News in South Africa 31st August:
1. Crypto industry crashing:
Nearly 5 000 crypto employees have lost their jobs since April, reflecting the crushing $1.9 trillion (R32 trillion-plus) loss in the market value of cryptocurrencies since the peak in November 2021.
Data from CryptoPresales.com shows June was the most brutal month, accounting for more than 60% of the job cuts. This coincided with the brutal sell-off in cryptocurrencies in June.
Data from Layoffs.fyi shows the San Francisco-based Coinbase made the biggest job cuts in the crypto market this year.
In June, the company announced it was laying off 1 100 people, or almost a fifth of its workforce amid a collapse in its stock and crypto prices.
Data from Layoffs.fyi shows the San Francisco-based Coinbase made the biggest job cuts in the crypto market this year.
In June, the company announced it was laying off 1 100 people, or almost a fifth of its workforce amid a collapse in its stock and crypto prices.
The job cuts came after Coinbase, which gets most of its top line from transaction fees, reported a slump in users and a 27% year-on-year revenue drop.
“Later that month, the Singapore-based crypto exchange Bybit joined the list of companies cutting staff, with the second-largest layoff this year. The company cut off a whopping 30% of its 2 000 people workforce,” says Crypto Presales.
Massive layoffs in June continued with the crypto exchange Huobi Global. Even before the crypto market crash, Huobi reported a sharp drop in revenue caused by China’s decision to ban crypto trading last year. As a result of the cost-cutting measures, the company laid off around 300 people or 30% of its workforce.
Writing in Fortune magazine, CEO of Coinchange, Maxim Galash, observes that crypto companies like his over-hired during the bull market and are now having to scale back fast.
“Now that the air is coming out of the market, they need to cut staffing costs urgently to stay afloat and weather a downturn that could be intensified by the worsening economic outlook. In other words, hire slow, fire fast. Layoffs are painful, but we do what must be done to sustain and grow the business: prioritize long-term shareholder value over short-term pain,” he says.
The good news is the layoffs are slowing and reverse when the market turns bullish.
Galash believes many of the retrenched workers may end up in other start-ups, given their ability to build things from the ground up.
2. Food price inflation:
The Bureau for Food and Agricultural Policy (BFAP) has published its food inflation brief for July 2022, highlighting the food items that have recorded the biggest price hikes in South Africa.
While food price inflation outstripped headline inflation again in July, the group said that it expects price increases to slow towards the end of the year.
However, if measures put in place to curb foot and mouth disease in cattle are extended, meat prices could shoot up, it said.
The BFAP brief provides an overview of food inflation dynamics, its associated causes, and the cost of basic healthy eating each month.
It features a Thrifty Healthy Food Basket (THFB), which measures the cost of basic healthy eating for low-income households in the South African context. The basket consists of a nutritionally balanced combination of 26 food items.
For July, the THFB was recorded at R3,261 a month, up 2.4% from June’s basket and up 11% from the basket in 2021.
Food expenditure as a percentage of total income spent on food increased to 31.1%, from 30.4% in June, the BFAP said. This is based on a dual -minimum-wage income.
The group highlighted the following foods that saw inflation above 10% in July:
- Vegetables: spinach, broccoli, cauliflower, beetroot, onions, cucumber, tomatoes, lettuce, cabbage;
- Fruit: oranges, avocados, apples;
- Fats/oils: Vegetable oil, margarine;
- Legumes: canned baked beans, dried beans;
- Pork: ham, bacon;
- Beverages: Ceylon/black tea, coffee, fruit juice;
- Starch-rich foods: wheat flour, super maize meal, brown bread, pasta, white bread;
- Beef: T-bone, brisket;
- Canned pilchards.
The following foods saw inflation more muted but still above the Reserve Bank’s target range, over 6%:
- Mutton/Lamb neck;
- Beef: chuck, rump steak, mince, offal;
- Dairy: yogurt, milk, cheese;
- Chicken: IQF portions, giblets;
- Peanut butter.
Inflation for food and non-alcoholic beverages reached 9.7% in July, according to the latest data from Stats SA.
“This is comparable to levels last recorded in 2016/17 – which was due to the widespread drought in South Africa. The high levels of inflation are a culmination of numerous factors in global commodity and money markets,” the BFAP said.
3. Consumer fraud rising:
Stats SA’s Governance, Public Safety, And Justice Survey 2021/22 says housebreaking, which affected 983,000 households in the country, was the most prevalent of all crimes over the 2021/22 period, consumer fraud, with its total of 844,000, came in second.
According to the survey, South Africans, especially female South Africans, are all too familiar with people duping them. It found that “females and persons living in urban areas were most likely to experience consumer fraud”.
Consumer fraud was not only the second most prevalent crime, but it also showed a dramatic 71% increase in the past year.
“The survey further shows that the number of incidences of consumer fraud increased from 493,000 in 2020/21 to 844,000 in 2021/22.”
As defined by Stats SA, consumer fraud happens when someone provides services or goods and cheats on quality or quantity.
This also includes advance-fee fraud (like R99 debit/credit card scams, 419 scams, and online shopping) where products and services are promised but never given.
The increased prevalence of these types of fraud, however, did not lead to a big rise in the number of cases reported.
“The percentage of individuals who reported some or all incidences to the police increased from 41,3% in 2020/21 to 44,2% in 2021/22.”
This means crime pays for conmen operating in South Africa, as the chances of being held to account are low, with less than half of these crimes reported.
4. Unexplained wealth targeted:
Several regulatory and investigative agencies in South Africa are coming together to pilot a new initiative to root out taxpayers with unexplained wealth.
SARS, the Financial Intelligence Centre, the Hawks and the NPA are coming together to use existing legislation to obtain court orders and warrants to confiscate unexplained wealth in the country.
If the pilot proves unsuccessful, creating a single law to enable this will be considered.
5. Zuma assets seized:
Collapsed banking group VBS has been permitted to seize R6.5 million worth of former president Jacob Zuma’s assets to pay back money owed on his bond.
When Zuma was questioned about so-called ‘security upgrades’ done on his Nkandla home in 2011, the former president said he had a R7.8 million bond with VBS, which was issued in 2016.
He has defaulted on paying this loan back. VBS collapsed due to rampant looting of depositor funds and is now under curatorship.
All information sourced from articles posted by: Moneyweb, BusinessTech, Business Insider, BusinessLive, and ENCA.
