Tag: South Africa

How the world sees South Africa

South Africa dodged a bullet when credit ratings agency Moody’s Investor Services put the country on review for a downgrade rather than reducing its status, as rival agency S&P and Fitch did, notes London-headquartered global newspaper, the Financial Times.

This four-month reprieve creates an opportunity for the South African government to send a signal to the international community that it will undertake a political and economic overhaul. International investors are asking why Moody’s rates South Africa more favourably than Argentina and Ukraine, which both have reform programmes. Yields on South African bonds reflect the assumption that a Moody’s downgrade is on the way.

The South African government and investors may think none of this matters, with bonds and the currency recovering after former finance minister Pravin Gordhan was fired. But look beyond the short term opportunities to buy, as respected economist Dr Azar Jammine of Econometrix has, and it is evident that the S&P and Fitch teams have given up on South Africa for now.

The outcome of the credit ratings reviews by S&P and Moody’s revealed a mixed result. S&P did indeed downgrade the credit rating on South Africa’s local currency debt to junk status, but Moody’s has deferred its decision to do so until after next year’s Budget. As a result, the worst-case scenario of South Africa falling out of key world government bond indices in such a way as to precipitate a huge outflow of capital from sales of domestic bonds, has been averted for the present. The earliest date at which such an outcome can now materialise is March next year.

Essentially, S&P has given up on South Africa being able to restore its fiscal strength and promote higher economic growth over the next few years, whereas Moody’s seems to have given the government an urgent opportunity to undertake the structural reforms needed to promote higher economic growth and alleviate the fiscal deterioration. The latter rating agency also seems to give greater credence to the importance of having deep financial markets, a stable and sound banking system, a solid spread of maturities for government debt, as well as deriving the benefits of having a freely floating exchange rate and democratically-oriented institutions. S&P in contrast has taken the view that irrespective of the ANC’s presidential electoral outcome, there are likely to be huge impediments to undertaking reforms that might improve the economic growth and fiscal outlooks.
The uncertainty surrounding the possibility of further credit ratings downgrades and South Africa falling out of world government bond indices, therefore remains in place. In such a situation, the Rand is likely to remain under pressure, but not to collapse. The one ray of hope that we see is that real economic growth might surprise on the upside and as a consequence could serve to prevent the worst-case scenario materialising in 2018.
Both views on credit ratings downgrades have been partially vindicated

Clients will be aware of the uncertainty with which we have been looking ahead for several months at the S&P and Moody’s credit ratings and reviews which were due to be released on November 24th. Over this period we were arguing that there was a very high probability of the credit rating on S&P and Moody’s local currency debt ratings being downgraded to junk. However, we were uncertain as to whether or not these ratings agencies would give the country the benefit of the doubt and wait to see what panned out in the ANC’s electoral conference in December and the subsequent policy adjustments that this might bring forth, before taking the final action in downgrading. We had argued that ratings agencies that had already placed the outlook on South Africa’s credit rating to negative, had 12 months in which to either go ahead with a downgrade or restore a stable outlook.

This meant that S&P had until April to make up its mind and Moody’s until June. In the event, S&P seems to have decided that there is no point in holding off a ratings downgrade to junk despite not yet knowing for certain what the outcome of the ANC’s electoral conference might bring, whilst Moody’s has decided instead to place the country’s rating on review. It has been fairly transparent in suggesting that it wishes to see what the electoral outcome might be and subsequently to wait to see what measures are announced in the February 2018 Budget before deciding whether to join S&P in downgrading South Africa’s local currency debt.

As we have frequently argued, a junk status rating for local currency debt by both the S&P and Moody’s would precipitate South African government bonds having to fall out of key world government bond indices. Such an event would lead to tracker funds which base their asset allocation on the breakdown of the various world government bond indices being driven to sell out of South African government bonds.

The resultant outflow of funds could amount to over R100bn, or even R150bn, leading to a rapid depreciation of the Rand’s exchange rate, with inflationary consequences and potential upward pressure on interest rates. This could damage economic growth still further, thus exacerbating the ability to raise sufficient government revenue to reduce the budget deficit and constrain the increase in the public debt.

S&P has given up hope of an early restoration of fiscal strength, Moody’s hasn’t

On Thursday last week Fitch credit ratings agency had left its credit ratings at one notch below investment grade (ie the best junk rate rating) in respect of both foreign currency debt and local currency debt. Encouragingly, however, it maintained the stable outlook assigned to South Africa’s credit ratings. In the case of S&P, it maintained the one notch differential between the rating of foreign and local currency debt even while reducing the rating on local currency debt to junk status.

This meant revising down its rating on South Africa’s foreign currency debt to two notches below investment grade, thus allocating the worst rating of all to this form of South Africa’s credit rating. On the other hand, so long as Moody’s persists with keeping South Africa on review rather than going ahead with a further downgrade, its rating on both local and foreign currency debt remains at the lowest rung of investment grade just above junk status. The difference between S&P and Moody’s in deciding whether or not to go ahead with downgrading South Africa’s debt to junk status lies in the fact that S&P appears to have given up even bothering to wait until the outcome of the ANC’s electoral conference before going ahead with its decision.

