tame Times Fresh Approach to local news

Tag: Economy

Government Helps Struggling Businesses

President Cyril Ramaphosa has on Sunday unveiled plans to assist businesses caught up in the recent unrest in KwaZulu-Natal and Gauteng, and those SMMEs that have been affected by the Covid-19 pandemic that has ravaged the country’s economy.

The president eased lockdown restrictions in an address to the nation – imposed a month ago in an attempt to curb the spread of the deadly delta variant of the coronavirus. Ramaphosa also announced the reinstatement of a monthly welfare grant of R350 for the poor until the end of March 2022, along with a R400 million state contribution to the humanitarian relief fund.

A slight improvement in revenue collection has made this possible.

“We are also implementing measures to help businesses to rebuild. The most immediate need is to ensure that those businesses that were damaged or looted are able to rebuild and reopen as quickly as possible,” he said.

Ramaphosa said that South Africa is one of the few countries in the world to have a state-owned insurance company, SASRIA, which provides cover against incidents of public violence, strikes, riots, and national unrest.

SASRIA has committed to expediting the payment of all valid claims and is working together with private insurers, Ramaphosa said, adding that some businesses that were victims of this violence may not have been insured.

“We will not abandon them in their time of need. We are therefore working to extend support to uninsured businesses that were affected by the violence. The government will set aside dedicated funds for this purpose and we will soon announce a mechanism for these businesses to apply for support.”

Pandemic relief

Ramaphosa said that the government will reprioritise funding for SMMEs affected by the pandemic through a once-off business survival funding mechanism.

“We are also working with large businesses to determine their contribution to the support of SMMEs, job creation and eradication of hunger and poverty.”

The UIF will facilitate payments as quickly as possible to support workers who have not received an income.

“Most importantly, the UIF will provide income support to all those employees who have lost jobs as a result of the recent unrest,” the president said. This will ensure that jobs are protected and that workers can continue to earn an income as those businesses take time to rebuild.

“We are expanding the Employment Tax Incentive for a period of four months to include any employee earning below R6,500 and to increase the incentive amount by up to R750 per month.”

This will encourage employers to hire and retain employees, especially those in the retail and hospitality sectors that have been worst affected.

“We will also defer payment of PAYE taxes for a period of three months to provide businesses with additional cash flow, with an automatic deferral of 35% of PAYE liabilities for employers with revenue below R100 million.”

The payment of excise taxes by the alcohol sector will be deferred for a period of three months, to ease the burden on the sector as it recovers following yet another prohibition, the president said.

“These interventions are designed to extend as much relief as possible to individuals and businesses that are in need of support, without compromising our fiscal sustainability.”

Bloomberg reported that the South African economy shrank 7% in 2020, the most in a century, with unemployment at record highs as businesses closed their doors amid a pandemic that has lasted more than 18 months, and is still going strong.

The country’s struggles were exacerbated by the recent unrest in KwaZulu-Natal and Gauteng, which lead to violence and looting at the cost of many lives and damage to the industry. The South African Property Owners Association estimates a cost of around R50 billion in lost output while placing 150,000 jobs at risk.

South Africa’s Economy IS Recovering

President Cyril Ramaphosa believes that South Africa is beginning to see signs of economic recovery after the country’s economy was severely damaged by the Covid-19 pandemic. In his weekly letter to the public, president Ramaphosa cited data from the South African Revenue Service (SARS) which shows that the country recorded yet another record trade surplus in May, to the value of R54.6 billion.

The trade surplus is mostly driven by mineral and precious metal exports as well as exports of vehicle and transport equipment, chemical products, and agricultural products, according to Ramaphosa.

“High commodity prices and rising global demand is good for our economy, particularly the mining sector. Rising global metals prices will play a significant role in accelerating our recovery from the pandemic downturn. In addition, they open up a host of new opportunities in the mining value chain, boosting the fortunes of the mines themselves and with them the suppliers of capital goods and the options for beneficiation.”

Ramaphosa stated that mining has always had a dual role in the South African economy and society.

