Vodacom is reimbursing subscribers who were affected by a billing issue on Monday night, the operator said on Twitter.

Customers took to social media last night, causing Vodacom to trend on Twitter, to complain about disappearing airtime and data.

Those affected by the billing bug complained about missing data and airtime depleting for no apparent reason.

Vodacom has committed to ensure that all affected customers will be refunded in full. On Tuesday morning, the mobile network said it had begun the process.

Vodacom said that all out-of-bundle charges incurred during the incident are being refunded, and that depleted bundles are being reinstated.

By Jan Vermeulen for MyBroadband 

Fewer seek credit as tough times bite

Consumers, many of whom are vulnerable in an environment of rising retrenchments and weak economic growth, are trying to pay down debt.

Consumers adopted a cautious stance to credit applications in the first quarter of 2017, figures from the National Credit Regulator show.

At end-March, credit applications decreased by 998,000 to 9.53-million, representing a quarter-on-quarter decline of 9.5%, the regulator said. Consumers, many of whom are vulnerable in an environment of rising retrenchments and weak economic growth, are trying to pay down debt.

Head of Absa home loans Carel Grönum said last week household debt to disposable income, at 73%, was at its lowest level since the global financial crisis. Credit bureau Compuscan recorded a 13% year-on-year increase in the number of accounts that were more than three months in arrears in the first quarter, suggesting consumers cannot afford to take on more debt.

The total value of new credit granted in the first quarter fell 5.6% from the fourth quarter of 2016 to R116.5bn, representing a 7.5% year-on-year increase, the regulator said. The largest increase was recorded in the developmental credit category, which nearly doubled to R5bn. The value of mortgages granted and of other secured and unsecured credit agreements, fell.

Credit facilities such as credit cards and overdrafts increased moderately, while short-term credit granted also declined.

By Hanna Ziady for Business Day

Hapless Public Protector loses SARB ruling

The legitimacy of the Public Protector’s office and her reputation may be damaged if she takes a dismissive or procedurally unfair approach as she has done in the matter regarding the South African Reserve Bank (SARB), Judge John Murphy said.

The judgment, delivered on Tuesday by Justice Cynthia Pretorius on behalf of Murphy, sets aside Public Protector Busisiwe Mkhwebane’s remedial action.

According to a report issued by the Public Protector’s office in June, which was based on an investigation into the apartheid-era Bankorp bailout, Mkhwebane ordered that the Reserve Bank’s constitutional mandate to protect the currency be changed instead to ensure the socio-economic well-being of citizens and the achievement of socio-economic transformation.
Mkhwebane also ordered the Reserve Bank and the chairperson of the portfolio committee on justice and correctional services to submit an action plan before August 18. This has also been set aside.

In his judgment, Murphy said that it is “disconcerting” that Mkhwebane seems “impervious” or “disinclined” to address criticism of her conduct during the investigation.

Murphy acknowledged that the Public Protector has a difficult task and is expected to deal with complex and challenging maters with limited resources and without the “benefit of rigorous forensic techniques”. This would make it easy to make errors in informal alternative dispute resolution processes.

But Murphy added that the Public Protector is the “constitutionally appointed custodian” of legality and due process in the public administration. “She risks the charge of hypocrisy and incompetence if she does not hold herself to an equal or higher standard than that to which she holds those subject to her writ,” he said.

“A dismissive and procedurally unfair approach by the Public Protector to important matters placed before her by prominent role players in the affairs of state will tarnish her reputation and damage the legitimacy of the office.”

Murphy said the Public Protector should reflect “more deeply” on her conduct during this particular investigation, and she should consider the criticism made by the SARB and Parliament.

Professor Jannie Rossouw, head of the Wits School of Economic and Business Science, said that if the matter had gone any other way, it would have been a “constitutional crisis”. “From that perspective it is a very positive judgment,” he said.

‘Maybe she should just resign’

The judgment also raises questions on whether Mkhwebane is fit to hold office, he said. “Maybe she should do the honourable thing and just resign.”

Econometrix chief economist Dr Azar Jammine said the ruling may have damaged the image of the Public Protector, and that some may argue that her days are numbered. He said the ruling showed the strength of South Africa’s institutions and the judiciary.