Essentially, S&P has decided that no matter what the outcome of the presidential election, South Africa is going to struggle to restore the strength of its fiscal position. In the case of all three ratings agencies, three main problems manifest in South Africa’s fiscal situation. Firstly, because of the low rate of economic growth and the downward revisions of growth forecasts over the past year, including by all three ratings agencies, the projected growth in government revenue is just too low to accommodate a reduction in the budget deficit in the face of difficulty in reducing government expenditure due to social pressures. Secondly, there is deep concern about the possible liability for government emanating from poor corporate governance and low or negative returns at state-owned enterprises (SOEs). This might exert further upward pressure on South Africa’s debt metrics should guarantees granted to the SOEs by government be called up.

Thirdly, worries continue that economic growth remains unacceptably low and that under such circumstances fiscal consolidation requires dramatic action to curtail expenditure, a required development which is unlikely to be forthcoming. The difference between S&P and Moody’s is that the former believes that no matter what the electoral outcome in December, whoever succeeds president Zuma as leader of the ANC will be unable to effect structural changes to ameliorate the country’s fiscal situation for a long while.

In contrast, Moody’s suggests that if it sees sufficient action to address structural weaknesses in the economy being taken by a new leadership in the aftermath of such an electoral outcome, it might yet hold off a downgrade to junk. In this regard, the forthcoming February 2018 Budget is obviously perceived by the agency as being the litmus test of required action to improve the fiscal situation. Clearly, the agency is still providing a ray of hope that an appropriate new leader of the ANC will bring about changes in the structure of the economy and manifest the intention to effect such changes in next year’s Budget in such a way as to give a renewed sense of hope that some action is being taken to prevent the public debt from getting out of hand.

Several negative structural features identified by S&P

Similar structural weaknesses in the South African economy are identified by all three credit ratings agencies. The aspect of unacceptably low economic growth goes without saying. S&P picks up on this by arguing correctly that capital investment remains unacceptably low and this is likely to constrain an improvement in economic growth in the longer term. It argues further that even though there have been encouraging signs of an improvement in the country’s trade balance, this has less to do with increased competitiveness from an export point of view and more to do with an unwillingness to increase capital investment, leading to a lower rate of growth in imports of capital equipment.

In other words, the improvement in the balance of trade and a reduction in the current account deficit are a function of economic weakness rather than strength. Part of the reason also why S&P seems to have given up on South Africa’s being able to address its structural weaknesses, lies with the labour market situation. Clearly S&P does not foresee any major amelioration in the standoff between the stance of employers and that of workers in the economy, no matter who leads the country. One reads into the agency’s stance a perception of the ideological divide between market-friendly and interventionist policies persisting.

Finally, S&P highlights the difference between South Africa and other emerging markets in tackling inequality. It argues that whereas other similar countries have made some inroads into reducing inequality, this is not the case with South Africa where such inequality has been exacerbated. We have frequently suggested that the causes of this lie in the very poor outcomes of the domestic educational system which leaves such a high proportion of the workforce unable to command a job, or alternatively not to be able to perform a job that adds sufficient value to accommodate remuneration of a level that will allow for reduced inequality. Furthermore, the concentrated structure of the private sector, with so much power residing in the hands of big rather than small business, also constrains the ability of the economy to reduce inequality.

Fortunately, some positive structural attributes re-emphasised by Moody’s

On the other hand, as was the case with Fitch’s credit rating review on Thursday, Moody’s did at least re-emphasise some of the positive features of the South African economy which still justify an investment grade rating.

These include the depth of its financial markets, the strength of its banks, the well-diversified maturity spread of its government debt, as well as the fact that the country operates on a flexible exchange rate regime which can insulate the economy from the worst ravages of exchange rate depreciation.

Moody’s also draws attention to the ongoing strength of many of the country’s institutions such as the judiciary and other vibrant democratic non-governmental organisations. The presence of such institutions provides it with confidence that the country can indeed tackle its fiscal challenges under the right circumstances. In the case of S&P, even though the organisation acknowledges the persistence of institutional strength, it nonetheless points out various areas of deterioration in this attribute.

The most important of these is the manner in which S&P expresses its alarm at the deterioration of the ability of the South African Revenue Services to collect taxes. Nonetheless, one derives some encouragement from the fact that the credit ratings agencies are still prepared to acknowledge some residual strengths in the economy. The most important of these would appear to be the ongoing independence of the Reserve Bank in the implementation of monetary policy, something which is not prevalent in many other emerging markets.

Uncertainty to continue prevailing, but with a strong message to forthcoming president of the ANC

The mixed nature of the credit ratings reviews by S&P and Moody’s unfortunately leaves continued uncertainty in the outlook for the country’s credit ratings and through this for financial markets in the next few months.

