Tag: South Africa

Source: Supermarket & Retailer

South Africans are truly struggling financially and are prioritising their monthly debt repayments as they battle to make ends meet.

This is according to Debt Rescue CEO, Neil Roets, who said that consumers typically prioritise debt repayments for their homes and cars as these are assets that they do not want to lose to repossession.

However, these repayments also usually have the highest instalment amounts, so keeping them up to date just adds to the financial burdens embattled consumers are already facing, he said.

Roets added that consumers are cutting down on a number of purchases to keep up on their expenses.

“We have seen a lot of belt-tightening happening over the past year, so consumers have started cutting down on many expenses,” he said.

“Most luxury expenses have been foregone, and purchases such as dining out and takeouts are no longer part of budgets, to keep up with debt repayments and put food on the table.

Consumers typically prioritise debt repayments for their homes and cars as these are assets that they do not want to lose to repossession.

However, these repayments also usually have the highest instalment amounts, so keeping them up to date just adds to the financial burdens embattled consumers are already facing, he said.

Roets added that consumers are cutting down on a number of purchases to keep up on their expenses.

“We have seen a lot of belt-tightening happening over the past year, so consumers have started cutting down on many expenses,” he said.

“Most luxury expenses have been foregone, and purchases such as dining out and takeouts are no longer part of budgets, to keep up with debt repayments and put food on the table.

“Many consumers are resorting to credit in the form of store cards, credit cards or payday loans to put food on the table.”

Roets said this was of great concern as it shows that South Africans are taking on debt to cover day-to-day expenses.

“Day-to-day expenses that consumers are taking debt for includes food, clothing, electricity and fuel for transport,” he said.

“But there are cases where people are taking up debt to repay other debt, or a new payday loan shortly after the previous one was repaid, placing them in an even larger debt spiral.”

Mustek Limited, one of the country’s largest assemblers and distributors of personal computers and complementary tier 1 ICT products, has officially put to an end to its 17-year long distribution agreement with NEC Visual Display Products in South Africa. This includes the large format display panel products and the projector range.

Speaking about the termination, Mustek brand executive Trevor van Zyl says: “The decision to terminate the agreement is merely a result of Musteks continued effort to maximise its profitability to stakeholders and rationalise its product offering to resellers and the channel with its existing range of visual display products including tier 1 brands, Epson, Philips, Samsung, Acer and Mecer.”

Van Zyl also clearly stated that this termination does not affect the NEC Server business at all.

According to Van Zyl, all the current NEC stock in channel will still be fully supported and all service and warranty commitments will remain in place.

Now Eskom is selling electricity to Zambia

By David McKay for Mining Mx

Zambia is to import 300MW of electricity from Eskom, the South African power utility, for six months in order to ease shortages, said Reuters.

Citing Webster Musonda, MD of Zambia’s electricity company, Zesco, Reuters said imports would begin on 1 October and would cost about $22m per month. “The negotiations have been concluded and we have an offer on the table. We will spread the cost of importing this power to our customers,” says Musonda.

Africa’s second largest copper producer, Zambia has a power deficit of more than 750MW because of low water levels at hydropower dams, said Reuters. Zambia last week announced it would increase the hours for power rationing as water levels continued to fall.

Zambia has historically priced electricity below the cost of production through subsidies. Only in recent years has the country started to gradually raise prices.

In 2017, the country’s energy regulator approved a 75% price hike for electricity retail consumers and introduced a flat 9.30 US cents per kilowatt hour tariff for mining companies, said Reuters.

Zambia’s president, Edgar Lungu, said in June the country was not slipping into a sovereign debt crisis. “Zambia is not in a position of a crisis,” he told Bloomberg News. “When you find that you are being strangled by debt, you hold back and see how you can realign your position so that in the end you continue being alive, you don’t suffocate.

“That’s where we are now,” he said.

According to the International Monetary Fund, Zambia is growing at the slowest pace in two decades. A drought has lowered water levels at hydroelectric dams whilst earnings from copper – its main export – have slumped following a decline in metal pricing.

By Arnold Zafra for Reclaim The Net

Affidavits and other documents of former State Security Agency Director-General Arthur Fraser reveal that the South African government has been conducting mass surveillance on all communications in the country. This was filed in 2017 during the court case on the South African nonprofit investigative journalism organization, the amaBhungane Centre for Investigative Journalism.

