Tag: South Africa

SA moves to Level 1

Source: BBC

President Cyril Ramaphosa last night announced that, following consultations with health experts and officials from across South Africa, the country would lower its current alert Level 2 to Level 1 from midnight on 20 September.

This means that, as of Monday 21 September:

  • Social, religious, political and other gatherings will be permitted, as long as the number of people does not exceed 50% of the normal capacity of a venue, up to a maximum of 250 people indoors and 500 people outdoors
  • The maximum number of people who can attend a funeral is increased from 50 to 100
  • Venues for exercise, recreation and entertainment – such as gyms and theatres – currently limited to 50 people, will be allowed to accommodate up to 50% of their venue’s capacity
  • The national 22:00 – 04:00 curfew will start two hours later
  • Alcohol will be permitted for on-site consumption in licensed establishments
  • International travel would resume from 1 October. Those arriving in South Africa must present a negative coronavirus test taken within three days of travel.

A further stimulus package was being drawn up to rebuild an economy that has been savaged by the lockdown.

By Mfuneko Toyana for Reuters

Africa’s most industrialised nation has been hit hard by the COVID-19 pandemic, recording the seventh-largest number of cases worldwide, although it has seen fewer deaths than some other badly affected countries.

Analysts polled by Reuters had predicted a 47.3% contraction because of the lockdown restrictions, which were among the harshest in the world.

“This is the first time in history that the South African economy has contracted for four straight quarters,” Statistician-General Risenga Maluleke told a news conference.

The rand fell roughly 1% against the dollar on the dismal data to trade at 16.9325 per dollar.

Joe de Beer, another top official at Statistics South Africa, said that after adjusting for inflation the economy was roughly the same size in the April-June quarter as in the first quarter of 2007.

Most sectors declined steeply except for agriculture, which grew 15.1% in the second quarter from January-March, helped by fruit and nut exports, and better-than-average winter rainfall.

Mining declined 73.1%, manufacturing 74.9% and construction 76.6%. Gross domestic product (GDP) for the whole economy shrank 17.1% from the same period in 2019.

Jeff Schultz, economist at BNP Paribas, said the global impact of the pandemic coupled with the recent return of power cuts by ailing state utility Eskom would hamper any economic recovery.

“It will take a very long time to get to pre-pandemic levels,” he said.

The government expects a GDP decline of at least 7% in 2020, a worrying prediction in a country where unemployment was at around 30% before COVID-19.

Pamela Mutandwa, 37, who runs a roadside vegetable stand in Pretoria, said times were hard. “It was really difficult during lockdown. There were no people buying and I struggled. When I opened in 2009 there were more customers.”

Tlouama Abrama, 31, a petrol attendant, said he was disappointed by the government’s economic policies. “They should be doing more to revive the factories around here so people can get jobs. Their policies are not working.”

Source: Evina

Extensive data collection and analysis has lead to the Paris-based anti-fraud firm Evina determining that one out of every three mobile subscription attempts in South Africa is fraudulent.
South African cellular users are very often subscribed to mobile services without their consent.

After Kenya, South Africa is the African country most affected by fraud that daily fleeces millions from the mobile accounts of cellular users around the globe.

“As Africa’s most advanced economy, it is particularly tragic that South African mobile users are falling victim to subscription frauds that are well managed in many other countries,” says David Lotfi, CEO of Evina.

This when consumers across the globe are under significant financial pressure following the worst of the Covid-19 pandemic.

Fraud is not treated seriously enough by the various mobile payment actors and this can be seen in the fact that 31% of mobile subscription requests in South Africa in July were fraudulent.

This is deeply concerning and the solution is not to block mobile value-added subscriptions by default but to manage the problem with better tools and expertise.

South Africans are mostly at risk from a very basic fraudulent mobile activity, clickjacking.

This is a malicious technique tricking a user into clicking on something different from what the user perceives, thus potentially revealing confidential information.

“Clickjacking is a type of mobile-based fraud that is more than five years old and could be blocked very quickly if local market players took this threat seriously,” Lotfi says.

To a lesser extent, South African mobile users are also targets of a whole range of nefarious applications commonly available for app store download and these include everything from flashlight to wallpaper, pedometer, file manager and video maker apps.

A recent study has highlighted the devastating impact the Covid-19 pandemic and subsequent economic turmoil has had on the people of South Africa.

