News in South Africa 17th October:

1. Food insecurity warning:

The number of people unable to meet their minimum food consumption needs in South Africa is expected to marginally decline to just under one in two by 2025, according to the World Data Lab.

Food insecurity warning
Photo by Erik Scheel

The firm, which conducted research for Shoprite Holdings Ltd.’s food index, estimates that 49% of South Africans will be food insecure in two years’ time, down from 52% at the height of the coronavirus pandemic in 2020.

The Western Cape, Free State and Eastern Cape provinces are expected to show the biggest progress in addressing hunger.

While “the modelling shows an improvement by 2025, the reality is that in two years’ time, just under half the population will still be struggling with hunger,” said Sanjeev Raghubir, Shoprite’s sustainability and corporate social investment head.

“That’s why we must urgently escalate the rate of people escaping food insecurity. Doing so will improve not only their prospects but that of the country.”

Africa’s largest grocer commissioned the research to draw attention to food insecurity and get South Africans involved in rolling back hunger and poverty, it said in a statement on Monday.

South Africa is the most unequal country in the world for which data is available, according to the Thomas Piketty-backed World Inequality Lab.

2. SA set to be Africa’s biggest economy:

South Africa is set to briefly overtake Nigeria and Egypt as the continent’s largest economy next year, International Monetary Fund (IMF) forecasts show.

The IMF’s World Economic Outlook envisions South Africa’s gross domestic product reaching $401 billion based on current prices in 2024, compared with Nigeria’s $395 billion and Egypt’s $358 billion.

Africa’s most industrialized nation is expected to only hold the top spot for a year before it once again lags behind Nigeria and then falls to third place behind Egypt in 2026, according to the report, which was released last week.   

While IMF data shows Nigeria’s economy has eclipsed South Africa’s since 2018, its fortunes have dimmed along with a decline in the production of oil, and it has been grappling with runaway inflation and a plunge in the value of the naira.

Bola Tinubu has announced significant policy changes aimed at getting the state’s finances back on track since he became president of the West African nation at the end of May, including revamping the foreign exchange system, scrapping costly gasoline subsidies and taking steps to address dollar shortages and boost tax revenue. 

Those measures are causing initial pain in Africa’s most populous nation but are expected to increasingly pay dividends going forward. The IMF sees GDP expanding 3.1% next year, compared with 2.9% in 2023. 

The reforms should lead to “stronger and more inclusive growth,” Daniel Leigh, division chief in the IMF’s research department, told reporters at the fund’s annual meetings in Marrakech, Morocco, last week. 

Egypt has devalued its currency three times since early 2022 as it confronts a foreign exchange crunch, with the pound losing almost half its value against the dollar. 

The government secured a $3 billion IMF package last year that requires a more flexible exchange rate, a move it’s only likely to undertake after the December elections in which President Abdel-Fattah El-Sisi is seeking to extend his rule until 2030. 

The delay has stalled IMF reviews that were initially scheduled for March and September. Successful appraisals could unlock about $700 million in postponed loan tranches, give Egypt access to a $1.3 billion resilience fund and potentially spur major Gulf investments.

The government is meanwhile in talks with the IMF on boosting its rescue package to more than $5 billion, according to people familiar with the discussions, confident it can overcome the hurdles preventing it from accessing support, including addressing concerns over its currency policy.

The implementation of a reform agenda could underpin an economic growth rate of 5% or more from 2026, according to the IMF.

Unlike Nigeria’s naira and Egypt’s pound, South Africa’s rand is free-floating and has lost about 10% of its value against the dollar this year. 

Currency weakness has been stoked by concerns that the National Treasury will miss its budget deficit and debt-to-GDP targets for the fiscal year through March due to increased demands on the state for support and revenue shortfalls, as a fraying transport network and record power cuts curtail economic growth.

The IMF sees South Africa’s economy expanding 0.9% this year and 1.8% in 2024, with the potential to expand 2.5% to 3% faster should it improve the power situation, tackle logistic bottlenecks and institute other reforms. 

3. Medical aid prices spike:

Skirmish with the Council of Medical Schemes (CMS) aside, it is likely that the proposed increases tabled by the five under-fire schemes, including Discovery Health Medical Scheme (DHMS) will be ‘approved’ – a technical administrative hurdle, nothing more.

Discovery Health says the average weighted increase across DHMS plans is 7.5% for 2024. DHMS last week appealed the CMS directive “to cease and retract all communication to members” regarding the proposed changes to contributions and benefits across its plans for 2024. These were announced at the end of last month.

The publicly announced 7.5% average, however, includes some sleight of hand where medical savings accounts (MSAs) on its most popular plans – including Classic Saver and Essential Saver, which together have around half a million members – have been slashed.