Interestingly, the mass surveillance has been happening since 2008. In the said affidavit, South Africa’s State Security Agency said that the Signal Intelligence collection process is formed by the National Intelligence Priorities and this includes imminent and anticipated threats. The surveillance was supposedly designed to cover information about organized crime and acts of terrorism. It even involves surveillance on food security, water security, and even illegal financial flows.

The report also revealed that the South African government has done bulk interception of Internet traffic by way of tapping into fiber-optic cables under the sea. What is not clear though is whether the surveillance covers all Internet traffic or limited only to some of the fiber cables.

The SSA said that the automated collection of data was specifically geared for foreign communications that pose threats to state security only. However, even the SSA admits to the fact that it will require human intervention to determine whether any communications that pass through the fiber cables are foreign or not. Hence, it would be difficult to distinguish between foreign and local communications.

Given that information, it is clear that the SSA has been collecting data and communications of South Africans without permission. This is considered an unconstitutional and illegal activity in the country. Unfortunately, the SSA is not worried about it and even commented that such surveillance is a common practice internationally.

While this is maybe quite alarming, it seems that the SSA is not bothered at all since it has been accused of widespread and indiscriminate surveillance back in 2017. amaBhungane even started legal proceedings after they’ve found out their editor’s communications were being recorded for six months. This resulted in the widespread revelations about widespread indiscriminate surveillance conducted by the SSA in South Africa.

Source: A News
Image credit: AP

South African police on Monday arrested dozens of people following looting in Johannesburg and protests in the transport industry linked to a wave of anti-foreigner sentiment. At least 41 people were arrested after hundreds of people marched through Johannesburg’s Central Business District (CBD), plundering shops and torching cars and buildings, the police said in a statement.

Looting and violence spread across several neighborhoods in South Africa’s major cities of Pretoria and Johannesburg on Monday, after a spate of overnight attacks that appeared to target foreign-owned shops.

At least 50 shops were looted and burned early Monday in the southern Johannesburg suburbs of Malvern and Jeppestown. Police fired rubber bullets at looters as burnt cars were stranded in the roads as violence grew.

Officials dismissed reports that the ongoing attacks were xenophobic and that foreign-owned shops were targeted in the violence, insisting they were opportunistic crimes.

“Xenophobia is just an excuse that is being used by people to commit criminal acts,” Police Minister Bheki Cele told the media on Monday afternoon. “It is not xenophobia, but pure criminality.”

Cele said the government’s first priority was to deploy more police officers to the affected areas.

Police arrested 41 people for the violence in Johannesburg, while 8 others were arrested in Tembisa township, east of Johannesburg, and one person arrested in the capitol Pretoria, police said.

On Monday, a pamphlet circulating on social media, seen by The Associated Press, encouraged South Africans to chase foreigners out of their communities.

The pamphlet, attributed to a group called the Sisonke People’s Forum, accused foreigners living in South Africa of selling drugs and stealing jobs, both common refrains during the regular flare-ups of violence against foreigners in the greater Johannesburg area in recent years.

Monday’s violence follows similar incidents in Pretoria last week, in which protest led by taxi drivers saw several foreign-owned shops looted and torched.

According to IPG Mediabrands’ specialist digital agency Reprise, South Africa’s e-commerce industry, while still in its infancy, is showing strong growth thanks to high mobile penetration, secure payment options and changing spending habits.

Natasha Courtney, social media manager at Reprise South Africa says: “Currently only a quarter of South African retailers are spending through digital channels but with more of the population shifting their behaviour and budgets to online shopping, more retailers are making their products and services available online all the time.”

Women especially prefer interactive and easy-to-use options that allow them to share their shopping experiences with other users, and to get feedback and user ratings about the products or services they’re interested in purchasing. “Out of the 39% of women who are actively shopping online in South Africa, there was one predominant reason they enjoyed shopping this way – convenience,” says Courtney.

Digital shopping platform ThinkOver says that 89% of women will wait for an item to go on sale before purchasing. More than half of respondents (55%) said they continuously check a retailer’s website for sales while 58% monitor their inboxes for sale alerts. What’s more, 75% of women said they get upset when an item they wanted to buy went on sale and they weren’t aware of it.

