Connect with us

Entrepreneur Today

Consumer Protection Act a Fatal Blow for Entrepreneurs?

How does the CPA affect your business, and what can you do to mitigate risk?

Liz Zambonini

Published

on

Find_Your_Match

As of 1 April 2011, South African consumers became some of the most protected in the world, thanks to the implementation of extremely progressive legislation which is comparative to those of developed markets.

The Consumer Protection Act (CPA) applies to the supply of all goods and services (including every role-player in the supply chain), as well as to the promotion and marketing of these goods and services. For the average South African who is weary of poor service delivery, they will be pleased to know that ‘goods’ include gas, water and electricity.

Intentions

The intention behind the legislation is to promote a culture of consumer rights and responsibilities, as well as to encourage business innovation and enhanced performance. In addition, it is hoped that regulations will improve access to, and the quality of, information that will enable consumers to make informed choices and protect them from hazards.

Companies not abiding by the CPA face penalties of a fine of up to 10% of turnover, or a fine and a prison sentence of up to 10 years where an order is not complied with.

While this legislation is a boon for consumers, concerns are being raised that it may signal the end for many small businesses and entrepreneurs however.

Too much legislation, particularly around compliance and corporate governance, kills innovation and an entrepreneurial spirit. Entrepreneurs need to be agile and able to adjust quickly to changing circumstance, but legislation such as the CPA will hinder small businesses. Exemptions should be provided for these entrepreneurial ventures as not only is it extremely difficult for someone who is getting their business off the ground to be fully informed about all of the complexities of the Act, but there is also a cost of compliance which many will not be able to afford.

As even boards of large companies are finding that they spend far more time talking about compliance than they do about strategy, one can only imagine what this change in the business landscape will do to entrepreneurs.

Far-reaching consequences

One of the areas which the CPA will affect is food, including safety, labelling and hygiene. While no-one will deny that these are all important elements in the production and packaging of foodstuffs, entrepreneurs who sell homemade goods to earn a living will in all likelihood find themselves unable to comply with the legislation.

The knock-on effect of the CPA will be enormous for small caterers. One example is that we at The Hope Factory support an entrepreneur by packaging and selling her baked goods, the income from which she uses to support her two sons who are at university. Unfortunately she cannot afford to comply with all of the aspects of the CPA – such as the food labelling requirements – therefore we have no choice but to discontinue buying her products. The ramifications of this are that her sons will not be able to finish their studies, which will have an extremely detrimental effect on their futures.

It has been proven time and again that if developing countries such as ours aim to grow their economies, that encouraging entrepreneurs is the best way forward. While it is not wrong to have the CPA therefore, it would be beneficial for entrepreneurs and small business owners – and the country – if it could be moderated to give their businesses the best possible chance of survival.

Liz Zambonini is the CEO of The Hope Factory, an established Enterprise Development Initiative of the South African Institute of Chartered Accountants (SAICA). For more information, visit www.thehopefactory.co.za

Advertisement
1 Comment

1 Comment

  1. Fudley Bez

    Nov 17, 2011 at 12:02

    Do we need any more proof that those in power have lost the plot? There seems to be no end to all this madness till they kill the proverbial goose that lays the golden egg. We’ve had them protecting tenants to the extent of killing off landlords, protecting the workers at the expense of the employers, protecting criminals while denying the rights of the victims, protecting the secrecy of government while flouting the right to privacy of SA citizens. On-and-on. Maybe our law schools are to blame for producing over-zealous graduates who lack the wisdom to think through the consequences of the legislation they conceive.

    What the govt fails to realize is that they steadily are making criminals of all of us. You cannot remain law-abiding unless you have just laws to begin with. And just laws cannot be moderated into palatability. Why do we need them invoked into existence in the first place? Who will be the moderator?

    So the very CPA brought into existence to protect the consumer, will ultimately end up causing more harm to the consumer. Now don’t tell me they didn’t think of that?

You must be logged in to post a comment Login

Leave a Reply

Entrepreneur Today

5 Businesses You Should Start in 2019

Here’s the lowdown on consumer and technology opportunities in 2019 and beyond.

Entrepreneur

Published

on

starting-a-business-in-2019

Savvy entrepreneurs should keep a close watch on consumer and technology trends in 2019. This, according to Silvertree Internet Holdings Co-founder and MD, Manuel Koser. Having invested in and grown a number of highly successful South African brands (among them Faithful-to-Nature.co.za, UCOOK.co.za, Pricecheck.co.za, CompareGuru.co.za, Petheaven.co.za, Cybercellar.com, and CarZar.co.za). Silvertree’s management team sees several business opportunities set to grow exponentially over the coming decade.

Here’s the lowdown on consumer and technology opportunities in 2019 and beyond.

