Scielo RSS <![CDATA[South African Journal of Economic and Management Sciences ]]> vol. 19 num. 3 lang. es <![CDATA[SciELO Logo]]> <![CDATA[<b>Enhancing the Accuracy of Fiscal Projections in South Africa</b>]]> The accuracy of the National Treasury's projections of GDP and key fiscal aggregates is comparable to that of the projections of private sector economists, other reputable organisations and the fiscal authorities of other countries. The errors in the projections of the National Treasury have nonetheless been substantial in some years, and have increased from 2000/01 to 2010/11. This paper argues that the credibility of fiscal policy would have been severely tested if the largest annual errors in respect of the various aggregates had coincided. Against this backdrop, the paper makes the case for structured bi-annual discussions of government's forecasts during public parliamentary hearings as a mechanism for improving the accuracy and credibility of official projections. It also discusses the potential benefits for South Africa of two alternative mechanisms, namely fiscal councils and committees of independent experts. <![CDATA[<b>How do age and location affect a business? Evaluating the objectives, outputs and outcomes of small business policy</b>]]> Many scholars have dedicated their studies to understanding the kind of assistance given to small business. Likewise, numerous studies have concentrated on how government in particular, through a small business policy, can be instrumental in providing business support. This article evaluates South Africa's small business policy by concentrating on its objectives, outputs and outcomes. Studies evaluating small business policy according to its objectives, outputs and outcomes, have been limited. Such policy evaluation goes beyond merely reporting to understanding why certain phenomena take place. As an emerging economy, South Africa is in dire need of well-developed policies. This article proposes that understanding the link between small business policy and the age and location of a business may help government to refine policy formulation and design. Using a survey method and cross-sectional research design, the sample size of 340 respondents consisted of start-up and established business owners. This study found that not the age of the business, but only its location (the metropolitan municipality where the business is located) has a statistically significant effect on the objectives, outputs and outcomes of the small business policy. These findings should assist both national and international policymakers to identify specific context-bound interventions relevant to the location of businesses with a view to improving them. <![CDATA[<b>Art Investment in South Africa: Portfolio diversification and art market efficiency</b>]]> Art has been suggested as a good way to diversify investment portfolios during times of financial uncertainty. The argument is that art exhibits different risk and return characteristics to conventional investments in other asset classes. The new Citadel art price index offered the opportunity to test this theory in the South African context. Moreover, this paper tests whether art prices are efficient. The Citadel index uses the hedonic regression method with observations drawn from the top 100, 50 and 20 artists by sales volume, giving approximately 29 503 total auction observations. The Index consists of quarterly data from the period 2000Q1 to 2013Q3. A vector autoregression of the art price index, Johannesburg stock exchange all-share index, house price index, and South African government bond index were used. Results show that, when there are increased returns on the stock market in a preceding period and wealth increases, there is a change in the Citadel art price index in the same direction. No significant difference was found between the house price index and the art price index, or between the art and government bond price indices. The art market is also found to be inefficient, thereby exacerbating the risk of investing in art. Overall, the South African art market does not offer the opportunity to diversify portfolios dominated by either property, bonds, or shares. <![CDATA[<b>Pricing contingent convertible bonds in African banks</b>]]> In times of financial distress, banks struggle to source additional capital from reluctant private investors. Sovereign bailouts prevent disruptive insolvencies, but distort bank incentives. Contingent convertible capital instruments (CoCos) - securities which possess a loss-absorbing mechanism in situations where the capital of the issuing bank reaches a level lower than a predefined level - offer a potential solution. Although gaining in popularity in developed economies, CoCo issuance in Africa is still in its infancy, possibly due to pricing complexity and ambiguity about conversion triggers. In this paper, the pricing of these instruments is investigated and the influence of local conditions (using data from three major African markets and an all-African index) on CoCo prices is explored. We find that the African milieu (high interest rates and equity volatility compared with the situation in developed markets) makes CoCos particularly attractive instruments for the simultaneous reduction of debt and the enhancement of capital. If CoCo issuance becomes a viable bank recapitalisation tool in Africa, these details will be valuable to future investors and issuers. <![CDATA[<b>The source of investment cash flow sensitivity in manufacturing firms: is it asymmetric information or agency costs?