mining output, and despite a 6.5% jump in agricultural growth. The manufacturing sector was the primary driver of growth, expanding 7.5% q/q and adding 0.9 pps, while the electricity and construction sectors contracted by 0.9% and 2.7% respectively. The tertiary sector also contributed to the better growth outcome, with transport jumping 5.7%, trade increasing by 3.2% and finance, real estate and business services up 2.3%. Growth in the government sector remained relatively robust despite the fiscal constraints.

The data suggests there is no reason to change our 2018 growth forecast of 0.7% y/y. Many obstacles lie ahead for the domestic economy (electricity supply, confidence, elections, ratings pressure) and we remain below market consensus over the next two years, given the constraints we see these factors having on investment and consumption.

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South Africa's First National Minimum Wage Has Become Law

President Cyril Ramaphosa has signed into law the National Minimum Wage Bill, the Basic Conditions of Employment Amendment Bill and the Labour Relations Amendment Bill - thereby setting the foundations for the implementation of minimum wages for around 6 (six) million South Africans who currently earn less than the new minimum.

The National Minimum Wage Act, 9 of 2018 ("the Act") will come into effect on 1 January 2019. The Basic Conditions of Employment Amendment Act, 7 of 2018 and the Labour Relations Amendment Act, 8 of 2018 will subsequently be implemented following the commencement date of the Act.

The national minimum wage has been set at R20 (twenty rand) for every ordinary hour worked. According to the Basic Conditions of Employment Act, 75 of 1997 (as amended), an employee may currently work a maximum of 45 (forty-five) hours per week. This means that the national minimum wage currently equates to around R3,600 (three thousand six hundred rand) per month, depending on the number of hours worked in the month. In addition, any employee who works for less than 4 (four) hours on any day must be paid for 4 (four) hours on that day.

The new minimum wage does not apply to farm and agriculture workers (whose minimum wage is currently set at R18 per hour), domestic workers (who are currently entitled to a minimum wage of R15 per hour) and extended public works programme workers such as welfare and care givers (who are currently guaranteed a minimum wage of R11 per hour). However, the Act does provide for the wages of these specific types of workers to be reviewed in the near future in line with certain guidelines for review and adjustment as set out in the Act. The Act also deals separately with learnerships concluded under the Skills Development Act, 97 of 1998.

The calculation of the minimum wage excludes any additional amounts that may be paid by employers to employees to cover extras such as transport, equipment, tools, food or accommodation allowances, unless otherwise specified in a sectoral determination. It also excludes any gratuities such as bonuses, tips and gifts.

The Act also establishes a National Minimum Wage Commission, whose task is, amongst other things, to review the national minimum wage every year and to determine any applicable exemptions that may be granted.

If, as an employer, you fail to comply with the Act's requirements to pay your employees the stipulated minimum wage, a fine will be imposed, unless you have applied for and been granted an exemption. Exemptions can be applied for using the online exemption process which is managed by the Department of Labour. An exemption may only be granted if the delegated authority is satisfied that, as an employer, you cannot afford to pay the minimum wage, and only if every representative trade union has been consulted in a meaningful manner. In instances where there is no trade union representation, there must be proof of meaningful consultation with the affected employees. The consultation process requires the employer to provide affected parties with a copy of the employer's exemption application.

The Act does not govern compensation for employees of the South African National Defence Force, the National Intelligence Agency, the South African Secret Service and any volunteers who provide their time and services at no cost.

The Act takes precedence over any conflicting provision in a contract of employment, collective agreement, sectoral determination or law, unless the conflicting provision is more favorable to the affected employee/s.

Four dangers of business underinsurance

In another article, the focus was on insurance as one of the most overlooked priorities when starting a business and how it can impact business sustainability. In this article, we focus on the risks of being underinsured. This is a common peril that many SMEs face when submitting a claim following an insured event.

Malesela Maupa, Head of Products and Insurer Relationships at FNB Insurance Brokers says, many small business owners mistakenly believe that by merely having a short-term insurance policy in place they are adequately protected against unforeseen events.