A different judgment would not have been viewed favourably by ratings agencies, he said.

By Lameez Omarjee for News24

How Zuma killed Stuttafords

Stuttafords officially closed its doors on Monday, 31 July after 159 years of operating in the South African retail market.

The retailer filed for business rescue in October 2016, after it could not recover from the pressures of the low growing economy and the significant devaluation of the rand following the axing of former Finance Minister Nhlanhla Nene.
A final bid to buy the last two operating stores in Sandton and Eastgate was rejected by the landlord, Liberty. Chief executive Robert Amoils told Fin24 that all staff at the two remaining stores will be retrenched and have their full retrenchment packages paid.

The business is currently undergoing a winding down process which will take a few months to complete. A sale of Stuttafords intellectual property is being finalised by the business rescue practitioners.

Amoils had explained to Fin24 that the business had been on the right path, but simply ran out of time to correct things. “I believe the path we set was correct. I believe the repositioning we did was consistent with what international trends have shown to work,” he said.

“Simply, we ran out of runway, we ran out of time. The market downturn was so swift, so severe and was paralleled with significant [rand] devaluation and political uncertainty.”

Amoils explained that the rand devaluation impacted the business model negatively because commitments were made to buy international brands almost a year in advance. But director at Norton Rose Fulbright and senior insolvency lawyer Haroon Laher said that the downfall could not be pinned down to the economy only.

“I think there were a number of factors. There was a lot of tension between the shareholders which obviously is tension in the house, so to speak. That did not contribute to a successful business rescue.”

Stefan Salzer, partner and managing director at Boston Consulting Group said that generally the retail sector is under pressure. Particularly in recessionary conditions consumers tend to cut down on spend for discretionary items such as clothing, household appliances and furniture.

“It is tough not to buy food but it is very easy not to buy a TV or buy the latest fashions from Stuttafords,” he said.
Salzer explained that over the past two to three years international clothing retailers had been entering the market, posing another complication for Stuttafords. Amoils previously told Fin24 that the arrival of international players like H&M, Zara and Cotton On had cut into their customer base.

That, coupled with increasing financial pressures on consumers and changing credit regulations did not contribute positively to the environment for clothing retailers, said Salzer.

Indeed, the devaluation of the rand impacted Stuttafords profits, he explained. An item that cost $3 would end up costing more at a later stage due to the sensitivity of the currency. This cost could be borne by the consumers, in the final price charged for the item, or the retailer would have to carry the expense and let profit take a knock.
Stuttafords purveys international brands and this set it in a disadvantage to other local retailers which rely on South African produced and sourced products, explained Salzer.

International players
Salzer said that international players are also clear on what they are, and on what they are not.
These retailers also differentiate between “basics” and fashion items and price these accordingly. For example a basic white T-shirt would be just that. Contrarily South African retailers would sell a “basic” white T-shirt with some print on it. Additionally, South African retailers often do not match pricing for basic and fashion items appropriately. Something considered basic, would be priced as a fashion item.

Local retailers also need to adopt fashion faster as international retailers do, he said. International retailers also have the advantage of scale, they have access to global brands at larger volumes.

South African retailers should also learn to introduce a “theatre of shopping” to inspire people to buy. Some retailers just put items on shelves, which is not as inspiring as having a styled manikin, he explained. A consumer could walk into a store with the idea to buy a T-shirt but then leave with a dress because the product was represented in an emotive and inspirational way, said Salzer.

International players also follow a different model when it comes to planning and buying merchandise, explained Derek Engelbrecht partner and consumer products and retail sector leader at EY. Global brands have a sense of urgency and frequency with which they change offerings.

“That is probably one of the key reasons the department store has battled. In gold old fashioned department store planning, the business would put new things on the shelf when the seasons change.”
“Global brands have worked hard and long to perfect the model where they are able to put items on the shelf every four to six weeks,” he said.

Develop a niche
Globally, the department store is facing challenges, explained Salzer. The way forward is to develop niche or specialist stores. Given South Africa’s mall culture, retailers do not necessarily have to stock all kinds of items under one roof, when a consumer can get these products a few meters away in a different store.

