The poor are carrying the burden of State Capture through the VAT increase, a Parliamentary committee has heard.
 
This is just one of the criticisms raised by several organisations and industry representatives before Parliament’s Standing Committee on Finance at a hearing on the VAT panel report on Wednesday.
 
The report, published in August, is the work of an independent panel that reviewed the current list of items exempted from VAT and proposed new items to be zero-rated. The panel was constituted after then Finance Minister Malusi Gigaba announced in February that the VAT rate was to increase by one percentage point from 14% to 15% to raise an additional R22.9bn. 
 
1. The poor are paying for State Capture
 
Neil Coleman, who represented the Institute for Economic Justice, said that SA has to try to find ways to plug revenue shortfalls as tax collection has lagged. This problem has further been exacerbated by State Capture, which has reduced revenue to the fiscus.
 
“It should not result in punishment of the poor. We had nothing to do with that failure,” he said. The SA Revenue Service has experienced two successive years of tax shortfalls: R30bn in 2016/17 and R49bn in 2017/2018. 
 
Similarly, trade union federation Cosatu believes the one percentage point VAT hike punishes the poor for the “sins of the rich”. The federation insisted that government has other options to address revenue shortfalls. It wants the state to “stamp out corruption” and set out how it will recover stolen funds.
 
2. Unlikely VAT hike will be rescinded during the mini-budget
 
The Budget Justice Coalition was among the organisations calling for the VAT hike to be rescinded. But committee chair Yunus Carrim pointed out that the mini budget, set to be delivered on October 24, has already been set and it is unlikely that any decisions would be implemented then.
 
Cosatu proposed that government purchase and distribute sanitary pads to clinics, hospitals, no-fees schools and tertiary institutions.
 
“Government has done it with feeding schemes and condoms. Girls should not be disadvantaged because of a normal cycle of life,” said Cosatu’s Parliamentary coordinator Matthew Parks.
 
The Budget Justice Coalition also proposed that government invest in providing sanitary products to poor women and girls – as this will ensure that they will directly benefit from the zero-VAT status, while richer households can continue to buy the sanitary pads. Sanitary pads were one of the items that the VAT panel proposed be zero-rated. 
 
4. More protein needed on the zero-VAT list
 
The Budget Justice Coalition, which represents several other organisations, raised concerns over the lack of protein on the zero-VAT list, a concern as malnutrition and protein deficiency leads to stunting and anemia. It suggested peanut butter and soya mince be included on the list.
 
The South African Poultry Association pointed out that chicken accounts for 13% of food expenditure for lower-income households, and supported the inclusion of whole fresh or frozen chicken products and portions. 
 
5. VAT hike simply unaffordable for the poor
 
The Pietermaritzburg Economic Justice and Dignity Group collected data on the impact of the VAT hike by tracking a basket of 38 foods, 20 of which are subject to 15% VAT, the committee heard.
 
In August 2018, the total cost of the basket was R3 009. Foods subject to VAT accounted for 55% of the basket - or R1 654. The VAT on the foods amounted to R215, or 7.2% of the entire basket, said the group's Mervyn Abrahams. This equal to the price of a 35kg of maize meal which poor and working-class households buy each month.
 
Taking into account the recommendations of the VAT panel, the savings on the food basket for August 2018 would equal R40.81, bringing the total cost of the basket to R2 968. Abrahams said this was roughly equivalent to the median wage of a black South African worker, which is R3 000.
 
“That is just food alone - therein lies the problem,” he said. SA households are not getting sufficient income, and that the problem is not just simply a question of zero-rated items, he said. 
 
6. Food choices must be expanded
 
Geoff Penny of the Baking Association of South Africa weighed in on making white bread zero-rated. He said this decision would enable poor consumers to choose the product they prefer.
 
Poor consumers should be given the opportunity to shop with dignity, the baking association’s submission read.
 
Similarly, Dr Ziyanda Majokweni of the Broiler Organisation argued that whole chickens should not be subject to VAT - as opposed to just having portions like chicken feet and gizzards zero-rated. This would give consumers more choice, she told the committee. 
 
7. Double take on current list
 
Lionel Adendorf of FairPlay criticised the fact that the current list 19 zero-rated items was not reviewed. If there were a thorough review of the list the panel would have taken some items off the list, and would have included new household items which are being used by these poorer households, he argued.
 
The PwC’s VAT Partner Lesley O’Conell also echoed views that the current list should be reconsidered to include ones that are consumed by the poor.
 