"This is technically correct provided that the business is covered for the full replacement value of the items insured. However, in circumstances where the sum insured does not cover the full replacement value or material loss of the item insured, the business is underinsured," explains Maupa, as he unpacks the dangers of business underinsurance:

Financial loss - the most common risk is financial loss on the part of the business. If the business is underinsured or the indemnity period understated, the short-term insurance policy will only pay out the sum insured for the stated indemnity period as stated in the schedule, with the business owner having to provide for the shortfall. This often leads to cash flow challenges, impacting profit margins or rendering it difficult for the business to recover following the financial loss.

Reputational damage - should an underinsured business not have sufficient funds to replace a key business activity or critical component following a loss, this may impact its ability to fulfil its contractual obligations, leading to a loss of business or market share, and irreparable reputational damage in the worst-case scenario.

Legal Action - a small business also faces the risk of customers or clients taking legal action against it, should it fail to deliver on goods and services following a loss or be unable to honour its financial commitments that they committed to prior to the loss.

Survival of the business - a catastrophic event such as fire, which could result in the loss of stock or company equipment and documentation, could threaten the survival of a small business that is not yet fully established, if the business assets are not adequately insured.

Working with an experienced short-term insurance broker or insurer is essential when taking up short-term insurance to ensure that business contents are covered for their full replacement value.

Furthermore, depending on the nature of the business or item insured, the policy should be reviewed on a regular basis to avoid underinsurance as the value of items often change overtime due to fluctuations in economic activity. Where it's necessary, evaluation certificates need to be kept up to date.

"Lastly, SMEs should ensure that the sum insured does not exceed the replacement value, which would lead to over insurance. Should a business submit a claim following a loss, the insurer would only pay out the replacement value, regardless of the higher sum insured," concludes Maupa.

Keeping Your Business Safe Over The Festive Season

Don't let your business premises become a target over the December holiday period. Over the years, statistics show that business burglaries during the Festive Season increase exponentially, especially in empty offices and buildings

According to Malesela Maupa, Head of Insurer Relationships of FNB Insurance Brokers, burglary is a serious threat to any business and can significantly affect operations. He says, "a lot of burglaries and related theft occurs primarily at businesses when they are closed for business. The losses are quite large and happen over a relatively short period."

There are some practical measures you can take to protect business premises and property during the holiday season - always remember that thieves do not only steal physical assets, but can also steal electronic data. Having tighter security measures can give business owners peace of mind while away on vacation.

Maupa shares a few precautionary tips on how businesses can tighten their security during this festive season:

Make sure your business is adequately insured: It has become essential for businesses to have adequate insurance cover in place. Insure valuable assets and understand the replacement value of those assets. Make sure you engage your broker to ensure that your business has adequate cover.

Lock your valuables: Burglars have become highly aware of vacant offices containing assets such as computers, laptops and stock for the festive season. Place valuable items in a secure room or safe; do not leave expensive items hanging around the office.

Activate alarm systems: Test your alarm systems and make sure they are operational, if possible, activate new and stronger passwords and alarm codes.

Burglar bars: Secure burglar bars and place them on the inside of any windows, this acts as a deterrent and can slow burglars down. Make sure your surveillance cameras are working, if you have them. Signs warning of the presence of CCTV cameras can deter crime, so place them in plain sight.

Keep records of all movable assets in case of a robbery: Take an inventory of computers, stock, keys, and gate remotes. Also, list all serial numbers for equipment - this helps to speed up the insurance claim process in the event of theft.

Car remote blocking / jamming check that your business vehicles remain locked before walking away.

Electronic devices: Laptops/tablets please do not leave these items visible inside your locked vehicle. Kindly place them in a lockable compartment/boot.

Yellow plant items kindly remove batteries, tyres, etc. and store it within locked premises.

Money Ensure that your safe complies to the minimum safe requirement in terms of your policy, especially considering that you may have an increased amount of cash on premises during the festive season. Keep cash in tills to a minimum. Banking procedures for the season should also be reviewed, and so too the frequency of banking, in order to keep the level of cash on premises to a minimum.

