News in South Africa 6th July:
1. Rand at same level as Covid peak:
On Tuesday, the rand slumped to its weakest level against the dollar since 2020 as global investors took fright.
In early evening trading, the rand was trading at R16.58/$, more than a percent weaker than on Monday.
The rand was stronger at R19.75 to the pound and R16.98 to the euro. The European currency slumped to its lowest level since 2002.
The euro fell as low as $1.0261, threatening a push towards dollar parity. The pound also slumped to a two-year low below $1.20.
Amid global risk aversion, foreign investors sold off the rand and other currencies, and piled into safer assets like the dollar.
Stock markets and world oil prices plunged on Tuesday on mounting fears that major economies would slide into recession this year as inflation soars.
Europe’s main stock markets shed three percent heading into the close of trading, while benchmark crude contract, Brent North Sea, was down almost ten percent.
Wall Street indices were down almost 2% in early trading on Tuesday.
Markets dived as investors eyed aggressive interest rate hikes by the US Federal Reserve in its fight against inflation, in contrast with the European Central Bank, seen as planning more modest increases.
Meanwhile a key survey showed that economic growth in the eurozone floundered in June, hit by soaring consumer prices. S&P Global’s closely-watched monthly purchasing managers’ index (PMI), which measures corporate confidence, fell to 52.0 in June from 54.8 in May.
“Growing fears of a recession are hammering the euro lower, whilst the dollar is soaring on bets that the Fed will keep hiking rates aggressively to tame inflation,” City Index analyst Fiona Cincotta told AFP. “Today’s PMI data from Europe highlighted the risk of slowing growth at the end of the second quarter and raise the prospect of a contraction in activity in the coming months.”
After reaching R14.58/$ in April, the rand has been steadily losing ground. In June, the currency lost almost 4% against the dollar.
2. Eskom needs wage funds:
Eskom said that it needed to go back to the drawing board to look for the R1 billion that would fund the new wage deal with workers.
Unions and the company’s management signed a new agreement on Tuesday following weeks of tense negotiations.
However, as the power utility struggles with debt costing over R400 billion amid infrastructure challenges, the money won’t come by easy.
Workers may be breathing a sigh of relief after clinching a deal that guarantees them 7%increases and R400 more in housing allowance but the stress has just begun for Eskom.
“These were very prolonged engagements. They were not easy ones. I must put it on record that the offer that we signed today, we actually don’t afford as an organisation. We need to make plans to find additional money to fund this agreement,” said the power utility’s Elsie Pule.
The unions were not too happy either.
The National Union of Mineworkers’ William Mabapa said that they’d also had to make compromises.
“If you look at our demands and you look at this agreement, if you are a person that appreciates, you would have appreciated that we had to come to a time when we cut the demands that our members demanded. Those are the demands that Eskom has not serviced for two years,” Mabapa said.
Workers had made initial demands of 15% and most recently proposed that Eskom pays them R15,000 once-off cash gratuity.
Meanwhile, medical experts are calling on Eskom to exclude public healthcare facilities such as hospitals and clinics from rolling blackouts. The deputy director-general for primary healthcare added it is essential to the sector as they are dealing with life or death situations that require electricity in places such as operating rooms.
Acting Deputy Director-General for primary healthcare at the National Health Department, Ramphelane Morewane, weighed in on the matter.
“It’s a desirable position that there could be a way of exempting health facilities. We’re dealing with matters of life and death but that would be a call to be made at a high level,” he said.
“Imagine what would happen if the power went off while someone is in [an] operating theatre. It’s a position that I would support.
“We are receiving reports from that level and you can’t blame people for thinking that it would make sense to have facilities exempted from load-shedding.”
3. Government ignores tourism industry:
The government has ignored a plea for assistance from South Africa’s leading inbound tourism organisation, for urgent intervention to unblock a “bureaucratic debacle” that is strangling the industry.
SA Tourism Services Association (Satsa) CEO David Frost said on Tuesday that the organisation is disappointed it has not heard from anyone from national or provincial government, including the [relevant] ministers and the departments of tourism and transport, the Presidency or the President’s Red Tape Task Team since its media briefing on June 22 to highlight the industry’s problems.
“But we are unfortunately not surprised,” he said.
Satsa claimed last month the National Public Transport Regulator (NPTR) is preventing tour operators from renewing or obtaining new tourist vehicle operating licences.
This is negatively impacting hundreds of tour operator vehicles and causing severe economic and reputational damage to the tourism industry, apart from inhibiting the growth and job creation of small, medium and micro enterprises (SMMEs), resulting in business closures and job losses, it said.
No response from transport and tourism departments
News outlets emailed a list of questions to both the Department of Transport and the Department of Tourism almost two weeks ago, but has not yet received a response.
Satsa has called for three interventions that would alleviate the situation:
- Declare an urgent moratorium to suspend the need for operators to carry operating licences to get all tourism vehicles back on the road immediately.
- Appoint a broad task team, which includes Satsa and other representatives from the tourism industry, to develop long-term solutions and relook at the regulation of tourist transport, with a view to deregulating the industry.