“On the one hand, mining contributes over half of our goods exports, around 10% of GDP and 5% of employment. It is a pillar of our capital goods industry. It is not a coincidence that when global metals prices peak, our economy and job creation also surge.” On the other hand, mining has historically been central to South Africa’s deep inequalities, he said.

“Ownership is concentrated in a few huge companies, while workplaces, pay-scales and communities around the mines are still largely shaped by discriminatory relationships established under apartheid.”

Ramaphosa said that the challenge is to benefit from the mining boom while laying the groundwork for more diversified, inclusive, and environmentally sustainable economic growth.

“In constant dollar terms, prices for most of our metals exports – led by platinum, gold and iron ore – are now as high as they were at the peak of the last commodity boom in 2011. These prices have helped sustain the economy despite the sharp decline in the hospitality and tourism industries. As a result, our growth has recovered far better than we thought possible in the bleak days of last April, although employment creation is still far behind.

“Now is the time to facilitate investment along the mining value chain to promote broader job creation, small business development and growth in dynamic new industries.”

Covid and Fraud Destroys Businesses

South Africa may have received global praise for its ability to flatten the COVID-19 curve for the first and second waves without access to vaccines, but it has come at a great cost for small- and medium-sized enterprises.  One year since the lockdown began, thousands of small businesses have been closed permanently and its owners and staff have joined the ranks of the unemployed.  The enforcement of lockdown restrictions and the up and down movement between lockdown levels have simply been to much for many businesses.

“We just thought, close for three weeks, we closed and then we’ll open with a bang. Six, eight months later, and now since 23 March [2020], I lost my restaurant and we never opened again. I couldn’t pay my March and April rent, so my landlord locked the doors,” said Nolene Potgieter, owner of a 400-seater franchise restaurant in Polokwane.

Nolene had 60 employees and was well on her way to living a debt-free life.  Then the pandemic hit South Africa and everything changed overnight.  Today Nolene has R3 million debt.  In an effort so survive the lockdown, Nolene partnered with an independent restaurant, but this only lasted for three months between October and December.  With the increased lockdown over December, her business earned only 15% of its income.

“It’s something that I don’t want anybody else to go through. Oh my goodness, I’m already getting so emotional and I haven’t been like this for the last year. Oh my goodness, I didn’t want this to happen…”

Meanwhile, the country’s economy declined by 7% last year. While the figure attached to negative growth is alarming and has broken records that date as far back as the 1920s, economic experts say it could have been much worse.

Johann De Lange, the Founder and director of business valuation company Worth.Business, said: “I think when you look at the 7% there was an expectation that it will be worse. So it is a little bit better and also businesses are bouncing back, they are adapting to the new normal. If you look at households, the same will apply. A lot of people lost their jobs, it is incredibly sad and disruptive but there needs to be an adaptation to the new normal whether it would be to be more entrepreneurial or need to be a little bit more flexible in terms of employment maybe take on some freelancing work and contract work, you do what you need to do to survive”.

Reabetswe Mabotja, owner of an Events company,  said that she followed the advice of experts and became innovative when she could no longer host weddings and events of 250 people and more.

“I started cooking everyday meals for lunch deliveries and home deliveries, for six people, eight people. We started doing gift packs instead of having these big celebrations that we used to. We would do balloons and cakes here and there.”

Unfortunately, this was not enough to see her through the economic storm that was brought on by COVID-19.

“That is actually something that I can do on my own and that means my employees are not coming into work at all. And I’ve got equipment. I have five, six storages that need rent,” she explained.

The Department of Small Business Development introduced a R500 million SMME support intervention for six months from April last year with the intention of assisting businesses with soft loan funding. But both Reabetswe and Nolen said that despite applying, the service was not availed to them.

SA Economy – The Worst is yet to come

If you have been following the news over the past two weeks as the second wave hit the country, you will be familiar with the bleak outlook for South Africa’s economy going forward.

In a research note published on Monday (18 January), Stellenbosch University’s Bureau for Economic Research (BER) pointed to the country’s Covid-19 numbers, which reached a weekly record in the first week of Janaury, as a concern.

“Subsequent daily releases of Covid-19 statistics suggest the picture has worsened since, with a record high of more than 800 deaths due to Covid-related complications recorded on Thursday (14 January) alone.

