News in South Africa 15th September:
1. 8.5mil vaccines to be destroyed:
The government plans to destroy 8.5 million doses of the Covid-19 vaccine produced by pharmaceutical company Pfizer at the end of October.
This, some experts said, casted a damning spotlight on how South Africa’s Covid-19 vaccination campaign had missed the mark.
The situation also raises questions about the fate of a further 10.1 million stockpiled doses of the Johnson & Johnson vaccine that will expire between June and September 2023.
South Africa’s rate of vaccine doses administered per day has dropped to a fraction of its peak last year – even though a large segment of the population has still not been vaccinated.
South Africa’s fully vaccinated population, according to Our World in Data, stood at 33% as of September 2022.
It is far off the initial 70% target set at the start of the vaccination drive early in 2021. By comparison, Rwanda reports an 83% fully vaccinated population, Botswana’s vaccinated population is reported to stand at 66%, and Mozambique’s at 42%.
Wasted resources?
Destroying the vaccines in October may well be classified as wasted resources, but the financial value of the potential waste is hard to quantify.
The government will not disclose the cost of procuring the vaccines, citing “contractual agreements”.
Mohale said it had to be factored in that 7.9 million doses of the Pfizer vaccine, out of the 39 million doses received by South Africa, were a donation from the US government.
In April 2021, then-health minister Zweli Mkhize told Parliament both Johnson & Johnson and Pfizer were selling their vaccines to the country at US$10 per dose with no refunds or cancellations permitted.
At that pricing, the cost in wasted vaccine doses come end October will run into the tens of millions of dollars.
Mohale said the “environmentally approved” disposal would come with its own price tag, adding estimates were “R18 and R25 per kilogram of waste disposed and a tray of 1 170 doses weighs approximately 1.2 kilograms”.
Other options
The department said it was trying to extend the October expiry date by three months but was awaiting SA Health Products Regulatory Authority (SAHPRA) approval.
It has also tried to offload the 8.5 million near-expiry vaccine doses to other countries.
Mohale said the government had approached the African Union and COVAX facility.
The challenge though, he added, was any recipient country had to agree to the “no-fault compensation scheme”, which indemnified manufacturers in the event of any adverse events due to the vaccine.
2. Further interest rate hikes:
The South African Reserve Bank will keep its foot firmly on the pedal, with broad price pressures prompting a 75 basis-point interest rate hike and a hawkish statement next week, 22 September, according to Jeff Schultz, senior economist at BNP Paribas South Africa.
“We expect further hikes to follow, with a 7.00% terminal rate to be reached in January 2023,” he said in a note on Wednesday (14 September).
This will deal yet another hammer blow to consumers already buckling under the strain of rising living costs.
Adrian Goslett, regional chief executive of RE/MAX said that interest rates are beginning to resemble pre-pandemic levels of around 10% (prime), meaning that long-term homeowners will be accustomed to rates at these highs.
“My concern is around the many first-time home buyers who entered the market when interest rates were at an all-time low and who might be unfamiliar with the fact that interest rates change often over the span of a twenty-year loan term. For these kinds of homeowners, I would encourage them to do the necessary repayment calculations ahead of the next MPC (Monetary Policy Committee) meeting to make sure they can afford the higher repayments.”
Schultz said that the bank’s above-consensus view reflects rising unit labour costs, sticky two-year inflation expectations and the prospect of rand weakness on a return to twin deficits. “The risks to our view are tilted to the upside, with the possibility of higher rates into next year if core pressures prove more problematic than we already expect.”
3. Cape Town recovery:
Cape Town’s inner city is recovering from its pandemic-induced trouble, with retail business expected to return to 2019 levels by the end of the year.
Central business districts (CBDs) the world over were severely impacted by Covid-19, with offices closed as staff worked from home and entertainment venues shuttered amid social-distance restrictions. Hotels struggled to fill rooms because of travel bans, while stores and sit-down restaurants saw a drop in foot traffic as customers opted for online shopping and takeaways.
The Cape Town Central City Improvement District (CCID) – covering 1.6km², stretching from Buitensingel to Nelson Mandela Boulevard and from Buitengracht to Canterbury Street – wasn’t spared.
More than 100 retail businesses within the central city closed in 2020. The number of operational businesses across all sectors decreased by more than 14%, with retail, the biggest causality, joined by the likes of financial institutions, travel and accommodation, architecture, and advertising as others hardest hit.
Vacant office space in the Cape Town CBD climbed to almost 15%.
Despite recurring waves of infection and fluctuating lockdown levels in 2021, Cape Town’s inner city saw some improvement. This recovery has been detailed in the latest State of Cape Town Central City Report (SCCR) released by the CCID on Wednesday.
The CBD gained a total of 135 businesses in 2021, with retail accounting for more than 27% of these. The return of coffee shops, cafes, cell phone stores, kiosks, barber shops, restaurants, bars, and takeaway outlets are some of the leading contributors to this recovery in the retail segment.
Despite being around 6% lower than pre-pandemic levels at the end of 2021, the city’s retail segment is expected to make a full recovery by the end of 2022. This is supported by Sandra Gordon, SCCR research economist, who provided more recent data, up to the third quarter of 2022, on retail’s recovery.
By the end of the third quarter, a total of 1,208 retail businesses were operational in Cape Town’s inner city, representing a recovery of almost 98% compared to 2019 levels.
“We’re fairly confident that, by the end of this year, we will be back at 2019 levels,” said Gordon during the launch of the latest SCCR.
4. SA Express flies no more:
State-owned entity (SOE) SA Express will never take off again.
On Wednesday the South Gauteng High Court granted the final liquidation order, which was handed down without opposition.
SA Express was placed under provisional liquidation in April 2020, after the regional airline faced grave financial trouble, which at some point saw it unable to pay employee salaries.
Several attempts were made to try to rescue the airline from its financial woes, but none were successful.
Market impact
Commenting on SA Express’s exit, SA Flyer magazine editor Guy Leitch says the airline’s official exit from the market will not have any real impact on the sector, as the airline has been out of the game for a long time.
“The airline went into provisional liquidation back in April of 2020. It hasn’t been flying for over two years, so the market has filled the gap. Other airlines, particularly Airlink and Cemair, have rapidly stepped into the gap left by SA Express.”
“In fact in many senses Airlink and Cemair were already competing on the same routes anyway, so there hasn’t been any loss of air connectivity flying to South Africa and the market won’t feel it at all,” he adds.
5. Impact of wealth emigration:
The loss of wealthy South Africans to emigration is becoming one of the biggest worries for insurers in the country, who are losing inputs to their savings pools as a result.
Momentum Metropolitan CEO Hillie Meyer said that as the wealthy leave the country, the remaining client base is under more pressure as fewer people can afford savings and retirement products.
Industry experts have raised red flags around the country’s richest leaving.
All information sourced from articles posted by: News24, BusinessTech, Business Insider, Moneyweb, and BusinessLive.