The study by United Nations Development Programme (UNDP) on the socio-economic impact of Covid-19 in the country highlights the following:

  • The country’s overall GDP is expected to decline by at least 5.1% and up to 7.9% in 2020
  • The number of households below the poverty line will increases as households fall from the lower-middle class into vulnerability
  • 54% of households that have been pushed out of permanent jobs to informal or temporary contracts are likely to fall into poverty
  • As many as 34% of households are likely to exit the middle class
  • The real average monthly take-home pay in the private sector is R14 197, according to BankServ
  • The vast majority of South Africans operate in an informal sector, with salaries closer to R6 000 per month
  • South Africa’s minimum wage is around R3 500 per month
  • South African households were already getting poorer thanks to rising food prices and the general cost of living
  • The middle-high to high-income category only makes up 2.5% of the South African credit active population
  • Middle income made up 9.3% of the credit active population
  • 55.5% of South Africans live below the national poverty line, but that number is likely to grow

By Jan Vermeulen for MyBroadband

Amazon announced in June that it was hiring 3 000 new customer service agents in South Africa. The company was looking for skills ranging from basic computer literacy to technical experts.

These new employees are required to work from home and provide support to Amazon customers in North America and Europe.

This means you needed access to a high-speed ADSL or entry-level fibre connection to your home, and to be willing to work shifts the coincide with North American business hours. Some job listings explicitly state a 10Mbps minimum line speed and that LTE connections are not suitable.

According to Amazon, the addition of these 3,000 permanent and seasonal full-time positions will bring the company’s total permanent workforce in South Africa to 7,000.

MyBroadband recently had the opportunity to interview a successful applicant for one of Amazon’s customer service roles, who spoke to us on condition of anonymity. The interview was conducted in person and we were able to verify the authenticity of the claims made.

Impressive, efficient systems
The first thing our jobseeker noted was that every stage during his application and training process was like clockwork.

Amazon communicated what was required at every step and everything was streamlined for efficiency.

After the application through the Amazon jobs website, there was about a week’s wait before the applicant heard that he had made it through the initial screening stages.

Amazon asked whether he was still interested in the position. If he was still interested, he was informed that he needed to complete an aptitude test.

Aptitude testing
This extensive aptitude test is conducted online and took about two hours to complete.

Amazon tested for fluency in English, and reading and listening comprehension.

It then placed the applicant under pressure by having them listen to a scenario where a customer was complaining about something. The recording may be paused at any moment and they were required to answer questions such as “When was this item meant to arrive?”

As he was listening to the customer complaint, Amazon would also pop up perception questions like “Is this customer happy?”

Gruelling training
Another week after the aptitude test, Amazon responded with a job offer. It contained the conditions of employment, salary, and details on company perks like a medical aid, provident fund, and Internet allowance.

Our customer service associate-in-training said that they were given an allowance of R1 200 which had to be put towards their Internet connection.

His total pay package was around R12 000 per month.

The corporate medical aid was provided through Discovery and the provident fund through Momentum.

After accepting the offer, he received a call from an Amazon manager who congratulated him on his appointment.

Two weeks later, he received an email on a Thursday stating that he would receive everything he needed the following day and that his training would begin that Monday. The email also contained instructions on how to set up his equipment.

On Friday morning, a courier arrived with a Lenovo all-in-one computer, an uninterruptible power supply, and a set of hardware security keys. The computer was configured so it could only be used for Amazon.

On Monday morning at 08:00, our trainee was online with a group of 30 other people, a training officer, and his assistant.

They spent eight hours a day in a rigorous and strict training programme.

“Amazon expects a very high level of self-discipline,” he said. “During training, being absent is just not an option.”

If someone was not online at precisely 08:00 in the morning when training was scheduled to start, it was no small issue. The training officer was immediately on the phone to the absent trainee to find out what was going on.

Long hours, strict self-discipline
Trainees were told that after they completed the programme, their working schedules would be quite rigid.

To serve the North American market, your shift in South Africa would begin between 16:00 and 19:00 in the evening and run for eleven hours until the following morning.

This includes an unpaid lunch hour and two paid 15-minute tea breaks.

When you step away from your workstation to take a break, you must set your status as being on a break. If you couldn’t take your break at the scheduled time because you were finishing up a call, you must note that in the system.

Trainees were also informed that they should prepare for the fact that during the first six months of work they will not be able to swap shifts with other customer service associates.

Performance monitoring
Once you graduate from training and you begin working, Amazon monitors your performance.

However, this is not a fixed number applied to all customer support agents. Amazon makes provision for new recruits to go through a period of improving as they become more familiar with the job.

“Everything is measurable,” the interviewee said. “You set a baseline performance level in that first week.”

