News in South Africa 16th November:

1. Growing debt problems:

The latest debt index from DebtBusters shows that South African consumers are falling further into financial trouble as people turn to unsecured credit to supplement their paycheques.

Growing debt problems
Image taken by: Tima Miroshnichenko

The group’s third-quarter enquiries show that debt counselling increased by 17% compared to a year ago.

Many consumers are now proactively seeking help as they feel the impact of the end of 2020 payment holidays, said Benay Sager, head of DebtBusters. He added that the after-effects of several nationwide lockdowns and diminished ability to borrow are also being felt.

“It is clear the debt situation of South African consumers has further deteriorated recently. In the absence of a meaningful increase in real income growth, South African consumers continue to supplement their income with more unsecured credit.

“Average loan sizes have increased by over 50% in a few years, and the number of debt obligations has decreased by 19% over the same period – both indicating that consumers are seeking help sooner.”

While the lockdown has impacted all income groups, DebtBusters’ data shows that South Africa’s middle-class have been some of the hardest hit.

For those taking home more than R20,000 per month, the total debt to annual net income ratio is now 145%. By comparison, the average debt-to-net-income ratio is 116% across all income bands.

Looking at the monthly data, those taking home over R20,000 per month need to spend 60% of their monthly net income on repaying debt, the group’s Q3 2021 Debt Index shows.

While debt exposure worsened for all income groups, the worst increases were seen among those taking home R10,000 or more. Their debt to income ratio is 121% or more, the highest Debtbusters have ever recorded for Q3 consumers.

2. Covid tender fraud continues:

The Special Tribunal set up to investigate and prosecute cases related to corruption in the multi-million rand procurement of Covid-19 personal protection equipment by the state is to hear the review application, SIU (Special Investigating Unit) v Pro-Serve Consulting (Pty) Ltd and Thenga Holdings (Pty) Ltd (GP20/2021), on Tuesday (November 16).

The matter relates to the R50 million alleged tender irregularities in regard to the refurbishments and upgrades at the AngloGold Ashanti (AGA) Hospital in Carletonville, Gauteng.

With the advent of the Covid-19 pandemic, the Gauteng Department of Health (GDH) and Department of Infrastructure Development (ID) appointed a contractor to refurbish the AngloGold Ashanti Hospital.

The facilities were to be refurbished and fitted with between 200 and 250 beds. The radiology unit required major refurbishments, including new equipment for the operating theatre unit. The total cost was R50 million.

The GDH and ID appointed and paid Pro-Serve Consulting for the services, which the SIU alleged were “rendered in terms of the impugned transactions”. Thenga Holdings is alleged to have received an amount of R40.8 million in connection with its construction and related works rendered at the AGA Hospital.

Thenga’s access certificate alleged that the completion date of the project was May 30, 2020, such date having been extended by the Department of Infrastructure Development to June 30, 2020.

As at June 18 the refurbishments costs were estimated at some R588 million – more than 10 times the original estimate.

The SIU alleged that:

  • The procurement process was flawed, unlawful and invalid;
  • No consideration was given to the Treasury Regulations and Instructions Notes;
  • No consideration was given to the scope of work;
  • The procurement rules were violated;
  • The appointment of Thenga Holdings was done by a panel whose legal mandate had expired; and
  • No explanation was given for the increase in the costs of the refurbishment from an estimated R50 million to estimate of R588 504 235.43 as at June 18, 2020.

The SIU obtained an interim preservation order interdicting Pro-Serve and Thenga and freezing amounts of R1 706 301.60 and R6 234 365.26 respectively on September 17, 2021.

Both Pro-Serve and Thenga are opposing the review application.

3. Junk food tax opposed:

Businesses have hit back at proposals to introduce a ‘junk food tax’ in South Africa, saying that the additional tax burden would sink many small businesses and franchises.

The Healthy Living Alliance (HEALA) wants South Africa’s sugar tax to be extended to include ultra-processed food and junk food. However, its proposal to The Treasury for its Medium-Term Budget has not gone down well with small business owners, who believe that it will put a dent in their pockets.

According to HEALA, the increased revenue for the state could contribute to higher child support and COVID-19 relief grants, and also contribute to a basic income grant that is being considered by the government. Reporters spoke to several SMME owners, whom all believe that an additional tax will be detrimental for small businesses.

Businesses say it would do untold damage to the economy, with costs already escalating due to Covid-19 and the poor economy.

4. Flight searches and prices rising:

South Africans are eager to travel locally this summer season, according to the latest data on flight searches which shows that current interest far exceeds levels seen before the Covid-19 pandemic.

The world is reopening to international travel. More than 40% of the world’s population is considered fully vaccinated against Covid-19. And although some countries are experiencing a resurgence in infections, despite higher levels of herd immunity, daily new confirmed Covid-19 deaths recorded over the past month are at the lowest levels in 2021.

This easing of restrictions bodes well for travel-hungry South Africans and the country’s embattled tourism sector. A surge in travel queries, flights, and bookings was recorded in October, coinciding with the United Kingdom’s (UK) long-awaited decision to remove South Africa from its prohibitive red list.

Searches for flights from South Africa to Europe shot up by approximately 65% compared to the same period in 2019, according to Cheapflights’ data provided. Interest in flights to the UK increased by 77% and to the United States (US), which recently eased its restrictions on South African travellers, by 55%.

Even greater interest comes from the domestic market, showing that South Africans are keen on local summer holidays, more so than in 2019. Searches for domestic flights are up by about 294% compared to pre-pandemic times, notes Cheapflights.

Travel to coastal cities remains immensely popular, with searches for flights to Cape Town surging by 322% and to Durban by 258% compared to the same period in 2019. But South Africans looking to keep it local this summer season can also expect to pay more, with return tickets up 12% compared to 2019, with the average price at R2,200.

5. Load shedding looming:

South Africa is under constant risk of load shedding, with power utility Eskom dancing around failing equipment, explosions, fires, leakages and a host of technical problems, barely keeping things together.

Poor condenser vacuums, poor coal mill performance, fan vanes saturation, thrust bearing issues, demineralised water shortages, turbine steam leaks, condenser tube leaks, and boiler tube leaks are just some of the faults registered at power stations that recently led to stage 4 load shedding in the country.

All information sourced from articles posted by: BusinessTech, Moneyweb, EWN, Business Insider, and News24.

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