This is not disastrous and has at least allayed the worst-case scenario for the present, but can unfortunately not eliminate the possibility of such a scenario still materialising through the course of 2018. As a result, it is unlikely that the Rand can make significant gains in coming months. Instead, the currency might experience a continuation of bouts of significant weakness as some bondholders increasingly anticipate the country’s bonds having to fallout of world government bond indices.

Essentially, it suggests that the Rand will trade somewhere between R14 and R15 over the next few months, without eliminating the possibility of a much more substantial depreciation in the event that Moody’s does go ahead with downgrading the country’s local currency credit rating in March. Under such circumstances, there is little chance of domestic interest rate relief, but at least it does mean that the Reserve Bank will be reticent to increase interest rates.

What if economic growth does turn out to be stronger than previously anticipated?

There is a final point worth making on a more positive note. In recent weeks and months we have increasingly pointed to the possibility that real economic activity might after all turn out to have been stronger than anticipated.

We have argued that, contrary to the fact that economic growth forecasts have progressively been downgraded in recent years in each important budgetary presentation, it is not inconceivable that for a change we might find a situation in which the government, as well as analysts, begin to revise economic growth forecasts upwards. In their latest credit ratings reviews, all three ratings agencies downgraded their forecasts for South Africa’s economic growth by a good few decimal points for both 2017 and 2018.

We are now increasingly posing the question as to whether or not the 0.6% to 0.7% prevailing forecast for economic growth in 2017 and the 1.0% to 1.2% growth forecasts for 2018, might not turn out to be unduly pessimistic. In the event of this suspicion turning out to have been correct, it is just conceivable that the ratings agencies will recognise that the deterioration in the country’s fiscal situation might not turn out to be as aggressive as currently anticipated. In the case of Moody’s, at the margin, this might assist in the agency staving off downgrading the country’s credit rating to junk in March.

Under such circumstances, the worst-case scenario of South Africa falling out of key world government bond indices might yet be avoided. However, common wisdom suggests that the probability of such a positive outcome is less than 50%.

By Jackie Cameron, Dr Azar Jammine for Biz News 

Do-or-die priorities for SME survival

With 70-80% of SMEs failing within the first five years, and only 1% growing to employ more than 10 people, South African SMEs are struggling to realise their own growth potential and become active drivers of job creation. And with slow economic growth, on-going political uncertainty, and a national budget shortfall of R209-billion, SMEs seeking much-needed funding face a tough time ahead.

Following the crisis at African Bank a few years ago due to non-payment of unsecured loans by its customer base, traditional lenders largely lost their appetite for exposure to unsecured lending. This has left the majority of SMEs without access to funding via traditional banking channels. And where such loans are on offer, the application process is loaded with administrative and bureaucratic red tape that can take more than three months to work through, with no guarantee that the loan will be awarded.

In fact, in our latest survey of South African SMEs, 76% of respondents said they suffered through tedious paperwork and waited for months only to have their applications for funding denied. This is creating an environment of immense risk to SMEs.

The #1 priority for SME success
I believe access to adequate and flexible funding is the number one priority for South African SMEs over the next six months. The results from our survey showed that access to credit is the single biggest business challenge South African SMEs face today, with a further 33% listing cash flow management as a primary challenge.
A deeper look into why SMEs are seeking funding brings further cause for alarm: nearly a quarter of respondents listed “unforeseen circumstances” as their reason for seeking funding. In a time of constrained economic growth and difficult trading conditions, profits are likely minimal, meaning any event causing need for quick access to funding could spell disaster – or even ruin – should the SME not get the funding they need.
To fill the gap left by the big banks’ unwillingness to expose themselves to unsecured business lending, a vibrant ecosystem of innovative fintech companies have emerged. In the Disrupt Africa Finnovating for Africa 2017 report, South Africa was found to be home to 94 fintech start-ups, 22 of which offer some form of lending support. Such tech-first lenders are able to adapt quicker to changing market needs than their big traditional peers, and are playing an increasingly important role in supporting a rather fragile SME sector. And since they are built on technology and unencumbered by legacy systems, this new breed of fintech company can process and award loan applications in a matter of days compared to the 2-3 months traditional lenders such as banks generally demand.

The role of the SME owner in ensuring survival, success
But it’s not all about the banks and lenders: SME owners also need to play a more active role in ensuring their businesses are resilient enough to withstand times of hardship. Many SMEs lack basic accounting and administrative processes, leaving SME owners blind to potential weak spots or areas of opportunity.
Successful entrepreneurs are able to take calculated risks to accelerate their growth and expand into new markets, but without a solid understanding of the current state of their business, any risk they take is potentially ruinous. A lack of adequate financial reporting also limits SMEs’ ability to apply for and secure funding,

Technology as enabler
Technology can provide support to SMEs wishing to strengthen their administrative and operational processes. Even competent use of something as basic as Excel could give SME owners much-needed insight into the state of their businesses. Online accounting software such as Xero gives SMEs enormous authority over their finances and helps business owners plan and strategise more effectively. In a do-or-die environment such as the one we currently find ourselves in, every slight advantage could mean the difference between success and failure, survival or bankruptcy.
SMEs should prioritise marketing their business effectively. In fact, 47% of respondents in our survey listed marketing as the biggest potential factor in growing sales and revenue, and yet only a third had a marketing budget. Technology can provide cost effective marketing opportunities to SMEs and assist with reaching and influencing key stakeholders. Google AdWords, social media profiles, LinkedIn groups, and even a basic website not only increases the SME’s exposure in the market, but also gives potential lenders comfort that the business is well-supported and in a healthy state.

Entrepreneurs should also seek membership of relevant associations and industry bodies to get access not only to other businesses and business owners, but to draw on the knowledge and research capacity most such associations and industry bodies produce. The better a SME owner’s knowledge of the market in which he or she operates, the better they are able to adapt to changes and ensure the long-term sustainability of their businesses.

Partner, and partner well
Partners can play a vital role in supporting and driving business growth in the SME sector. Whether it is an equity partner providing much needed financing during the early stages of a business, or a business partner that provides goods or services that are complementary to an SME’s core business, effective partnership is essential for long-term business sustainability.
SME owners should however take care to ensure the partner shares similar values and ethics, and strive toward building long-term trust with a view to ensuring mutual benefit between the two businesses. Our philosophy is to seek SMEs that share our passion for sustainable business growth, and to build a long-term partnership that enables us to provide on-going lending support through various growth stages.
In our current economic climate, a go-it-alone, shoot-from-the-hip approach is a recipe for disaster. SME owners should prioritise gaining access to funding, improving their financial and administrative processes, expand their marketing efforts, and seek appropriate partnerships to ensure they continue to survive and thrive.

By Trevor Gosling, CEO of Lulalend

How you can score from your bank on Black Friday 2017

Black Friday has evolved into so much more than just finding the best discount. It has also become a clever way to earn points and rewards from your bank and loyalty programmes, with several leading lenders taking part in the retail phenomenon this year.

Dr Christoph Nieuwoudt, CEO of FNB Consumer says that e-commerce is likely to get a boost around Black Friday and Cyber Monday as some consumers will be looking to avoid the long queues associated with such shopping sprees.

“Any savvy shopper can cash-in on the specials without spending time in queues and traffic, trying to move from one destination to another. While e-Commerce is still in its infancy in South Africa compared to global standards, both the consumer and retail sectors are warming up to the use of technology to deliver and acquire goods and service.

“From placing a food delivery order, buying clothing, booking a taxi ride or renewing your license disc, it’s all being integrated into the virtual world and available at your fingertips.”

Dr Nieuwoudt said, broadly, the use of online shopping is a trend that has been gradually gaining momentum locally, pointing to the growing number of customers who are using the bank’s digital platforms to purchase goods and services.

“We expect the use of technology, especially for day to day services, to increase significantly over the next few years, partly because consumers are starting to realise that it’s both inevitable and a much better way to do a lot of things,” he said.

And while digital transactions may be on the rise, Geoff Lee, Absa head of card, noted that approximately 65% of all transactions in South Africa are still done in cash, which he warned was dangerous and inconvenient.

“The perks of plastic are fast eclipsing those of hard cash, particularly when you take into account the loyalty programme benefits that also come with card purchasing,” added Lee. “So the reasons for adopting this behaviour are simple and logical: it’s faster when you Tap-and-Pay, it’s safer than carrying cash, you earn rewards when you swipe, and you can easily track your spend.”

BusinessTech looks at what some of the major banking groups will be offering on Black Friday 2017.

Absa

To help customers save and start using cards more, the bank said it has partnered with a number of leading retailers to bring customers registered for Absa Rewards ‘even better’ specials this Black Friday, 24 November 2017.

Absa’s one-day-only Black Friday specials include:

Every customer that opens a Dynamic Fixed Deposit account and keeps it running for 12 months will earn up to 8.20% when the account is opened at any Absa Branch, or through your Private Banker.

You won’t pay commission when you buy your Forex from any Absa branch on Black Friday.
Absa Rewards members will enjoy as much as 7% cash back when you swipe your Absa card at any Tiger Wheel & Tyre for transactions greater than R4 286.

Instead of earning up to 15%, you will earn as much as 30% in Cash Rewards when paying with your Absa card at hi-stores, which are owned by The Foschini Group and offer a comprehensive portfolio of 18 retail brands that cover clothing, footwear, jewellery, sportswear, mobile phones and technology products, and home stores.

Relax at select Mangwanani African Spas on Black Friday and pay R599 for a half day spa which includes three treatments and a meal. Bookings must be made and paid for by card on 24 November 2017; the deal will be applicable for Tuesday and Friday bookings until 24 December 2017.