The committee's chairperson Yunus Carrim called for Treasury to interrogate the submissions more seriously than they had previously.
 
 
Business Insider.

Deep and liquid local debt capital markets have reduced the need for South African companies to borrow abroad, making them less vulnerable to a financial crisis than peers in Turkey and other emerging markets, according to Moody’s Investors Service.

Large external financing needs and a plunging currency are proving a toxic mix for Turkey’s corporate sector. But in South Africa, companies have enough access to local funding, and those that have turned to foreign debt used hedging strategies to cushion the effects of short-term currency fluctuations or buy time to adjust to long-term rand weakness, Moody’s said in a report dated 12 September.

 

In addition, most foreign borrowing by South African companies has been driven by offshore expansion and the debt is serviced with cash flows generated in the same currency, creating a natural hedge to currency weakness, the report said.

“Currency volatility in emerging markets has been one of the key focus areas for investors this year, particularly in terms of how it affects credit risk for companies,” Moody’s analysts lead by Dion Bate said in the report. “Despite continued rand volatility, we expect the credit quality of most South African companies we rate to remain broadly stable during the next 12 to 18 months.”

 
 

Foreign exposure

About 38% of South African non-financial corporate debt is denominated in foreign currencies, according to Moody’s. That compares with 56% for Turkey, or an amount of $336bn, almost triple the borrowers’ assets, according to data compiled by Bloomberg. The lira’s 40% slump this year will make servicing those loans more burdensome, lowering capital spending and GDP growth.

Moody’s expects the rand to remain volatile over the next year, driven by how successful the government is in implementing economic reforms, as well as global factors including the US policy path, trade tensions and emerging-market turmoil. That will complicate the operating environment and investment decisions for South African companies, Moody’s said.

News24

The International Monetary Fund (IMF) has raised its growth projection for the Sub-Saharan Africa’s economy to 3.8 percent in 2019 from 2.8 percent in 2017, implying 0.1 percentage point increase compared with its April, 2018 projection.

The fund also upgraded Nigeria’s 2019 Gross Domestic Product (GDP) by 0.4 percentage point to 2.3 percent.

The IMF disclosed this in its World Economic Outlook (WEO) Update for July 2018 titled “Less Even Expansion, Rising Trade Tensions” released on Monday.

According to the release, the upgraded forecast “reflects improved prospects for Nigeria’s economy” and supported by the rise in commodity prices.

The global monetary authority said Nigeria’s growth is expected to rise from 0.8 percent in 2017 to 2.1 percent in 2018 and 2.3 percent in 2019 on the back of an improved outlook for oil prices.

But, it left its 2019 growth prediction for South Africa unchanged at 1.7 percent, South Africa is Africa’s most-industrialized economy and hasn’t grown at more than 2 percent a year since 2013.

Nigeria and South Africa’s economies account for about half of the Africa’s GDP.

In May, the National Bureau of Statistics (NBS) released the GDP report for the first quarter of 2018 indicating that Nigeria economy grew by 1.95 percent from 2.11 percent recorded in Q4 2017.

“Despite the weaker‑than-expected first quarter outturn in South Africa, the economy is expected to recover somewhat over the remainder of 2018 and into 2019 as confidence improvements associated with the new leadership are gradually reflected in strengthening private investment,” the fund said.

Nigeria’s economy is recovering after it plunged into recession in 2016 after a drop in the prices of crude oil in the international market, owing to its over dependence on the oil, the country’s main source of foreign exchange earnings.

Credit: TheRipples.com

Absa unveiled its new look on Wednesday, including a colour scheme that claims a wider spectrum of red. The bank has effectively been chained to the staid Barclays brand for more than a decade – so when Barclays ditched it, it decided to make deep changes.

Absa is even changing the voice that answers those who phone into its call centres, on top of 27,000 different forms and a total of some 500,000 "artefacts". Absa on Wednesday morning finally showed the world the new logo it has been so secretive about (although that leaked) and the colour scheme it will now be using (though that too leaked).

But in coming months customers will find changes to the massive bank's identity will run far deeper than that, down to the way it answers the phone.

Absa has recorded more than 10,000 individual items for the interactive voice systems used in its various call centres, says group marketing head David Wingfield.

Watch: A secret rehearsal of Africa's first ‘drone fireworks’ for Absa's big reveal today
"We are going for a friendlier tone, with slightly younger voices and different intonation," he tells Business Insider South Africa.

Those recordings are on top of the 27,000 different forms Absa uses that will now have to be replaced – and the 345,000 branded pens, notepads, lanyards and pieces of clothing it had made to introduce the new look.