- The new interim board at the NPTR needs to be instructed to follow the law and stop making up their own rules and overstepping their mandate.
Satsa said last month the law prescribes that operating licences for tourist vehicles be issued by the NPTR, which falls under the Department of Transport, within 60 days for new operators and within a day for an already accredited operator.
Frost said on Tuesday: “It is incomprehensible that an operating licence that should, by law, be issued to new tour operators within 60 days, and already accredited operators within a day, is taking years to be processed, if at all.
“Satsa continues to receive daily calls from tour operators whose vehicles have been impounded, despite them having all the necessary documentation to show that their licences are in process.”
“Every time a vehicle is impounded, it costs an operator in the region of R10 000 to get it back – money they can ill afford,” added Frost.
He emphasised that Satsa is “not asking for grants or for hand-outs”. Rather, it is simply asking government, and especially the ministers of tourism and transport, the Presidency and his Red Tape Team “to do their jobs, so that we can do ours”.
4. 75% of citizens without wills:
A will means you have the final say about where your assets go when you’re gone, but according to Sanlam research, 75% of black South Africans do not have one, and this can have a huge impact on spouses and adopted children.
Under the current legislation, blood relatives of the deceased are the only ones eligible to claim what belonged to the deceased, leaving behind close family members who are not blood related such as their spouse and adopted children.
“The general rule is that only blood relations of the deceased and their descendants may inherit should someone die without a will. This includes children, grandchildren, parents, brothers, sisters, grandparents, uncles, and aunts.
“The surviving spouse and legally adopted children are exceptions to this rule. Nobody else, even if they are financially dependent on the deceased, has a claim on intestacy (when you die without a will) as per the current legislation,” said Head of Wills Operations at Sanlam Trust Moremadi Mabule.
Although this is the case, the Constitutional Court recently ruled that the current definition of spouse – in the Intestate Succession Act and Maintenance of Surviving Spouses Act – is unconstitutional as it excluded life partners in long term or permanent relationships.
As a result, the court ordered Parliament to amend the specific laws within 12 months to ensure that life partner’s rights to inherit and claim are recognised after the death of their partner.
Why black South Africans don’t have wills
Lack of knowledge about estate planning, financial literacy, and procrastination are some of the reasons many black South Africans do not have wills.
“While financial literacy does still need attention, the main issue around the lack of estate planning seems to be procrastination. People know that it is important, but do not see it as something to do immediately.
“When you combine that with the prevailing idea that you need a certain amount of assets to justify having a will, this is a recipe for disaster. Everyone has some form of an asset and having a will in place goes a long way toward helping those who depend on you to live confidently,” Mabule said.
How to draft a basic will
According to Sanlam, a basic will can be drafted by completing a will application form, preparing a list of assets and liabilities, instructions on what needs to happen to the estate and the details of beneficiaries.
A simpler route would be to write one up or type it out at home and keep a copy where it will be easily found while keeping the other copy safe.
Choose trusted witnesses and sign your dated will in their presence. Ensure that all other previous wills are revoked.
5. Pension changes:
Retirement funds will have to invest in upskilling trustees to empower them to navigate the complex world of infrastructure investing opened up by the gazetting of the amendments to Regulation 28 of the Pensions Fund Act, says Andrew Davison, chair of the Investments Committee of the Actuarial Society of South Africa (ASSA).
The new Regulation 28 investment limits allow retirement funds to invest up to 45% of assets in South African infrastructure projects, effective from the beginning of January 2023.
Infrastructure assets are defined as physical assets or technology constructed, developed or maintained with the main goal of providing services or facilities for the benefit of South Africa’s people, business and economy.
Davison welcomed the introduction of the specific infrastructure investment limits, aimed at encouraging retirement funds to invest in infrastructure projects.
He said that the new 45% allowance change places an additional duty on retirement fund trustees to pick well-defined infrastructure projects that contribute to building the country while also providing the returns members need on their savings over the long term without excessive levels of risk.
“Trustees need to consider the new limit in the context of each retirement fund’s benefit objectives. The reality is that infrastructure investments are accessed mostly via private equity and other unlisted instruments and come with significant risk.”
Davison said trustees will have to make sure that they understand the infrastructure investing space. “Retirement fund trustees, as well as their asset consultants and asset managers, will have to build knowledge and skills in evaluating and managing infrastructure investments.”
“An important point for trustees to note in the new regulations is the requirement for retirement funds to report on their investments in infrastructure. To allow the Financial Sector Conduct Authority to monitor the assets being allocated to infrastructure as well as other exposures, the existing reporting exclusion on look-through of Collective Investment Schemes and insurance policies has been removed.
“This introduces an additional administrative requirement, including the need to classify all infrastructure investments as such based on the definition.”
Davison said he does not expect a rush into infrastructure investments despite the introduction of the very generous limits, because investable opportunities remain scarce. In his view, it would not be sensible for South African retirement funds to invest in infrastructure outside of South Africa.
“We should be building South Africa first. In order to achieve this, we need well-defined projects that are corruption proof.”
All information sourced from articles posted by: Fin24, EWN, ENCA, Moneyweb, Business Insider, and BusinessTech.
