News in South Africa 23rd November:
1. Fourth Covid wave creeping in:
Wits University vaccinologist Prof Shabir Madhi says that South Africa is in the early stages of a Covid-19 resurgence and warns that the fourth wave of infections will likely hit different parts of the country at different times.
The fourth wave is starting, but there is no reason for national panic at this stage.
According to experts, the wave will hit provinces at different times and intensities. The devastation already caused by Delta in the country will stand us in good stead for this wave, and citizens still have influence over how and if the wave surges.
Prof Shabir Madhi, a vaccinologist at Wits University, told Sunday Times Daily: “We are in the early stages of a resurgence, and are likely to start seeing an uptick of hospitalisations in two to three weeks.”
He said there had been an increase in cases during the past week, but, “as with the third and earlier waves, the timing will differ by province”.
This is “due to multiple factors, including the most recent wave dynamics, possibly population level immunity and waning thereof”.
On Sunday, the National Institute for Communicable Diseases reported 687 new cases.
This brings it close to a cumulative 3-million threshold, with the total number of laboratory-confirmed cases since March last year at 2,929,862.
This increase represents a 3.4% positivity rate and, according to the World Health Organisation, as long as the test positivity rate is 5% or below for two consecutive weeks, countries should not be in hard lockdown.
However, that doesn’t mean it is time to relax and not take precautions.
South Africans have influence over this wave by observing non-pharmaceutical protocols and getting vaccinated.
Experts are keeping an eye on the vaccine rollout which is directly linked to the severity or mildness of a fourth wave.
2. DA takeover of ANC metros:
South Africa’s ruling African National Congress lost control of the nation’s richest city as parties backed Mpho Phalatse from the main opposition Democratic Alliance as mayor of Johannesburg on Monday.
The parties installed Phalatse after the ANC failed to secure an outright majority in the city, tallying 33.60% in the November 1 local government elections. More than 60 local councils including major urban metropolitans did not have an outright winner.
The DA won 26.1% and newly formed ActionSA, led by Herman Mashaba and hailed as a “king-maker” after its maiden election, got 16.1%. Mashaba, 62, was the mayor of Johannesburg from August 2016 to November 2019 when he was a DA member.
“ActionSA’s councilors have cast their votes for DA mayoral candidates in Johannesburg, Tshwane and Ekurhuleni,” Mashaba said in an emailed statement on Monday. “ActionSA made a commitment to all South Africans that, where we contest, we will unseat the ANC in these elections. We do not take this promise lightly.”
The ANC’s loss of Johannesburg comes after it failed to retain control of the industrial hub of Ekurhuleni on the same day. Council sittings for the capital, Tshwane and eThekwini in KwaZulu-Natal, a stronghold of former President Jacob Zuma, will also take place this week amid growing anticipation that the party’s mayoral candidates will lose to the opposition.
3. SARS releases details globally:
The South African Revenue Service (SARS) says that more information on more than 75 million financial accounts, covering total assets of around R160.4 trillion, is being automatically exchanged by tax bodies worldwide.
In a statement on Monday (22 November), SARS commissioner Edward Kieswetter said that the revenue collector is now sharing its data with 76 partner jurisdictions, whereas 96 partner jurisdictions have concluded their exchange obligations with South Africa.
“As business models increasingly evolve to be more digital, non-local and virtual, and physical borders are less relevant in the production and movement of goods and services, national tax bases are under constant threat of erosion,” he said.
“Working with tax administrations to improve the tax ecosystem to foster greater collaboration and co-operation is essential to leverage the benefits of tax transparency and exchange of information.”
Kieswetter said that the goal is to rebuild a smart, modern SARS with ‘unquestionable integrity’.
The key to this is augmenting the revenue collector’s human capabilities by leveraging enabling technologies and data through artificial intelligence with use of sophisticated machine learning algorithms, he said.