In total Absa will be replacing some 500,000 different "artefacts", says Wingfield, ranging from TV ads to the signs used inside branches.

Those changes will take some 10 months to complete, with three branches and 15 ATMs scheduled to be rebranded per day.

Using friendlier, younger voices alongside a more "digital" logo is all part of moving away from Absa's past, says Wingfield, which has kept its brand shackled for more than a decade.

British bank Barclays first moved in on Absa a decade ago, and it has not changed its look and feel since.

After Barclays dumped Absa in a shakeup of its global approach, the local bank decided it needed to leapfrog all the changes that had come to the world – and marketing – since then.

"The old Absa and Barclays were much more austere and serious," says Wingfield. "The world now is younger, digital. That's what we're trying to capture."

Along the way, Absa expanded its colour range around the "passion red" of its logo. Using everything from pink to orange "makes us more playful," says Wingfield, but it is also just sensible. Every cell phone and computer screen will display a slightly different shade of red anyway; trying to keep to a pure brand colour is a lost cause.

So Absa's logo button will always be either "passion red" on white, or white on red, but there will be many other warm hues in its branches and in some of its ads.

Including all the forms and all the signs used in some 620 branches scattered throughout the country.

With that kind of scale and spread there will be "something of a lag" until each instance of the Absa brand is updated, says Wingfield.

 

Source: The Insider

SBV is offering a R1 million reward for information on a cash-in-transit heist that left two guards dead in Tsolo, Eastern Cape, on Friday.

It said in a statement that it took exception to loss of life and was offering the reward for information that would lead to the successful arrest and conviction of those involved.

Police spokesperson Brigadier Vishnu Naidoo previously told News24 that the guards were loading money at an ATM machine near a supermarket when a group of armed men pounced on them.

Naidoo said the suspects fled with an undisclosed amount of money in a hijacked van.

 

SBV said two of its guards were killed. The driver of the van was unharmed.

Counselling was being offered to those affected.

The company was also offering R100 000 rewards for information on heists that took place in Pietermaritzburg and Hammanskraal on Monday.

Security company Fidelity said on Saturday that despite figures indicating a reduction in cash-in-transit incidents during the month of June, it could be a different story for July.

"This week alone, there have been four cross pavement incidents and three vehicle attacks – one of these occurred in the Eastern Cape and two in Bloemfontein which is worrying as the crime could simply be dispersing into other areas," said Wahl Bartmann, CEO of Fidelity Security Group, in a statement.

Police officials on Friday welcomed the reduction of cash-in-transit robberies in the June figures, saying the implementation of the South African Police Service's nationwide stabilisation programme was paying off.

"These robberies have been reduced significantly by 61% in the month of June 2018, compared to the month of May 2018," Police Minister Bheki Cele and national police commissioner General Khehla John Sitole said in a joint statement.

More than 40 suspects had been arrested since June 4, 2018.

"Four of these suspects rank among the top 20 of identified suspects wanted for similar crimes," the statement read.

Cele and Sitole noted that despite the reduction in incidents, there had been several robberies and attempted robberies on cash-in-transit vehicles in the past week.

 

Source: News24

Absa is relaunching its brand next week. Last week it applied for new trademarks.
This is it's new (if still officially unconfirmed) logo – though we still don't know what it is doing with all the colours suddenly popping up.
Absa is due to relaunch its brand next week, but trademark filings show what its new logo will look like.

Absa applied for two new trademarks on 27 June, which now form part of public records, first spotted and reported by BusinessTech.

Absa has been using the word "digital" a great deal during 2018, and the new registrations have a distinctly digital feeling to them.

Absa has been dropping pointed hints towards its new identity since March.

It has also been using a range of colours in internal presentations since March – which seemed to have no meaning until similar colours started appearing on an in Absa headquarters in Johannesburg this week.

How the colours relate to the new identity is not clear, and as before Absa has resolutely refused to comment or answer questions.

However, Business Insider South Africa understands that staff in South Africa have been briefed about the new banner under which they will be working, and have kept the plans quiet to date.

Absa CEO Maria Ramos said in March that the new approach "will have something new and something old" "with an identity fit for the modern, new and forward-looking businesses we are creating."

"We are bringing Africa into Absa," she said.

 

Credit: Business Insider

The South African Reserve Bank has written to the National Credit Regulator requesting a probe into loan-origination fees charged by Capitec Bank Holdings Ltd., according to a person familiar with the matter.
 