Were it not for these sharp reductions to MSA allocations, the contributions for these Discovery plans would’ve seen increases of between 8% and 11% from January.

This would’ve meant an average jump in DHMS contributions of 10.25% (excluding Classic Smart Comprehensive, which has been overhauled and now includes an MSA).

Alexforbes, as an independent healthcare consultant, has published a comparison of the increases announced thus far across the industry.

It is important not to look at these increases in isolation and that a comparison needs to be done including all adjustments from 2020, where the impact of the Covid-19 pandemic on healthcare utilisation across the sector saw little to no contribution increase in many schemes.

Medical aid contribution increases announced so far
Members*Average increase
Discovery Health Medical Scheme1 353 0127.5%
Bonitas Medical Fund340 1196.9%
Momentum Medical Scheme156 4399.6%
Bestmed Medical Scheme100 6899.6%
Medihelp87 26915.97%
Medshield Medical Scheme74 2068.9%
Fedhealth Medical Scheme68 80110.8%
Sizwe Hosmed Medical Fund65 48510.02%
Keyhealth33 840n/a
Compcare Wellness Medical Scheme17 853n/a
Health Squared Medical Scheme16 954n/a
Thebemed11 2499.45%
* As at December 2021 as per the CMS.
Source: Alexforbes

The average increase on Bonitas Medical Fund’s plans is 6.9%, with the risk contribution on its Primary, Primary Select, BonSave, BonFit Select, BonEssential, BonEssential Select, BonStart, BonStart Plus and BonCap plans increasing by 6%. It says these “options contribute to over 70% of new business”.

Lee Callakoppen, Bonitas’s principal officer, says about two thirds of its base, or 227 000 members “will experience an increase below CPI”.

Bonitas notes that plan increases range from between 2.7% to 9.6%. The nearly 10% jumps in contributions are on its three top-end plans, where these range from R5 300 to R9 800 (for main members).

Bonitas says it has increased the allocation to savings on plans, which stands in stark contrast to DHMS.

On BonSave, it says the savings allocation increase is 25%.

Momentum, the third largest scheme by members, says that benefit limits will be “enhanced” by around 5.5% next year, in line with medical inflation, which translates to an average weighted increase across its plans of 9.6%.

Biggest jump

Medihelp has announced the biggest jump in weighted average contribution increases, at 15.97% from January.

It says the “scheme’s adjustment should be set off against the past three years’ average adjustments of 5.8%, -0.45%, and 7.5%, bringing it to an average increase of 7.2% per year over four years”.

It also contends that the “majority of Medihelp’s options are currently priced lowest in the market, which provides a very low base for adjustment and ensures that the product range remains well-positioned despite the increase”.

4. Call for halt to budget cuts:

More than 100 academics, economists, professionals and civil society organisations have signed an open letter to President Cyril Ramaphosa and Finance Minister Enoch Godongwana calling for a halt to all planned budget cuts.

The calls come as SA faces a deteriorating fiscal position characterised by low growth, much reduced tax revenue, expenditure overruns and ballooning debt.

5. Govt worker strike:

Government services, including hospitals, Home Affairs and grant payments across the country could be without technical support on Wednesday (18 October) as thousands of State Information Technology Agency (SITA) employees down tools after salary negotiations reached a deadlock.

The Public Servants Association (PSA) has embarked on a national shutdown of the State Information Technology Agency (Sita), which will impact government’s online services at Home Affairs, SASSA and the Department of Employment and Labour this week.

The group said the shutdown would take effect from Monday, 16 October, following lunchtime picketing held last week.

Workers are striking over wages, with negotiations between unions and Sita deadlocking on an offer of 4.5% against demands of 7.5%.

The PSA represents the majority of employees at Sita.

“The employer continues to show no interest to resolve the impasse. Employees have been mobilised and are preparing to participate in a total shutdown.”

Services at departments such as Home Affairs, Employment and Labour, and SASSA will be affected by the shutdown, it said.

The union said that the shutdown will last until worker demands are met.

“The PSA is conscious of the implications of the total shutdown, which could adversely affect network connectivity, operations in most government sectors, and service delivery. The PSA thus urges the Minister to intervene and instruct the SITA board of directors to improve the salary offer to 7.5%.”

In an earlier notice, the union said that it is planning to follow up the shutdown with a march to the Ministry of Communication and Digital Technologies on 23 October 2023.

“All members of PSA at SITA and their supporters are encouraged to fully participate in the National Shutdown by converging in their workplace entrances and not reporting for duty from Monday 16 October 2023 until their demands are met.

“Employees working remotely are also encouraged to join the picket lines and withdraw their labour to put pressure on the employer,” it said.

All information sourced from articles posted by: BusinessTech, DailyInvestor, Moneyweb, BusinessDay, and Fin24.

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