E-tolls, industry and the plight of the small business

March 17th, 2014, Published in Articles: Vector

 

by Mark Botha, editor

The recent introduction of the e-toll system as part of the Gauteng Freeway Improvement Project (GFIP) is adding to the soaring cost of doing business in South Africa, and to the woes of the country’s small business sector. As the Road Freight Association (RFA) puts it, small enterprises which fail to absorb toll-related costs and to transfer them to their clients may face closure before long.

Mark botha

Mark botha

Faced by rising municipal rates, soaring fuel prices, fuel taxes and the tyre disposal levy announced by the Department of Environmental Affairs in 2012, smaller distributors and transport companies are especially at risk and should re-evaluate their distribution networks to accommodate toll fees and the related expenses they incur.

The recent announcement by Shoprite Checkers that it is considering an application for toll fee exemption is a case in point. Toll fees on its distribution fleet amount to R4-million a year and this situation is no different for companies in the electrical industry.

Another threat to the small business sector pertains to the province’s rapidly deteriorating roads infrastructure, an essential amenity for doing business. Howard Dembovsky, chairman of corruption watchdog Justice Project South Africa, ascribes the current state of disrepair of Gauteng’s alternative, non-tolled routes to increasing volumes of traffic experienced on them since the toll system became active in December last year. Added to this is the substantial damage to these roads caused by the recent heavy rain and flooding around the country.

None of this bodes well for small businesses which, as the RFA puts it, must now effectively choose between paying toll fees and high truck maintenance bills incurred by pot-holes on the roads. To make matters even worse, the Automobile Association (AA) has warned recently that the price of fuel may soon reach R16/ℓ if the rand’s plummet against the dollar is not halted.

Mario Miao, MD of electrical manufacturer and distributor ACDC Dynamics, points out that all business depends on good roads and that industry should support government’s decision to maintain this infrastructure by means of the toll system.

The backbone of any industry, its work force, is also impacted by the toll system. These people are already burdened by the 20c/ℓ fuel levy and other transport expenses. Tolling the roads adds to their bill of expenses while salaries are not increased in line with inflation. In addition, fluctuations in the exchange rate between January and December last year have devaluated the rand by almost 50% while the cost of living has increased by 25%. The implication for industry is that employees will demand better remuneration while clients’ budgets are reduced.

That small business in SA is particularly vulnerable to the impacts of the toll system goes without saying. Companies in this economic sector must find innovative solutions and review their business models as a matter of survival.

To comment on this article, contact vector@ee.co.za

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