“Daily new infections have come down in recent days, but remain very high.”

Continued Load Shedding

The analysts said that the picture for the first quarter of 2021 is also more muted after stage 2 load shedding was implemented from Tuesday as 14,748 MW of generation capacity was unavailable due to unplanned maintenance, breakdowns and outages delays.

This was in addition to the 5,385 MW being unavailable due to planned maintenance and in total amounts to over 40% of Eskom’s installed generation capacity.

Over the weekend, Eskom also said that positive Covid-19 cases among employees were negatively affecting their operations and that of their suppliers.

“Looking further ahead, it is very concerning that Eskom’s forecast of demand and supply dynamics suggests that there is a risk of load-shedding every week for the next three months,” the BER said.

Financial support 

Despite restrictions continuing to weigh heavily on the hospitality and liquor industries, in particular, no mention has been made on additional (income) support for affected workers or businesses, according to the BER.

“However, later in the week encouraging reports emerged that business and labour are in negotiations with the government to extend the UIF/Ters scheme which ended in October.

“While Ramaphosa confirmed on Friday that government itself has no room to provide further fiscal support, it is estimated that the UIF has – if carefully managed – enough assets to allow for a further extension.

“This is especially so because the group of people affected by current restrictions is much smaller than before, but a particularly vulnerable group as their sectors have taken the strain from lockdown regulations for most of 2020. ”

The announcement by SA Breweries (SAB) that it would cancel another R2.5 billion of 2021 capital expenditure should not come as a surprise then, said the BER.

SAB had placed the investment under review pending “greater policy and regulatory certainty” which did not materialise amid a third outright alcohol ban and now warns it may have to consider even more “difficult measures”.

Vaccine Procurement and rollout

The BER said that there is still little clarity on South Africa’s actual vaccine strategy, including whether it refers to inoculations requiring only one shot, or two shots to be effective.

There are reports that  Treasury has agreed on an expedited payment process with the health department to buy more vaccines within a month, which is encouraging.

“Other tentative positive news is that, pending regulatory approval, the first batch of vaccines acquired from the Covax pool (in total set to cover 10% of South Africa’s population) will arrive in February already.”

Initial data from Israel, which has now provided a single vaccine dose to about 1 in 4 people, already shows promising signs of a slowdown in the rate of transmission and underscores how important it is to start the process as quickly as possible.

In terms of vaccination progress, Israel is followed by the United Arab Emirates (19% of the population), and Bahrain and the UK with about 6-8% of the population having received one dose already.

In the US, the percentage of people vaccinated remains lower (just below 4%) due to the large population, but their 7-day rolling average of daily vaccinations is now the highest in the world at close to 800,000 doses administered per day.

Lockdown Level 4 – Sooner than we think?

Moving back to an adjusted lockdown level 3 will without doubt, have an impact on South Africa’s struggling economy, but this time it will mostly be affecting the tourism and hospitality sector.

“The latest lockdown measures are more social than economic – so whilst there will be a negative drag, it will be slight,” said Peter Attard Montalto, Intellidex analyst.

Montalto however warned that there is a bigger issue facing South Africa and her people: the Covid data will get much worse in the latest wave of infections, which could very likely prompt further tightening. The uncertainty about South Africa’s access to a vaccine, and the possibility of a rate cut by the South African Reserve Bank in January makes it incredibly difficult to predict where the economy is headed in 2021.

Assessing the new lockdown measures announced by president Ramaphosa this week, Attard Montalto said that the address was high in emotion, but on paper didn’t shift things around too much.

“The use of the term ‘adjusted alert level 3’ is meaningless – both vs the previous levels and also any sense of what a step to level 4 or level 3 from here would be,” he said.

“The regulations should be viewed in isolation. Overall, the social aspects (gatherings and curfew) are harsher than the previous level 3 but the economic aspects are lighter. We think the phrase is mainly being used for signalling purposes.”

Montalto noted that there was no shift in travel rules – either interprovincial or internationally – and there was no announcements with regards to schools. There was also no information on additional economic support for South Africans or businesses affected by the decision.

The bulk of the focus was on the tourism and hospitality sector, where restaurants will be forced to close earlier due to curfew, and alcohol sales are once again banned.

