News in South Africa 15th September:
1. Mass exodus of professionals:
South Africa’s tax base is steadily declining as more of the country’s skilled professionals look overseas for greener pastures, says Izak Smit, chief executive of the Professional Provident Society (PPS).
In an interview with BusinessDay, Smit said that the loss of these workers will not only impact revenue collection but also job creation, as many of these individuals develop businesses and generate wealth.
PPS is a financial services firm that caters exclusively to graduate professionals with honours level or higher qualifications. Smit said that around 25% of the group’s clients that left its services in the past year cited emigration as their reason.
This equates to 2,500 PPS clients in the last year alone – while an estimated 9,000 taxpayers in the R750,000+ tax bracket have left the country over the last two years.
Smit’s comments align with Treasury data published by Reuters in August, which shows that the Covid-19 crisis could prove to be a tipping point as more skilled people look to leave the country.
For the first time since the current tax brackets were established six years ago, the country will see a drop in the number of top earners this fiscal year, the data shows.
Revenue from the three highest brackets will fall by 8%, or around R22.6 billion according to previously unreported treasury forecasts.
- The number of taxpayers earning R1.5 million or more will shrink 9.6% for the 2021-22 fiscal year.
- The R1 million to R1.5 million bracket is expected to contract 13%.
- The R750,000 to R1 million rand bracket is expected to contract 1.1%.
Personal income tax accounts for 38% of total tax revenue, far eclipsing corporate tax receipts, and those in the top three brackets represent a third of the total personal income tax base.
2. 20,5mil people living on grants:
More South Africans are dependent on social grants and welfare from the state than in jobs getting a salary, economists note – with as many as 20.5 million people living off grants.
At the same time, only 14.9 million are formally employed. Even with official statistics published by the government, this rings true.
The latest employment data points to 14.9 million people employed and 7.8 million jobless; however, with the extended definition, the jobless number climbs to 16.8 million.
The government is now mulling another basic income grant which will put even more people on the state’s tab.
3. Vaccines reduce risk of death:
Figures from the UK’s Office of National Statistics (ONS) released Monday found that 0.8% of deaths in fully-vaccinated people were linked to Covid-19 between January and July. These figures covered people who died 21 or more days after the second dose.
For comparison, roughly 37% of deaths in unvaccinated people “involved Covid-19” during the same time period, the data showed.
In total, 57,263 fully vaccinated people in England died at least 21 days after their second vaccine dose, and just 458 deaths “involved” Covid-19. Over the same period, there were 38,964 Covid-19-related deaths in unvaccinated people.
Professor Kevin McConway, professor of applied statistics at the Open University, said in a statement to the Science Media Center on Monday that the data showed vaccines were effective at preventing death from Covid-19, but that they weren’t “perfect.”
“Some people do still die of Covid-19 even though they are fully vaccinated,” he said. “No vaccine is 100% effective,” he said, adding that it was important to get both doses.
The ONS data came from census and family doctor health records, considered to be representative of 79% of people aged 10 or older living in England. It didn’t specifically look at variants.
4. IEC claps back at DA:
The Electoral Commission (IEC) has called the DA’s Constitutional Court bid to declare the reopening of the candidate nomination process unconstitutional “premature and entirely speculative”.
In an answering affidavit on Monday, IEC CEO Sy Mamabolo said the party’s urgent application was premised on its views of how the elections should be run and factual inaccuracies.
“The DA’s application arrives in the midst of election preparations which are being undertaken under difficult circumstances during the Covid-19 pandemic, before the commission has even formally decided to amend the election timetable.
“The case is littered with factual inaccuracies and unsustainable allegations. It is insinuated the commission’s determination to reopen candidate nominations was made to benefit certain political parties. This is simply false,” read the affidavit.
The apex court denied an application by the IEC to postpone the election and ordered that the commission determine if it was possible to hold a voter registration weekend before the polls, which it said must take place between October 27 and November 1.
The IEC determined that a voter registration weekend could take place and, as part of this process, reopened the candidate application process.
This gave the ANC a desperately needed lifeline after the party failed to register candidates in several municipalities before the initial deadline, with the party admitting it would lose control or no longer be the official opposition in dozens of councils.
The DA lodged an urgent application to set aside the IEC’s decision. In its papers, filed last week, it argued the decision was unconstitutional and unlawful.
Mamabolo warned that if the DA’s application is upheld, it would open the floodgates for political parties to micromanage decisions of the commission.
“It will be a recipe for chaos and confusion,” he said, adding that elections should be allowed to go ahead on the basis of the commission’s timetable once published.
The commission said it viewed the DA’s bid as an attempt to prevent it from exercising its powers in law.
“But such relief is not warranted on facts. That is because the DA can only speculate prejudice.
“If the DA ultimately believes any decision of the commission rendered the elections unfree and unfair, it can change them after the elections have happened and seek relief then.”
5. Too few female fund managers:
Asset managers are increasingly backing diverse teams but gender parity in investment roles could still be a lifetime away.
While the percentage of women in the Citywire fund manager database has risen from 10.3% in 2016 to 11.8% in 2021, at this rate gender parity will only be reached in 127 years.
That is a key finding of the Citywire Alpha Female 2021 report, now in its sixth year. The report tracks the progress that asset management firms are making in bringing more women into portfolio manager roles.
Fund groups may still be struggling to move the dial on the headline numbers, but the 12-month increase in the overall percentage is the biggest yet and Citywire data suggests asset managers believe diversity works. The number of mixed teams has almost doubled since the first Alpha Female Report in 2016.
Five years ago, just 6.7% of the Citywire fund manager database was made up of mixed teams. That number reached 11.8% in 2021.
In South Africa, the rate of change is less encouraging. In 2019, 10.6% of the local fund managers in Citywire’s database were women. That rose marginally to 10.8% last year, before dropping back to 10.7% in 2021.
The percentage of assets under management run by single woman managers or women-only teams has also fallen. It was 4.6% in 2019, 4.1% in 2020 and 3.9% this year.
It is also notable that not a single large South African asset manager has even 25% female representation at fund manager level. Absa Fund Managers leads this group with 24% of its named fund managers being women.
At Ninety One, 21% of fund managers are women, while Allan Gray shows 17% representation and Coronation 11%.
The only local asset manager with more than five named fund managers to have achieved gender parity is Truffle Asset Management. In its team of six, three are women: Nicole Agar, Sophié-Marié van Garderen and Palvi Kala.
Significantly, Agar and Van Garderen are the only South Africans to make Citywire’s list of top female managers. The pair were AAA-rated at the time the research was compiled.