As long as you are always improving, Amazon is happy. The company also works hard to try and retain staff, he said.

Exit procedure
The person we interviewed did not end up becoming an Amazon staff member. They bowed out during training for personal reasons, and because they felt they would not be able to multitask at the pace needed to excel at the job.

He explained that during training, he learned that they would be required to look up information related to a customer’s query in the Amazon knowledge base for support agents while on a call, and then proceed based on the guidelines provided.

“It’s extreme multitasking,” he said.

When he informed Amazon that he did not wish to continue, there was genuine concern. They wanted to know if they had done something wrong and whether they could be clearer in explaining what the job entailed so applicants would know exactly what to expect.

He was also caught off-guard when Amazon said they would pay him for the time he spent in training.

“It was truly impressive,” he said. “It would be great if South African companies could operate at this level of efficiency.”

South Africa is in deep financial trouble

Source: MyBroadband

The South African government is spending nearly R50-billion a month more than what it collects in taxes – and the situation is getting worse.

This is the warning from economist Mike Schussler, who said rapidly-increasing government debt is creating a “very, very deep hole”.

Speaking to eNCA, Schussler said the government’s budget reveals that the country is heading to a deficit of between R60 billion and R65 billion per month.

“This means we are spending R2 billion per day more than what we get in income from taxes,” he said.

Schussler said that while COVID-19 and the lockdown has aggravated the situation, the country was already running at a big deficit before the pandemic hit.

The projected deficit for this year was expected to be around R325 billion, but the pandemic has pushed this up to between R710 billion and R800-billion.

The higher deficit is a result of lower tax collection – which is expected to be down by around R313 billion – and higher spending on grants, hospitals, and other COVID-19 related matters.

Schussler said the lower tax collections are also partly a result of the cigarette and alcohol ban, people driving less, people losing their jobs, and lower consumer spending.

Filling the hole
The combination of lower tax collections and higher government spending is resulting in a big debt burden for South Africa.

To fill this hole, the government has to borrow money – which comes at a higher cost because of the country’s recent credit rating downgrades.

“Because of the downgrades our debt is becoming more and more expensive,” said Schussler.

An IMF loan of around R70 billion covers 10% of the expected deficit, which comes at a low interest rate.

This gives the country some breathing room, but big spending cuts and tax increases are still required to make up this deficit.

Even with the loans from the New Development Bank and African Development Bank, the country will still have to raise a lot more money to cover the growing deficit.

“We will have to go back to the IMF, we will have to look at our pension funds, and we most likely have to enter the international markets again,” said Schussler.

“We are in very, very deep financial trouble in the next few years. It is a very difficult hole to get out of.”

The chart below, published by Schussler, shows the government’s monthly budget deficit in recent years.

In addition to the inevitable jobs and livelihoods lost due to the Government’s ban on alcohol, South Africa has also lost R13.3-billion in investments.

SAB

  • SAB has put R5-billion worth of capital investment projects on ice
  • South Africa’s largest brewery is cancelling R2.5-billion in investment for 2020
  • An additional R2.5-billion in investment is being reviewed for 2021, due to the ban
  •  Distell has said that the industry had already lost 118 000 jobs, and projections showed that a nine-week ban now would cost another 84 000 livelihoods
  •  The tax loss from the first six-week ban on alcohol sales came to R15.4-billion
  • If the current ban remains in place for nine weeks, another R13-billion would be lost

Consol

  • Glassmaker Consol has suspended construction of a R1.5-billion glass manufacturing plant that it was due to build in Erkhuleni, Gauteng
  • In additon, Consol has halted R800-million worth of furnace upgrades
  • Consol maintains that the alcoholic beverages industry accounts for about 85% of glass sales, and that the South African glass industry will see a 15% decline over the next 12 months
  • The new manufacturing plant would have added 130 000 tons of glass production to Consol Glass’s capacity
  • It was anticipated to create 120 direct job and approximately 2 600 additional employment opportunities across the value chain

Heineken

  • Heineken, the world’s second-largest beer brewer, has shelved R6-billion in planned investment
  • A new brewery was to be built on the KwaZulu-Natal north coast
  • It was expected to create more than 400 permanent jobs

National Treasury now estimates that job losses could be between 690 000 and 1.79-million due to the impact of the Covid-19 pandemic on the South African economy.

The 690 000 job losses are likely in the event of a quick recovery; the larger figure is a worst-case scenario.

The sectors that will see the largest impact are likely to be:

  • Manufacturing;
  • Construction;
  • Trade;
  • Catering and accommodation; and
  • Financial and business services.