The referral came after the issue was raised in a report by short-seller Viceroy Research in January, said the person, asking not to be identified because the matter is private. The investigation is ongoing, the person said. Capitec Chief Financial Officer Andre du Plessis said he was unaware of the central bank’s referral, or of an investigation by the Johannesburg-based NCR.
 
Capitec shares dropped as much as 4.3 percent and were trading down 1.9 percent at 870.89 rand at 9:05 a.m. in Johannesburg. The stock has declined 21 percent so far this year, more than any other lender in the six-member FTSE/JSE Africa Banks Index, which is down 5.3 percent.
 
In the January report, Viceroy said Capitec boosted its income by charging excessive fees on its multi-loan product, which carried a monthly charge for allowing a previously vetted customers to extend their facility by answering some questions. While Capitec said it terminated the product in 2016, after rules introduced by the NCR meant it was no longer viable, Viceroy said that the lender rebranded it and that Capitec’s methods risk over-indebting consumers.
 
Capitec denied this, saying Viceroy did not understand the product or how its processes work. The NCR had previously probed the multi-loan facility and was satisfied with the fees and interest charged, Capitec said on Feb. 8.
 
‘Very Active’
Both the Johannesburg-based NCR and Pretoria-based central bank declined to comment.
 
The central bank monitors lenders for their compliance with rules ranging from their operations and capital levels to staffing and money laundering, with the ability to fine companies or revoke their licenses. The NCR can also administer financial penalties on lenders which violate the National Credit Act, legislation aimed at protecting consumers from becoming over-indebted.
 
Officials from the central bank and the NCR told lawmakers in March that many of the allegations made by Viceroy were not new and that not all of them were accurate.
 
“The Reserve Bank is very active in doing ongoing reviews at all the banks,” said Du Plessis, speaking more broadly on the regulator’s oversight. “If anything bothers them, they actually contact us or ask that we report on something. That happens on an ongoing basis.”
 
On Friday, Capitec announced it had reached an agreement with Summit Financial Partners, which was challenging the lender in court and before the NCR on behalf of six complainants. The cases, which mostly centered on Capitec’s now defunct multi-loan facility, were withdrawn.
 
Source: Bloomberg News
Consumer watchdog Summit has withdrawn all assisted and initiated court and National Credit Regulator (NCR) cases it brought against Capitec.
 
The principle contention in these cases was against Capitec's Multi Loan product, which the bank discontinued in February 2016.
 
Summit Financial Partners' CEO, Clark Gardner, told Fin24 on Friday that it was a tough decision to settle with Capitec.
 
"Summit has always been about the consumer. The last six months or more, Summit and Capitec have been talking about how to improve the industry," said Gardner.
 
"Our view has been, after much deliberation, that it is in the best interest of consumers for Summit and Capitec to work together. None of the cases of complaints we had lodged had been decided on by the courts yet."
 
He said Summit and Capitec would now work on improving the unsecured lending industry in South Africa, in order to see how debt relief can be provided for consumers.
 
"We are really taking it seriously, and want a healthy unsecured lending industry in the country," he said.
 
Summit's primary concern with Capitec's Multi Loan product was the manner of the agreement, according to Gardner.
 
"To Capitec's credit, it stopped the product soon after our case had started, and the regulator also gave them a clear bill of health. So we concluded a forward-looking agreement where we will clean up the industry together from within.
 
"I am happy that we can be a positive force for change and consumers will come out far better."
 
"Both sides believed they had strong arguments. So, instead of continuing [to pay] high legal costs on something that is going nowhere in the courts, we decided to use our combined efforts on positive initiatives that will benefit the consumer," said Du Plessis.
 
"We will spend our money and resources on a programme to improve consumer financial literacy and consumer debt relief solutions. There is generally a lack of financial education in the market. Both Capitec and Summit believe we can help to address this."
 
He said Capitec does not believe there was anything "wrong" with the Multi Loan product, although it has since been discontinued.
 
"We now offer a credit card and a facility product to fulfil the needs of our clients," he explained.
 
The initiative with Summit will include programmes to improve consumer financial literacy, providing effective consumer debt relief solutions and building consumer financial capabilities.
 
Source: News24
Cape Town - The South African Human Rights Commission has said that economic challenges that prompted the VAT and fuel levy hikes announced in the budget could have been averted if the government had earlier demonstrated better management of the economy and clamped down on corruption. 
 
“Public and private sector corruption, according to the Auditor General, a fellow Chapter 9 Institution, costs the nation billions on an annual basis,” it said.
 
The commission, a national institution established to uphold constitutional democracy and human rights, said it believed a “significant portion” of the economic challenges facing SA could have been avoided had the state “demonstrated better management of the economy and demonstrated an intolerance toward corruption, inefficiency and maladministration”. 
 
In his maiden budget delivered on Wednesday, Finance Minister Malusi Gigaba announced that VAT would increase by one percentage point from 14% to 15%. 
 
The current zero-rating on foods including maize meal, brown bread, dried beans and rice would remain, and “limit the impact on the poorest households”. 
 
The SAHRC said it was “deeply concerned” that the VAT rate would go up, saying it was a tax that impacts the poor the most.
 
According to the budget, it is expected to bring in R22.9bn in additional revenue in the 2018/19 financial year. 
 
“Further, the SAHRC is also concerned with the increase in the fuel price through the introduction of a 52 cents per litre fuel levy,” it said. “This increase in fuel price particularly impacts on the poor as it affects the price of public transport and the price of goods as the vast majority of goods sold to the public are transported on the road.”
 
The commission also acknowledged that the budget was a “complex and difficult balancing act”, saying it was “fully aware” of the difficulties in limiting expenditure while collecting revenue through taxes and stimulating economic growth. 
 
Going up  
 
Gigaba had argued that the government was doing all it could to reduce the impact of the VAT hike on poor households, noting that the state was also boosting social grants payments and increasing the bottom three tax brackets.
 
He said plans to spend R57bn over three years on fee-free tertiary education for students with a family income below R350 000 per annum was another “important step forward in breaking the cycle of poverty and confronting youth unemployment”.
 
“Labour statistics show that unemployment is lowest for tertiary graduates,” he said.“Higher and further education and training is being made accessible to the children of workers and the poor.”
 
Source:News24
JOHANNESBURG - Old Mutual Plc returned to its South African roots on Tuesday when it listed its $11 billion African financial services business in Johannesburg, a move which largely completes a major overhaul of the company.
The 173-year old group has been disentangling its conglomerate structure created after a series of acquisitions since it moved its headquarters and primary listing to London in 1999.
Chief Executive Bruce Hemphill set the break-up in motion in 2016, saying the company’s four main businesses — a U.S. asset manager, a British wealth manager, an African financial services division and a South African bank — would achieve higher investor ratings as separate entities.
Old Mutual Plc’s African financial services business, Old Mutual Ltd, listed roughly 5 billion shares on Tuesday. They traded at 29.39 rand each during the session, valuing the company at roughly 145 billion rand ($10.7 billion).
Old Mutual Ltd, now the parent to what is left of Old Mutual plc, will also have a standard listing in London, and secondary listings on the stock exchanges of Malawi, Namibia, and Zimbabwe.
Hundreds of Old Mutual Ltd’s employees, blowing green vuzuzelas and beating drums, danced through the streets of Johannesburg ahead of the listing.
“What’s most exciting about our listing as an independent, standalone entity is that it enables us to unlock shareholder value and create a business with a strong strategic focus on sub-Saharan Africa,” Old Mutual Ltd’s chief executive Peter Moyo said.
MUTUAL AID
Old Mutual, which traces its roots back to the mid-19th as South Africa’s first mutual aid society with 166 members, has already sold its U.S. asset management business and on Monday separately listed its U.K wealth arm, renamed Quilter.
 
The break-up is part of a growing global trend for conglomerates to hive off bits of their businesses, sometimes in response to pressure from activist investors.
 
General Electric said earlier on Tuesday it would spin out its healthcare business and sell its stake in oil firm Baker Hughes, leaving the U.S. company focused on jet engines, power plants and renewable energy
 
“The nice thing about this Old Mutual break up is that you now have a vehicle that’s purely emerging market, if you want to buy that, and another vehicle that’s purely UK,” Michael Treherne, a portfolio manager at Vestact, said.
 
Later this year, Old Mutual’s African business will spin off part of its 53 percent interest in South Africa’s fourth largest lender, Nedbank.
 
Old Mutual, which will retain a roughly 20 percent stake in Nedbank, bought into the bank in 1986 when it was forced by apartheid South Africa’s strict capital controls into being a major shareholder in several local companies.
 
The company’s head office in London will be wound down this year. It has been cutting staff in London since it first announced the demerger two years ago. Staff numbers in London are expected to fall to around 40 this year from 120, Old Mutual has said. 
- REUTERS 
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