Salzer added that if some retailers still want to diversify their offerings, they need to be clear on the overall theme they are offering, like quality, convenience or affordability. For example a retailer could offer clothing items and cars, if the overall expectation of the offering was quality.

Engelbrecht explained that retailers can no longer be all things to all people. “If you follow approach of being all things to all people at some point your customer will leave you,” he says.

“If you identify the niche or the consumer you are targeting, while it may not appeal to all people, at least you are guaranteed that you created something unique. That is probably where the slow demise of the department store as a concept comes from.”

Engelbrecht also pointed out the importance of retailers adapting to the world in which they operate in.
Before entering business rescue, Amoils said Stuttafords had managed to reposition itself as a provider of cutting edge fashion and offered affordable branded luxury. The customer base was also more reflective of the South African consumer, with over 60% of Stuttafords’ market being black. The group also started focusing on targeting younger, tech-savvy consumers. “We perpetually evolved and I think we did a good job in the last five years,” says Amoils.

By Lameez Omarjee for Fin24

During June 2017 the Information Regulator South Africa (IRSA) released a number of documents on its web site which give an insight into how the IRSA will conduct its work in the coming years.

In this article we will take a look at the Strategic Plan, incorporating the Annual Performance Plan and see what we can learn about the IRSA and the status of the Protection of Personal Information Act (POPIA) and Promotion of Access to Information Act (PAIA) which fall under the responsibility of the IRSA. In a later article we will look at the various committees that have been established by the IRSA. Before we start it is worth remembering that as the IRSA is an arm of government the approach and terminology used is more aligned to government-speak than that familiar to a commercial or non-state owned entity.

Strategic Plan, incorporating the Annual Performance Plan
This thirty one page document covers the period 2017-2020. This is shorter than the usual five year period used by government entities as the IRSA is entering into operation part way through the current SA government planning cycle. The first point of interest is that there appears to be an attempt to seek independent insight in the assistance sought from the Monitoring and Evaluation Unit of the Department of Telecommunications and Postal Services in the development of the plan, as is referred to in the “Foreword” signed by the IRSA Chairperson.

The Vision, Mission and Values are laid out in the Strategic Plan and hold no surprises given the mandate of the IRSA. As part of the mandate the core functions are listed (Part A, section 4), in line with the POPIA and PAIA remit of the IRSA and are worth mentioning here:

• Mandate for POPIA: provide education; monitor and enforce compliance; to consult with interested parties; to handle complaints; to conduct research; codes of conduct; facilitate cross-border co-operation.
• Mandate for PAIA: complaints; investigations; assessments of compliance; a list of more than a dozen “additional functions” including both educational and operational issues.

The final item listed under the mandate is the requirement to submit an annual report to the national assembly.
None of this coverage of the mandate is particularly revealing, except the strange imbalance in the way the mandate for POPIA and PAIA have been presented. One might have expected a balanced approach to presenting the mandate in terms of the focus on education, compliance monitoring and other issues for both pieces of legislation. For example we see the term “enforce compliance” being used in relation to POPIA and not being used in the same way in relation to PAIA. Another inconsistency is the explicit emphasis on training Information Officers and Deputy Information Officers under the PAIA mandate and no such explicit reference under POPIA. Could this be a statement of intent or a mere oversight? A similar inconsistency is the involvement of the Public Protector under PAIA but no similar mention of the Public Protector under POPIA. Perhaps the reasons for these inconsistencies will become clear later?

Section 5 of the Strategic Overview focuses on planned initiatives. There are five areas that are listed that the IRSA will be treating as priorities:
• The adoption of the Regulations
• Codes of conduct needs assessment
• Stakeholder engagement
• Analysis of legislation that impacts on its operating environment

A major disappointment is that these initiatives are stated without reference to POPIA or PAIA specifically, and only by implication can be seen to apply more directly to POPIA. What is absent is any sense that enforcement action is a priority (for either POPIA or PAIA), suggesting a less aggressive approach than some have anticipated.
A curious anomaly in terms of a conventional strategic plan is part A section 6 (Litigation) which is presented more as a report back on recent activity than a commitment to be involved in future litigation as part of a strategic commitment.

Section 7 covers the situational analysis. The first two sections focus on the internal procedural matters of interest to the IRSA (performance and organisational environment) and add no value in terms of the external environment, in particular global influences on the performance of a national information regulator and the external political, economic, social, legislative and other influences it operates under. The final part of section 7 covers the IRSA strategic planning process. Sadly therefore the situation analysis adds little value in terms of the local (national) regional (SADC) or continental (AU) context for the work of the IRSA.

Section 8 claims to cover the high level governance structure. Sadly, given the launch the King IV Report and Code™ in the month prior to the IRSA taking office, there is no acknowledgement of then overall approach to ensuring effective governance as outlined in King IV™. Given the intense focus on the performance of the Chairperson of the IRSA in her previous position at the IEC one might expect a more proactive approach to establishing the legitimacy of the IRSA as a governance outcome. In fact section 8 presents more of an organisation chart than a governance structure.
Section 9 covers the budget overview and mid-term expenditure estimates. These clearly demonstrate that the IRSA will be severely limited in its abilities to deliver on its mandate unless there is a significant change to the budget for the period covered. With compensation of employees pegged at a flat R17,486,000.00 for each year from 2017/18 to 2019/2020 there is little chance that the highly knowledgeable, skilled and experience staff required will grow in any meaningful way for the foreseeable future.
The final part of the Strategic Overview (Part A of the document) covers in section 10 strategic outcome oriented goals. There are seven goal listed, and in the next article we will look at these in relation to the strategic objectives and annual performance plan that make up parts B and C of the overall strategic plan document.

By Dr Peter Tobin

Pressure on retailers may lift in Q4

While there is no outright good news for retail, analysts say the last quarter of 2017 is unlikely to plunge the sector to new lows.

“The interest rate cut and lower inflation numbers should see conditions improve for consumers on the balance,” says Old Mutual investment professional Meryl Pick.

“There may be a lag and the improvement could be muted to begin with. We may see a marginally better fourth quarter compared with last year.”

The South African Reserve Bank surprised markets with an interest rate cut of 25 basis points in July. In the same month, inflation fell to its lowest level since November 2015.

Inflation, as recorded by the consumer price index, dipped to 5.1% in June, from 5.4% in May.

Pick says despite this encouraging data, retailers had indicated that trading conditions would remain tough for the rest of 2017.

Cratos Wealth portfolio manager Ron Klipin says there was good news for retail shares at their current prices.

A year ago, Pick n Pay’s share price was trading at about R80.76. The share currently trades at about R62.84.

Mr Price Group was at about R228.50, but has since fallen to about R175.66.

“Looking at retail counters, prices are becoming more attractive and may see some buying because of the value they offer at these prices. But the conditions in the sector itself aren’t great,” says Klipin.

Klipin says there was a lack of confidence in the market and the economy, while household incomes were under pressure.

“There are a lot of pluses and minuses and anything could change the balance. There is still a possibility for a downgrade, but the lower level on inflation appears to be a positive aspect.”

In clothing retail, Pick and Klipin says Mr Price Group and TFG were best placed to survive the economic environment.

In food retail, Klipin says Shoprite would fare best, being affordable for most consumers. The retailer’s African operations would also help support it.

By Colleen Goko for Business Day www.businesslive.co.za

Vodacom bows to pressure to reduce prices

Vodacom will actively participate in the Independent Communications Authority of South Africa’s (Icasa) consultation process on the draft regulations regarding data expiry periods and out-of-bundle billing.

Vodacom told Fin24 that it was committed to the process of drafting new regulations, after the communications regulator stepped into the going feud between consumers and networks over the high cost of data.

“Vodacom is aware of the draft regulation gazetted by Icasa regarding data expiry periods and out-of-bundle billing,” a company spokesperson told Fin24 this week.

“Vodacom is committed to bringing down data prices and has brought down effective data pricing by 44% over the last three years.

“Through the likes of Just4You, which offers customers hourly, daily, weekly and monthly bundles, Vodacom has made significant inroads in recent years in its pricing transformation journey,” the spokesperson said.

The latest step by Icasa to join the #DataMustFall campaign was aimed at regulating data expiry dates, according to a notice published in the Government Gazette on Monday.

Icasa intends to encourage networks to extend the validity of data bundles.