1. Indigenous and ethical: Personal and home care products

2019 Sees growing potential for personal care products – ‘Those with local and indigenous ingredients, ethical sourcing which is kind to nature and the body,’ Koser explains. ‘There is a lot of room to play in the African haircare market particularly, as it’s often overlooked by the major FMCG companies.’

The Silvertree MD also sees increasing room for innovative natural home cleaners as consumers become increasingly environmentally conscious. ‘Until now, it was all about the well-known cleaning products the major chemical manufacturers put on the shelves. Now, there’s increasing space for new, exciting entrants.’

2. New beverages

‘Locally-sourced ingredients and an earth-first mindset will also play an increasing role in the consumer beverage market. Add to this the fact that major soft drink manufacturers will struggle to produce drinks for increasingly health-conscious consumers. They’re often just not quick enough to adjust to changing consumer tastes – particularly the tastes of millennials. Think less about a standard fizzy drink, but rather one that’s kind to the body, with natural ingredients. Non-alcoholic: water plus, say, cucumber, or another indigenous ingredient. The market for this will grow.’

3. Ethical snacking

Plant-based, vegan, ancient grains, ethical, protein-rich snacks – these are just some of the trends Koser sees dominating in the snack segment in 2019 and beyond. It’s about unique, tasty, functional foods that cater to the modern, time-starved consumer, Koser explains.

4. Buy, sell and compare online

In the technology space, marketplaces, e-commerce sites and classifieds will all gain momentum in 2019 and beyond. This encompasses aggregators as well as more unusual online businesses, which are increasingly able to find and reach consumers interested in niche products and services.

‘Consider an online ice-cream business. Once, something like that would have been unthinkable,’ Koser explains. ‘But as consumers demand greater choice, room for niche products like this grows.’

Yet, dabble online and seamless execution and delivery become make-or-break factors. ‘Many South African consumers use services such as Google, Amazon, Uber and Spotify daily – world-class products that function on a global scale. You can call an Uber and wait for just two minutes before getting a ride,’ Koser explains. ‘It’s quick and totally seamless. Consumers have come to expect that level of service across the board. Aligned to this is the fact that the millennial wave is currently hitting Cape Town right now, and Joburg secondarily, meaning a number of opportunities are opening up. Go after products and services in the right space and consumers will follow.’

5. Reinvent the wheel – and make it better

The final type of business entrepreneurs should keep an eye on is those that currently have low Net Promoter Scores. ‘This means that very few people like them, or the services they provide are of very poor quality,’ Koser explains. ‘Think of postal service providers or telecoms companies. With any monopolistic or oligopolistic structures, the service is often terrible because the heavyweights hold so much power. There’s a huge gap here.’

An allied approach for entrepreneurs is to assess opportunities for automation, or cutting out the middleman with technology. ‘Once, many markets – such as real estate were opaque, meaning you needed a middleman to help you transact. However, as the capabilities of technology have grown, markets have become far more transparent – making it easier for buyers to match with sellers safely. Today, a lot of this is easy to automate services – think about connecting a homeowner to a prospective renter through a digital solution where renters can be qualified, for example, in terms of their finances, personal information and criminal records. Quick and simple. And no middleman.’

The biggest opportunities here centre around where consumers spend the greatest amounts of time and money, Koser notes. ‘Housing and rent are always major costs. In terms of where consumers spend their time, on the other hand, much of it is, on a mobile phone, or PC.’

However, entrepreneurial success is never down to any one magic formula, Koser emphasises. Nor does Silvertree invest in prospective entrepreneurs solely on the basis of the product or service they offer. ‘It’s about passion, perseverance and tenacity as much as it is about the quality of the product.’

Silvertree Internet Holdings is an investment growth partner who aims to understand, grow and scale business, consumer and digital brands to unlock the brands’ exponential growth.

Continue Reading

Entrepreneur Today

What To Watch For In Tito Mboweni’s First Budget Speech

By Rob Cooper, tax expert at Sage, and chairman of the Payroll Authors Group of South Africa.

Entrepreneur

Published

on

rob-cooper-sage

Finance Minister, Tito Mboweni, delivers his first Budget Speech on 20 February at a difficult time for the South African economy. Even though President Cyril Ramaphosa has done much to restore business confidence in his first year in office, GDP growth remains weak, government finances are in relatively poor shape, and renewed load shedding is hurting business confidence.

Judging from his Medium-Term Budget Policy Statement in October last year, I expect Minister Mboweni — backed by the team in the National Treasury—to deliver a relatively cautious budget. Much of the focus will be on refinancing the state-owned enterprises and putting them back on to a sustainable footing.

We probably won’t see much in the way of radical thinking since the room for manoeuvre is so limited. Click each header below for an indepth video on the upcoming topics.

