Legislation hampers SA's ambitious growth objectives

Small and medium sized South African companies operating in the sub-Saharan region are shackled by inappropriate foreign exchange legislation, which increases the challenges of doing business and prejudices their chances of success.

This is according to Keith Boyd, CEO of the Venture Communications Group, a communications infrastructure company with offices and subsidiaries throughout Africa.

“Unlike their European competitors, local companies looking to neighbouring states and beyond for business opportunities are handicapped by strict foreign exchange controls – particularly the requirement for Reserve Bank approval for each and every outgoing transfer of funds,” he says.

“Most young, growing companies do not have massive capital surpluses, and need to manage their cash flows between their subsidiaries in different countries on a daily or weekly basis.

“For companies looking to transfer small amounts regularly, this requirement represents a frustrating waste of manpower, which stifles the enthusiasm of many smaller companies for growth.”

Boyd says it seems unfair that large organisations with infrequent, multi-million dollar transfers are subjected to the same legislation.

He calls for an urgent change in legislation, so that only the “net inflow and outflow” of foreign exchange in the company’s account is measured.

“Companies could then file a report - together with explanations - on the status of their account each quarter, which would save a considerable amount of time-consuming and inappropriate red tape.”

Adds Boyd: “If we are to deliver on the ideals and ideas behind NEPAD and the African Renaissance, business, politics and legislation need to work together for growth, increased employment and a better life for all Africans – whatever it takes.”