Source: MyBroadband

Compared to the world average, South African’s GDP per capita plummeted in 2019 and 2020, and its citizens are now in the poorest 40% of the world.

Economist Mike Schussler said that between 2019 and 2020, South Africa’s relative GDP per capita, when compared to the world average, dropped by the biggest margin since 1994.

“South Africans now have just under 71% of the income that average person living in the world,” Schussler said.

He said South Africans are now firmly in the poorest half of world’s the GDP per capita ranking – 107th out of 191 countries.

“We are firmly on the way to the bottom third. Just another sad story,” said Schussler.

Unless there are significant changes in the local economy, the situation will get much worse.

“If we do the same we did in the last 30 years, South Africa will not be inside the top 125 countries on the planet.”

“South Africans are now in the poorest 40% of the world population. By 2040 we may be in the poorest 20%.”

Even if South Africa’s economy starts to show strong growth, it will take decades to get back to the world average.

The world population currently grows at about 1%, while South Africa’s population grows at around 1.5%.

If the South African economy grows by 6% and the world continues to grow by 4%, it will take South Africa 25 years to catch up to the world average.

The chart below, courtesy of Economist.co.za and the World Bank, shows South Africa’s income per capita as a percentage of the world’s per capita income.

 

Petrol approaches R18 per litre

By Jason Woosey for IOL

South African motorists, who are already reeling from record fuel prices, will have to fork out even more from Wednesday, August 4, as the Department of Energy has announced steep price increases for both petrol and diesel.

Both grades of petrol are set to increase by 91 cents a litre, while the wholesale price of diesel will rise by 55 cents. This means that from Wednesday, South Africans will pay R17.58 for a litre of 95 Unleaded petrol at the coast and a whopping R18.30 in the inland regions, where the cheaper 93 Unleaded petrol will now retail for R18.11. The price of 50ppm diesel will rise to R15.06 at the coast and R15.66 inland, but keep in mind that these are wholesale prices and the (somewhat higher) retail prices for diesel will vary between fuel stations.

How much more for a tank?

What do these price increases mean in terms of the cost of a tank? Putting 35 litres of 93 Unleaded petrol into the 40 litre tank of a Volkswagen Polo (assuming you’re sensible enough to never arrive with less than five litres on board) will now cost you R634, or R31.85 more than it currently costs. Putting 50 litres into a mid-sized car like a Toyota Corolla will now cost R905.50, which is R45.50 more. 75 litres of diesel in a large SUV like the Toyota Fortuner, or a Hilux bakkie, will cost an extra R41.25 versus last month.

According to the Automobile Association, the price of petrol in August will be around 23 percent higher than in January, while diesel would have risen by around 20%.

“The average Rand/US dollar exchange rate consistently trended upward during July and the weaker local currency will make it more expensive for South Africa to import fuel,” the AA said, also noting that international oil prices averaged at a higher level last month. Fuel taxes and levies such as the Road Accident Fund levy, which increase annually, are not helping the situation, accounting for R6.11 per litre of fuel.

 

Tiger Brands forced to recall 20m cans

Source: Supermarket & Retailer

Tiger Brands is recalling certain KOO and Hugo’s canned vegetable products produced from 1 May 2019 to 5 May 2021 due to an extremely small number of defective cans supplied by a packaging supplier. The cans may have a defective side seam weld that could cause the can to leak. The company identified the issue as part of its internal quality assurance processes.

Canned products forming part of this recall include products from the KOO and Hugo’s canned vegetable range, including baked beans, that were produced from 1 May 2019 to 5 May 2021.

The issue was first identified as part of routine quality control procedures. Investigations identified a deficiency in the side seam weld of cans manufactured by a third-party supplier.

No health issues have been reported to date relating to the affected product range. Despite the low probability of illness and injury, matters of quality and food safety are an absolute priority for Tiger Brands. Therefore, the company in consultation with the National Consumer Council (NCC) made the decision to initiate a precautionary withdrawal in the best interest of consumers.

Tiger Brands is working with its retail and wholesale customers to remove all affected canned vegetable products from store shelves and replace with fresh stock produced from quality assured cans.

The company encourages consumers to check their food shelves at home and to return any canned products forming part of this recall to their nearest supermarket or wholesale outlet for a refund.

KOO canned products forming part of the recall produced from 1 May 2019 to 5 May 2021 can be identified by looking at the manufacturing date code stamped on the bottom or the top of the can. The manufacturing date appears in the first line following the letters MAN. In the example below, the manufacturing date is 5 May 2021.

MAN 05/05/2021 08:58 4 K2 2H 9
BEST BEFORE 05/05/2024

Canning is a safe way to preserve food and extend the shelf-life of fresh produce. It is good practice to always take a moment to inspect the quality of a can when you’re choosing products. Never purchase or use cans that are dented, cracked, leaking or have bulging lids.

Tiger Brands estimates the number of cans forming part of this withdrawal to be approximately 20-million cans, around 9% of annual canned goods production.

For more information visit www.KOO.co.za or contact the consumer care line on 0860 100 891 or at tigercsd@tigerbrands.com.

R350 covid relief grant reinstated

By Nonhlanhla Nozizwe Hlatshwayo for IOL

Advocacy group Black Sash has welcomed the reinstatement of the Covid-19 social relief of distress grant (SRD) and called on the South African Social Services Agency (Sassa) to ensure it is implemented more effectively.

This comes after President Cyril Ramaphosa announced on Sunday night that the grant will be reinstated until March next year. He said caregivers who are receiving the child support grant are also eligible.

Black Sash said Sassa should ensure this by urgently attending to the grant’s numerous administrative inefficiencies.

“Sassa must improve the grant’s application systems, appeals, payment processes with quicker turnaround times and develop a more effective communication strategy with applicants and beneficiaries,” they said.

Black Sash also raised concerns that the grant was not increased to at least the Food Poverty Line which is R585 a month.

“We will continue to advocate for permanent social assistance for the unemployed pegged at the Upper Bound Poverty Line, currently R1 268, while working towards a universal basic income as our ultimate goal.

“Given the country’s structural unemployment crisis, the Black Sash has repeatedly said that job creation programmes must be complemented with income support measures and a more comprehensive social security programme,” they said.

The Inkatha Freedom Party (IFP) also welcomed the announcement.

“We note the reinstatement of the SRD grant, which will help millions of South Africans worst affected by the Covid-19 pandemic,” the party said.

 

By Londiwe Buthelezi for News24

In the few months before South Africa went into adjusted lockdown level 4 this year, people shopped more in Sandton City than they did in 2019.

The high-end mall started showing above-expectation recovery numbers every time the government eased lockdown restrictions in 2020. In March 2021, its owner, Liberty Two Degrees (L2D), reported that it recorded its best March in five years.

April and May delivered the same out-performance, L2D’s half-year results showed. L2D will share the mall’s June and July turnover growth in a trading update at a later stage.

In April, Sandton City’s turnover was 4.8% more than the mall recorded in April 2019. In May, its turnover was 14.5% ahead.

The Botshabelo Mall in Bloemfontein also far exceeded 2019 benchmarks on those months, and the Liberty Midlands Mall in Pietermaritzburg was ahead of 2019 in May.

“From a foot count point of view, Sandton’s May better than it was in 2019, which starts to indicate that it bounces back very quickly,” said L2D CEO Amelia Beattie.

“It’s an incredibly resilient asset, and it also has a very loyal customer base,” she added.

She said even with offices in Sandton City not back to their full capacity and the Sandton Convention Centre hardly a hive of activity for over a year now, weekday activity in the malls has not died. As for weekends, Sandton City appears to have held its own as a preferred shopping destination, and not just for seekers of luxury items anymore.

“Because Sandton offers so many unique things, people come from everywhere to go to Sandton because it’s an outing, it’s an experience,” said Beattie.

Sales of luxury brands in L2D’s malls have delivered double-digit growth every quarter since Q3 2020. In April and May 2021, they were respectively 84% and 88% ahead of 2019. But turnover for groceries, apparel and technology was also ahead of 2019 before SA went back to level 4 lockdown.

Beattie said luxury brands did so well because the Covid-19 lockdowns have not financially impacted that particular target market. She said even international trends, when looking at sales figures from companies like Louis Vuitton, suggest that consumers are consistently spending on luxury brands.

“There are not thousands of these retailers in the country. It is in one place…Also, we’ve done some good work bringing more international retailers into the Diamond Walk,” she said.

Adidas recently opened its Halo flagship store in Sandton City, which promises an exclusive retail experience comparable to the brand’s other flagship stores in New York, London, Paris, Dubai, Beijing and Tokyo.

Alexander McQueen will soon open shop there, a first in SA. Other luxury brands are moving from their current spaces to open bigger stores within Sandton City. They plan to bring kids’ offerings to their old shops.

“We still see some demand from tenants wanting to come in, and that will support the trade in the Diamond Walk,” said Beattie.

The other businesses in the Sandton City complex – that is, the Convention Centre, Nelson Mandela Square and the hotels – still have not recovered from the initial lockdown slump, save for Sandton Sun, which started trading again in 2020.

“If you went to the Sandton Sun any weekend afternoon, from four o’clock, the queue snakes down the passage to get on to the deck. People love experiences; they love going there.”

Source: MyBroadband

SAA interim chief executive Thomas Kgokolo said Mango Airlines, the low-cost arm of state-owned South African Airways (SAA), will be placed into business rescue.

Mango Airlines, trading as Mango, is based at OR Tambo International Airport and is a whole-owned subsidiary of SAA.

Mango was launched in October 2006, and the first commercial flight took place on 15 November 2006.

The airline has a fleet of new generation Boeing 737-800 aircraft, which boast a seating capacity of 186.

Mango Airlines faced financial challenges and was grounded due to non-payments and debt to Airports Company of South Africa (Acsa). No Mango planes were allowed to depart or land at any Acsa airport.

Kgokolo has now revealed that the Mango board and the government will place the company in business rescue. Consultation with labour groups was underway.

Speaking to ENCA, Kgokolo said some Mango staff were still awaiting delayed salaries. This problem should be addressed in the coming weeks as part of a R2.7 billion bailout given to SAA subsidiaries.

SAA exited business rescue in April after a lengthy process that reduced its workforce by almost 80%.

The national carrier has been unprofitable for almost a decade, surviving on state bailouts and government debt guarantees. It was placed under administration a year ago.

The airline exited administration after receiving R7.8 billion from the government.

SAA has not yet committed a firm date to recommence operations, promising an announcement in the coming weeks.

Last month, the government announced it would sell a majority stake to a consortium in the country’s grounded national carrier.

The consortium comprised Johannesburg-based Global Airways and private-equity firm Harith General Partners.

They will take a 51% shareholding in South African Airways, and the government will retain a minority stake.

The grouping named Takatso will invest around R3.5 billion rand over the next three years in SAA, Harith CEO Tshepo Mahloele said.

“Government will have no further financial obligations to the company, outside of the existing liabilities that they will settle,” Global Airways’ Gidon Novick said.

“Route networks we are still working on, and it will be a phased rollout based on demand re-emerging post-Covid.”

 

The Dome sold to WeBuyCars

South Africa’s largest multipurpose indoor arena, the Ticketpro Dome in Northgate, Gauteng has been sold by its owners. The buyers, WeBuyCars, do not operate in the events arena.

WeBuyCars has confirmed the purchase is to increase the company’s national footprint.

The Dome has been sold by the owners, Sasol Pension Fund.

On Monday, RX Venue management company said the ban on public gatherings had meant that during 2020 and 2021, the indoor arena was unable to operate.

“This is another devastating blow for the exhibitions, events and entertainment industry due to Covid-19.”

The Dome was originally intended to be a permanent motor showroom for consumers to view and test drive a variety of vehicle brands under one roof, said WeBuyCars.

According to Faan van der Walt, WeBuyCars CEO, WeBuyCars will now realise the original vision for the Dome and develop it into a large pre-owned car dealership.

“The Dome will be able to store approximately 1 500 vehicles, providing customers with an enticing experience of vehicle choices along with the fascinating design and layout of the Dome,” said Van der Walt.

Plan for loadshedding as cold front hits

By Tom Head for The South African

One of the top energy experts in South Africa has Tweeted an ominous 15-word warning for the country, forecasting a very tense period for Eskom in the days to come. On top of the Level 4 restrictions and the aftermath of widespread looting, load shedding may soon make an unwelcome return.

Ted Blom is something of an oracle when it comes to all things Eskom. His usually scathing takes on the load shedding situation never seem to be far from the mark, and when he says there’s a problem, it really is time to listen:

“Electricity supply going to be VERY tight again this week – plan for possible load shedding”

South Africa has been burdened by load shedding in 2021, as rolling blackouts became as bothersome as the pandemic itself. Businesses, already crippled by lockdown and illnesses, have also had to contend with one of Eskom’s worst years on record. For the past month or so, the situation has been relatively serene – but that’s likely to change soon.

Freezing cold conditions are set to blast the country this week, and that poses some severe operational challenges to the utility. On Monday, regions in Limpopo, North West, Gauteng and Free State have been hit by load reduction schedules – signalling that a national plan of action may have to take place soon.

There have been no outages since the middle of June, but it remains to be seen just how severe a potential new period of load shedding could be. For now, the experts are warning citizens to “plan for the worst”.

 

By Khulekani Magubane for Fin24

Sovereign credit ratings agency Moody’s downgraded South African metropolitan municipalities on Friday citing uncertainty in the strength of their revenue collection and increasing financial pressures.

The downgraded metros are the City of Ekurhuleni, the City of Cape Town, the Nelson Mandela Metropolitan Municipality and the City of Johannesburg.

Ekurhuleni Water Care and the City of uMhlathuze, which is a local municipality that includes Richards Bay, were also included.

This comes after Moody’s downgraded the Tshwane Metropolitan Municipality in June citing liquidity concerns at one of South Africa’s richest municipalities.

As the local government elections draw closer and the finances of South Africa’s 257 municipalities are expected to come under keen focus.

The Auditor General Tsakani Maluleke reported earlier this month that the combined irregular expenditure of all municipalities over the past year amounted to R26 billion.

In the latest report Moody’s said rating downgrades reflect rising liquidity pressure “as a result of material shortfalls in revenue collection” in the context of very weak growth.

“In this environment, the reviews for further downgrade reflect high uncertainty about the RLGs (regional and local governments) capacity to secure financing well in advance of debt and other payments being due,” the report said.

Moody’s said these South African metros were likely to draw down on cash buffers which will heighten the risk that their capacity to absorb future shocks will be eroded.

Moody’s said the decision to downgrade the ratings of the municipalities by one notch reflects the rising liquidity pressures and shortfalls in revenue collection, that Moody’s expects to last as a result of lackluster growth.

“On average rated municipalities generate more than 80% of their operating revenues from fees for services provision. Based on currently available information, very weak growth is likely to result in a more marked decline in their collection rate than Moody’s previously expected,” the agency said.

Moody’s observed that some municipalities reported declines of up to 10% in revenue collection during 2020, which the agency said is likely to be widespread and persistent.

“As a result, Moody’s expects a material deterioration of gross operating balances and cash balances in the 2021 financial year and the 2022 financial year,” the report said.

Moody’s expects the metros will continue struggling to balance operations in the coming years, potential cuts in capital expenditure and an already significant infrastructure backlog, which will be credit negative.

 

The victims of looting and civil unrest in parts of South Africa will be looking to Sasria (the SA Special Risks Insurance Association) – the state-owned entity that provides cover for loss or damage to insured property as a direct result of civil unrest, including rioting, strike action and public disorder – for payouts.

Saria is the only insurer in South Africa to provide this service. It does not conduct business with the public, but is included in most commercial and consumer insurance policies.

Sasria cover is bought through insurance companies which administer the cover. When a loss is the result of some form of civil unrest, insurance companies act as intermediaries and hand over the claim to Sasria.

But some people are questioning the state-owned entity’s ability to settle the claims.

Businesses and homeowners who have Sasria cover will have their legitimate claims met, and in the case of smaller claims, they will be paid out within a week. This is according to a report by The Sowetan.

Asked if Sasria will pay out claims from businesses and consumers relating to looting at this time, MD Cedric Masondo told TimesLIVE that while criminality may be at play in many cases, “the trigger was what we call civil commotion” — so the claims will be honoured.

“Our clients won’t have to go to great lengths to prove that there was a link between their loss and a civil commotion,” Masondo said.

 

 

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