“We have a lighter lockdown now, but less stimulus support – we still judge it to be a limited, but negative impact on growth. The impacts on growth will be concentrated in the tourism and hospitality sectors with others affected only by weaker sentiment on vaccine uncertainties and worries over what is to come,” Montalto said.

What is likely to come?

“Viewed in isolation as a period of now till 15 January we see this slowing the recovery but not derailing it,” the analyst said.

“We will however likely get a longer period of lockdown now through until, say, start February or beyond – and then further waves later in the year.”

He said that the problem for South Africa is that with social adherence to preventative measures low, and with a large stock of transmissions over Christmas filtering their way through to the data (cases and deaths) in the coming weeks – the data is going to keep getting worse through and after the 15 January assessment.

“Equally, the point of vaccine herd immunity – whatever that is, lets say 60% – is still some way off.

“As such we have a worsening crisis short-run, a strong possibility of a third wave mid 2021, and then a smaller fourth wave into end 2021. Restrictions cannot last this long – but they can be extended; we think well beyond 15 January,” he said.

Thus talk of stronger economic growth in 2021 – around 4.2% – is heavily slanting to the downside, with leanings toward 3.5% seeming much more realistic.

The Consequences of Mini Lockdowns

With mini, or ‘snap’ lockdowns now almost certain for areas of South Africa where Covid-19 infections have seen a sudden spike, economists at the University of Stellenbosch’s Bureau for Economic Research (BER) say this will be bad news for economic recovery in the country.

The BER said that the whole of South Africa is seeing a steady rise in new coronavirus cases, with the seven-day rolling average now at about 2,900 daily cases, from 1,500 cases at the start of November.

This is still off from the 12,000-plus daily cases seen at the peak of the virus in June and July, but is showing a definite trend upwards.

The fresh surge is largely due to the spike in cases experienced in the Eastern and Western Cape, the BER said, with authorities officially characterising it as a resurgence.

“The Western Cape government said that the province is now officially experiencing a resurgence of the virus as active cases jumped by more than 20%, week-on-week. In fact, new cases rose by more than 52% over the past week in the Western Cape with community transmission again established. The province issued a hotspot alert for the Garden Route as well as the City of Cape Town. George and Knysna recorded more new cases than during the peak of the nationwide pandemic in July. Health minister Dr Zweli Mkhize also expressed concern about the number of positive cases as well as rising hospital admissions and deaths from the virus in the Eastern Cape,” the BER said.

While the Western Cape government has made it clear that South Africa cannot afford another nationwide lockdown, it, along with the Eastern Cape, have seriously considered implementing tighter restrictions in hotspot areas – a type of mini lockdown, or snap lockdown, similar to those seen across European cities.  Reports suggest that these lockdowns will probably be level 3 restrictions.

“While in theory, local, or snap lockdowns could be a sensible approach to ensure that a region’s health system can cope with a sudden rise in cases, it will be challenging to implement this in practice – especially ahead of the festive season,” it said. “Furthermore, local lockdowns will be a setback to the economic recovery in those regions.”

Level 3 focused mainly on restrictions on alcohol, leisure travel, social visits and large gatherings.  It will also mean that those who can effectively work from home will be required to do so.  People will be prohibited from leaving their homes except for travel to and from work and for essential shopping and emergencies.  Hotels and accommodation will be closed.

These restrictions will end the upward trend observed in the economy.  South Africa can ill afford further economic decline with several state owned companies barely staying afloat.  “The improvement in business confidence was supported by a broad-based recovery in all sectors included in the index. However, the consumer-linked sectors performed much better than manufacturing and in particular building.

“While this does raise some questions about the sustainability of the improvement, the fact that some growth momentum seems to have been sustained from Q3 to Q4 was heartening,” it said.

UK Economy Rebounds While World Struggles

Britain’s economy have seen a record rebound in the third quarter following its deepest ever recession, official data showed on Thursday.The GDP (Gross Domestic Product) expanded by 15.5% in the July-September period, as an initial coronavirus lockdown was eased, said the Office for National Statistics in a statement. Economic activity bounced back after shrinking by almost a fifth in the second quarter on the initial COVID-19 lockdown.

