Tag: payments

Source: TPN

The percentage of total tenants that were recorded as being in good standing with their landlords dropped sharply in the second quarter of 2020.

From 81.52% of tenants being in good standing in the first quarter, the percentage declined to 73.5% in the second quarter, a decline of eight percentage points.

Those tenants that paid on time amounted to 59.48% of total tenants in the second quarter, down from 64.84% in the previous quarter.

“This all translates into quarterly increases in the percentage of tenants ‘partially paying’ or not paying at all,” TPN said. “Interestingly, though, is that the percentage paying late remained on the decline in the second quarter.”

From 11.57% in the first quarter, the percentage of tenants making a partial payment jumped to 15.28%. The percentage who did not pay also rose from 6.92% to 11.22% over the same second quarters.

However, the percentage paying late declined from 16.68% to 14.02% after having been on decline from a few preceding quarters.

TPN said that the sharp weakening in tenant performance is strongly related to the Covid-19 lockdowns, the most severe lockdown months being in April and May.

“These widespread business shutdowns likely saw many tenants lose either part or all of their income, especially amongst those employees with more flexible remuneration arrangements, for example casual labour and those that are commission-based,” it said.

In addition, the tenant population went into the lockdown period already under some heightened financial pressure, caused by a long term stagnation in South Africa’s economy, its economic growth having broadly slowed from around 2011/12 to 2019, the group said.

By the second half of 2019 and early-2020, the country was already in mild recession even without any lockdowns.

“Economic stagnation had been taking its toll on tenants, and we had already seen a multi-year decline in the percentage of tenants in good standing, from a decade high of 85.95% back in 2014 to 81.52% in the 1st quarter of 2020, prior to the lockdown.”

Source: Business Insider SA

The Unemployment Insurance Fund (UIF) is still not paying out special coronavirus grants as it tries to verify the identity documents of those who applied over recent months.

The delay has resulted in new cut-off dates for applications for the so-called Temporary Employer/Employee Relief Scheme (TERS):

The final deadline for TERS applications for March to May 2020 is September 25.
TERS applications for June close on October 15.
TERS applications for July to September 15 close on October 30.
The UIF’s process to pay out the TERS grants has been marred with irregularities.

In a new report, the auditor-general outlined various problems it found with the TERS system, including that the UIF did not sufficiently corroborate information it received from applicants.

This resulted in fraudulent payments, which included:

  • Almost R696 million was paid to foreigners who have not made UIF contributions in the past 12 months
  • More than 50 children under the age of 15 received payments
  • More than R440 000 was paid out to the accounts of dead people
  • Almost R170 000 was paid to prisoners
  • More than R30-million was paid to people with invalid identity numbers
  • It also found that there was “double dipping” of more than R140 million – thousands of people who already get state grants, including students and disability grant recipients also received TERS payments.
  • The AG report resulted in the suspension of top UIF executives, including its commissioner Teboho Maruping.

The UIF took the TERS platform offline over the past weekend to implement changes to its systems, as recommended by the AG. The system was supposed to be restored by Monday, but by Tuesday it was still down.

“Currently payments are still on hold as the [UIF] is still working with the Department of Home Affairs and other government databases to verify about 5 million identity documents of Covid-19 TERS applications. This is done to ensure that payments are made to deserving and authentic workers,” said Marsha Bronkhorst, acting UIF Commissioner, in a statement.

“We are aware of the negative impact this delay has caused and is causing. But in the interests of mitigating the risks which have been identified both by our Risk Unit and the Auditor General, we unfortunately have to pause payments,” she added.

In total, the UIF has paid out almost R42-billion in 9.5-million payments to workers.

From July, claims will only cover employees whose employers are:

  • not permitted to commence operations under lockdown regulations
  • unable to make alternative arrangements for vulnerable workers (those above the age of 60 years, or with co-morbidities), such as working from home
  • unable to make use of their services because of the coronavirus restrictions, for example on how many employees can be in the workplace at the same time.

 

According to a recent article by MyBroadband, a large number of South Africans have asked their banks for payment holidays and cash flow relief during the Covid-19 pandemic.

  • Absa has seen almost 570 000 account holders benefit from relief
  • This amounts to R7.8-billion cash flow relief
  • Nedbank has assisted more than 225 000 clients, out of a total credit active client base of approximately 2.5-million
  • Standard Bank granted instalment relief to nearly 150 000 clients in the wake of the national lockdown
  • This amounts to over R1-billion in instalment relief per month
  • FNB said it has offered almost R6 billion in relief to customers since 1 April 2020
  • Nearly 700 000 account holders benefited from relief
  • A total of 1.64-million South Africans have received payment holidays

By Helena Wasserman for Business Insider SA

Large companies have been urged to pay their creditors early this month in an effort to bolster small and medium businesses.

The CEO Initiative, whose members include 200 company bosses, has called on businesses to settle their bills with suppliers on 20 April.

According to Discovery’s CEO, surveys among small businesses show that 60% of them are either considering retrenchments, or have already started.

Business for South Africa estimates that less than 50% of the economy is currently functioning.

The CEOs of Standard Bank, Discovery and other large companies have called on businesses to pay their suppliers earlier this month, as small firms face a struggle to survive during the national lockdown.

There are some 525,000 formal small and medium businesses (SMEs) in South Africa, which employ 6.6 million people.

“Given the lockdown, the vast majority are unable to pay their rent, utilities, and importantly, their employees. Initial surveys indicate that 60% of SMEs are either considering retrenching employees, or already have,” says Adrian Gore, CEO of Discovery.

Gore joined 200 other company bosses, as part of the CEO Initiative movement, in calling on companies to pay their creditors by Monday 20 April 2020.

“We believe early payment is the right thing to do and will have a significant impact on their ability to survive and keep paying their employees,” says Sim Tshabalala, CEO of Standard Bank.

“They are under enormous strain and we are already seeing many businesses having to close their doors, which has a significant impact on their ability to sustain their employees. Even outside of the lockdown, many of these businesses often do not have the cash flow needed in order to maintain sustainability.

It is estimated that less than 50% of the South African economy is currently functioning, according to Martin Kingston, spokesperson of Business for South Africa, a new organisation that coordinates the corporate response to Covid-19. He told a media briefing on Tuesday morning that the trade in liquid fuels is down 80% since the lockdown started

Kingston says companies in the accommodation, tourism and transport sectors are worst affected. He expects “a very significant contraction” in South Africa, with a large increase in unemployment.

Following a surprise 100 basis point interest rate cut on Tuesday, Reserve Bank governor, Lesetja Kganyago warned that South Africa’s economy will shrink by 6.1% in 2020. GDP is expected to grow by 2.2% in 2021 and by 2.7% in 2022.

Source: SA Commercial Prop News

As South Africa goes into a 21-day nation-wide lockdown, The Foschini Group – whose brands include Foschini Stores, @home, Markham, Totalsports and Sterns – has said it will stop rental payments because of the impact of the coronavirus outbreak.

This comes days after Edcon, SA’s second-biggest clothing retailer, said it may not be able to re-open after the 21-day lockdown.

The Foschini Group has 2 582 outlets across Africa which are now closed after President Cyril Ramaphosa ordered a three-week national shutdown from 27 March to combat the pandemic.

While essential services such as grocers, pharmacies, banks and gas stations are allowed to remain open, clothing retailers are not.

The Cape Town-based owner of Totalsports and American Swiss jewellery chains is also halting any planned expansion projects and will delay store refurbishments, TFG said in a letter to its landlords seen by Bloomberg and verified by the company.

“Once the situation normalises we will then be able to assess the full financial impact on the business and will engage with you further,” it said.

It is believer other retailers, big and small, are contemplating putting a stop to rental payments as business grinds to a halt.

Edcon, which had already been under financial strain, said what it’s experiencing is an indication of the challenge that many other businesses and the government will have to face after the shut down.

Although yet to recover from Edcon’s woes, retail landlords are set to face even more intense pressure as Walmart-owned Massmart announced recently the closure of 23 DionWired stores across the country.

TFG, which operates in South Africa, Australia and the UK, occupying space in major centres, went against the prevailing retail trend by producing positive trading updates in a difficult economy. The group pushed up turnover 5.9% for the nine months to 28 December 2019, compared to the corresponding period in 2018.

Coronavirus crisis in South Africa

As of Wednesday, South Africa has 1 353 cases with 5 fatalities.

Globally, coronavirus cases have reached 859 032 cases, with 42 322 deaths recorded.

South Africa is also facing additional headwinds after ratings firm Moody’s downgraded the country’s credit rating to below investment grade.

Moody’s downgraded South Africa’s long term foreign and local currency debt ratings from Baa3 to Ba1 with a negative outlook.

By Sam Rutherford for Gizmodo; and Angela Monaghan for The Guardian

Despite the prevalence of credit cards and payment services like Venmo and Apple Pay, when things go wrong, cash is still king.

Europe and the UK got a really good reminder of that after a network crash on 1 June prevented millions of Visa credit and debit card holders from making any transactions.

Things got even worse when some MasterCard and American Express cards started getting declined after transactions were rerouted through Visa’s IT network.

All told, this issue created a pretty big headache for a lot of Europeans who found that when trying to buy tickets for a train or bus ride home after work, the cards in the wallets had suddenly reverted to being useless pieces of plastic.

In addition to many gas and railway stations, other major outlets including Mark’s and Spencer’s and Sainsbury’s were unable to accept payments from Visa cards, with The Guardian reporting that after learning about the issue, “some customers were simply dumping their shopping at the tills”.

Apparently people with Visa debit cards were still able to withdraw cash from ATMs.

Visa UK first tweeted out a statement regarding “service disruptions” shortly before 6pm London time, after problems first started around 2:30pm. This was later followed up by an announcement from UK Finance, the trade association that represents payment firms in Britain:

Visa is currently experiencing a service disruption which is preventing some Visa transactions in Europe from being processed. It is investigating the cause and acting as quickly as possible to resolve the situation. Visa is working with banks, building societies, merchant acquirers and card providers to return to a normal service and will provide regular updates.

Meanwhile, MPs are demanding answers from Visa, who were down for half a day after a “hardware failure”.

“A third of all spending in the UK is processed by Visa. It’s deeply worrying, therefore, that such a vital part of the country’s payment infrastructure can fail so catastrophically,” Nicky Morgan, the chairwoman of the Treasury select committee, said.

“The consequences were sudden and severe. Many consumers and businesses were left stranded on Friday, unable to make or accept payments, with chaos reported in shops.”

A committee has been formed, and is seeking answers on a number of issues, including whether or not cardholders or shopkeepers will be entitled to compensation, and what steps Visa will take to prevent a similar system failure in the future.

E-toll mess just gets messier

Sanral may have to restart the legal process from scratch should it want to recover the money it claims it’s owed, or abandon the cases entirely.

Last week, the Organisation Undoing Tax Abuse (Outa) barred roads agency Sanral from pleading 55 cases against its members in court on the grounds that it had not followed court procedures and had delayed presenting its cases in court. These 55 cases represent nearly R2-million in outstanding e-tolls.

What this means is that Sanral may have to restart the legal process from scratch should it want to recover the money it claims it’s owed, or abandon the cases entirely. The roads agency has issued several thousand summonses to collect outstanding e-tolls and has obtained default judgement against some who failed to put up a defence in court. Though Sanral has trumpeted these default judgments as precedent-setting victories, Outa says they are nothing of the sort. They merely mean the defendants failed to show up in court and argue the case.

Outa is defending roughly 150 summonses issued against its members, roughly a third of which it says have now been barred.

Sanral is attempting to recover about R11bn in outstanding e-tolls from Gauteng motorists. Some 3m motorists are reckoned to owe e-tolls, out of 3,5-4m registered motorists in the province.

As usual, Outa and Sanral have entirely different interpretations of the same facts. Says Vusi Mona, Sanral’s GM for communications: “There are no matters in which Sanral has been barred from pleading. There have been ongoing engagements with Outa’s attorneys for agreed timeframes for the exchange of pleadings and there are no operative bars against Sanral.”

Both Sanral and Outa had previously agreed to run a “test case” which would serve as a legal precedent, so as to avoid clogging the courts with thousands of cases. Last month, Outa pulled out of the test case process as this was taking too long to get to court, opting instead to lodge papers in the high court in Pretoria in defence of one of its members, Thandanani Truckers and Hauliers, which outlines its opposition to e-tolls.

“We were aware that while developing the complicated e-toll test case process, Sanral was issuing default judgments and declarations against the general public, in the belief they would be able to secure a precedent-setting case,” says Ben Theron, Outa’s chief operating officer. “One would have thought Sanral would have learnt by now that coercion and intimidation have not worked in the past and will not resolve the entity’s mounting debt.

“As far as Outa is concerned, Sanral’s journey of following an extensive litigation process to collect outstanding debt will take years to unfold and is a significant waste of the courts’ time and taxpayers’ money,” says Theron.

Another potential problem for Sanral is the issue of prescription in terms of the Prescription Act, which makes it difficult for creditors to recover debts older than three years.

Who is going to criminalise 3m motorists? We know what happens to governments who go to war with their own people on issues such as this
E-tolls came into being in December 2013, so any outstanding e-tolls from December 2013 to May 2014 may have to be written off by Sanral. Outa chairman Wayne Duvenage reckons that more than R1bn of the outstanding e-tolls have now prescribed and are therefore unrecoverable by Sanral. And it’s getting worse every day.

Sanral’s Mona takes a different view: “To date, the issue of prescription has not been raised by any defendant in any matter where Sanral has sought payment of outstanding e-tolls. In any event, the failure to pay e-tolls is a criminal offence which is not subject to prescription.”

Sanral is relying on the Administrative Adjudication of Road Traffic Offences (Aarto) Act, which criminalises certain traffic-related offences in the Joburg and Pretoria metropolitan areas.
Wayne Duvenage
A legal expert specialising in prescription told Moneyweb that Sanral is treading on thin ground if it is relying on Aarto to recover its debts. “Sanral’s attempts to recover debts is a civil matter, and the Prescription Act applies. If I was defending clients summonsed by Sanral I would argue this vigorously and have any debt older than three years thrown out. I doubt any court is going to look at this as a criminal matter.

“Another point I would argue is that Sanral is potentially engaging in reckless lending in terms of the National Credit Act, since it is effectively issuing credit without doing the requisite credit assessment, despite the fact that Sanral says it is exempt from the NCA.”

Duvenage says the matter of prescription is likely to be contested by Sanral but any entity attempting to criminalise 3m defaulting motorists through the courts is playing with fire. Who is going to criminalise 3m motorists? We know what happens to governments who go to war with their own people on issues such as this.”

Theron says despite warnings from civil society that the Gauteng e-toll scheme would collapse due to its cumbersome, costly and burdensome administrative processes, Sanral and the department of transport have decided to continue their litigious war against motorists.

Meanwhile, earlier this month, Sanral announced that it had cancelled all future bond auctions pending the outcome of a governmental task team inquiry into road funding. Sanral needs to borrow about R600m/month to cover its interest bill and operations, but the auctions have been poorly supported over the last year. Sanral says it has enough cash to last a few months. Institutional investors and rating agencies are increasingly concerned at the state of governance in state-owned companies, which means the government will be left to pick up the tab.

Source: MoneyWeb

The South African Post Office (SAPO) has officially joined the scramble to replace Cash Paymaster Services (CPS) as the country’s social grants distributor amid an ongoing crisis over the payment of beneficiaries.

CEO Mark Barnes has submitted an affidavit dated March 13 to the Constitutional Court as part of the Post Office’s application to be admitted as a friend of the court in the Black Sash vs Sassa matter due to be heard on Wednesday.

In the court papers, Barnes states that using the Post Office would “serve the national interest, protect beneficiaries’ information and support government’s ambitions for radical socio-economic transformation”.

Barnes has proposed two alternative systems to solve the crisis, including one that could be implemented within days. However, another long-term plan would need to include CPS.

The South Africa Social Security Agency (Sassa) is under more pressure to find a solution after CPS said it would not be able to pay social grants from April 1 if an agreement is not reached by Thursday.

Read the article here: If there’s no new contract by Thursday, grants may not be paid

Barnes states in the papers that the Post Office had already submitted an emergency backup solution to Sassa on March 1 in case CPS pulled out of the payment of grants to 17 million beneficiaries.

It says it can step in by using an electronic voucher system already used to pay staff employed at the department of public works in the Eastern Cape.

The Post Office said the system can be up and running within days, ruling out the need to extend the CPS contract that expires on March 31.

“Pay points would include SAPO branches as well as the 10 000 locations managed by the current cash-in-transit service provider. Identity documents and identity cards would be checked to ensure that the right people are paid the right grants after comparing to Sassa’s SOCPEN database,” Barnes states in the affidavit.

However, Barnes’ long-term solution that would meet the Sassa requirements would need CPS to assist for a maximum of twelve months as the Post Office prepares to take over.

The Post Office would need CPS to provide the biometric system, personnel that could be retained or replaced over time and cash dispensing machines owned by CPS.

Social Development Minister Bathabile Dlamini has insisted on a biometric system, arguing that it guards against fraud and has saved the fiscus R2bn. She said the system ensures that the right beneficiary is paid the right grant and proves the beneficiary is still alive.

‘State organ should have first preference’

Barnes proposes that the Auditor General monitor the 12-month handover period, with quarterly reports submitted to the court.

Barnes said the Post Office would charge R20 per beneficiary. CPS is currently charging R16.44 per beneficiary, an amount that is expected to increase if a new interim contract is signed.

Barnes argues in the court papers that the Post Office as a state organ should have first preference as a service provider.

“Where an organ of state is able to provide services, it is suggested that such services should first be procured from organs of state prior to the invitation being sent out to the public.

“The procurement of such services from the state-owned entities, where it is possible, is in the national interest and is fiscally prudent,” Barnes states in his affidavit.

However, Sassa and Dlamini have previously argued that the Post Office has only 2 567 outlets that are predominately in urban areas while the current system offers 10 000 outlets, mostly in rural areas. The two also said their norms and standards state that beneficiaries should not travel more than 5km to a pay point.

By Mahlatse Gallens for News24

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