Business group Sakeliga has opposed the proposed Companies Amendment Bill, which it warns will harm the business landscape and ultimately push more skilled people to leave South Africa.
The Draft Companies Amendment Bill, which is currently open for public comment, would require some firms to disclose information on directors’ remuneration and prescribed officers.
Furthermore, it requires that companies disclose the average remuneration of all employees and the ratio between the total remuneration of the top 5% highest-paid employees and the total remuneration of the bottom 5% of the lowest-paid employees of the company.
“One can think of emigration among South Africa’s skilled businesspersons and the growing number of skilled and unskilled unemployed persons,” Sakeliga said.
“Both of these phenomena are the result of decades of government interference in and distortion of market forces, in particular with restrictive labour policy but recently with Covid-19 lockdowns.
The group added that the available pool of high-demand senior executives is quickly diminishing, meaning that when shareholders approach an executive, they know the offer must be handsome due to the executive very likely having available opportunities abroad.
Similarly, the supply of labour at the lower and mid-levels is so high that it would not make economic sense to remunerate staff on par with international levels for the same work.
This is not the firms’ doing, but a result of policy decisions taken by the department and its colleagues in government, it said.
“This Competition Amendment Bill is exactly what the economy needs much less of. Its core problems revolve around improper reporting requirements and political discretion around ethics committees,” said Piet le Roux, Sakeliga chief executive.
“The proposed Bill is against trade, against industry, and competition. While the Bill is currently nothing more than a policy proposal by Minister Patel and the DTIC, it is enough to further alienate businesses and entrepreneurs who spot the Minister’s trend of interventionism and centralisation.”
Each new regulation introduced by the government might, on its own merit seem innocuous or even harmless, but when one zooms out and considers the developing thicket of regulations together, it becomes easy to see why there is no explosion of small business activity in the South African economy, Sakeliga said.
“The Companies Amendment Bill is an example of exactly the kind of interventions South Africa needs to see considerably less of.”
Businesses to rethink
These concerns were echoed by Business Leadership South Africa (BLSA) chief executive Busi Mavuso, who warned that sections of the Bill would impact South Africa’s attractiveness as a place to do business.
“Taken together, these elements diminish the attractiveness of South Africa as a place for companies to do business by adding to all the other onerous compliance requirements.
“Why would a company, local or foreign, want to list on a South African bourse when we’re putting up so many obstacles while others are doing all they can to attract them? Already we have a problem with companies domiciling or listing in Mauritius or London to avoid the bureaucracy of South Africa’s exchange controls – this is another reason for them to do so.”
Mavuso said that the government needs to view South Africa as a competitor for investment in a global market and offer a compelling case.
“Many of our natural competitive advantages have been systematically eroded by bad policy and over-regulation. The contrast with countries that promote business-friendly policies such as Rwanda is astounding. That country’s phoenix-like rise from the horrors of the 1994 genocide should serve as a lesson for our policymakers.”