In his Medium-Term Budget Policy Statement on 26 October 2016, Finance Minister Pravin Gordhan said that government’s objective was to achieve inclusive economic growth in South Africa, and that South Africa’s weak economy can be restored if all sectors work together. He also encouraged South Africans to collectively make the right choices and put the national interest first.
According to Ernest DuToit, Chairman of the Direct Selling Association of South Africa (DSA), these ‘right choices’ must include a strategy to encourage and grow small, medium and micro businesses, and the direct selling industry in South Africa was uniquely placed to help the country achieve this, due in part to its low barrier to entry as almost anyone can participate regardless of location, qualification or financial position, as well as the business training provided to all new entrants to the industry irrespective of their level of education.
“Direct selling companies offer basic business skills to people interested in joining the industry – providing them with effective presentation skills courses, focused business solutions and other programmes where we see introverts and shy people turn into confident professionals with solid skills. They are provided with financial training to understand how to distinguish business expenses and revenue from personal finances, and then how to invest money in growing their business,” says Du Toit.
In South Africa an estimated 1.1 million independent business owners in the direct selling industry are making good, growing their businesses and contributing more than R11 billion in sales to the national economy.
In 2015 sales to consumers across the 36 direct sales business entities that are represented by the DSA were up by 13.1% to R10.93 billion, from R9.66 billion in 2014.
At the start of 2015 the number of independent direct selling business owners had increased by 129 803 over the previous year – a growth of 13.3%, and in 2014, independent business owners collectively earned R3, 929 billion, with 23,2% of active business owners operating in a fulltime capacity and 76,8% working part-time.
“The direct selling industry is a significant economic enabler, adding value to peoples’ lives and giving them unique opportunities for wealth creation. It is a credible and viable mechanism for generating income and growing the economy, governed by a robust code of ethics and product quality controls,” says Du Toit.
While direct selling is well established across South Africa, it is clear that Gauteng remains the engine room – delivering 42% of the total sales value, followed by KZN at 12.8% and the Western Cape at 10%.
“Direct selling has a much greater reach than retail outlets have. Retail outlets have a fixed footprint in specific geographic locations, whereas direct selling can reach as far as any individual can travel or have their product delivered. It offers far better penetration into the distant rural markets, but without the costs evident in the more urban markets,” says Du Toit.
A very positive development for Direct Selling, is that the industry as a whole already reflects the population profile of South Africa. This is evident in the racial ratio of independent business owners – the 2014 statistics demonstrate that 83% were black of which 85% are women, 14% were white, 2% were Indian and Asian and 1% were coloured.
“As an industry we are currently expecting at least a 7%, year on year revenue growth,” says Du Toit.
For further information or comment please contact Philippa Piguet, at [email protected] or on 011 506 7300.