Avis Budget Rent-a-Car, part of the Barloworld Group, announced that a total of 978 employees would be affected by retrenchment, according to a Fin24 article. This is nearly half of the employees of the company.

Meanwhile, the Bidvest Group’s shares fell more than 5% on Monday after the diversified services and trading company warned of possible job losses as a result of coronavirus-related disruptions across its operations.

This is in addition to running list of companies in South Africa who have gone into business rescue, or foresee retrenchments and job cuts.

These include:

  • Phumelela Gaming and Leisure (currently in business rescue)
  • Afarak Mogale and Afarak South Africa (currently in business rescue)
  • SAA (currently in business rescue)
  • SA Express (currently in business rescue)
  • Edcon (currently in business rescue)
  • Comair (currently in business rescue)
  • Tiger Brands
  • Cell C
  • Pam Golding
  • Prasa
  • Flight Centre
  • SAB

Although the South African government has put a number of relief measures in place to help those adversely affected by the Covid-19 lockdown, the structures seem to be overwhelmed or not functioning at all.

The week before last, it was reported that not one of the channels for the application to the Covid-19 Social Relief of Distress (SRD) grant of R350 was functional. More than 4,9-million people have applied for the new grant but on Friday 22 May SASSA’s CEO, Busisiwe Memela-Khambula, confirmed that just ten people had been paid.

The TERS UIF application process caused headaches for many business owners in April. However, applications for the month of May have still not been opened, and the following message is displayed on the website:

A business contacted My Office News with the information that they had received an e-mail stating that:

Companies that are no longer in full lockdown from 1 May cannot apply for this relief fund. This option is only available if your company is still in full lockdown with no operations taking place.

This means that, although many companies will need financial assistance due to a lost of customers or rule changes during Level 4, they will not be able to access it.

The Reserve Bank partnered with National Treasury and large private banks to launch a R200-billion loan guarantee scheme, which aimed to extend loans to businesses with an annual turnover of less than R300-million for operational expenses.

However, businesses have to apply within a number of metrics set forth by the bank in question, and many are finding that the other available relief funds such as SAFT do not cover the salaries of employers, only employees.

By Marelise van der Merwe for Fin24

South Africa is likely to see long-term economic damage and “deep scarring” on unemployment numbers unless urgent reforms are implemented to attract foreign investment and improve ease of doing business.

This is because there simply isn’t enough money available locally for the country’s recovery to be driven by domestic consumption, according to Dr Morné Mostert, Director of the Futures Institute at Stellenbosch University.

Late in April, President Cyril Ramaphosa announced an unprecedented R500 billion support package aimed at mitigating the impact of the coronavirus on South Africa, with Finance Minister Tito Mboweni expected to be ready to table his adjusted budget after 24 June. R130 billion of the package will be supported by reprioritising funds from South Africa’s existing budget, while the rest must be funded externally.

That’s for the current year. The next remains to be seen.

In Mostert’s view, the Level 5 lockdown was initially successful, but the lifting of restrictions has been hamstrung by a focus on minutiae at the expense of a long-term recovery strategy. The key to a recovering job market lies in attracting foreign investment and improving ease of doing business, he argues, “not whether we can or cannot buy open-toed sandals”.

South Africa – like countries across the world – has seen job losses and a reduction in working hours since the start of the pandemic. Estimates for April suggested some 20 000 jobs were shed.

But SA is not alone. Elsewhere, there have been similar or even steeper declines. For the past nine weeks, the United States has filed a record number of unemployment claims, erasing the gains of the last decade and bringing the total to over 38 million jobless.

Economies that have historically boasted the lowest unemployment rates are beginning to waver – from Australia to the UAE and Thailand. Canada’s unemployment rate spiked to 13% in April of 2020 from 7.8% in the previous month. Jobless claims in the UK jumped 70% in April. China’s unemployment rate, described by critics as “suspiciously stable”, has been called into question in recent weeks.

The International Labour Organisation (ILO) has warned that nearly half of the global workforce is in immediate danger of losing their livelihood. That’s 1.6 billion workers worldwide. The first month of the crisis saw an estimated drop of 60% in the income of informal workers globally, while worldwide, over 430 million enterprises faced high risks of “serious disruption”.

This is bad news for South Africa, whose long-term prospects for economic recovery depend to no small extent on its attractiveness as a destination for foreign investment as well as the resilience of its trade partners.

The wellbeing of the US consumer, in particular, has a widespread knock-on effect, says Maarten Ackerman, Chief Economist at Citadel.

