Tag: South Africa

When the going gets tough … the marketing budget gets slashed. It’s an age-old truism that marketing activities are among the first to be cut back during austere times. It’s also often the wrong thing to do, said Nona Koza, Business Partner at Oliver South Africa.

“It’s a mistake that brands make worldwide. Research shows the contrary is true: if you keep up your brand activity during austere times, when the economy swings up again you make a lot more money. The reason why is something we often forget: consumers buy a value. It’s a promise of what that brand is going to deliver. In tough times, when the brand becomes less prominent, it comes across as a lack of empathy. Your customers are struggling – where are you?”

Customers, just like companies, are more frugal and value-conscious when the economy is down. So, it is ironic that by underplaying your brand during such periods, you are taking important signs of confidence away from your customers. Hence why cutting back on brand positioning as a cost-saving measure is often self-defeating.

But slashing budgets need not be the only strategy. Hard times are an opportunity to revisit marketing strategies and ask if there is a better way to do things – and yes, there is. Through an on-site approach, organisations can radically improve their marketing activity. This is crucial for the above considerations: to keep customers close in a tough economy, you want a marketing approach that operates on close proximities and immersion with them.

“What you want to pursue is customer retention,” explained Koza. “How are your customers using your products? Who are your best customers? How do you reach them more directly? For example, the cost of one billboard can cover several breakfast events with key customers. The key thing here is targeted customer engagement and much more face to face interaction.”

Targeted engagement is just one side of this strategy. The other is to develop an agile marketing pipeline that is engaged with the business. Brand activities should align with business strategy and expectations. If your marketing people are not there in the trenches, meeting customers alongside other staff, grasping the roadmap and moving with its requirements, your branding efforts will struggle.

External marketing agencies are often too removed from the business coalface to achieve this. Internal marketing can, however represent an incredible cost centre. This challenge has given rise to a third model – the on-site agency.

“Unlike an external agency, an on-site agency works at the customer’s premises,” Gabrielle Gray, Executive Creative Director at Oliver South Africa explained. “Its people are there to engage with the business at every level – from chatting at the water cooler to sitting in on important meetings. And unlike internal agencies, an on-site agency manages marketing operations such as talent acquisition externally. You get the best of both agency models, but without the drawbacks.”

Oliver is pioneering the on-site agency model. It works with customers to create internal teams from Oliver’s own ranks, based at the customer’s premises to ensure the types of engagements described above. Complementary to any other internal or external marketing functions, on-site agencies improve delivery times, move with the customer business, help align marketing with business objectives, and brings the nuance needed to woo the business’ clients.

In difficult times, such a personal touch is important. Customers want to see it from their brands, and those brands need it from their agencies. Cutting back on brand positioning is not the right strategy during tough times. But branding can be done differently: customer-focused touch points and engagements, pop-up events, tailored digital messages – these are crucial tools. The on-site approach offers significantly better engagement and brand performance at the budgets of traditional marketing, since it works intimately with the organisation to become on-premise brand partners and it can leverage creative resources like no other.

“Traditional approaches do work for some companies,” said Gray. “However, what we find is the immediacy of being on-site, a client being able to walk over to us and say, ‘I’ve had this idea, how can we execute it? What do you think?’ – this is a very good way to deliver on business objectives. As a result, we understand the customer’s business better and, in turn, the customer is more involved with brand activities. ”

South Africa’s economy is in bad shape

Source: FNB

The Medium-Term Budget Policy Statement (MTBPS) is an update by the National Treasury of the South African government’s financial health relative to what was proposed in the main Budget Review tabled in February.

In his opening remarks Finance Minister Tito Mboweni presented an Aloe ferox to the House, which he highlighted had survived a bitter cold winter during which the ground had become hard.

The Minister likened this plant to the toil that the average South African has been enduring through these challenging economic times.

While the 2019 MTBPS provided a reasonable framework given the challenging circumstances, Minister Mboweni emphasised that the timely implementation of much-needed structural reform was the silver bullet that would provide the fundamental support required for the South African economy to grow meaningfully and sustainably.

In sum, the MTBPS highlighted that chronically poor economic growth is putting pressure on tax revenue collection, while expenditure pressures continue to mount as the government continues to offer assistance to ailing state-owned entities (especially Eskom). Indeed, the combination of these factors has put the government between a rock and a hard place, as sovereign debt continues to rise at increasingly unsustainable levels.

Highlights of the budget:

  • In line with expectations, there was a material deterioration in the fiscal deficit. The estimate for the main budget balance widened to an average of -6.2% of GDP in 2019/20, compared to the -4.7% estimate from the 2019 Budget Review.
  • There were no announcements of tax increases. The Treasury acknowledged that tax measures implemented in recent years have not translated into stronger economic growth. However, given the severity of revenue under-collection, they will still consider additional tax measures in the 2020 Budget Review.
  • Encouragingly, the expenditure ceiling (which excludes Eskom) was lowered for this year and the next two years.

