SA's STEEL CRISIS: It is difficult to do business in a dysfunctional state.

SA’s STEEL CRISIS

IT IS DIFFICULT TO DO BUSINESS

IN A DYSFUNCTIONAL STATE
by Gerhard Papenfus

The following is an email from an employer in the steel industry:

“We are a small business employing 135 people, we are desperate to survive, but find it difficult with Government’s parastatal conspiracy and ministers simply ignoring the reality on the ground.

We are a manufacturer to the mining industry, which forms the backbone of government’s income and a big earner of foreign exchange. It is faced with huge hurdles to survive, simply because Government does not care.

Firstly, local producer ArcelorMittal South Africa (AMSA) is unable to sufficiently supply the South African steel downstream, which forces many companies to import in order to survive. The first hurdle is therefore that you have to pay import duties which were put in place by Government to protect the same AMSA that cannot supply the material. A contract breach can force any company to close its doors and face legal repercussions, especially in servicing contracts with the mines.

Once you’ve imported, you are faced with your next hurdle, namely, to get your product out of Transnet Ports. It almost creates the impression that Customs and Transnet conspire with forced inspections to leverage earnings for Transnet with prolonged storage costs. A real life scenario is the following:

 – The ship carrying imported material berths on 14 December 2020.

 – On 21 December, the South African Customs performs a customs check. (The trading terms         with the supplier is 30% deposit and balance owing 60 days from bill of lading.)

 – Customs sees this as under-declaring and issues a R2,5 million refundable penalty to release     the shipment. Release is given on 24 December 2020, the day before Christmas. This is also       the annual shutdown period in SA.

 – Transnet levies an invoice for R269 000,00 (Excl. VAT) to the clearing agent; which payment        was demanded from us.

 – We write a letter to Customs and they respond that ‘it’s a matter between the clearing agent         and Transnet.’

 – We write a letter to Minister Ebrahim Patel and the Department of Trade, Industry and                   Competition (DTIC). They refer us to Minister Pravin Gordhan, Minister of Public Enterprises.

 – We write a letter to Minister Gordhan and explain the entire matter. The same letter was               subsequently forwarded on two more occasion during the past month. No response has been       received to date.

 – As a result hereof we are now forced to go the legal route, which could cost us R2 300 000,00,     as quoted by our ‘customs specialising’ attorneys.”

Government is simply doing nothing to make it easier for business. In fact, just the opposite applies. There are simply too many hurdles, exacerbated by endemic corruption, inefficiency, laziness and indifference.

The fact that Government does not act on these very worrying tendencies, illustrate that their ‘hollowed-out’, cadre-filled state administration makes it impossible for them to act and that their socialist entrenched ideology simply causes them to be indifferent towards the plight of business.

Civil society will have to act upon this. We simply cannot stand idle while our societal fibre and the economy gradually erodes.

Gerhard Papenfus is the Chief Executive of the National Employers’ Association of South Africa (NEASA).

For more information:
NEASA Media Department
media@neasa.co.za