Theft of Goods in the Open Give thought to discussing this cover with your broker, i.e. theft of a component from a generator housed outside, theft of CCTV cameras mounted to the outside of the building, etc.

"In these tough times when businesses are finding it difficult, the last thing business owners want is to be caught off guard by a robbery. Without taking the necessary precautions and putting tighter security measures in place as well as ensuring adequate insurance cover against potential risks, a business can be left defenseless during this festive season," concludes Maupa.

To make sure that your business assets are adequately covered or for any enquiries, please contact one of our FNB Insurance Brokers at and quote Business Insurance as a reference.


April 2020

Corporate tax rate cuts are on the horizon

February 2020

FNB Rolls Out Further Support For SMEs

FNB launches initiative to scale social entrepreneurs

Franchising - is it for me?

FNB revamps eBucks Rewards for business

Business Credit Card mistakes to avoid

How to expand a South African franchise into the rest of Africa

Optimising Cash Flow improves chances of Sustainability

Getting Your Business Tax Affairs In Order

Factors To Consider When Applying For Business Credit

2020 Budget Review

The 2020 Budget Speech review - Impact on Agriculture

3Q19 SA GDP by sector

Novermber 2019

Winners of FNB Business Innovations Awards 2019 unveiled

September 2019

Food inflation outcomes on the downside for September 2019

June 2019

2019 Budget Review

Positive outcomes for agriculture - Budget 2019

Tap in to emerging trends in the tourism industry

FNB Business Innovation Awards 2019 entries open

FNB Supports National Entrepreneur Workshops

March 2019

New ways of working

Business-related announcements in the recent budget give way to government spending and SOE emphasist

Optimising Cash Flow Improves Chances Of Sustainability

The legal status of your business can impact its longevity

Inadequate Short-Term Insurance Can Impact Business Sustainability

Getting Your Business Tax Affairs In Order

November 2018

FNB announces the 7th Franchise Leadership Summit

August 2018

Explore New Financing Options To Help You Grow

Summer crop area down on last year but better than earlier market expectations

July 2018

Saryx Engineering Group (SEG) wins FNB Business Innovation Awards 2018

Ensure you comply with new minimum wage requirements

Importance of separating business and personal finances

Self-employed individuals, such as freelancers and tradesman easily fall into the trap of unintentionally mixing business and personal finances.

Not only does this expose the business to several risks, it also creates a bookkeeping problem with the entrepreneur failing to account for business expenses adequately.

Kenneth Matlhole, FNB Business spokesperson, says although it can be quite an inconvenience for sole proprietors to carry two sets of debit and credit cards or switch between bank accounts when transacting, it is a necessary discipline to ensure that the entrepreneur always has accurate financial records and a clear view of how the business is performing.

He unpacks a few risks associated with commingling funds:

Applying for credit - when applying for business credit, the business owner might be required to provide the bank with relevant information, such as banking statements and a cash flow projection as part of the credit assessment process.

The business may be impacted negatively if certain transactions are not reflected in the business account as the bank needs a holistic understanding of the business.

Matlhole also cautions entrepreneurs from the habit of borrowing funds from their business for personal expenses, with the intention of re-funding the account. The situation can easily get out of hand leading to cash flow constraints.

Tax - tax filing can become a challenge, especially if the business is audited and required to provide proof for some of its financial activities, that were performed through a personal account. The business can also lose out on several deductions should it fail to prove that the respective activities were performed by the business.

Cash transactions - not only is it costly for businesses to operate in cash, it also makes it easy for self-employed individuals to mix business and personal finances. Banking through digital channels, such as online and app banking, often proves to be the most effective.

Failure to consult - as the business grows and the owner has less time to manage administration, it may be effective to use the services of professionals, such as accountants. This could ensure that there are strict and consistent finance processes for the entrepreneur to follow.

If you are comfortable in managing the administration yourself, there are several online based applications and software available which can assist in tracking revenue and expenses, such as FNB Instant Accounting which is our online accounting solution. Instant Accounting uses your FNB bank transactions to electronically generate financial statements and reports, including income statements, balance sheets and cash flow statements.

