News in South Africa 23rd December:
1. Over the peak of fourth wave:
South Africa has crested the fourth wave of Covid-19 infections driven by the spread of the omicron variant.
CSIR researcher Ridhwaan Suliman said that the country passed the peak in about half the number of days it took to get past previous waves.
South Africa’s new daily infections peaked in the 20,000s in early December. The latest stats show that the country had 15,424 new cases on Tuesday, 21 December.
Despite remaining on adjusted level one lockdown, South Africa’s hospital admissions only reached 8,019 last week.
This is compared to the 14,504 weekly hospitalisations during the third wave’s peak, when the country was still under Alert Level 4 lockdown.
Actuarial scientist Louis Rossouw said the 7-day moving average Covid-19 cases reached a peak on 12 December of 22,000 cases per day.
South Africa had significantly looser restrictions during the fourth wave of infections than during the third.
However, this was because hospital admissions remained well within our healthcare system’s capacity.
Medical researchers have said that there may be several reasons hospital admissions remain relatively low:
- Omicron doesn’t cause as severe a case of Covid-19 as Delta.
- A combination of vaccinations and infection from previous variants has spared most South Africans who catch Omicron from worse symptoms.
- Increased hospitalisations could be lagging behind new cases due to how rapidly this wave peaked.
An Imperial College London study contradicted the first possible explanation. It found no evidence to suggest that Covid-19 from the omicron variant was less severe than the delta variant.
While the data suggests that South Africa’s Omicron-driven fourth wave may be less severe than previous coronavirus outbreaks, researchers warned that South Africans must not let their guard down.
National Institute of Communicable Diseases hospital surveillance team researcher Waasila Jassat explained that Covid-19 still presents with a spectrum of symptoms.
People still get severe symptoms and die, and some report suffering “long Covid”.
For this reason, people should vaccinate, continue to wear their masks, and avoid large gatherings, Jassat said.
2. Lesotho borders open:
South Africa’s Disaster Management Act, which governs the country’s response to Covid-19 by way of lockdown regulations, has been updated to reopen a border post between Lesotho and the Eastern Cape.
Border closures – of air, sea, and land ports – have been a common response to the Covid-19 pandemic on a global scale. Most countries have limited cross-border movement at some point during the pandemic to limit the spread of Covid-19 and importation of new coronavirus variants.
South Africa’s hard lockdown, first implemented at the end of March 2020, closed all 53 land borders with neighbouring countries, with exceptions limited to the transportation of fuel, cargo, and goods.
These closures were maintained until October, when 18 of South Africa’s land ports with Botswana, Namibia, Zimbabwe, Mozambique, Lesotho, and Eswatini reopened. This grew to 20 open borders by the end of the year.
Battling a second wave of Covid-19 at the start of 2021, South Africa reverted and temporarily closed its borders. This included the closure of South Africa’s busiest border posts, including Beitbridge, Lebombo, Maseru Bridge, Oshoek, Ficksburg, and Kopfontein. The 20 land borders were reopened in mid-February.
The Telle Bridge port of entry, connecting South Africa with Lesotho, remained closed throughout lockdown. It reopened on Tuesday, following an update to the Disaster Management Act by the Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini Zuma.
3. SARS targeting expatriates:
The South African Revenue Service (SARS) recently began sending out letters to taxpayers working abroad, confirming their change in status to non-residents for tax purposes.
This is a somewhat peculiar development for expatriates who have previously ceased their tax residency, as they are now requiring an additional step to objectively support their non-residency as issued directly from SARS, said Thomas Lobban, legal manager for cross-border taxation at Tax Consulting SA.
“As some taxpayers have discovered, this is not as simple as merely contacting SARS and requesting the letter. SARS is first verifying one’s status and then only issuing the letter of non-residency,” he said.
“The supporting documents and clarifications requested by SARS are onerous, at least nine points in total, and which range from a letter of motivation setting out the facts and circumstances in support of the taxpayer’s declaration of non-residency, all the way to the granular details of their social interests – for example, if you still maintain a gym contract in South Africa.”
A taxpayer will request the letter to confirm their status as a non-resident, not to cease their South African tax residency, which is a separate preceding declaration made to SARS, said Lobban.
“Put differently, this means that a taxpayer who has already undergone the onerous process of proving their non-residency to SARS must further undertake to satisfy the same onus of proof upon requesting the SARS letter to confirm this status.
“In effect, non-resident taxpayers are subjected to these audits even after ceasing residency,” he said.
A decision by SARS not to issue the letter upon a taxpayer’s request is indicative of the fact that the taxpayer cannot prove that they are non-tax residents in South Africa, he said.
