Budget Speech Release
But what does this and the measures Treasury is putting in place mean for bill payments?
“Bill payments tend to be informed by indicators like a robust economy, thriving organisations that are both solid in their foundations and liquid; and, most importantly, disposable income across income brackets – all of which were covered in the budget speech which seemed to be reasonably positive,” shares Andrew Hardie, Chief Executive Officer at Pay@ – a leading payment aggregator and provider of secure payment solutions.
Employee retention impacts the economy
Regarding the lowering of the corporate income tax rate to 27%, Hardie says that this will help keep people employed as companies will now have additional liquidity to retain them. “Those same people are then able to pay their bills, meaning that their income is circulated back into the economy.”
Disposable income to drive growth
He adds that the 5% adjustment to personal income tax brackets will also increase the disposable income available to South Africans, especially those with lower income levels, and enable them to make bill payments. “The increases in social assistance grants will have a similar effect as these people will be trading in the economy by paying their bills and keeping it afloat.”
Hardie is concerned however about the repercussions of the public sector wage freeze as this might see government employees being retrenched who in turn would potentially draw on the fiscus for social grants. “A bloated government payroll is not good for the fiscus. However, the flipside to this is that at least the individuals employed by government have disposable income to pay for goods and services that in turn stimulate the economy – quite a conundrum!”
Small business solvency
He welcomes the Department of Small Business Development’s allocation of R4 billion over the medium term to township and rural enterprises. “This investment will help to kick-start these businesses, but they will also need mechanisms to manage their cashflow in order to trade – a crucial next step given that small enterprises employ between 50% and 60% of the country’s workforce and contribute around 34% of GDP. Tothis end, we have recently launched an electronic bill presentment and payment tool specifically for SMEs, enabling them to do on-the-go invoicing and payment requests.”
Salvaging ailing sectors
With bill issuers in the travel and tourism industry under threat, the CEO says the Department of Tourism’s reprioritisation of R540 million over the medium term to establish the Tourism Equity Fund (TEF) to support the tourism sector’s recovery will be incredibly helpful. “With travel and tourism contributing 8.8 % to GDP, this Fund will be pivotal in reigniting the sector. The big question, however, is ‘will people start travelling again, especially with the stigma around the South African variant of the coronavirus?’”
Making municipalities more effective
In response to the Minister’s call for collaboration and partnerships between municipal councils, labour, communities and the private sector to transition to smart local government and innovation for local development, Hardie shares that Pay@ is working with several municipalities on this. “Many municipalities have to contend with legacy systems and are themselves not known for innovation, however we are helping to make their collections environment more efficient. This is crucial for the delivery of services such as electricity, water, refuse and waste disposal.”
“All in all, the Budget Speech should bode well for bill payments which in turn is important for stimulating the economy,” concludes Hardie.