News in South Africa 29th July:

1. Hospitals and staff overwhelmed:

While South Africa may be past the peak of the third wave, hospitals and medical staff are suffering aftershocks as admissions continue to rise.

Hospitals and staff overwhelmed
Image taken by: RODNAE Productions

The peak of the wave reflects a topping out of new infections – however, those new cases tend to flood healthcare facilities in the following weeks.

Hospitals report being overwhelmed, and oxygen use increasing rapidly. Meanwhile, infections continue to rise in a number of provinces where things have not yet peaked.

Sadly, the flattening of the peak is followed by the most recent infections turning into severe cases – some requiring ICU and some also resulting in death.

2. Support package for looting victims:

Finance Minister Tito Mboweni and National Treasury director-general Dondo Mogajane revealed a new financial support package of some R36.2 billion in the wake of the recent unrest and destruction to property in KwaZulu-Natal and parts of Gauteng.

The pair were joined by South African Special Risk Insurance Association (Sasria) and SA Revenue Service (Sars) bosses in a briefing on Wednesday regarding the new package.

It follows President Cyril Ramaphosa’s announcement on Sunday that further support measures by government were in the works for South Africans and businesses amid the continuing impact of Covid-19 and recent unrest in the country.

The overall package will not only cover insurance claims from affected businesses, but also go towards funding additional social relief for poor South Africans as well as see additional funding for the police and the South African National Defence Force (SANDF).

While Mboweni initially mentioned a figure of R27 billion in further support “needed to fund the system” during Wednesday’s briefing, Mogajane later confirmed that the overall value of the new support package would in fact total more than R32 billion.

Mboweni said that the recent riots and destruction in KwaZulu-Natal, Gauteng and certain other areas in South Africa has “had a major impact on the country’s economic recovery trajectory” especially in the context of Covid-19.

“Damage in Ethekwini Municipality [greater Durban] alone is estimated at some R15 billion,” the finance minister pointed out.

He said that the destruction has been significant with shops, shopping malls, post offices, factories, transport networks and even cellular towers being targeted.

Mboweni condemned the “violent acts of destruction” and added that government “can’t sit back and needs to do something”.

3. Further delays in SA Express liquidation:

The return date for a liquidation application for state-owned regional airline SA Express was again extended on Wednesday, this time to 11 January 2022.

This was primarily because two unions are bringing an application in the Constitutional Court to try to save the airline. The National Union of Metalworkers of SA and the SA Cabin Crew Association want the Constitutional Court to compel the National Assembly to debate whether SAX should be permitted to go insolvent.

The two unions contend that, in the absence of Parliamentary oversight, a state-owned company cannot be finally liquidated by a court.

SA Express was placed in provisional liquidation in April 2020, after its business rescue process failed. In the second half of 2020 Fly SAX, consisting of a group of former SAX employees, was announced as the preferred bidder to buy the airline. At that stage it relied on funding to be obtained via a crowdsourcing platform.

However, in May this year, Fly SAX submitted a revised offer to the provisional liquidators, after the latter found that Fly SAX had breached the terms and conditions of the sale process as “no funds were forthcoming”.

4. Tito – retirement fund changes:

Finance minister Tito Mboweni wants a key regulatory change that will allow South Africans to access their retirement funds early.

The finance minister said in a media briefing on Wednesday (28 July), that the change will be made with the proviso that workers use any funds in a responsible manner.

He said that workers should be able to access a portion of their retirement funds during ‘difficult times’ – whether it be for a bond repayment or to pay off debt.

“A portion of their retirement funds, workers should be able to access, to finish off bond repayment whatever debt they are in … I must warn that it must be used for purposes of relief and making better their own situation.”

“The matter – which seems to be stuck somewhere in the system – has to do with making allowance for workers to have access to a percentage of their retirement funds times of difficulty,” the minister said.

However, Mboweni also cautioned that people must ensure that they use this facility for purposes of relief and improving their financial situation.

5. Business start-up costs low in SA:

It costs just R175 to start a business in South Africa, which is cheaper than 90% of the rest of the world, according to the World Bank Group’s Doing Business study.

Starting a business in South Africa is inexpensive. Reserving a company name and registering with the Companies and Intellectual Property Commission (CIPC) can cost less than R200. These are the only cost-driven procedures associated with starting a business in South Africa, as determined by Doing Business’ company registration study using data from 2020.

Opening a dedicated bank account, registering for income tax, withholding taxes – employees tax (PAYE), Unemployment Insurance Fund (UIF), Skills Development Levy (SDL) – VAT and with the Compensation Fund carry no initial charges.

These processes do, however, come with a mountain of paperwork and take a comparatively long time to complete, which decreases South Africa’s overall Doing Business (DB) score.

This DB score is determined according to 11 areas of business, including how simple it is to deal with construction permits, register properties, acquire electricity, get credit, trade across borders, enforce contracts, and resolve insolvency.

South Africa has an overall DB rank of 84 out of 190 countries surveyed, scoring highest in the tax department – measuring the number of taxes and contributions paid – and in starting a business.

South Africa is ranked tenth for its start-up affordability, with a total cost relative to the monthly average income of 3%. Most neighbouring countries have considerably higher cost-to-income percentages, with Namibia at 116%, Mozambique at 213%, and Zimbabwe at 501%.

The cost of Starting a Business in Africa
Image created by: businessfinancing.co.uk sourced from Business Insider.

But South Africa isn’t the most affordable country to start a business in on the African continent. First place with 0% belongs to Rwanda, which doesn’t charge a start-up fee for small and medium enterprises for at least two years.

While the African continent contains the countries with the most affordable start-up process, it also has the Republic of the Congo, which, conversely, is the most expensive place to start a business in the world compared to its average income per capita. Start-up fees in the Republic of the Congo total $1,232 (R18,000) against a wage of $48 (R710) resulting in a cost-to-income of 2,554%.


All information sourced from articles posted by: BusinessTech, Business Insider, TimesLive, Moneyweb, and Fin24.

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