Get 1% cash back when you purchase a 2017 Toyota RAV 4 and get 7 years / 150 000 km Service Plan and an eight-year Unlimited mileage warranty. Or get R15 000 deposit assistance from McCarthy.co.za when you buy a 2017 Polo Vivo Trendline 1.4 and still earn 1% cash back.
Get as much as 50% off on back-to-school bundles, IT hardware, stationery and more when you use your Absa card for online purchases made on Bidvest Walton’s website, www.waltons.co.za. You will also receive your normal benefit of 3.5% in Cash Rewards.

Standard Bank

With Standard Bank, customers will be able to collect double UCount Rewards Points when swiping their Standard Bank Credit Card at the group’s Rewards Retailers this Black Friday.

The bank will also run special offers through its business banking unit, which will be announced on Black Friday.

FNB

FNB, through its rewards programme, eBucks, will offer Black Friday deals with an 80% discount on its products for members.

The company told MyBroadband that Black Friday fits in well with a bigger campaign it is currently part of – Tap Into Summer with FNB & eBucks.

The Tap Into Summer campaign started on 1 November and offers FNB customers and eBucks members good deals from the eBucks Shop.

“In addition, during this campaign eBucks Shop offers great deals daily which are valid for one day,” it said.

On Black Friday, a discount of 80% will apply on its products – including electronics, appliances, gaming, and consumables.

The eBucks Shop will also offer free delivery on selected products during this period.

Source: Business Tech

Coding should be SA’s 12th language

South Africa’s 12th official language should be coding. This is according to Sipho Maseko, Telkom group CEO, speaking at the BCX Disrupt Summit in Johannesburg.

“South Africa has 11 languages; we will now be investing quite a significant amount of money in what we believe is the 12th language of South Africa, which is coding,” he said.

“How do we make sure everyone between the ages of 17 to 25 has an opportunity to learn how to code? Because in a world of the Internet of things, artificial intelligence, robotics and devices that talk to each other, if you don’t understand and speak that language you will really be left behind.”

He said it is fundamentally important for Telkom and BCX to make sure SA’s youth learn the language that he believes “will sustain them for the next 100 years”.

“We have pledged to start a tech fund, largely focused on teaching young people, between the ages of 17 and 25, coding. We have pledged to invest R250 million over the next three years,” Maseko announced.

He said real change is possible “if we can double, treble or quadruple the number of young people that can start to learn how to code at an early age, even younger than 17, at the age of 10 or six. And also start thinking about coding as a core curriculum in how people learn going forward”.

However, he also warned that “we can’t just introduce technology for the sake of technology; it must mean something and must have the right social impact. If it can’t solve practical problems then it’s not useful.”

In May, Telkom-owned BCX announced it was investing R60 million over three years for WeThinkCode to invest in the next generation of coders. The funds will enable expansions and upgrades for the tech hub’s Johannesburg office and allow for the opening of a new campus in Cape Town. As part of the agreement, BCX and other Telkom group companies will also host 40 interns from WeThinkCode’s innovative educational programme every year for the next three years.

Girl coders
Mariéme Jamme, founder of iamtheCODE, explained to the audience at the summit about her massive goal: to enable a million women and girl coders globally by 2030.

“Coding is a 21st century skill and every young girl growing up today in our society should have access to it. But only with time, investment, with commitment, empathy and compassion you can allow this to happen for young girls growing up in SA, maybe extremely poor, neglected and forgotten by society,” she said.

“Technology is an enabler for young girls and young women in Africa. We cannot design solutions where we forget young girls and young women.”

IamtheCODE is a movement to mobilise governments, business and investors to support young women in STEAMD (science, technology, engineering, arts, mathematics and design), through learning how to code, creative learning and cracking problems.

Jamme said it is important to allow marginalised girls and women to be empowered by technology. Her organisation is active in 54 countries across the globe, teaching young girls how to code.

“Technology has no gender, no bias,” she said.

By Paula Gilbert for ITWeb

How businesses contribute to SA

A report by Quantec Research, a leading South African economic consultancy, on Monday revealed the significant contribution made by South African business to the wealth of the country. The report notes, amongst other things, the significant contribution of business to the South African economy.

The study was commissioned earlier this year by Business Leadership South Africa (BLSA) to better understand the national footprint of its membership. Quantec Research was asked to conduct empirical research on the scope and magnitude of BLSA’s members’ activities and their contribution to the economy.

The study revealed several striking findings over the role of business in society; business is the most significant direct contributor to the South African economy. The direct output created by BLSA members was R1.9 trillion in 2016; 1.2 times the value of total budgeted expenditure by government in 2016.

Nearly R1 trillion in expenditure was paid to suppliers, enabling them to employ people, pay taxes, purchase supplies and make investments. BLSA collectively received 34.4 points out of 40 for black enterprise development as prescribed by BEE Codes.

Business employs 6.9 times the number of public sector employees. BLSA members themselves employ 1.29 million people, with another 1.97 million jobs supported in the supply chain. 596,719 people are dependent on BLSA employees. The 57 member companies in the study contribute 23.5% of total private sector employment, and pay full-time and part-time employees just under R2 trillion.