National Health Insurance (NHI)

Renewal of the country’s public healthcare system with a mandatory health insurance fund and free healthcare at the point of need has been the ANC government’s policy for years, but progress has been slow to date. There isn’t much money in the country’s coffers to fund something as ambitious as NHI, yet the government will want to show that it is advancing the concept ahead of the elections.

With an NHI bill to be tabled in Parliament soon, we could learn more about how NHI will be funded in this year’s Budget Speech — it’s still not clear whether we will pay for it through payroll taxes, VAT increases or other fundraising measures. As an initial step, we could see medical aid tax credits reduced (or at least not adjusted for inflation) to free up some funding for the NHI.

The Employment Tax Incentive (ETI)

The ETI Act came into effect on 1 January 2014; as a fan of this incentive, I was delighted that President Ramaphosa announced that it will be extended for 10 years another decade in his state of the nation address. However, I have also long argued that the scheme is not performing to its true potential because it is so complex for payroll managers to administer.

The introduction of the national minimum wage adds even more complexity— until and unless the ETI Act is amended, SARS is of the opinion that the National Minimum Wage will not qualify as a “wage regulating measure”. I hope the Budget Speech will announce steps to align the ETI with the national minimum wage and take other measures to simplify administration.

Tax hikes

I don’t expect any major increases to corporate or personal income tax this year since the taxpayer doesn’t have much more to give. I think the top 45% rate will remain unchanged, while tax bracket creep relief (to compensate for inflation) will be limited to lower income earners. It seems unlikely that the Minister will increase VAT again this year, given last year’s increase.

That means the Minister is likely to look at ‘moral’ taxes (sin and sugar taxes) to raise more money; we can expect another steep increase in the fuel levy. Perhaps we’ll also hear about efforts to improve SARS’ revenue collection after several years of under-performance. The agency seems ripe for a turnaround strategy, with high-powered team looking for a permanent chief to take the reins at SARS.

Follow us on @SageGroupZA on 20 February 2019 for LIVE expert insights from the annual Budget Speech.

For more information about Sage’s annual tax seminars, please visit: https://get.sage.com/PRL_19Q1_C4L_ZA_EVCU_NPS_AnnualPayrollTaxSeminar2019

Continue Reading

Entrepreneur Today

Top SA Entrepreneurial Competition Praises Sector Optimism And Calls For 2019 Entries

Entrepreneurs interested in entering the competition can enter online here.

Entrepreneur

Published

on

2019-entrepreneur-of-the-year-competition-sponsored-by-sanlam

Even in the face of ongoing sluggish growth, exacerbated by widespread allegations of corruption and muted domestic economic activity, South African entrepreneurs remain overwhelmingly optimistic. This was revealed in the Real State of Entrepreneurship Survey 2018, which found that the vast majority of over 1000 business owners surveyed feel very positive about the business climate and outlook for the 12 months ahead.

It is these resilient individuals who will have their deserved time to shine in the 2019 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, says Kobus Engelbrecht, spokesperson for the competition, who says entries for the renowned competition – now in its 31st year – are officially open.

Entrepreneurial competitions of this nature, however, serve a greater purpose than just celebrating South Africa’s spirited self-starters, notes Engelbrecht.

“Credible platforms such as the Entrepreneur of the Year® competition also act to inspire the next generation of budding entrepreneurs, who have the potential to drive real economic growth at a time where the country needs it most.”

Engelbrecht refers to the World Bank’s recent downward revision of South Africa’s projections for economic growth in 2019 to just 1.3% – 0.6% lower than the South African Reserve Bank’s earlier prediction of 1.9% in November.

“Despite these challenging economic conditions, year on year we still find exceptional entrepreneurs who continue to identify gaps in the market and transform these into viable businesses.

“It is our aim, through this long-standing competition platform, to continually recognise, encourage and support the hard-working entrepreneurs who continue to do well despite the challenges they are faced with. We use the competition to convey our appreciation for the role they play in inspiring others to venture into the world of business,” he says.

In addition to offering valuable mentorship support, networking opportunities and national media exposure, Engelbrecht says that the2019 Entrepreneur of the Year® competition, sponsored by Sanlam and BUSINESS/PARTNERS, offers prizes valued at over R 2 million, which includes cash prizes of R 70 000 for each main category winner, and R200 000 for the overall winner.

“All South African businesses are eligible to enter this competition, and prizes will be awarded across six categories, namely: Overall Entrepreneur of the Year®; Emerging Business Entrepreneur of the Year®; Small Business Entrepreneur of the Year®; Medium Business Entrepreneur of the Year®; Job Creator of the Year; and Innovator of the Year.”

Entrepreneurs interested in entering the competition can download entry forms online at www.eoy.co.za as well as interact with fellow entrepreneurs and entrants on the competition’s social media platforms www.twitter.com/@EOY_SA and www.facebook.com/EOY.SA. The closing date for the competition is 31 May 2019.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending