Benefits of business for  supporting Government

Godknows Hofisi

Business & Law

This article is more on the business side than the ones I usually write which dwells more on commercial law.

In this article, which is quite general, I look at the benefits to businesses for supporting Government programmes. Put differently, this article is about the advantages to businesses for being pro-Government or cooperating with the authorities. 

It is about business and just that.

Supporting Government

A Government creates the macro-business environment for the various businesses to operate. It is not a small responsibility but one with a national outlook. In coming up with the

macro – business or economic environment the Government also has to take into account the world or global economy, especially given the implications of imports, exports and international currencies.

Government policies have a bearing on businesses. This is why industry and commerce try to follow closely the Government’s economic and other policies as well as programmes. Even a Government’s policies and programmes on social issues that affect the general populace do affect businesses. Due to the significance of Government decisions, this is why there is so much interest in the national budget that is presented by the Minister of Finance, Economic Development and Investment Promotion.

Examples of Government priorities

A Government’s priorities vary but the following represent some of them:

Controlling inflation to acceptable levels.

Fair pricing that ensures the viability of business but at the same time protects the populace.

Currency stability i.e. local currency versus major international currencies such as the United States dollar.

Revenue collection through the collection of taxes.

Improving certain sectors of the economy. In our case, the Government is working flat out to improve mining, for example. Other areas include agriculture.

Food security through agricultural productivity or strategic imports during periods of

drought.

 Energy and power supply.

Enhancing road infrastructure. I am sure many of you have seen the work done on major highways and the work currently being done on some roads in Harare.

Employment creation.

Support by business

Businesses may support the Government in many ways. These may include the following:

Making recommendations to the Government on policies or measures to improve the business environment.

Charging fair prices that bring about stability and control inflation.

On currency stability to conduct business in ways that promote the stability of the local currency.

To pay taxes when they fall due.

To invest in sectors of the economy which are a priority to the Government, for example, mining, energy and agriculture.

Banks may finance businesses generally through loan finance or they may prioritise areas being targeted by the Government for growth or revival.

 Grow businesses and create employment opportunities in the process.

Fair labour practices that balance between business and the labour force.

Generally, keep good business relations with the Government.

Engage in corporate social responsibility programmes or activities to improve local communities.

Benefits to businesses for supporting Government

There are various benefits to businesses. Some of them include the following:

There are entities that do business with the Government. 

A Government can be a big consumer of any goods or services. One needs to understand the Government’s needs and the business opportunities available. Good business relations with the Government will always give an advantage.

-Businesses, especially if coordinated as groups such as associations or confederations, can easily engage the Government on policy issues. It is easy if such a group or sector of

the economy is viewed as supporting Government policies and programmes.

There are businesses which require licences or permits to operate. 

Good relations with Government ministries or departments may make it easy to get such licences or permits as businesses can advise on what is practical or bottlenecks that may need removal. 

Businesses can advise on systems that are efficient to enable a deserving business to get the licences or permits.

Where businesses operate in sectors which are a priority to the Government it may be easy to negotiate some concessions from the Government.

Businesses that may be threatened by imports, for example, might be able to seek the Government’s intervention through policies on import substitution or simply to curtail

imports. This can be done through bans or imposing heavy import duties.

Businesses may also positively engage the Government on tax policies or laws to make them favourable or fair to businesses.

Some businesses may successfully engage the Government on pricing and payment issues, for example, the fuel industry. Even miners may engage authorities in retention

or liquidation of their proceeds from gold sales to Fidelity or exports generally.

Conclusion

In my view business and Government are partners. There are mutual benefits if the two work closely. There are benefits to business for supporting the Government and engaging the

authorities where improvements are required.

Disclaimer

This simplified article is for general information purposes only and does not constitute the writer’s professional advice. It does not target any known individuals or entities.

 Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi Partners Commercial

Attorneys, chartered accountants, insolvency practitioners, registered tax accountants and advises on deals and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit.  He writes in his personal capacity. He can be contacted on +263 772 246 900 or [email protected] or [email protected]. Visit https://hofisilaw.com for more articles.

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