Business contributes to the public sector and supports the most important institutions of state through taxation. Taxation to government from BLSA members alone amounted to over R431 billion in 2016, 35.9% of total taxes collected. That’s the equivalent of more than one million teacher’s salaries, or almost two million police officers, or almost 1.5 million low-cost housing units.

Bonang Mohale, Chief Executive of BLSA, commenting on the findings of the report said: “This report confirms that business is a vibrant part of South African economy and society and a significant national asset. The footprint of BLSA’s members alone is notable – often bigger than that of Government itself. It’s a reminder that business touches every part of South African life and has a positive role and voice to play in the success of the nation.”

Source: IOL 

SA slumps to 92nd spot in ICT rankings

Despite improvement in the performance of the majority of countries in this year’s ICT Development Index (IDI), according to assessment by the International Telecommunication Union (ITU), SA’s global ranking continues to take strain.

South Africa slipped down four places from 88th position last year to number 92 in 2017, the ITU’s latest IDI rankings show.

The IDI is a feature of the Measuring the Information Society Report (MISR), which the ITU released during its World Telecommunication/ICT Indicators Symposium today. The ITU is hosting this year’s symposium in Tunisia until 16 November.

Developed by the ITU in 2008, the IDI is a composite index that combines 11 indicators into one benchmark measure, which can be used to monitor and compare ICT developments between countries across the world. The ranking index has been described as a tool for monitoring progress towards a global information society and a core feature of the MISR.

The 2017 IDI edition ranks the performance of 176 economies with regard to ICT infrastructure, use and skills, allowing for comparisons to be made between countries and over time.

The most important aspect of the IDI is that countries should track their own year-on-year progress and make policy adjustments to grow their telecommunication or ICT sector, said Brahima Sanou, director of the Telecommunication Development Bureau for the ITU.

This year’s results show improvements have been most significant among countries in the middle of the IDI rankings, many of which are middle-income developing countries.

In addition, least developed countries improved their average IDI value, with mobile broadband attributed as the driving force behind bringing previously unconnected individuals online and catering for the ubiquitous data needs of the ICT ecosystem.

According to the index report, Africa has by far the lowest average IDI performance of any region. Only one country in the region, Mauritius, falls into the top half of the IDI distribution or exceeds the global average value for IDI 2017.

Although SA’s global ICT IDI rankings dropped during the period under review, the country, together with Mauritius and Seychelles, still ranks as one of the relatively high-performing on the African continent, says the report.

“As in other regions, there was relatively little movement in regional rankings between IDI 2016 and IDI 2017. At the top of the distribution, Seychelles moved from fourth to second position, at the expense of SA and Cabo Verde, while Gabon moved above Ghana, from seventh to sixth. The biggest gain in the regional rankings was made by Uganda, which moved from 24th to 20th position.”

By Simnikiwe Mzekandaba for IT Web 

The future of work could be in freelance

Today freelancers present 35% of the workforce in the United States, 16% in the European Union and – while South African figures are harder to determine – the number is thought to be about 10% and rising strongly.

Linda Trim, Director of FutureSpace, said: “The data shows that freelancing is on the rise worldwide.

“And that’s partly because of the ‘gig economy’, people working independently for companies like Uber which is a relentlessly evolving phenomenon.”

In OECD countries, studies show that freelancers individuals work chiefly in the services sector (50% of men and 70% of women). The remainder are everything from online assistants to architects, designers and photographers.

A recent study called “A snapshot of today’s on demand workforce” by software firm Xero, showed that the majority of freelancers in OECD countries are “slashers”, meaning that their contract work supplements another part-time or full-time position.

These additional earnings can vary considerably. Those who spend a few hours a month editing instruction manuals from home may earn a few hundred euros (R3 to R4k) a month. Freelance occupational therapists may pull in ten times that working full-time (R30 to R40k/month).

Said Trim: “Perhaps the most glamorous face of freelancing are the ‘creative classes’ an agile, connected, highly educated and globalised category of workers that specialise in communications, media, design, art and tech, among others sectors.

“They are architects, web designers, bloggers, consultants and the like, whose job it is to stay on top of trends.”

Freelancers constitute a diverse population of workers – their educational backgrounds, motivations, ambitions, needs, and willingness to work differ from one worker to the next.

“In addition to the rise if the gig economy, the search for freedom with income is another huge motivator. Freelancing is increasingly a choice that people make in order to escape the 9-to-5 workday.”

Trim added that many of the clients that have signed up at FutureSpace work for themselves and are developing their business or have worked for big businesses for years and are now independent consultants.

“We have also noticed that many large corporates are hiring freelancers and are wanting to use shared spaces like FutureSpace for specific projects or innovation drives rather than have them in the established where they will be exposed to how things have always been done.”

Trim noted however that full-time, company-based work is still the standard for employment in most countries, including South Africa.

“But with the rise of telecommuting and automation and the unlimited potential of crowdsourcing, it stands to reason that more and more firms will begin running, and even growing, their businesses with considerably fewer employees.