“As we are increasing and expanding the use of data, Exchange of Information (EOI) and Automatic Exchange of Information (AEOI) form a valuable data source that supplements our vast third-party data repository enabling the detection of taxpayers & traders who do not comply.
“Non-compliance would be hard and costly, therefore I urge taxpayers and traders to do the right thing and voluntarily comply,” he said.
4. Share prices soar despite poor economy:
Global and not local factors are at play in the surging stock market. But 2022 might be a negative turning point for financial markets, say analysts.
You would never know how terrible the past few months have been for SA’s economy and the national psyche by looking at the JSE, which has been going gangbusters during the pandemic.
On Monday, 15 November, the JSE All Share index (comprising the largest companies on the local bourse) reached an all-time high, closing above 70,000 points for the first time.
To the people on the street, these are just meaningless numbers. But to the investment community, all-time highs suggest stock prices are increasing because there is usually optimism about the performance of companies and the economy — enticing investors to purchase shares.
As Covid-19 officially burrowed its way into SA in March 2020, the JSE plunged, but then something strange happened a few days into the pandemic. Even as thousands of lives were lost, millions of people were laid off and businesses shuttered because of stop-start lockdown measures, the stock market soared for weeks.
The JSE continues to rise in 2021 despite SA’s moments of crisis, including the week of anarchy in July, the government’s delays in implementing pro-growth and investment structural reforms, and worsening blackouts that blow out chances of economic recovery.
The JSE has not only soared but also delivered decent investment returns.
Over a five-year period to 16 November 2021, the JSE has delivered total returns (excluding dividends) of 7.4% (in rand terms) while inflation over the same period measured 4.4%. Total returns were positive even after inflation. Higher inflation is usually looked on as a negative for stocks because it erodes wealth, increases borrowing costs, increases input costs (materials, labour) and reduces standards of living.
The JSE managed to outperform the UK’s FTSE 100, which delivered total returns of 4.6% over a five-year period. But the JSE has underperformed the US’s S&P500 (total returns of 18%), Japan’s Nikkei (12%) and Europe’s EuroStoxx (10%). But over a 20-year period, the JSE has outperformed all major markets, delivering total returns of 11%.
SA, an emerging market, has largely benefited from the extraordinary measures taken by central banks around the world, especially the Federal Reserve, since the start of the pandemic to support financial markets and reassure investors that they wouldn’t let major corporations fall apart.
But the market optimism might come to a screeching halt in 2022. Several central banks around the world will start withdrawing their support measures for economies, an environment of low interest rates might end, and there is a risk of rising inflation. McCurrie and Klipin are already pricing in a market correction in 2022.
5. Zimbabwean forex fines coming:
Zimbabwean companies have until the end of this year to declare sales undertaken in foreign currency or risk rigorous audits and hefty fines – as dollarisation, which remains unmatched by foreign currency tax collections, intensifies across the economy.
The local unit of exchange, the Zim dollar, has continued to struggle on official and parallel currency markets, prompting traders to push for sales in hard currency.
The government is now going after businesses not declaring their forex sales, although big mining houses report their financials in foreign currency. They also liquidate their hard currency earnings for local currency balances.
President Emmerson Mnangagwa’s administration – cash-strapped owing to a dearth of foreign investment, smuggling of minerals such as gold, and because of its net importer status – is expecting a boost to its foreign currency revenues from the latest operation, which is targeting firms not declaring forex sales.
The Zimbabwe Revenue Authority says it has noted that there are “… traders who are falsifying their financial records”, through failure to declare foreign currency sales or converting such sales into Zimbabwean dollar for taxation purposes.
Additionally, some companies that are transacting in foreign currency, “… are converting such transactions to Zimbabwean dollars for tax purposes”. The authority has therefore given these businesses until December 31 to declare all sales recorded in foreign currency.
“Zimra is therefore urging all traders to come forth and make voluntary disclosures of all under-declared or non-payment of tax by 31 December 2021 to avoid vigorous audits, prosecution and penalties that will be instituted soon after the deadline,” the authority said in a notice.