When it comes to preferred payment terms, 54% of South African shoppers like to pay cash on delivery. When asked about debit card payments, 52% of consumers preferred this method – quite an even split. “Loyalty programmes are a big part of a woman’s shopping experience with the study finding that 80% percent of women belong to store loyalty programmes,” she says. “And we’re spending a lot of time online – the majority of female shoppers spend an average of an hour a day looking for great deals before we buy.”

For South African female consumers, the three most popular categories of online purchases are clothing, entertainment and education, and tickets for events. Over 75% of women stated that they go online and choose what they want to purchase before they go out, suggesting that most purchases are pre-meditated and not a spur of the moment decision.

“Pick n Pay’s integrated annual report for 2018 showed a 70% increase in its customers visiting their website from a mobile device since they launched their online grocery shop,” says Courtney. “But there are some down sides too – when purchasing clothing online, some women say that the clothing sizes are incorrect on delivery and the return policies and overall service turnaround times are the areas that need attention from retailers.

Poor user experience on websites is another deterrent to online shopping.

Mobile technology is transforming e-commerce in Africa, and consumers are actually more likely to have a mobile device than a bank account,” she says. “South Africans are also becoming more comfortable with mobile shopping due to, for example, easy-to-use apps for ordering car rides or food becoming more commonplace.”

This research shows that the online shopping industry is growing and is set to grow even more in the coming years. It is also clear that consumers will choose online payment partners they can trust, and that provide peace of mind that the security of their financial information will be a priority.

“For now, traditional shopping habits still dominate in South Africa but with almost half the population set to make an online purchase in the next year, it is clear that the ecommerce market has huge potential and will continue to grow year on year. It’s hugely exciting for retailers and consumers alike!”

What unemployment looks like in South Africa

South Africa’s unemployment rate is getting worse. The latest stats from Stats SA, as well as the opinions of leading economic and labour experts, paint a very dire picture:

  • The unemployment rate increased by 1,4 percentage points from 27,6% in the first quarter of 2019 to 29,0% in the second quarter of 2019
  • The number of people unemployed grew by 455 000
  • The number of people employed grew by just 21 000
  • Government’s failed Industrial Policy Action Plan (IPAP) was supposed to create 350 000 manufacturing jobs
  • 320 000 manufacturing jobs have been lost since 2008
  • Gang violence on the Cape Flats is a direct result of the loss of jobs in the textile industry in the areas
  • 6,7-million people are currently unemployed in South Africa – the size of the entire country of Bulgaria

According to a Business Tech article published recently, chief economist at Efficient Group, Dawie Roodt believes that state spending has increased relentlessly since 2009, at a time when tax collections collapsed – and that the South African economy “doesn’t have a long time”.

“Even if we can somehow wave a magic wand and get rid of all the corruption and incompetence in the state and SOEs overnight, the perilous condition of the state’s finances will need an extraordinary attempt to save us from further economic collapse,” Roodt was cited as saying.

South Africa’s faltering economy can be attributed to:

  • Eskom’s dire financial results, with a record reported loss of R20.7-billion
  • The potential for load-shedding making a return in late August
  • The latest unemployment data: the Quarterly Labour Force Survey for Q2 2019 showed that the unemployment rate increased by 1.4 percentage points from 27.6% in the first quarter of 2019 to 29% in the second quarter of 2019
  • Rumours that international ratings agency Moody’s could downgrade South Africa’s sovereign debt to junk status abound
  • A collapse of fiscal accounts
  • Lack of economic growth – it needs to be at 6%

There are a few ways to remedy this, including:

  • Increasing taxes, such as VAT, by 11 percentage points will get in approximately R250-billion
  • Cutting state spending by a similar amount, and do away with cash-heavy initiatives like the NHI

For many South Africans, retirement is not the life of leisure and financial freedom that it’s made out to be. In fact, the majority rely heavily on income from a salary because their pension income is insufficient to support them.

This is the startling result from the 2019 Old Mutual Savings and Investment Monitor, which has included this audience in its research for the first time.

This annual study, now in its eleventh year, tracks shifts in the financial attitudes and behaviour of South Africa’s working metropolitan population. Criteria for inclusion of retirees into the study, which was released today in Sandton, was that they receive a monthly income in some form of at least R15 000.