“This does not necessarily mean an increase in unemployment. Instead, it likely means more freelancers, who will form and reform around various projects in constant and evolving networks,” Trim concluded.

What can SA sell?

A Cabinet committee has changed its tune regarding a plan to sell its full R13-billion stake in Telkom to fund the recapitalisation of South African Airways (SAA) and the SA Post Office, it was revealed at the mini budget last Wednesday.

By selling state-owned assets, Treasury aims to avoid breaching its expenditure ceiling by R3.9bn. This comes after its decision to bail out SAA with a R10bn appropriation and R3.7bn recapitalisation of the Post Office.

The change in tune follows Cabinet’s realisation that the opportunity cost of losing its 39.75% stake in Telkom would be too great.

Now, Cabinet is looking at selling departmental assets and expects a cash windfall from its release of 2.6MHz broadband frequency.

Treasury director general Dondo Mogajane told media on Wednesday that they can’t simply ditch all their Telkom assets. “Telkom is a well-performing share, contributing R900m to R1bn in dividends every year,” he said. “It is important that we hold on to that as much as we can.”

Later, Finance Minister Malusi Gigaba revealed in his mini budget speech that government has “decided to dispose of a portion of government’s Telkom shares, with an option to buy them back at a later stage”.

Hang on to Telkom

In an interview with Fin24 following the speech, Mogajane said government owns many assets which are not being used, which can be sold to limit the amount of Telkom shares they sell.

“We are currently looking throughout the whole of government,” he said. “We are engaging with Public Works, we are engaging with the Department of Rural Development in terms of assets that we have.

“Once we have identified all of those, we will make recommendations to the (Cabinet) committee, which will make these hard decisions to sell based on the quantum of what’s needed.”

This Cabinet committee comprises Gigaba, Economic Development Minister Ebrahim Patel, Public Enterprises Minister Lynne Brown, Telecommunications Minister Siyabonga Cwele and Science and Technology Minister Naledi Pandor.

“Our ceiling, as the books indicate, will be breached by R3.9bn, so we will be looking for assets that will clear that by March 31, so that we remain within the ceiling, even for the current year,” said Mogajane.

“For the MTF (medium-term fiscus), we have confirmed that we will not breach the ceiling and that is the commitment we have made.”

Regarding the release of broadband frequency, Treasury said in its mini budget that “the bulk of additional spectrum is ready to be allocated immediately, without requiring the migration of existing spectrum users to digital television”.

“The delay in allocating telecommunications spectrum constrains growth across the economy. Lack of radio frequency limits the ability of businesses to deploy new technologies and contributes to the high cost of broadband,” it said.

“A well-designed spectrum auction can promote transformation and improve competition as new participants enter the market.

“Universal service conditions can improve access for low-income households. And a competitive auction can sharply reduce data costs.”

By Matthew le Cordeur for Fin24

Revealed: the real source of SA’s massive data breach

The largest data leak recorded in South Africa has been traced to a Web server registered to a real estate company based in Pretoria.

Table headings from the data leaked are as follows:

  • NEW_IDN
  • TITLE
  • FIRST_NAME
  • SURNAME
  • DECEASED_STATUS
  • CITIZENSHIP
  • GENDER
  • AGE_GROUP
  • POPULATION_GROUP
  • LOCATION
  • MARITAL_STATUS
  • LSM_GROUP
  • ESTIMATED_INCOME
  • HOMEOWNERSHIP
  • DIRECTORSHIP1
  • CIV_NET
  • MOST_RECENT_PHYSICAL_ADDR_LINE1
    MOST_RECENT_PHYSICAL_ADDR_LINE2
    MOST_RECENT_PHYSICAL_ADDR_LINE3
    MOST_RECENT_PHYSICAL_ADDR_LINE4
  • MOST_MAIL_PHYSICAL_ADDR_LINE1
    MOST_MAIL_PHYSICAL_ADDR_LINE2
    MOST_MAIL_PHYSICAL_ADDR_LINE3
    MOST_MAIL_PHYSICAL_ADDR_LINE4
    MOST_RECENT_POSTAL_ADDR_LINE1
    MOST_RECENT_POSTAL_ADDR_LINE2
    MOST_RECENT_POSTAL_ADDR_LINE3
    MOST_RECENT_POSTAL_ADDR_LINE4
  • CELL_1
    CELL_2
    CELL_3
  • WORK_1
    WORK_2
    WORK_3
  • HOME_1
    HOME_2
    HOME_3
  • EMAIL_1
    EMAIL_2
    EMAIL_3
  • OCCUPATION_1
    OCCUPATION_2
    OCCUPATION_3
  • EMPLOYER_1
    EMPLOYER_2
    EMPLOYER_3
  • PROPERTY_1_TRANSFER_DATE
    PROPERTY_ID10
    PROPERTY_1_PROVINCE
    PROPERTY_1_TOWNSHIP
    PROPERTY_1_ERF_NUMBER
    PROPERTY_1_UNIT_NUMBER
    PROPERTY_1_SALES_PRICE
    PROPERTY_1_BOND_AMOUNT
    PROPERTY_1_BOND_HOLDER
    PROPERTY_1_TITLE_DEED
  • PROPERTY_2_TRANSFER_DATE
    PROPERTY_2_PROVINCE
    PROPERTY_2_TOWNSHIP
    PROPERTY_2_ERF_NUMBER
    PROPERTY_2_UNIT_NUMBER
    PROPERTY_2_SALES_PRICE
    PROPERTY_2_BOND_AMOUNT
    PROPERTY_2_BOND_HOLDER
    PROPERTY_2_TITLE_DEED
  • PROPERTY_3_TRANSFER_DATE
    PROPERTY_3_PROVINCE
    PROPERTY_3_TOWNSHIP
    PROPERTY_3_ERF_NUMBER
    PROPERTY_3_UNIT_NUMBER
    PROPERTY_3_SALES_PRICE
    PROPERTY_3_BOND_AMOUNT
    PROPERTY_3_BOND_HOLDER
    PROPERTY_3_TITLE_DEED
  • PRIMARY KEY (NEW_IDN’)
  • KEY MOST_RECENT_PHYSICAL_ADDR_LINE3’ (MOST_RECENT_PHYSICAL_ADDR_LINE3’)
  • KEY PROPERTY_1_TOWNSHIP’ (PROPERTY_1_TOWNSHIP’)
    KEY PROPERTY_2_TOWNSHIP’ (PROPERTY_2_TOWNSHIP’)
    KEY PROPERTY_3_TOWNSHIP’ (PROPERTY_3_TOWNSHIP’)

