Business and entrepreneurs are vibrant part of South African economy

24 November 2017 Authored by Consultancy.co.za

According to a report from Quantec Research, businesses and entrepreneurs directly contribute more than R800 billion to South Africa’s gross domestic product (GDP). Finance and business services comprise the biggest part of the contribution.
 
Earlier this year, Business Leadership South Africa (BLSA) commissioned Quantec Research, a Pretoria based economic consultancy, to study the impact that BLSA member firms had on the overall South African economy. Quantec Research uses analytical software to engage in marketing, distribution and support of financial data across the country. The firm analysed the revenues and outputs of all 73 member organisations to develop the comprehensive report.

Domestic output

In terms of output, the firm measured the goods and services produced by all member firms, either for final consumption or for further use as intermediaries, specifically during 2016. The report found that the median output generated by firms amounted to R18.6 billion.

BLSA Members’ output impactWhen combined, the direct output for these firms amounted to R1.87 trillion, which represents 39% of the total impact that these firms had on the domestic output. Combined with the indirect and induced impacts that these firms had, the total output amounted to approximately R4.8 trillion, or 36% of the total domestic output in the country.
 
Breaking these down by sector, financial and business services, which includes consulting firms, contributed the highest output, followed by the manufacturing sector. These two sectors combined had a direct output effect of R905 billion. These figure come as no surprise, as recent reports show that the South African business advisory and consulting segment alone is worth R70 billion.

National economy

In order to measure the member firms’ impact on GDP, Quantec defined GDP as the monetary value of goods and services produced within the country during 2016. In terms of direct production value, member firms generated R815 billion, which is 38% of the total GDP effect. Combined with the indirect and induced impacts, the total effect on the GDP amounted to just over R2.1 trillion.

BLSA members Gross Domestic Product ImpactAgain, financial and business services were the biggest contributors, at around R350 billion of direct production value. This was followed by the transport and communication sector with just over R100 billion of production value, and by manufacturing, with around R100 billion.

Tax gains

Similar to other metrics, the report uses the direct contribution, indirect contribution, as well as induced contributions of all member firms to determine the total tax contribution. Direct taxes include those levied directly on the company, whereas indirect tax includes value-added –tax, excise duties, fuel levies, customs duties and other such taxes.
 
Direct tax contribution from the members amounted to R268 billion, contributing 38% of the total tax contribution. Indirect tax amounted to R163 billion, or 23%, while induced tax amounted to R270 billlion, or 39%.

Similar trends as before were observed in the sectoral breakup. Financial and business services contributed the most, falling just short of R100 billion. Manufacturing followed with just under R60 billion.

BLSA Members Total Tax Impact
All in all, the report highlights the substantial role that businesses play in the South African economy. "The analysis confirms that business is a vibrant part of South African economy and society and a significant national asset," said Bonang Mohale, chief executive of BLSA.

The figures are en-route to further improvement, with a recent report from PwC highlighting that most African CEOs are confident and optimistic about economic growth in the near future, based on market trends and demographic patterns.

BLSA is an independent organisation of businesses in South Africa, which acts as a forum of sorts for business leaders across the country to not only interact with each other but to engage with members of civil society as well as the government. Members of BLSA include some of South Africa’s biggest and most prominent organisations, including Big Four professional services companies DeloittePwC and EY. Other consulting firms in the membership list include Bain & Company and local consulting giant Alexander Forbes.

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