SMEs And Staff Burdened By Debt, Not Contributing Towards Retirement –  Old Mutual Corporate SME Monitor

Updated on 21 June 2017

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Today's Top Entrepreneurship and Business Stories (21 June)

If South Africa is to address the negative economic growth levels, the national savings level needs to be addressed due to the correlation, and SMEs are ideally positioned to close this gap. This was the overall message of Old Mutual’s 2017 SME Employee Benefits Monitor.

According to the report, with only 32% of small and medium enterprises (SMEs) – the country’s largest source of employment – having retirement funding on their agenda, the feasibility of improving the country’s saving rate narrows .

“Our 2017 Retirement Monitor shows the dire extent of this, with 30% of working South Africans having no formal retirement savings at all. SMEs should be looking at measures to implement that will afford their employees long-term financial security,” says Malusi Ndlovu, Head of Old Mutual Corporate Consultants.

Talking to the results in greater detail, Prudence Thipe, General Manager: SME Segment at Old Mutual Corporate, says that while 86% of SME decision makers agreed that retirement funding should be a priority for SMEs, and while both SMEs and staff acknowledge that it is a shared responsibility in terms of contributions, these attitudes aren’t translating into action due to perceived barriers.

Financing and debt is one such constraining factor for SMEs and staff alike, says Thipe. “38% of SME decision makers feel a considerable amount of their business’ turnover is used to pay off debt.

“As SMEs’ business confidence and prospects also become increasingly strained, this has the potential to compound their financial pressures. Only 27% of SME decision makers strongly agree debtors are paying on time – a decrease of 5% when compared to 2015. There is also a strong agreement amongst decision makers that the cost of business has increased (64%) and that SMEs are operating in a more competitive environment (58%).

“Furthermore, in terms of their business’ profitability, only 41% of SMEs reported healthy profits – down from 48% in 2015.”

From a staff perspective, 45% feel a large percentage of their salary goes to paying off debt, and of these, almost half (48%) says it is more than 50% of their salary. Thipe adds that staff’s inability to afford employee benefits was listed as one of the reasons for decision makers not offering it.

“The provision of employee benefit solutions can help staff achieve their desired financial outcomes, but can also be a significant source of competitive advantage for an SME, particularly when it comes to attracting, retaining and developing scarce talent, which ultimately comes at a cost to a company in terms of, recruiting, training and mentoring.”

The Monitor shows that 75% of staff believe it is different working for an SME compared to working for a corporate. “While many viewed this as a positive – in that it offers a more personal and flexible environment – they also believe corporates hold better prospects, better benefits, and higher salaries. Of those staff who believe SME’s are different, 33% cited they’d leave for better benefits.

Sage Payments Landscape Report Shows Majority Of Customers Are Embracing New Payment Methods

Half (50%) of small businesses surveyed as part of Sage’s Payments Landscape Report South Africa, agree that South African businesses are lagging behind other countries when it comes to introducing new payment methods.

The report looks into trends in the flow of cash between businesses and consumers, emerging payment methods and industry innovation in South Africa.

Almost a quarter (23%) of South African’s were unbanked in 2015, down from 25% in 2014, according to the TNS Consumer Finance Finscope 2015 survey. Yet South Africa has the most technologically advanced and accessible banking system on the continent, offering great potential for those operating in the payments space.

What’s more, 96% surveyed say it is important for businesses to offer customers a diverse range of payment methods.

The new report looks at the status of payments and payments innovation in South Africa. Headline findings of the report include the following:

  • 72% of South Africans prefer in-store purchases, with 42% looking online before making a purchase.
  • Only 29% of consumers will make a purchase online.
  • 65% of consumers say online wallets are likely to make a business seem modern and progressive.
  • 47% say the same about in-app payments.
  • Over 50% of consumers believe that online wallets and online debit transactions are secure. Mobile options such as Apple and Samsung Pay are considered far less secure.
  • While only 15% of those surveyed say they have been affected by online fraud in the last 12 months, 93% believe that payment providers can still improve their protection against fraud.

For businesses, it’s all about catering to each consumer’s need and desire. Consumers say that security is the most important factor for them when it comes to payments — 58% say it’s the number one priority and 22% rank it as the second most important priority. Cost and convenience are also important to them. The majority of consumers agree that security of payment has improved in the last decade.

Says Charles Pittaway, Managing Director of Sage Pay, a division of Sage: “Though around two-thirds of transactions in South Africa are still conducted using cash according to other research, we’re seeing a steady rise in adoption of credit cards, debit cards and mobile payments. More and more South Africans small businesses are beginning to appreciate that digital payments are safer than carrying money around.”

AGT Foods CEO Named EY World Entrepreneur of the Year 2017

President and CEO of AGT Foods, Murad Al-Katib, was picked from 59 individuals representing 49 countries and named EY World Entrepreneur of the Year 2017. He was chosen not only for his success in building a business empire focused on providing vegetable protein to the developing world, but also for helping to feed refugees.

Al-Katib has used his manufacturing and distribution network to deliver more than 4 million family ration packs to international agencies for Syrian refugees under the UN World Food Programme.

“Social cause is not only important for business, it’s essential. I’ve been given this platform now and I want to use it to change the way that our businesses engage with their stakeholders around the world,” he added.

AGT went public in 2007 and has been increasing revenues by an average of more than $100m a year to $1.4bn in 2016. It has made 17 acquisitions in 15 years and now runs 46 manufacturing facilities and employs 2,000 people around the world.

In South Africa, AGT Foods represents the Retail, Hospitality, Spices, Ingredients, Popcorn, Bakery and Protein Divisions as well as Pouyoukas Foods, which falls under the Retail Division and is sold through all major supermarkets in South Africa. The company’s produce accounts for more than 20% of world trade in lentils. (via Bizcommunity)​

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