"It is also important to ensure that you have the right bank account for the type of business you are running to avoid incurring unnecessary banking fees," concludes Matlhole.

Don't Think of a Business Plan as a Once-off Task

Your business plan should be a living document that guides strategy, the optimal structure for your business, all operations, marketing and sales strategies. There's also not just one "right" plan, and it should be flexible enough to accommodate market and industry changes over which we often have no control. If you think about a business plan in this way, you'll realise that it's a tool and guide for navigating through tough and good economic times.

Starting the task of writing your plan can be terrifying, so it's best to start simple. Before you start thinking about the structure, main headings or design of your business plan, write down a list of the stakeholders you are writing the business plan for.

If you are writing the business plan for yourself as a way of organising all your thoughts and tracking your progress, you will need a set of headings that match the way you think. However, if you are preparing the business plan in order to attract funding, you will need to make sure that the headings you use match the requirements of the investors you want to approach. A great tip is to keep in mind that you can approach these investors to find out whether they have any specific requirements for a business plan.

Once you know who you are writing it for and what their requirements are, you can start organising your work. Since it is a big task, you need to break it down into smaller pieces of work that you can tackle one at a time. You also need to give yourself the flexibility to make changes to your plan as you go along. The easiest way to do this is to start with a separate page for each heading as shown in the table below:

Once you've settled on the blueprint, spend some time gathering all the information you need from the sources you wrote down. This will probably add up to a lot of paper or digital notes, so you will probably need to organise it all into files so that you can retrieve the information easily.

Your next task will be to use the information you have gathered to translate your main points into sentences and paragraphs. Do this one heading at a time so that the task doesn't feel overwhelming. This way, you will be able to focus on giving your best explanations to one point at a time.

Finally, make sure that you leave the executive summary to last. This is the hardest part, because you have to do two important things:

  1. You must select the most important points to emphasize for your reader.
  2. You must summarise these points in a way that captures the reader's interest and makes him/her want to know more.

If you take this approach, you are on the way towards completing a comprehensive and well-structured business plan. For more entrepreneurial help and business tips download the FNB App and access Fundaba for free!

Start your small business off on the right foot

As we head into a new decade, many aspiring entrepreneurs will be looking to start their own successful businesses and potentially contribute to creating much needed jobs and GDP growth in South Africa.

Lauren Deva, Sales Head for FNB Business Core Banking, says that since FNB's integration into the Companies and Intellectual Property Commission (CIPC) in July 2013, FNB has assisted with the registration of more than 65 000 companies. The CIPC annual report for 2018/19 shows that the volume of company registrations increased by approximately 9000 registrations compared to the 2017-2018 financial year.

Deva adds that, while success can never be completely guaranteed, there are key steps that entrepreneurs should consider when planning to start a business. These include the following

  • Do your research - Conduct market research to ensure that there is demand for your product or service. Try to identify gaps in the market or opportunities for new products or services. You should also research information about starting a new business. 'Fundaba', a free interactive e-learning platform developed inside the FNB banking application, is an excellent starting point.
  • Register the business correctly - You can choose to run the business as a sole proprietor, which is the more popular choice by many entrepreneurs, or you can register the business with CIPC as a private business. Another option is to run the business as a sole proprietor for the first few years and then register the company as a private business. If you choose the sole proprietorship option, it is vital to keep your private and business finances separate but be cognisant that you are personally liable for any debt that the business incurs.

Registering a private company limits your liability risk as an individual and your business can benefit from tax benefits/deductions such as business expenses, auto expenses, medical aid, and office space.

The cost of registering your business is relatively low at R125 (no name reservation) to R175 (name reservation included). At FNB, we offer clients the ease of registering their business through the FNB website and will help you open a business account suited to your needs.

  • Keep initial costs low - When starting out, try to keep your costs low, without compromising on the quality of your product or service. For example, you can save on bank fees by making use of FNB's First Business Zero, a business banking account for sole proprietors with no monthly fees, access to free data and QR Speedpoint R.
  • Make the most of marketing opportunities - As a small start-up business, you are your best marketer. The 2018/2019 SA SME Landscape report revealed that access to market was one of the biggest challenges faced by small business entrepreneurs.

Take advantage of opportunities to showcase your business, whether it's via an advert in your child's school newsletter or an advert in a local newspaper. Don't underestimate the power of word-of-mouth advertising either - people can't support your business if they are unsure of what you do. Social media is a great platform to create a buzz around your product offering so use the tools available to put your business in the spotlight.

"In these tough times, we look to the SME sector to revitalise the South African economy, but small business owners are urged to take the correct steps to ensure that they launch competitive, thriving businesses," Deva concludes.

What's needed for a Business Credit Card?

Taking the time to understand what banks look for when accessing an application for a business credit card or limit increase can help SMEs increase their chances of approval.

Valentine Jingura, Head of Pricing for FNB Business says, credit plays an important role in helping SMEs start, run, grow and sustain their businesses.

There are common criteria that financial institutions and banks consider before a business credit card/limit increase can be granted:

  • Existing bank account - often, the first consideration is for the applicant to have an existing business bank account that is in good standing before a credit card can be offered.
  • Monthly payments - banks want to determine whether the applicant will be able to keep up with the minimum monthly instalment payments, should they use the entire amount allocated on the credit card.
  • Financial records - businesses that have just started out and do not have adequate financial statements may be required to provide additional business information, such as cash flow projections and estimated monthly spending. This enables the bank to make an informed decision, based on the information at hand.
    Credit behaviour - although there isn't a credit bureau for businesses in South Africa, lenders use any information at their disposal to understand how the business handles its financial affairs and honours its obligations to creditors. A good record always works in the business' favour. Directors associated with the business also need to have good credit records.

    Furthermore, if you are a sole proprietor, mismanaging your personal financial affairs may impact the final decision from the bank. Part of this reason is because a sole proprietor is not recognised as an independent legal entity and the owner is legally liable for all the business' debt.
  • Suretyship - depending on the legal structure of the business and its credit profile, the directors of the company may be required to sign surety for payment of the credit card debt - in case the business fail to meet its obligations. This often forms part of a banks' risk mitigation processes.

"A business credit card forms part of several unsecured credit products offered by banks to help businesses manage daily operations, working capital and cash flow shortages. Before applying, ensure that you are choosing the right form of credit for the business' needs," concludes Jingura.

Avoid cutting back on business short-term insurance in tough times

Business owners who are under pressure due to the tough economic environment should avoid cutting back or cancelling their short-term insurance as they could be left in a far worse predicament.

Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says having insurance coverage is critical when a business is going through turbulent times. During this period, the business faces a multitude of risks that could lead to liability issues by failing to provide a service or meet the needs of its customers.

He points out factors that businesses should consider before taking any drastic measures:

Contractual obligations - for some businesses, having adequate short-term insurance cover is a contractual requirement which needs to be met, always.

For example, when contractors are awarded a contract to construct a building, some contracts require that the contractor has short-term insurance cover in place for the duration of the contract.

Alternatively, when purchasing a franchise, the bank and franchisor may require that you have adequate cover in place as part of the agreement. The same principle applies when a bank finances the purchase of a commercial property.

Transport and logistics businesses are also required to have some form of short-term insurance cover to ensure that their clients' goods are protected.

Financial impact of cutting cover - before you amend your short-term insurance policy, it is essential to assess the risk impact of the cover you are cutting back on - how would it impact business operations and the continuity of the business following an insured incident?

Cancelling your policy - cancelling your short-term insurance policy might seem like a quick solution in terms of reducing costs, but may have catastrophic implications for your business. A business that is not insured faces a multitude of risks which could result in the business being liquidated and the owners being held personally liable for damages in the worst-case scenario.

Premium reducing approaches - the most efficient way of reducing your short-term insurance premiums is to reduce the risks that the business is exposed to. Avoid taking cheap insurance cover that offers very little protection for your business.

There are several approaches to consider depending on the type of business and its operations. These strategies range from addressing the business' risk exposures to transferring the risks to other stakeholders or third parties.

The first step is to review your short-term insurance cover to determine if there aren't any items or equipment, which no longer exist (or update the values the items are insured for) which are covered under the policy. Secondly, you can use an effective risk mitigation approach to reduce your premiums, such as installing an alarm system, burglar bars, tracker on vehicles or a modern sprinkler system etc.

"Before making any amendments to your short-term insurance policy, it is advisable to consult your broker or insurer to ensure that you avoid making mistakes that will cost you more in the long term," concludes Malesela.

First Business Zero - an offering ideal for digital savvy sole proprietors

FNB is committed to helping SMEs start, run and grow their business and in support of this, has launched First Business Zero - a new digital solution designed exclusively for sole proprietors who prefer to bank on the FNB App or Online Banking. (A sole proprietor business is owned and run by one person with no legal distinction between the owner and the business).

We understand that when you are starting a business, every cent counts and with First Business Zero you pay no monthly account fee and get unlimited free card swipes. It is more than just a bank account and comes standard with the following:

  • Free FNB Connect SIM card with a monthly allocation of data, voice and SMSes*
  • Ability to accept payments with QR Speedpoint® available on the FNB App. Simply generate a QR code to accept payment on the go and there are no sign up or monthly rental fees.
  • A linked Savings Pocket to help you keep money aside for future cash flow needs while earning interest on it.
  • Access to a free business coach in the palm of your hand with Fundaba, available on the FNB App.
  • Access to our full range of Instant Solutions, including Instant Accounting, Instant Invoicing, Instant Payroll and Instant Cashflow.

Furthermore, the account can be opened easily and quickly on the FNB App and within a couple of steps, your business will be ready to receive and make payments. Using the FNB App and/or Online Banking for daily banking will further assist you in reducing monthly banking fees and save time from queueing at branches.

*A free FNB Connect SIM is delivered with the First Business Zero debit card and by transacting at least once a month on the FNB App, Online Banking, via card swipe or depositing, you automatically get allocated a free monthly bundle of 100MB data, 30 voice minutes and 30 SMSs, to help you stay connected and run your business.

Corporate tax rate cuts are on the horizon

Some are calling it a "Moody's Budget" and some are calling it a "Consumer Budget" - so what did the minister's Budget Speech mean for business?

On the one hand our Minister of Finance made a point of reminding us that we can again become a "winning nation", and on the other he set the scene for his speech within the context of a lacklustre growth forecast for at least the next three years. It will average at 1% and the focus will be on restructuring state-owned enterprises, modernising what he called "network industries", stimulating cross-border trade on the African continent, and implementing a "reimagined industrial strategy".

The minister did make one notable comment that will impact businesses - the prospect of a future reduction in the corporate tax rate, which will be funded by broadening the corporate tax base (the tax rate has remained unchanged at 28% for more than a decade). Treasury intends to create a more standardised tax approach to businesses from different sectors, and that in turn could enable lower tax rates.

Again, there was the expected commitment to stimulate start-ups and assist in their tax burden, and to close loopholes that open the system up to abuse.

Plans include an Innovation Fund and a R6.5bn allocation for small-business incentive programmes, R2.2bn of which will be transferred to the Small Enterprise Development Agency. In 2019 a total of R481.6 million was allocated to SEDA to expand its small-business incubation programme. This detail comes as a follow-up to the President's State of the Nation Address, where he iterated government's commitment to helping 1 000 young entrepreneurs with grant funding and business support in 100 days. The long-term goal is to help 100 000 young entrepreneurs access business skills training, funding and market facilitation over a period of three years.

The minister also said all the right things about focusing on growing the tech and fintech sectors and allocating funds to support agriculture and tourism.

Once again, we heard about government wanting to streamline the administrative burden on SMMEs insofar as requirements related to registration with the Companies and Intellectual Property Commission (CIPC), South African Revenue Service (SARS), the Unemployment Insurance Fund (UIF) and the Compensation Fund. The BIZPortal should help in getting all these tasks completed online in just one day.

Given the current environment, the minister didn't have much wiggle room, and whether or not the private sector will breathe easier remains to be seen...

FNB expands its QR code payments channels

Following a positive response to FNB's integrated App-based QR code payments solution from merchants and consumers, the Bank is expanding its ecosystem by adding even more QR code payment channels in South Africa.

Consumers shopping or filling up at Engen service stations across the country are now able to make QR code payments (Scan to Pay) on FNB's turquoise point of sale terminals (POS Terminal). This is the first phase of the rollout with further QR code payment channels soon to be introduced at major retailers across the country.

Thokozani Dlamini, FNB Merchant Services CEO says the ability to process convenient, efficient and safer payments in a cost-effective manner continues to be essential for businesses. Digital payment solutions are key to drive wider financial inclusion and acceptance - helping consumers move away from cash.

"We are fortunate in that our market leader position and continued digitisation of our banking platform enables us to benefit from scale. Consequently, we are able to reach a significant number of merchants in SA, while providing them with industry leading and affordable banking solutions. This coupled with our initial partnership with Engen, which has the largest service station footprint in South Africa, will go a long way in helping us to accelerate the adoption of digital payment solutions in the country," adds Dlamini.

This payment option is powered by Masterpass, Mastercard's digital payment service, which is interoperable with most major domestic QR payments services.

Since launching the integrated QR code payments solution on its banking app for both consumers and businesses in the SA banking sector, FNB has seen steady growth with FNB-banked merchants, who actively use 'QR Speedpoint'.
From a consumer perspective, Scan to Pay usage has seen double digit month on month growth since its launch on the FNB App. This complements a wide range of convenient Digital Payment alternatives such as FNB Pay on the FNB App, Samsung Pay, FitBit Pay and Garmin Pay.

For added convenience using Scan to Pay, FNB customers can simply enable the FNB App 'Scan to Pay' widget on their smartphones. Alternatively, they can select the Payments option on the FNB App - login and select FNB Pay, then click on 'Scan to Pay'.

"We continuously strive to improve our payments solutions and enhance our customers experience by providing them a range of solutions that are secure and convenient when making purchases," Dlamini concludes.

FNB Rolls Out Further Support For SMEs

FNB Business continues to live up to its commitment to help SMEs by launching a first of its kind in South Africa, an interactive educational section on its banking APP called 'Fundaba'.

Fundaba is a free value-added service for bank customers that offers information and insights about running a business and various aspects of entrepreneurship. The name Fundaba is a portmanteau of the South African words "Fundi" (colloquially means "expert") and "Indaba" (discussion), because our long-term vision is to increase the knowledge of entrepreneurship skills through discussion and dialogue.

It includes multimedia content that spans videos, podcasts, quizzes, infographics, and a range of templates and tools. Topics extend from incubating a business idea to starting, running and growing a business in South Africa. SMEs can also actively share and provide feedback about the content, testament to the bank's commitment to grow this platform through dialogue and collaboration.

The APP currently houses 12 modules and follows Lebo, a South African entrepreneur, on his journey as he builds his first business, a bakery. All audio and video content is available in five local languages including, IsiZulu, isiXhosa, Sesotho, English and Afrikaans. Language preferences can be selected through a user profile.

If you are currently an FNB customer and already have the banking app downloaded, search for the Fundaba icon on your FNB App home screen, scroll down to the plus [+] sign, select it and add the Fundaba icon to your home screen.

Mike Vacy-Lyle, FNB Business CEO says, "It is the business owners in this country who challenge us daily as a bank, to innovate and find tangible solutions that are truly meaningful and impact the day to day running of their businesses and bottom line. We are proud that we can offer helpful solutions that provide much-needed relief and facilitate the development of SMEs." During the past financial year to June 2019, FNB Business banked SME lending reached more than R38bn, while the bank further extended over R8bn to women-led businesses during the same period.

Winners of FNB Business Innovations Awards 2019 unveiled

FNB Business in partnership with Township Entrepreneurs Alliance (TEA), 10Xe and Endeavor South Africa, have announced the overall winners of the 2019 FNB Business Innovation Awards (FNB BIA).

Umgibe Farming Organics and Training Institute clinched top honours in the R0 to R5 million category while Marc1 Dot Com Pty LTD dominated the R5 million + turnover category and Aerobotics was the overall winner in the R10 million + category.

These three businesses were recognised for demonstrating real innovation to drive business growth with the potential to change the way their respective industries operate.

Mike Vacy-Lyle, FNB Business CEO says, "congratulations to all the finalists for demonstrating great potential and the capacity to add substantial socio-economic impact to the South African economy. We recognise their hard work and are aware of the sacrifices they make daily - and urge them to continue pushing boundaries. Our best chance at solving unemployment and boosting economic growth in our beautiful country rests on the success of such businesses."

Each business will get business development support to the value of R1 million, to help them take their business to the next level.

Umgibe Farming Organics founded by Nonhlanhla Joye, promotes the idea of a sustainable local food system through the cost-effective and environmentally friendly Umgibe growing system. The business will receive marketing and branding to the value of R150 000; 24 months' mentorship from FNB Business; eB1 000 000 (eBucks) to be used towards the betterment of the business and a business cellphone package through FNB Connect for 24 months.

Marc1 Dot Com Pty LTD founded by Muhammad Simjee is the world's first IoT Point of Sale (POS) system, which incorporates an IoT device into the POS system and boosts retailer sales in real time at the point of purchase. Muhammad will get an opportunity to participate in the 10X Accelerator programme. The programme is for businesses that are scaling for the first time. It is designed to accelerate the transition from a frenetic hustle to a scaled, but still growing business that isn't totally dependent on its founders.

Aerobotics, founded by Benjamin Meltzer, an early pest and disease detection service enabled by drone imagery and artificial intelligence, will participate at the coveted two-day Endeavor International Selection Panel (ISP) in Argentina next year. ISP brings together high-impact entrepreneurs to present their business to world-leading business personalities for a chance to be part of an exclusive global network.

Factors such as brand and reputation; stakeholder relations and goodwill; environmental sustainability; social responsibility and quality of governance were all taken into consideration during the process of selecting the winners.

The FNB Business Innovation Awards aim to recognise and celebrate the efforts of high-impact SA entrepreneurs, who have embraced many challenges to create industry-disrupting and scalable companies that continue to forge unique ways of doing business.

For a comprehensive list of the finalists, judges, and background on the competition, please visit .

The 2020 Budget Speech review - Impact on Agriculture

Given the extremely difficult economic climate in which this budget speech was delivered, the immediate feeling is fairly positive. The fact that the minister focused on wasteful expenditure and cost savings from a government perspective shows the government's intent, but implementation will be key.

From an agricultural viewpoint the fact that R500 million has been provisionally set aside for disaster management, including floods and the ongoing drought, is very positive, although the implementation will be the proof in the pudding. This includes the allocation of almost the same amount to support compliance with biosecurity and to support exports. The recent foot and mouth disease outbreak proves the necessity for this allocation.

It is also promising that government has allocated funds for land restitution. The R500 million to be set aside for this could result in more land claims being resolved over the medium term.

The increase in the fuel levy was expected, but given the current over recovery in diesel prices, the impact will be limited. This is a result of lower oil prices on the back of the coronavirus and the exchange rate. The latter has reacted positively on the budget speech.

The move to allow third party access into the rail network is also positive as it may help expedite agriculture exports that currently face bottlenecks and higher costs from trucking due to poor road infrastructure in some provinces.

In a weak economic environment and with disposable incomes under pressure, the tax relieve for hard-working tax payers is most welcome and will help consumption growth (tax payers who earn on average R265 000 a year, will see their income tax reduced by over R1 500 a year).

by Paul Makube, Senior Agricultural economist at FNB Agri-Business & Dawie Maree, Head of Information and Marketing