“Whois lookup” information points to Jigsaw Holdings, a holding company for several real estate franchises, including Realty1, ERA and Aida. The misconfigured website had exceptionally lax security, and until recently allowed anyone with a small amount of technical knowledge to view or download any of the 75-million database records held there. More than 60-million of those records consisted of the personal data of South African citizens.

Contacted by TechCentral for comment on Wednesday morning, Jigsaw management requested time to investigate the issue, and on Wednesday evening neither the company nor its legal counsel was contactable.

It appears that Jigsaw had been using this data, which was likely sourced from credit bureaus, to provide a service to its estate agentsWhen the news of the huge trove of personal information was shared by information security researcher Troy Hunt on Tuesday, the initial response was that there had been a hack. But it seems that hacking wasn’t required: the information was easily available on an open Web server. Direct access to the server, had at the
time of writing late on Wednesday afternoon, been secured.

It appears that Jigsaw had been using this data, which was likely sourced from credit bureaus, to provide a service to its estate agents. Presumably this was to allow the agents to vet prospects, and get contact information for leads. It is questionable whether a real estate company should be hosting this volume of information and it is unclear what the original source of the data was.

The company initially fingered for the breach in some online articles, Dracore Data Sciences, is innocent. Initial circumstantial evidence linking the company based on some common headers on one of their own websites seems to be coincidence. Although Dracore may have been a data “enricher” for the company that leaked the data, it doesn’t seem likely that they had anything to do with the leak, and Dracore is adamant that it’s not involved.

Popi Act
Poor information control, as in this case, is one of the reasons for the introduction of the Protection of Personal Information (Popi) Act. And, had the act been fully implemented, a negligent company could be liable to up to R10-million in fines and negligent company officers jailed for up to 10 years. The ramifications of this breach probably won’t be as dire. Anyone who suffers damages due to the release of the data would have to sue for damages under common law, something that is quite difficult and complex to do.

Chris Basson, from Eighty20 business consultancy, put it like this: “Without making too many assumptions, we can say that the people responsible for building a solution which provides such uncontested access to personal information, had no business having the data in the first place.”

The credentials for these entry points were leaked via error messages from another site, and they appear to be re-using the credentials everywhere.

Basson argued that one should look beyond the ineptitude of the people who made the information so easily available, and rather ask the question: “Who was the idiot that gave them access to the data in the first place?”
The security missteps are egregious and, according to infosec consultancy SensePost’s Willem Mouton, showed an “overall lack of security awareness”.

“From a development perspective, the websites appear to be vulnerable to SQL injection… [and]… in terms of deployment, having database interfaces open to the Internet provide entry points.”

He pointed out that while examining the site, SensePost noticed that “the credentials for these entry points were leaked via error messages from another site, and they appear to be re-using the credentials everywhere”.
These leaked credentials allowed for full administrator privileges in the database, and in fact allowed full administrator access to all the databases on the server. To make matters worse, the personal data was contained in a single database in clear text.

Mouton also noted that it was concerning that nobody noticed the large volume of data leaving the network. “Multiple people pulled a 30GB file, and nobody noticed.”

He said verbose error messages and indexable Web directories were a boon to anyone who wished to hack the server.
Unfortunately, for South Africans whose personal information is now widely available, there isn’t much that they can do other than increase their vigilance for any attempts at identity theft.

By Andrew Fraser for Tech Central; PasteBin

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