“With regard to out-of-bundle billing, Vodacom reiterates its position on this matter in that it remains fully committed to addressing these and has already started to implement its plans,” Vodacom told Fin24.

“We remain committed to consulting with the regulator in our shared quest to continuously address customer needs and improve the customer experience,” the company added.

The public has until September 19 to submit comment.

Prior to the recommendation, the regulator announced it would hold an inquiry to try reduce high data costs. This inquiry will be conducted over four phases and completed in March 2018.

These phases include a market study, discussion document, public hearings, and findings document. Members of the public would have 45 days to submit comments following each phase, News24 reported.

By Kyle Venktess for Fin24

PNA stationery festival hits PE

Hardworking teachers stand to be rewarded with a share of R20 000 worth of essential classroom supplies when they visit the PnA Stationery Festival at Baywest Mall on Friday, 11 August.

The festival, which will be held in the Centre Court, will showcase the latest back-to-school products, office consumables, and related supplies and services from a range of national suppliers.

Baywest Mall marketing manager Lindsay Steele said the festival was an important initiative to recognise dedicated teachers who often invested their own time and money in teaching materials and classroom stationery.

“Aside from the competition for educators, all shoppers are welcome to walk through and see the latest stationery offerings. The festival runs until the Saturday and one lucky shopper could walk away with a Baywest Mall voucher worth R1 000.”

As far as the teachers’ competition was concerned, festival organiser and PnA Baywest owner Francois Steenekamp said there would be 10 product hampers to the value of R1,000 each, plus the grand prize of a R10,000 PnA voucher, up for grabs.

“To enter, teachers can collect an entry form at the festival, complete it by visiting each of the exhibitor stands, and drop it into the entry box provided.”

Steenekamp said 11 entries would be drawn on the Friday evening, and those finalists would be contacted to return for the attendance draw at noon on the Saturday.


Consumers travel far and wide for bargains

People are deserting retail stores’ butchery aisles, cutting out the middleman and turning to buying meat in bulk. Seemingly, it is proving to be a great saving.

“If I were to buy the same amount of meat at retail stores, I’d need a loan the following day, meat is so expensive,” says Bongani Qansane, of Germiston, who spends R1,500 a month on meat.

“Once a month I make the trip to Heidelberg.

There’s an Eskort butchery where I get my pork cheaper than at retail shops, and I go to a Karan Beef butchery in the same area for beef and mutton. It’s great value for money.” Sipho Dube teams up with a friend to buy wholesale.

“I spend R400 a month and an additional R40 for fuel so I’m saving big time.”A mother of two says she travels close to an hour with her friends every two months to Eskort.

“We buy and freeze,” she said, estimating that she spent 40% less than she would pay in retail shops. “Not only is the meat cheap, it’s fresh. I’m glad I made this decision.”

Pieter Prinsloo, of the Red Meat Producers’ Organisation, said last year’s drought contributed significantly to the increase in meat prices. He said meat was more expensive at retail shops because “its convenience shopping”.

“If you take lamb, for example, you can buy it wholesale for around R70 a kilogram. The cheapest at a retailer would be about R99 a kilogram.

“You can buy beef wholesale from a farmer for R48 a kilogram. That will give you a 30% saving,” he said.

Zeyn Adrian Jenkins, of Durban, said he paid around R350 for 10kg of chicken quarters in Durban. “It’s R200 in Pietermaritzburg and Port Shepstone.”

For six Soweto women, bulk buying allows them to keep meat on their tables for longer.Thoko Nkosi explained that they put away R150 a month for 11 months. Come the festive season, they can afford to stock up on meat.

“Last year, we were able to buy a beast for about R6,000 and we told the butcher how we wanted it cut. We all walked away with different cuts of meat — from rump steak to T-bone steak, ” Nkosi said.

“If I hadn’t joined the group and I walked into a [retailer] with R1 600, I would only get enough meat to last me about two months.”

The Times found stewing beef at a City Deep wholesaler in Johannesburg was priced at R65.95 a kilogram. Pick n Pay sold it for R79.99. It went for the same price at Spar and Checkers sold it for R10 more.