</b>]]> In the literature, positive investment cash flow sensitivity is attributed to either asymmetric information induced financing constraints or the agency costs of free cash flow. Using data from a sample of 68 manufacturing firms listed on the South African JSE, this paper contributes to the literature by investigating the source of investment cash flow sensitivity. We have found that asymmetric information explains the positive investment cash flow sensitivity better than agency costs. Furthermore, asymmetric information has been observed to be more pronounced in low-dividend-paying firms and small firms. Despite South Africa's having a developed financial system by international standards, small firms are seen to be financially constrained. We attribute the absence of investment cash flow sensitivity due to agency costs to good corporate governance of South African listed firms. Thus the paper provides further evidence in support of the proposition in the literature that the source of investment cash flow sensitivity may depend on the institutional setting of a country, such as its corporate governance. <![CDATA[<b>Job crafting and its impact on work engagement and job satisfaction in mining and manufacturing</b>]]> The purpose of this study was to investigate job crafting and its relationship with work engagement and job satisfaction within the South African context. This research is important as job crafting has been shown to have a positive influence on employee motivation. A cross-sectional survey design was used to collect primary data from organisations in the mining and manufacturing industries of South Africa (N = 470). The results of multi-group structural equation modelling showed that the original four-factor structure of the job crafting scale was supported by the data, but that a three-factor structure was necessary due to a discriminant validity concern regarding two job crafting dimensions. Regression results revealed that increasing structural job resources with challenging job demands, and increasing social job resources were significant predictors of work engagement in both groups. Contrary to expectations decreasing hindering job demands was a negative predictor of job satisfaction in the mining group. Furthermore, increasing social job resources was also a significant predictor of job satisfaction in both groups. This study indicates the importance of job crafting for work engagement and job satisfaction in organisations. <![CDATA[<b>A customer-focused approach to distribution: the case of SANParks</b>]]> While the importance of distribution has been recognised in tourism literature, the research has been approached mainly from the perspective of supply, with very little attention given to the customer. To date, there has been even less focus on the distribution channel requirements of the National Park customers. The purpose of this study is to examine how the various distribution channels used by South African National Parks (SANParks) go towards satisfying the customers' distribution channel requirements and identifying whether there is any relationship between certain variables, such as gender or the frequency of channel use, and the level of satisfaction that customers experience with the various channels. Web-based and paper-based questionnaires are distributed to the customers who have used the SANParks distribution channels before. The results show that, although the SANParks website is the most frequently used channel for making a booking, it is not necessarily the channel with which customers are most satisfied; in fact, they are more satisfied with the satellite walk-in reservation offices and satellite call centres. While the majority of the research studies in the context of tourism distribution channels have shown the importance and popularity of electronic distribution channels among customers, this paper cautions SANParks not to assume the distribution channel requirements of their customers and urges them to continually assess their distribution strategies and to become more customer-focused in their approach. <![CDATA[<b>Characterisation of cyclists' willingness to pay for green initiatives at Africa's largest cycle tour</b>]]> The Cape Argus Pick n Pay Cycle Tour is a major event on the road cycling calendar. The majority of cyclists travel significant distances and participation produces a substantial carbon footprint. This paper examines participants' willingness to pay to offset their carbon footprint. The purpose of this paper is to make a contribution to the literature by linking willingness to pay to attitudes towards or beliefs (green views) about the initiatives in place, to ensure a greener cycle tour. Factor analysis is used to identify different lypes of cyclists, based on their green views: those with green money, those who prefer green products and Ihe "re-cyclers". The results of the regression analysis reveal that socio-demographic variables and the right attitude towards the environment are significant predictors of stated willingness to pay for climate change mitigation. <![CDATA[<b>The quest for process operations variability reduction in manufacturing firms in South Africa</b>]]> In an era characterised by a volatile economy, intense competition, and rising energy and material costs, improving operational efficiency has become a necessity for margin purposes and long-term business success. This research study attempts to develop a model for process operations variability reduction that integrates the fundamental drivers, the intermediate measures and the four traditional competitive capabilities: quality, cost, delivery reliability and speed of delivery. In addition, it highlights the precise mechanisms in plants that lead to multiple competitive capabilities development. The concept of a routine-based approach to capabilities development provides a nexus between the earlier actions by the organisation and competitive advantage. Using longitudinal data from the Manufacturing Circle of South Africa, a statistical analysis was conducted to support the model, and path analysis models were developed which confirmed that the performance frontier is really a surface that spans many different dimensions. It is observed that the model clearly outlines pathways to process operations variability reduction through better execution of the routines concerned with maintaining the performance by current processes, improving existing processes, and transforming or changing to new processes.