By Mbongeni Mbingo | 2022-12-04

The question about which comes first, between the egg and the chicken has always proven to be problematic, although for many, the answer to it is more about the attitude of that individual more than providing an accurate perspective.

So, you can imagine the response to this question from Neal Rijkenberg, for whom and his Cabinet I am sure the answer being the egg. If the answer to the question is that the egg comes first, then surely it means that you need to have patience before you get or reap your rewards.

To put it differently and in more practical terms, the finance minister is pushing to have corporate tax reduced by 2.5 per cent in what he believes will bring much needed fluidity in attracting investment.  

In essence, the minister wants to cap corporate tax at 25 per cent and is adamant this will bring the much-needed investment that the country is desperate for.

The decision by the ministry to reduce corporate tax has of course attracted some very curious and controversial stares from critics who question the logic of reducing tax at such a difficult time when the country needs all it can get from its already existing private sector.

In essence, reducing the corporate tax is the equivalent of cutting more than E100 million off your revenue, according to outspoken businessman Walter Bennett, who has joined the ranks of those questioning Rijkenberg’s plan.

In his view, this is suicidal, because the country already has a big hole it can’t fill and needs all the money it can raise. As it stands, the country is failing to honour its promise to offer bursaries to students who are in the thousands, while the issue of student allowances almost ground this country to a halt at the beginning of the year when the government was struggling for cashflow and couldn’t afford to disburse allowances to students.

This fiscal situation has forced government to cut down on scholarships, no doubt with the hope to avoid a repeat of this scenario of failing to provide the allowances for those students already on scholarship.

But, not providing scholarship for students who qualify for tertiary education is in itself a ticking time bomb.
In a period when thousands of young people are idle, without any prospect of further education or employment for those who have already completed their studies, the last thing the country needs is more young people without any prospects of fulfilling their ambitions.

It is not rocket science therefore to figure out what lies ahead, especially considering that youth unemployment and the youth’s restlessness and agitation with a number of issues have fuelled the political unrest.

You sense that we walk a tightrope, but also that the country needs to change its focus and be youth-inclusive in a lot of the decisions taken at government and national level for the titanic to avoid hitting the iceberg.

And one of the things we need for this country to emerge out of this predicament is for such plans as the corporate tax reduction to prove to be the right call.
That is, as the minister explains, the country reaps the positives by attracting the investment it needs and desires to bring to our shores by taking this direction.

Tax
However, this is what Bennett scoffs at, to reduce tax before you get the demand for investment or so to say, to cut your revenue at a time when you really need it. Bennett – addressing Senators a fortnight ago – also raises the point of government’s rationale in taking this decision, without perhaps demonstrating that this is an obstacle for private sector in this country.

His basis is that the country has already reduced corporate tax from 30 per cent and to do so again within such a short period is no different to throwing money in the drain when you have run out of any other alternatives to raise revenue.

In fact, he makes sense in his argument that there has not been any complaints from the private sector regarding corporate tax, yet, the country has drastically reduced it.
This issue is compounded by the admission by the parliament finance portfolio committee also admitting that it was not convinced this was a good decision for the country, but still went ahead and endorsed it.

Which is to say, perhaps the committee wasn’t persuaded by the facts on the ground, except that this is a government decision that must be adopted, ‘because it stands to benefit the country going forward’.

And that is what I want to believe too; that hopefully the finance minister is right to want to reduce corporate tax, because that is the way we want to go, or as he argues, that is the way other countries are going or that we are going to be left behind if we don’t reduce corporate tax.

I think all of that makes sense and that it is acceptable and my reason for the analogy of the chicken and egg situation. For Rijkenberg, the country needs to attract investment and soon.
The country needs to sell itself to the world that it has the right mindset to attracting foreign direct investment and has done its homework in doing so.

The country also needs to start now, not only when there is some kind of promising interest.

Work
For government, the country can’t afford to wait until the chicken has laid its eggs and then we start counting the chicks to say this can work. The plan has to be to start thinking big and ahead, by preparing for the egg to give us the chicks – which is why then the answer for the minister to what comes first, clearly is that egg. It has to lay the eggs.

It has to be given the right environment to lay the ggs. It is when the eggs have hatched that we begin to say we have done the right thing.
Fingers crossed, the eggs will all hatch and we will begin to reap the benefits of getting the foundational decision right.

But, what the minister and cabinet now need to do is make sure that we are able to survive for the current and the time when the eggs are hatched.

The question of making sure that the environment is conducive for the country to attract investment should not trump the decision against the current environment, especially regarding how the gap is going to be plugged going forward because E100 million is a lot of money if you are this country.

Otherwise not providing those answers is no different to putting all our eggs in one basket – and running the risk of having to answer uncomfortable questions, such as the motive behind cutting corporate tax at an awkwardly difficult time.
For now though, you have to accept that Neal Rijkenberg has the right answer. Time will tell as to how right.

Deja-vu for Ecsponent
investors

It is difficult to resist the dig that the Financial Services Regulatory Authority’s chief executive officer is sitting on a Phala Phala scandal of his own – and soon, he will have to answer questions of whether or not he should resign.

I say this because the Ecsponent collapse is one of the biggest scandals of our time if not the biggest in the financial services sector and therefore, it is incredible that nothing – and I mean nothing – has happened, despite this being the type of scandal from which heads roll.

It turns out that not even the forensic investigation has been instituted, at the very least – to establish how moneys were lost and how it is that no one saw this coming, let alone how this was allowed in the first place.

I have already previously said here that there is enough to suggest that the warning signs were there from the beginning that this was an accident waiting to happen but people either were complicit or just couldn’t be bothered that Emaswati were being sold a dummy.

Now, here we are, almost at the end of the year and the people who have been robbed in broad daylight – with everyone watching but choosing to do nothing – and the one thing that needed to be done within hours of this scandal unraveling, has still not be done!

Disappointed
I am shocked, utterly, if not disappointed at this flagrant disregard for the people who have spent sleepless nights praying and hoping that their monies are recovered. People have died, because of this scandal. People have suffered life-changing illnesses as a result of this scandal.

But government, parliament and the FSRA are still playing hide and seek. The people whose hard-earned money was stolen right in front of everyone watching deserve better. They deserve a government who cares and who keeps its word.

More importantly, this country deserves a regulatory authority that is ready to jump to action at the slightest and throw the book at whoever smells fishy from miles away so that this country attracts the right investors. As it stands, those who invested at Status Capital are now fearing the worst because it looks like lightning is about to strike there too – right under the noses of the FSRA.

Meanwhile, the people who were given assurances that they would get their money and that a forensic investigation would be instituted to give them the answers they need will spend this festive season asking themselves so many questions. And without any hope.

Perhaps the FSRA needs to ask itself if it is up to the task of oversight and if our confidence in their ability to do so is misplaced.

It may be a bit of a stretch, but this is beginning to look no different to hiding millions of dollars in a mattress and it is then stolen from you – and the only thing you do is pray it doesn’t get out.
That, I am afraid is indefensible.

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