News in South Africa 25th August:
1. One third of South Africans unemployed:
South Africa’s headline unemployment rate hit a record high of 34.4% in the second quarter from 32.6% in the first three months of the year as businesses shed staff due to the devastating economic impact of Covid-19.
The rate was the highest since Statistics South Africa’s quarterly labour force survey began in 2008, with a total of 7.826 million people out of work in the three months to the end of June.
According to an expanded definition of unemployment that includes those discouraged from seeking work, 44.4% of the labour force was without work in the second quarter, from 43.2% in the first quarter. That equates to 11.9 million unemployed by the expanded definition.
Stats SA said the only employment decrease was observed in the formal sector (375 000) in Q2: 2021, while employment gains were observed in the informal sector (184 000), agricultural sector (69 000) and private households (67 000).
Job losses in the second quarter were concentrated in finance, which shed 278 000 jobs, while community and social services lost 166 000 jobs and manufacturing lost 83 000 jobs.
2. Alcohol bans still being battled:
Covid-19 pandemic is a national disaster – and so it must be navigated at national level, the Western Cape High Court heard on Tuesday.
This was on the second day of a case brought by wine producers’ organisation Vinpro. Vinpro wants the court to rule that alcohol sales bans can be decided at provincial level.
The court earlier on Tuesday heard arguments from the Western Cape provincial government’s legal team, which agrees with Vinpro. It argued that declaring a national disaster does not give national government a licence to “hollow out” provincial government powers.
But legal representatives for national government argue that national government consulted extensively with provincial governments and took a holistic approach to implementing liquor sales bans.
“In response to the pandemic, government had to take a holistic look. The presidential coordination council plays pivotal role and it includes consulting with the premiers of the provinces.”
“Furthermore, there is no dispute about the impact of alcohol-related incidents on health services,” said Advocate Nazreen Bawa, SC.
“Vinpro and the provincial government claim disaster management cannot infringe on any exclusive provincial rights.”
“But if the court has to apply the principles as set out by the Constitutional Court, the conclusion must be that disaster management has nothing to do with liquor licensing and the national minister acted squarely within her powers,” said Pillay.
On behalf of government, it was also pointed out that Vinpro represents South African wine producers, wine sellers and industry stakeholders – that is, “it represents those who derive profit from the sale of alcohol”.
The advocates also argued that Vinpro’s case has become moot, because its primary relief relates to regulations repealed more than six months ago.
3. Digital assets will replace solid:
Most financial professionals expect digital assets will replace government-issued currencies within a decade, or at least present a solid alternative to them, a Deloitte survey has found.
Given that, financial services companies must get on board with cryptocurrencies, digital assets and blockchain, or risk losing ground to rivals as crypto shakes up the industry, the respondents said.
Among them, 76% said they believe that digital assets would be a strong alternative or replace fiat in the next five to 10 years, according to Deloitte’s blockchain survey report published last week.
They expect to see a positive benefit to their businesses from a range of assets, such as stablecoins and central bank digital currencies, or CBDCs algorithm-drived stablecoins and enterprise-controlled coins.
The flow of funds into digital assets is increasing, as institutions and investors become more interested in them as a store of value, it noted. There has been huge growth in new business models around crypto, reflecting a shift in the financial industry. Companies are looking at how to change their traditional products to be ready for their customers’ future needs, the Deloitte report’s authors said.
“Participation in the age of digital assets is not an option, it is inevitable. Leaders are left only to decide how to use digital assets and the new global financial service infrastructure to their greatest advantage,” they wrote.
Overall, 80% said the industry will see new revenue streams from digital assets and blockchain, with almost half identifying custody as the top opportunity. Others include new payment channels or types, and diversification of investment portfolios.
4. Covid-19 now an endemic?
Discovery Health chief actuary Emile Stipp said Covid-19 is becoming endemic and that people should forget about herd immunity.
Speaking to Biznews, Stipp said they estimated that the coronavirus had infected between 70% and 80% of South Africans.
This would suggest that the country is close to herd immunity, estimated at between 80% and 90% by the Infectious Diseases Society of America.
Stipp, however, dismissed the promise of herd immunity to end the pandemic.
“I think herd immunity is something that we must all forget now. It’s not going to happen,” Stipp said.
“The reason for that is that Covid-19 is becoming endemic. So, unless you have everybody vaccinated in a population and unless vaccination or previous infection gives you complete protection against reinfection or infection in the first place, you’re not going to get it to go away.”
He said if you’ve had Covid-19 before, your risk of getting it again if you come into contact with the virus is about 20% to 25%.
Even if you are vaccinated, the data emerging across the world is that you have a risk of about 20% of getting infected.
Covid-19 variants are also becoming more contagious, which Stipp said is “the real thing to be worried about”.
5. More emergency funding needed:
The bid to urgently release a further R32.85-billion from the national coffers to help pay for Covid-19 relief grants, soldiers’ deployment and to support the government’s all-risk insurer, Sasria, is formally under way in Parliament with the tabling of the Second Special Appropriation Bill.
It’s newly appointed Finance Minister Enoch Godongwana’s first piece of legislation, and he’s invoking the exceptional circumstances provisions of Section 16 of the Public Finance Management Act (PFMA) “to address the impact of the recent unrest and the Covid-19 pandemic”, according to the bill’s memorandum.
That PFMA provision – Section 16 is headed “use of funds in emergencies” – allows the finance minister to authorise funds “to defray expenditure of an exceptional nature, which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds”.
This special appropriation draft law comes after one earlier in 2021 that allocated an additional R1.25-billion for Covid-19 vaccinations, and R2.82-billion for the R350 Covid-19 Social Relief of Distress Grant, and shifted monies to SAA. It was passed and signed into law on 24 June.
The Second Special Appropriation Bill is for the release of an additional R32.85-billion from the National Revenue Fund – largely made possible due to higher tax income from a mining windfall. Godongwana consulted with his fellow Cabinet ministers of defence, police, trade, industry and competition, National Treasury and social development.
Money will also be funnelled to the state’s other problem areas, with an additional R1.25 billion for Covid-19 vaccinations and R2.8 billion for the R350 Covid-19 Social Relief of Distress Grant. Money will also be shifted to SAA.
The bill has come between Budget 2021 and the Medium-Term Budget Policy Statement (MTBPS), which traditionally adjusts any departmental allocations.