Key takeaways:

  • The reaction of the rand has been largely negative, with the R186 bond yield spiking by roughly 16bps from yesterday’s close on release of the budget.
  • A wider fiscal deficit combined with a higher debt-to-GDP ratio through the forecast horizon will be credit negative for Moody’s sovereign rating decision. However, we remain of the view that South Africa will maintain its investment grade rating status, although the possibility of being placed on a negative outlook has increased.
  • Equity prices have also been adversely affected, with the JSE All Share Index falling by approximately 0.3% from yesterday’s close. In all, much needed structural reforms that lend support to lifting potential economic growth and consequently equity prices will need to be announced in the February 2020 Budget Review.

Public forces SABC, Dstv to reach rugby deal

Source: IOL

A sponsorship deal with Heineken will allow the SABC to broadcast the Rugby World Cup final match between SA and England live across 11 SABC radio stations as well as on television.

Earlier this week, the broadcaster announced that, following an agreement with pay-channel Supersport, who owns the broadcasting rights to the 4-yearly rugby showcase, Saturday’s highly-anticipated clash would be broadcast on SABC 2.

This follows a public outcry that many South Africans would not be able to watch their team in the final, due to not having access to Dstv and other streaming platforms.

Additionally, the SABC will also broadcast the third-place play-off match between semi-final losers New Zealand’s All Blacks and Wales that will be played on Friday November 1.

The SABC announced Heineken as the official sponsor of the broadcast, and a partner in bringing the historic final match to the broader South African public.

The radio stations which will broadcast the match are: RSG; Radio 2000; Ukhozi FM; Umhlobo Wenene FM; Thobela FM; Motsweding FM; Lesedi FM; Ikwekwezi FM; Ligwalagwala FM; Phalaphala FM and Munghana Lonene FM, with live updates on SAFM.

Fans can watch a live build-up to the third place playoff and Rugby World Cup final on SABC 2 from 10am on Friday and Saturday respectively with the matches kicking off at 11:00.

SA, UK strike post-Brexit deal

Source: Supermarket & Retailer

The ANC’s Minister for Economic Development, Ebrahim Patel, has concluded a groundbreaking new trade deal with the UK, ensuring all existing trade arrangements and more have been cemented prior to the UK’s departure from the European Union (EU).

With the prospects of a no-deal Brexit having risen significantly in recent months, the onus has been on the UK to engineer new trade deals with partners across Africa and the rest of the globe in the event of a disorderly exit from the EU and immediate trade on World Trade Organization (WTO) terms.

The spectre of a no-deal Brexit has been the elephant in the room in terms of the financial markets for several months, with the pound looking increasingly weak against both the US dollar and the euro.

However, the pound has also become a forex market of interest among investors option trading in South Africa who are already speculating on the future price of sterling in the event that Prime Minister Boris Johnson’s new Brexit withdrawal agreement bill is approved by Parliament. Put options are also a useful hedge for those with ‘long’ positions on sterling in case a no-deal Brexit happens out of the blue, causing the pound to crash.

As the UK became South Africa’s fourth-largest export market in 2018, it was imperative for the South African government to have clarity and certainty as a Commonwealth trading partner, regardless of the Brexit outcome. Minister Patel has confirmed that the new trade agreement is effectively a “rollover” of the terms of trade in their existing European Partnership Agreement, which will enable “seamless” and “uninterrupted” trade to continue post-Brexit.

This new deal is essential for the protection of up to 175,000 jobs that have been created as a consequence of increased trade links between South Africa and the UK. It’s now a marketplace worth an estimated R142 billion to the South African economy.

What does this new trade deal offer for South Africa?

First and foremost, all automobiles assembled in South Africa can continue to be exported to the UK with tariff-free access. The new arrangement also extends the nation’s tariff-free quota for unrefined and refined sugar, canned fruits and wine – the latter extending to a whopping 70 million litres of South African wine. This is very good news for the Western Cape given that wine was its most influential export to the British Isles in 2018, valued at R1.89 billion. The new agreement also extends South Africa’s quota levels for specific duty-free products, whilst safeguarding the agricultural sector’s health and safety standards for all new products.

The nation’s existing trade terms on EU livestock will also remain applicable to British poultry, until March 2022 at the earliest.

This new trade continuity deal doesn’t just benefit South Africa before the Brexit deadline, it also offers certainty to the five other nations on the African continent within the Southern African Customs Union and Mozambique (SACU+M). The preferential trade terms will provide continued access to UK markets for Botswana, Lesotho, Namibia and Eswatini too.

In total, the trading relationship between the UK and the entire SACU+M was worth R184.3 billion in 2018. Consumers in the UK will continue to benefit from greater choice of goods exported from SACU+M, while the SACU+M will also benefit from UK exports of automobiles, machinery, appliances and much more.

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!”

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