A kilogram of brisket was sold for R65.95 at the wholesalers, for R87.99 at Pick n Pay, R92.99 at Checkers and R98.99 at Spar.

An Alberton butcher said it was important to note that it was not only the price of meat that could differ from one place to another but also the cut and grade.

Source: Supermarket & Retailer

Major changes loom in the pension industry

There is an unusual silence around the future of pension reform, even though it will both reshape the pensions industry and lead to some substantial wealth redistribution.

A social security paper incorporating pensions was released last year. But according to Mike Prinsloo, head of institutional research at Alexander Forbes, the document is light on detail.

The central proposal would have devastating consequences for firms such as Forbes and the employee benefits divisions of life offices such as Old Mutual, Sanlam, Liberty and MMI, as well as for union funds, which would lose virtually all their members. The paper foresees a 12% contribution of all earnings up to the unemployment insurance fund threshold (now about R190,000/year) going into the fund, which is now called the national social security fund (NSSF).

A 12% contribution of all earnings up to the UIF threshold is expected to go into the social security fund
Prinsloo says it is not clear whether this will operate like a defined contribution, where personal contributions are credited to each member, or whether there will be cross-subsidisation. The cross subsidy is often referred to by government spin doctors as defined benefit, though it has little in common with traditional final-salary schemes. A portion will certainly go to death and disability cover, and it might also incorporate unemployment insurance.
The process started as a pensions-only process in 2007, driven by then finance minister Trevor Manuel’s team at national treasury. The tone of the paper was one of co-operation with the private sector, as long as it got its act together on fees and rationalising funds. At the peak SA had an unmanageable 14,000 funds.
Senior treasury officials such as Andrew Donaldson talked of letting people opt out of the national fund, provided their private sector fund met certain governance standards.

There followed years of turf battles with the department of social development, which took a more hostile approach, even talking of abolishing all tax breaks on pension fund contributions. And some of treasury’s key goals have been held up by disputes in the National Economic Development & Labour Council. These include making it compulsory to preserve pensions and forcing provident fund members to buy pensions with their lump sums. Unions have insisted that any further progress on pension reform can take place only when the NSSF is up and running. In answer to questions from the Financial Mail, treasury claims to be on the same page as the department of social development when it comes to the NSSF.

But Old Mutual corporate consulting head Malusi Ndlovu is sceptical, saying there is still a difference in tone between the two departments, and it is not always clear who is responsible for what. Ndlovu says he would like to know whether there will be options for the private sector to take part in administration or investment management of the fund.

“There is a case for a single administrator, for economies of scale, but I believe it would be beneficial to have a diversity of investment managers to make the market more efficient,” he says.

Treasury will say only that provision will be made to ensure that investment of NSSF funds will be subject to a transparent and responsible investment mandate, and under the same regulatory oversight that is applicable to similar financial sector institutions. It is unlikely that the assets will be managed by the Public Investment Corp, as it would then end up owning up to 50% of certain shares and be even more dominant in the bond market.

Ndlovu says there was a proposal that the 1.2m members of the Government Employees Pension Fund should be exempt from joining the NSSF. But, apart from the issue of the hypocrisy of government exempting itself from its own law, the NSSF would need the contribution of government employees to bulk itself up and become viable.
Treasury insists that private sector pensions will continue to exist, though there needs to be further consolidation.

But Mathias Sithole, head of public sector & corporate consulting at Liberty, says there has been an increase in the number of standalone funds moving into umbrellas, with the total number of funds falling from 14,000 to 5,000 at the end of 2015 (statistics are slow to come out). “A small number of large multi-employer participating funds will dominate the industry, driving the necessary economies of scale,” Sithole says.

David Gluckman, head of special projects at Sanlam Employee Benefits, says that umbrella fund assets have
increased by a compound 25.6% over six years and now stand at R272bn.

Competition has increased with the entry of Allan Gray, Discovery and Sygnia.

Gluckman believes that by 2030 there will be 100 employer-sponsored funds, 10 commercial umbrella funds, 20 union-sponsored funds and five industry funds (such as those for mineworkers and metalworkers). Unions exercise substantial influence through their pension funds. They are sure to insist on their survival before NSSF is approved.

By Stephen Cranston for Financial Mail

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