News in South Africa 4th February:
1. 3.1 Million vaccines from Covax:
South Africa is expected to get another 3.1 million doses of the Coronavirus vaccine in the first half of this year.
COVAX has announced that around 2.8-billion jabs from AstraZeneca and 117,000 from Pfizer should be made available to South Africa.
That is if the vaccines are approved by the World Health Organization for Emergency Use Listing.
COVAX says the shipment of these vaccines will also depend on whether participating countries, including South Africa, are ready to distribute them to citizens.
The vaccines are expected to be delivered in the first half of the year adding to the 42 million other doses already secured. However, a big challenge provinces face with the vaccine rollout is keeping the doses cool – but the Health Department says that regions are ready to start inoculations once they are received by provinces next week.
2. SAA could exit business rescue:
If all goes well, South African Airways (SAA) could exit its business rescue process by the end of February this year – in other words, in a few weeks’ time.
This was the hopeful expectation expressed by the state-owned airline’s shareholder, the Department of Public Enterprises (DPE) to Parliament’s Portfolio Committee on Public Enterprises on Wednesday. The committee was briefed, among other things, on progress made in addressing challenges facing state-owned companies, including an update on the work of SAA’s business rescue practitioners.
The rescue practitioners have to confirm a list of outstanding activities before they can file for a notice that the rescue plan has been substantially implemented.
According to the DPE, from the R10.5 billion allocated for the implementation of the rescue plan in Finance Minister Tito Mboweni’s mini-budget in October 2020, R3.5 billion had already been made available and the full balance can now be transferred to the airline.
3. South Africans – over taxed:
The South African economy and certainly the tax-paying community have little tolerance for further tax increases. Government acknowledged this much during the mini-budget in October last year.
Finance Minister Tito Mboweni and his team are burning the midnight oil to find solutions to keep the debt wolf at bay and to find money to keep SA Inc’s doors open. He will be delivering the 2021 budget later this month.
The pandemic hit the country while its economy was already limping, exacerbating the economic contraction, causing millions of job losses and creating an urgent need to have at least 67-70% of the population vaccinated against the coronavirus for it to loosen its grip on the country.
One of the options to pay for the vaccinations and get the economy going again has been a dedicated tax – wealth or vaccination tax – or a general tax increase.
David French, tax director at Mazars, says South Africa’s Laffer curve has reached the point where despite an increase in tax rates, the country is collecting less in tax.
The Laffer curve illustrates the relationship between tax rates and the amount of tax revenue collected by governments.
Tax experts says a once-off ‘Solidarity Tax’ could work if it was simple to calculate and administer, but strongly advise against it.
4. SOE’s suffering from mismanagement:
Parliament’s public spending watchdog Scopa has heard of qualified audits for Eskom and Transnet, a disclaimer for Denel — and nothing for SAA because of a lack of financial reports since 2017.
The situation at South Africa’s major public enterprises is dire, and the public spending watchdog Scopa is concerned that little is being done to remedy the situation, while those responsible face no consequences.
Scopa was presented with a report on the state of SOEs like SAA, Eskom, Denel and Transnet, which painted a very bleak picture of operations. It said these institutions are in “dire straits”, and serious discussions need to be had about the lack of consequences for financial mismanagement.
But the SOEs that came under scrutiny on Wednesday are by no means the only ones in trouble. The SABC, for instance, is in turmoil, and the Land Bank, which has already received a R3-billion bailout, needs billions more to set right its agricultural loan book.
The focus now turns to the 2021 Budget on 24 February.
5. Hulamin, Liberty and Sappi release reports:
The KZN-based aluminium rolling company Hulamin released a strong production update for the past year – which triggered a 10% rally in its share price yesterday. Local demand improved after the SA government imposed a 15% import duty on aluminium rolled products into SA in December.
Liberty warned that its headline profit for the year to end December will be up to 20% lower than in the previous year. Last year, Liberty warned that its results were hit by people losing their jobs, and withdrawals from retirement schemes. Its share price is down more than 40% from a year ago, but yesterday strengthened slightly.
In a trading update, Sappi reported that its sales were down 11% in the quarter to end-December, with the company suffering a headline loss from a profit in the same period a year before. On Tuesday, Sappi’s share price hit its highest level in a year, but retreated yesterday.