“This puts the taxpayer in a precarious position and it begs the question if it effectively nullifies any process that was previously undertaken by the taxpayer to cease their South African tax residency – if any.
“As a further blow to these taxpayers, this decision by SARS is not one that is given effect to in an assessment, which means it cannot be challenged with the normal dispute process.”
4. Housing market to level out:
The interest rate hike in November, growing limited inventory for buyers, higher prices, and the continued flexibility to work remotely could see the housing market level out in 2022 from the growth experienced in the past year.
Although things might level off a bit, it by no means will turn down, the growth in property prices and trends like first-time homebuyers joining the property market will continue, says Antonie Goosen, principal and founder of Meridian Realty.
“With the SA Reserve Bank (SARB) recently hiking the repo rate by 25 basis points to 3.75%, placing the prime lending rate at 7.25%, the first repo rate hike in nearly three years, there will be some pressure on homeowners, but it would be premature to increase rates again in 2022.
“South Africa’s economic outlook is not looking strong, with the July unrest, the pandemic and ongoing energy supply constraints still having negative effects on investor confidence and job creation.
“The hike in the repo rate might have been premature, inflation was flat for the past couple of months, and we need the repo rate to stay at low levels to support growth in the economy. Globally central banks are supporting economic growth and I am hoping that the SARB does the same in 2022 and that we will not see another hike in the repo rate,” says Goosen.
Dr Andrew Golding, Chief Executive of the Pam Golding Property group says, “We have already seen the surge in FTHB demand fade as the effects of the aggressive interest rate cuts early last year abate. Although interest rates are unlikely to prove a significant impediment, consumers are dealing with the economic fallout of the pandemic, loadshedding and subdued growth prospects.
That said, SA’s young population does mean that there will always be a steady demand from young buyers – to the extent that they can afford to purchase a home, adds Golding.
“If you can live and work anywhere, it makes sense to live somewhere with a better quality of life in a more desirable location, says Golding.
“With a population of predominantly ‘young’ buyers, many of whom are likely to prefer life in a city hub, the increasing demand for accommodation to buy is helping drive activity in the residential property market, filtering upwards across all sectors of the market, boosting activity in middle markets and higher price bands as some existing homeowners upscale, and even creating stock shortages in high-demand areas.”
Goosen says if the prime lending rate stays at the current levels, and employers continue to give the flexibility to work remotely, there will be continued demand for home buying.
“With the Reserve Bank forecasting only marginal rate increases each quarter for the next three years, there is still plenty of time to make the most of the favourable lending environment that has helped keep the property market buoyant during the pandemic,” says Carl Coetzee, CEO of BetterBond.
He adds that as Interest rates are unlikely to reach double digits before the end of 2023, the current climate of affordability continues to present an opportunity to invest in property.
5. Prasa in crisis?:
The Passenger Rail Agency of South Africa (Prasa) has not published its annual financial statements (AFS) for the year to end-March 2021, and it is therefore impossible to attempt to estimate its financial status.
However, on Monday (December 20), Transport Minister Fikile Mbalula issued a press release stating that “it is common cause that we inherited a broken organisation in dire straits” and that “when we came into office in 2019, we set out a process to address the dire state of the entity”.
Mbalula is concerned that “there is a narrative that seeks to create an impression that there is a crisis at Prasa” and that there is a need to “set the record straight”.
Uncertainty on the ability of Prasa to continue as a going concern:
- In the 2018 annual report notice was given regarding “uncertainty on the ability of Prasa to continue as a going concern”.
- However, in 2019 the board was of the view that: “Despite the loss of R1.7 billion and R1.5 billion reported by economic and controlling entities respectively in the current financial year, there is no uncertainty regarding Prasa’s ability to continue as a going concern. Evidence of this is positive indicators of solvency and liquidity.” The Auditor-General (AG) issued a disclaimer of opinion for a number of reasons, including the lack of audit evidence to properly account for property, plant and equipment.
- In 2020 the board was again of the view that the financial statements should be prepared on a going-concern basis. The AG again issued a disclaimer of opinion on the basis that he “was unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated and separate financial statements”.
In a statement issued on Monday, Mbalula acclaims: “I have comfort that the Board has its eye on the ball and is making headway in addressing chronic challenges that have undermined Prasa’s ability to deliver on its mandate in the past”
“Our efforts to turn around Prasa will not take us 30 years, but will deliver tangible results in the coming year.
“Most of the corridors that were shut down will be back to full operation in the new year, including the Central line in Cape Town and the Mabopane line in Tshwane.”
Time will tell.
But first Prasa should publish its 2021 annual report.
All information sourced from articles posted by: MyBroadband, Business Insider, BusinessTech, Property24, and Moneyweb.