The economy is still wrestling with the virus fallout according to the data, which was published one day after Britain’s COVID-19 death toll passed the grim milestone of 50,000.  In September, growth slowed with a month-on-month expansion of just 1.1%, after the end of the government’s restaurant discount scheme for the virus-plagued hospitality sector.

Output was also hit when localised measures to control the virus spread were imposed in September in parts of northern and central England, as well as in Scotland and Wales.  Country-wide restrictions, which began last week, are meanwhile serving up a fresh dose of economic misery in the current fourth quarter.


“Today’s figures show that our economy was recovering over the summer, but started to slow going into autumn,” said Rishi Sunak, the finance minister.  “The steps we’ve had to take since to halt the spread of the virus mean growth has likely slowed further since then. But there are reasons to be cautiously optimistic on the health side – including promising news on tests and vaccines.”

Last week Sunak announced a new multi-billion-pound support package, extending his government’s furlough jobs scheme to the end of March. The Bank of England (BoE) at the same time injected an extra £150 billion in cash stimulus to aid growth. Britain plunged into a downturn after imposing a lockdown on 23 March that lasted until mid-June.

The economy shrank by a record of 19.8% in the second quarter after a 2.5% contraction in the prior three months, meeting the technical definition of a recession. The unemployment rate jumped to 4.8% in the third quarter as the pandemic destroyed a record number of jobs.


The outlook brightened this week after US pharma giant Pfizer and Germany’s BioNTech announced that their candidate for a Covid-19 vaccine had been 90% effective, boosting hopes of a return to normality next year.  On Thursday BoE governor Andrew Bailey  described the vaccine announcement as “encouraging”. “The news is encouraging, we have to be cautious. It’s mostly consistent with what we had forecast but it’s encouraging. It reduces uncertainty,” Bailey said in an online conference.

Laith Khalaf, analyst at AJ Bell, said “the real litmus test for the economy going forward is how soon it can return to pre-pandemic levels.  News of a potential vaccine makes the climb back look a lot less daunting, not only because it offers the prospect of a brighter future, but also because it gives businesses and individuals greater confidence. Businesses can see a glimmer of light at the end of the tunnel, rather than an interminable struggle to stay afloat,” Khalaf added.

For how long will the ZAR perform this well?

Because of the continued rise in risk appetite and the demand for higher yield assets, the ZAR continued an upward trend and gained significan ground against most major currencies this week.

The ZAR closed at GBP/ZAR 21.26 last week Tuesday on the back of continued rise in risk sentiment. This was because on a stronger stock market and better economic data from China (a leading driver of emerging market demand). This drove commodity prices higher during the early parts of last week and bode well for the Johannesburg Stock Exchange’s (JSE) resources sector.

Government reactions to the economic impact of the Coronavirus continues to be a key factor in the global economic environment. Until now, Governments from the developed world have been forced to significantly lower interest rates and drive down their asset yields. This, in turn, has created an interesting opportunity for emerging markets (with relatively high interest rates) whose asset yields have continued to outperform their developed country counterparts. South Africa, in this regard, is no exception. The demand for higher yields has contributed significantly to a stronger ZAR over the past week.

The rand maintained its strong performance from the previous week by closing at GBP/ZAR 21.26 on Tuesday last week. This trend continued for most of last week as the ZAR closed at 21.09 to the pound on Friday. The coming week may see some volatility as important data is released. Later today the release of unemployment and inflation data in South Africa. The Medium-Term Budget Policy Statement on Wednesday will also be a significant driver of volatility. Economists expect a large budget deficit (the largest in 14 years) due to the effects of Coronavirus and the subsequent lockdown on the local economy.



  • SA: Unemployment data


  • SA: Inflation data
  • SA: Medium-Term Budget Policy Statement


  • SA: M3 Money Supply and Private Sector Credit Data
  • US: GDP data


  • EU: GDP and inflation data
  • SA: Balance of Trade


  • SA: Manufacturing data

About Tame Times

Tame Communications (known as tameTIMES) was established in 1997. This long-established popular community title includes the key shopping centres:  Alberton City, Mall...

Get in Touch