2016 Predictions - 10 ups and downs as predicted by Aldes

​It is never a good idea to make any predictions when operating in an unstable economy. We’ll give it our best shot to forecast what we deem possible in 2016.

1. No certainty - if ever you started a year knowing that it is going to be different than the previous; 2016 will be it. There are so many variables and changes to our economy and country that the only prediction that can be made with a reasonable amount of certainty is that nothing is going to be certain in 2016!
2. Government influence – as a small/medium business owner one would like to know that you are not dependent on government policy. In fact, many businesses are started due to the innovative nature of entrepreneurs addressing shortcomings from government. “We do expect that there will be more regulations and economic policy changes from government. This will include aspects such as bargaining councils and minimum wages, establishment of more regulatory bodies, exchange control and tax,” says Ferdie van Greunen.
3. Currency – we do not foresee that the Rand will strengthen against the US Dollar on the mere basis that current inflation rate is at 5.2% whilst the USA has an inflation rate of 0.7%. Even with no change in government policy, an investor would rather hold US Dollars than SA Rand, giving him a stronger purchasing power at the end of the year. We thus foresee a strong outflow of money over the next few months.
4. Ministry of Small Business Development – in 2014 Minister Lindiwe Zulu was appointed as the head of the newly established department. Since the proclamation, and after a few initial initiatives, not much has come from this department. We hope for (but do not foresee any) change.
5. Inflation – With the drought grabbing hold of the whole country, there will be huge increases in food cost. Over the last month there has been a decline in meat prices. The reason for this is because farmers have been slaughtering animals that they can’t afford to feed. However, around midyear this scenario will be different and there will be an under supply of most food items. Less than 50% of maize farmers have planted this season. More import of maize will be required and with the weaker Rand/Dollar exchange rate, such imports will come at a higher price.
6. Manufacturing – With the weaker exchange rate, local manufacturers are able to compete with imports from China and the like. We foresee that there will be lots of action within the manufacturing industry, especially in the plastic manufacturing sector.
7. Eskom – We expect possible load shedding during the winter months, particularly as operating a coal powered station requires plenty of water. It is interesting to note that while Eskom is demanding a 17% increase in fees, they declared a nifty profit (EBITA) of R25.2 Billion according to its March 2015 financials.
8. Personal Loans – African Bank’s business model of extending personal loans to the penniless at excessive interest rates and costs without any security, landed them in business rescue. Banks would certainly be more cautious this year.
9. The Tourism Industry – An upturn in tourism can be expected, but limited to the role-players catering for the overseas traveler.
10. Opportunities – 2016 will certainly offer a vast amount of great opportunities. The businessman and entrepreneur with some ready cash, the ability to make quick decisions and execute with focus, will end up winners.

In short, we predict a bumper year in the business broking industry in Southern Africa.