“The US is still the biggest economy, and the US consumer is still, to date, the most important consumer. Their consumption spending is significant,” he says. “If they are going to remain sick for much longer, that is going to have a big impact on not only SA, but the whole world.”

China, as a key trading partner for South Africa, has shown some resilience – which is good news, says Ackerman. But South Africa’s trade relationships with its African neighbours are also significant, so the economic recovery of the rest of the continent, as well as implementation of the African Continental Free Trade Agreement, remain critical.

As for the US, its sustained job losses are in line with what was seen during the Great Depression, which is bad news for spending power. Moreover, according to Mostert, the strategic response to Covid-19 in the US has also “created havoc”, with global knock-on effects.

A prolonged recession is more likely than a depression, because a major structural shift in employment is unlikely, Ackerman says – meaning jobs will not be permanently destroyed.

But the concern is that comparing cycles – the Depression, the Recession of 2008, and the coronavirus crisis – indicates that while the current decline is extremely steep, during each cycle, recovery has taken longer.

“Getting 50 million people back into the employment sector will take a lot of time,” he says.

Tough times ahead for SA

South Africa faces its own complexities. Its labour market is less flexible, which has its advantages for the consumer, but can also signal challenges for recovery down the road.

“The US has one of the most flexible economies in the world. They very easily fire people, but hire them again when the economy picks up. Companies can get lean and mean very quickly,” Ackerman explains. This is not true of South Africa, which means there may ultimately be fewer jobs lost, but these could be permanent.

“There are a couple of [estimates] but depending on how long the lockdown continues, we could have 3 – 4 million people losing their jobs that will push unemployment close to 50%.

“Unfortunately, in our case, some of that damage will be more structural,” Ackerman says. “It will be difficult to replace those jobs and get those people back into employment. We entered this in a recession and may lose some companies as a result.”

The other difficulty in South Africa is that many of its people are already struggling financially, employed or not. This bodes ill for both individuals and economic recovery overall.

Credit bureau TransUnion’s Financial Hardship Survey has been monitoring the impact of Covid-19 on consumers across the globe. Its latest South Africa Report suggested that while a comparatively smaller percentage of South Africans had, as yet, been impacted by the loss of jobs than in the United States and United Kingdom, their concerns over making ends meet were already even greater.

The South African report for the week of 4 May noted that while the minority of respondents had lost their jobs, the majority (82%) had had their household income impacted. There was an average budget shortfall of R7 542.90 when paying bills or loans, with the average respondent expecting they will not be able to pay their bills or loans in 7.3 weeks due to financial hardship.

Across the country, no province had fewer than 83% of respondents saying they were concerned about their ability to pay their bills or loans. In Limpopo, a staggering 100% were worried about their ability to make ends meet.

In the US, respondents concerned about making ends meet ranged from 45% – 62%, while in the UK, figures came in at 60% – 65%.

Rough ride

For Mostert, this is one more reason to call for urgent reforms: SA will need outside help in order to recover.

“We don’t predict the future, because that depends on what people decide. But if there is no course correction, we are in for a rough ride,” he says.

This “rough ride”, according to Mostert, which includes a very rapid decline and slow recovery; a sharp increase in inequality; “deep” and “unnecessary” scarring on the job market; total erosion of South Africa’s already poor savings track record; and exacerbated damage to unemployment numbers by the Fourth Industrial Revolution, the effects of which will be accelerated.

Course correction involves urgently focusing on a more business-friendly environment. Mostert cites South Africa’s sliding rankings on INSEAD’s Global Talent Competitiveness Index; it has also slid in the World Bank’s Ease of Doing Business report, dropping from position 32 in 2008 to 84th out of 190 countries in 2019.

“Jobs cannot come from government. That’s impossible,” says Mostert. “What are you left with?

“Business, in all its various forms. Unless you are going to dramatically accelerate a welcoming environment for business, including foreign direct investment, the current future will be utterly undesirable. We need something drastic to attract investment – and it has to be foreign.”

Ackerman agrees. “The trouble is that taxes are drying up, which pushes government into a debt trap. You can only borrow up to a point,” he notes. “It’s totally unsustainable.

“If we can institute some reforms we can start heading for recovery. But if not, then unfortunately we are likely heading for a bailout [from the IMF].”

To survive Covid-19, South Africa ultimately depends on spending and investment from resilient economies, says Mostert. “There is no way SA can pull itself up by its own bootstraps. We can’t do something like inspire consumer spending and hope that gives us a chance. There just isn’t money,” he says.

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