Reviewing 2023 and Looking to 2024

Reviewing 2023 and Looking to 2024

Reviewing 2023 and Looking to 2024

2023 was a challenging year, but also a year of triumphs.

In February 2023, the FATF (Financial Action Task Force) grey-listed South Africa. As a result, FICA obligations and compliance was enhanced, and accountable institutions strongly advise and encouraged to comply. Although there are still areas that need improvement, most institutions embraced the new requirements and complied with legislation. This however did mean that additional checks and balances needed to be implemented by accountable institutions. At this stage, South Africa is waiting to see if we can, as Mauritius did, be removed from the grey list by mid-2024.

Inflation and interest rates are the two factors affecting every SA citizen. Headline consumer inflation rose to 5.9% year-on-year in October from 5.4% in September. Statistics South Africa data showed, higher than the 5.5% predicted by analysts polled by Reuter and higher than the SARB target of between 3% and 6%. In January 2023, the prime lending rate increased to 10.75%, currently the prime lending rate is 11.75% and expected to remain at this level. The 2% increase in the prime lending rate in the last 12 months, means domestic households are just simply not keeping up with their debt commitments.

SARS has been in the process of streamlining their processes and having your tax affairs in order is becoming crucial. SARS is enhancing this process and enforcing compliance.

What happened in WvdW in 2023? WvdW invested in systems and people to improve our service as well as positioning us at market leaders in our sector. With MBS accounting & taxation Services, now also part of the WvdW brand, our staff compliment almost doubled, each with their unique strengths and capabilities. With this bigger team we believe that we can service our clients even better and enhance our value-added service to them, helping them grow and be sustainable in the future.

Looking at what 2024 might bring. The GDP growth forecast over the period 2024 2026 is an average 1.4%. It is a challenging time for business owners in South Africa. They must deal not only with a sluggish global economy and disruptive military conflicts around the world, but also with an uncertain economic and political outlook at home. Public sector constraints on economic growth include ongoing load-shedding issues and uncertainty around water provision, food security and infrastructure maintenance.

Business owners are hoping for improvements in domestic economic conditions after next year’s general elections for national and provincial government.

Electricity supply remains one of the biggest challenges in South Africa, however the positive effect of the crisis is that the private sector is stepping in to provide additional capacity and reduce Eskom’s monopoly on power provision.

Beyond electricity, the key drivers of growth in the national economy are going to be investment in major infrastructure projects, especially the rail network and ports. Private sector concessions have already been issued for the largest rail corridor, which runs from the City Deep container terminal to the port of Durban. A multibillion-rand private concession has been issued in the port itself, to develop infrastructure and enable goods to move more efficiently.

There is much in the news and on social media about the run-up to next year’s elections. One of the most important realisations for many business owners who have acted and invested in technology to alleviate load-shedding, is that businesses can now focus on more sustainable models going forward.

SA is in a unique position – changes in the way Eskom operates and how electricity is generated and delivered will lead to a more sustainable, more carbon-neutral economy for all. A vast number of businesses are already in a place where efforts towards sustainability have led to alternative investments or new business models, which is happening without regulatory compliance dictating it.

Globally the outlook has weakened, and risks remain high. Expected lower commodity prices, high interest rates in the US, weakened Chinese economy will hamper South African growth. Government will have to work towards a stable macroeconomic framework and rapid economic reforms to sustain growth and build resilience to shock.

What about your business? Innovation will be key to survival. The landscape most of us trade in, chances rapidly and unless we are adaptable, your business might not survive the next storm.

SARS has proven in 2023, that they are utilising more and more technology available to them, resulting in enhanced focus on compliance.  Tax compliance has become a crucial part of doing business in South Africa.

Without up-to-date financial data, compliance can not be achieved and more importantly, key decisions in the survival of your business cannot be made.

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Kindly note this article is intended for general information purposes only and does not constitute accounting, tax, nor regulatory related advice. Should you need advice, please contact one of our practitioners.