“Including this demographic into our study reveals the impact that many households suffer because they are financially under-prepared for their retirement,” says Lynette Nicholson, research manager at Old Mutual. “While one’s sunset years are supposed to be a time to kick back and enjoy the pleasures that life has to offer, this does not appear to be the case for many of those we surveyed. What our study shows is that as many as 92% continue to work because they are dependent on additional income to make ends meet.

The monthly contribution from a pension for nearly 80% of people makes up only 27% of their income, with other investments or savings contributing only 7%.

Nicholson says this highlights the importance of proper financial planning in one’s productive years. For many, a company pension fund is proving insufficient to support them in retirement. She says it is therefore essential to speak to a professional financial adviser who is able to help consumers navigate along a path that reduces this financial pressure later in life.

The survey results show that half of retirees are working for an employer, 36% have started a business post-retirement, while 13% have continued to be self-employed or taken up a position as a consultant.

An important context to the results is that 53% of retirees are still supporting dependent children and or grandchildren, of which 41% are supporting dependents under the age of 12.

A further 9% of respondents are supporting parents or even grandparents, with those most under pressure (26%) being classified as the Sandwich Generation because they are squeezed between supporting older as well as younger generations.

It is no surprise then that retirees are actively cutting down their expenses in order to cope financially. Those polled in the survey are tightening their belts by spending less on clothing and shoes (45%), holiday and travel (41%), eating out and entertainment (39%), electricity and water (38%), entertaining at home (37%) and cell phone air time (36%).

Similar to the results from the non-retiree market, nearly two-thirds of their income is directed toward living expenses, with 14% going to savings. Understandably, the proportion committed to insurance and medical (10%) is double that of non-retirees.

The vast majority of retiree households – 83% – have an emergency fund of some sort. Nearly 80% hold this in a bank savings account, with 35% having this unbanked or in cash. Amongst the Black respondents contributing to at least one stokvel per month 29% have their rainy-day fund in a stokvel.

Most surprising of all, is that 14% admit to having a stash of cash that their spouse or partner is not aware of.

“The lack of preparedness for retirement could be measured to some degree by only 4% of respondents leaving their pension or provident fund lump sum intact and opting to receive a monthly pension,” Nicholson says. “This is the ideal situation as these pensioners should be better equipped over the long term to survive financially.”

“The 21% of respondents who took the entirety of their pension in a lump sum are potentially worst prepared for the future. And the 75% who took a portion as a lump sum and the rest as a monthly pension made a far wiser decision.”

She adds that households that manage to reduce their indebtedness in the later stages of their life are best prepared to see through their retirement in relative comfort.

It is therefore somewhat surprising that 49% of respondents have a credit card and 51% a store card. The 23% who still have vehicle finance should also be concerned about carrying this cost in their retirement.

“Not only is it prudent to reduce monthly expenses when in retirement, but severe financial stress can be reduced by having a long-term savings plan and outlook,” Nicholson says.

Source: Old Mutual

SOE bailouts loom in South Africa

By Gaye Davis for EWN

Finance Minister Tito Mboweni said cash injections for state-owned entities like the South African Airways, the South African Broadcasting Corporation (SABC) and Denel wouldn’t be handed over all at once but in chunks, as certain conditions are met.

Mboweni was on Tuesday replying to debate on the Appropriations Bill, which was before the National Assembly.

The Appropriations Bill provides for budget allocations to all departments and entities and was tabled by Mboweni along with his February Budget.

It included provision for R3.2 billion for the cash-strapped public broadcaster.

The bailout money for the SABC, Denel and SAA would come from the contingency reserve account but Mboweni said it came with strings attached.

“We would not just make that available tomorrow, it would be a mistake but we will release in chunks as certain conditions precedent are met, to make sure there’s progress in improving the organisation.”

Mboweni said chief restructuring officers for each entity would be announced on Wednesday. They would work with the management of the SABC, SAA and Denel to get them back on track.

The minister has warned that the country’s debt to GDP ratio was at an “unacceptable level”: “Thus providing the basis for a serious crisis in the country.”

He said financial management needed to be improved across government and people needed to accept the principle of paying for the services they use.

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