New research reveals scale of business contribution to SA

20/12/2017 | By Admin


20th November, Johannesburg: A ground-breaking report by Quantec Research, a leading South African economic consultancy, has revealed today the significant contribution made by South African business to the wealth of the nation. It re-iterates, amongst other things, the significant contribution of business to the South African economy.

The study was commissioned earlier this year by Business Leadership South Africa (BLSA) to better understand the national footprint of its membership. Quantec Research was asked to conduct empirical research on the scope and magnitude of BLSA’s members’ activities and their contribution to the economy. The study, published today, has revealed several striking findings about the role of business in society;

  • Business is the most significant direct contributor to the South African economy. The direct output created* by BLSA members** alone was R1.9 trillion in 2016. That’s 1.2 times the value of total budgeted expenditure by government in 2016 and even that only represents a portion of the total impact of business.
  • Big business supports small enterprises in the supply chain. Nearly R1 trillion, or 66.7% of BLSA member expenditure was paid to suppliers, enabling them to employ people, pay taxes, purchase supplies and make investments. BLSA collectively received 34.4 points out of 40 for black enterprise development as prescribed by BEE Codes.
  • Business employs 6.9 times the number of public sector employees. BLSA members themselves employ 1.29 million people, with another 1.97 million jobs supported in the supply chain. 596,719 people are dependent on BLSA employees. The 57 member companies in the study contribute 23.5% of total private sector employment, and pay full-time and part-time employees just under R2 trillion. A further R8.7 billion was devoted to training and skills development for BLSA’s employees.
  • Business contributes to the public sector and supports the most important institutions of state through taxation. Taxation to government from BLSA members alone amounted to over R431 billion in 2016, 35.9% of total taxes collected. That’s the equivalent of more than one million teacher’s salaries, or almost two million police officers, or almost 1.5 million low-cost housing units.
  • The direct positive impact of business on the economy and the lives of South Africans is significant, but the knock-on effects are often even greater. For every 1 rand of economic activity that BLSA members generate directly, a further 64c is added to the country’s GDP with an economy-wide impact of R2.59. And for every 100 people that were directly employed by BLSA members, another 153 indirect job opportunities were supported.
  • Business is a key contributor to South Africa’s GDP. BLSA members contributed roughly 36% of the total South African domestic economy’s output in 2016, compared to government’s 11.7%, while contributing 34% of the country’s GDP.

Quantec Research said: “It is clear from our footprint analysis that BLSA members play a significant and vital part in South Africa’s economy. The contribution of private sector entities, is an essential component of economic activity in the country and through this contribution plays an important role in the provision of sustainable and inclusive economic growth.”

Bonang Mohale, chief executive of BLSA, commenting on the findings of the report said: “This report confirms that business is a vibrant part of South African economy and society and a significant national asset. The footprint of BLSA’s members alone is notable – often bigger than that of government itself. It’s a reminder that business touches every part of South African life and has a positive role and voice to play in the success of the nation.”

He added: “Despite its already outsized contribution, business is committed to doing more to encourage inclusive economic growth and transformation. That is why earlier this year we launched our #Business Believes campaign where business made various commitments to society. Government must create the economic and policy conditions necessary for growth to occur, and then together business, government and civil society can work to put the South African economy back on track.”

* The economic value created by BLSA members refers to the combined revenue of the 57 members included in the study and the value created through their operations in 2016.
** Of the 73 BLSA member companies, 57 were included in the footprint study.
“Economic activity” refers to GDP.

Methodology: Quantec Research generated a snapshot of BLSA’s impact on the economy in 2016 by looking at direct operational and capital spending by the participating BLSA members and has developed a model to follow and measure the ripple effect of their operations in the economy. The model separates and reports:

  • Direct Effects: The impact of BLSA on direct suppliers to the economy, such as production, employment and tax revenue.
  • Indirect Effects: The impact suppliers to BLSA have in their own supply chains, who in turn pay employees and taxes.
  • Induced Effects: The impact that occurs when the supply chain companies and their employees and households, along with BLSA’s employees spend their earnings in the economy, generating further activity.
  • Total economy-wide impact.

Quantec Research: