Home » Articles Posted by Luvuyo Mdeni

Author Archives: Luvuyo Mdeni

SA well-resourced to cope with any outbreak of coronavirus: WHO
29 February 2020, 7:04 PM

CORRECTION: The headline and details of this story have been corrected

The World Health Organisation (WHO) says South Africa is well resourced to cope with any outbreak of the coronavirus and the WHO is working with South African authorities regarding the activation of necessary resources if required.

South Africa has been classed as a priority-one country because of the large number of travellers to and from the country – among other things.

The WHO is offering urgent support in certain areas regarding preparations to deal with the coronavirus.

The WHO has deployed personnel to countries in Africa, including South Africa. It says it has been assessing the continent’s preparedness.

Globally, close to 86 000 people have been infected in over 50 countries and almost 3 000 people have died from COVID 19 – the vast majority in China.

On the African continent, cases have been confirmed in Egypt, Nigeria and Algeria.

Technical Officer at the WHO Regional Office for Africa, Dr Mary Stephens, says they will continue to assist South Africa and other countries.

“The major areas we saw challenges with regards to preparedness was the areas of infection prevention and control and also case management. What we are doing is to provide targeted support to these countries in addressing those areas with greatest need. We have deployed experts to most of the priority one countries including South Africa and a lot of the priority two countries to help them address those gaps in those critical areas where we think they need urgent support.”

Joined via skype Dr Mary Stephens says the communities need the correct information on the virus itself.

The Organisation says if the outbreak of the deadly coronavirus hits Africa, it is ready to respond effectively and provide additional support to countries within 48 hours.

As the spread of the deadly coronavirus shows no sign of abating with Qatar now confirming its first case.

South Africa and coronavirus

Health Minister, Zweli Mkhize has appealed to South Africans not to cause unnecessary panic over the global spread of the coronavirus. Mkhize says experts in designated areas are ready to respond if the coronavirus were to spread further across the world and classified as a pandemic.

South Africans have mixed reactions to the government’s preparedness in the event of it reaching the country’s shores. However, Mkhize has moved swiftly to allay these fears.

“Our government has done enough to make sure that we are safe from coronavirus, that is why we haven’t heard any reports of it in our country. 2. I feel like not much has been done, these people should go in schools to educate our children and even produce books,” says Mkhize.

Repatriation of SA citizens from China

South Africa’s inter-ministerial committee on the spread of the Covid-19 viral disease is set to brief the media at the OR Tambo International airport, on Sunday.

The briefing is to inform the public on the repatriation and quarantine of South African citizens from Wuhan in China.

President Cyril Ramaphosa on Thursday ordered the repatriation of nearly 200 South Africans from the central Chinese city of Wuhan, the epicentre of the coronavirus outbreak.

At least 132 South Africans, who are currently in China, will be repatriated back home. Upon arrival, they will be held in quarantine to ensure that they do not have COVID 19.

South Africans tested positive in Japan 

The Department of Health says two South Africans working on Japanese Princess Diamond Cruise ship have tested positive for the coronavirus.

Japan’s health minister says 41 people on board the Diamond Princess had tested positive for coronavirus in addition to 20 previously identified cases, with those infected being moved to hospitals on land.

The Diamond Princess had been quarantined to ensure that the virus does not spread into mainland Japan.

Globally, more than 80 000 in nearly 50 countries – have been infected with the virus and close to 2 800 people have died the majority in China’s Hubei province.

There are rising fears that the COVID-19 virus could spread further.

The WHO has declared the outbreak a Public Health Emergency of International Concern.

Below is a Live Tracking of the cases, death toll and other information:



Another tough balancing act for Mboweni: Nkomo
24 February 2020, 4:50 PM

Be crystal clear in your plans, that’s the sentiment from economists to Finance Minister Tito Mboweni ahead of his much-anticipated budget speech on Wednesday.

Mboweni will deliver the speech at the time when the country is experiencing sluggish economic growth, the economy is on the verge of a complete downgrade by all three major credit rating agencies.

Much of the focus from Mboweni’s speech will centre on the government’s plans to get money, particularly for the NHI.

Inkunzi Investments Chief Executive Officer (CEO) Owen Nkomo anticipates that nothing drastic will to come out of the speech.

“We believe that we’re still going to be dilly-dallying around in terms of how to fix this difficult position that we have found ourselves in. I do not expect any major concrete decisions to come through. I expect minor changes to be made. And I think that that is quite unfortunate because it will only make things worse for us,” says Nkomo.

AUDIO: Owen Nkomo on the outcome out of the speech

‘Same as previous year’

The 2020 Budget will be the same as that of the previous year, according to Nkomo. “From the budget – expect more of last year, given that the budget was a balancing act between revenues that come in and expenses that go out from that.” Suggestions are that if there is any change to be anticipated is the backdrop that Mboweni would have been under more pressure compared to when he delivered his median budget in 2019.

This budget, however, presents its own complexities suggests Nkomo “It’s going to be another tough balancing act.”

Rating agencies will keep a hawk-eye as the minister stands before parliament, having recently cut  South Africa’s growth forecast, Moody’s remains the only agency to deem the countries credit rating as “junk”.

According to Moody’s, the economy remains stuck in low gear due to lacklustre domestic private-sector demand. In a research report, Moody’s also attributed the scaled-down forecast to the detrimental impact of the continuing load shedding on the country’s manufacturing and mining activity.

The rating agency left South Africa on the verge of “junk” status last year after it revised the outlook on the country’s last investment-grade credit rating to negative.

Mboweni’s speech is seen as an important event leading up to the ratings agency’s next scheduled review of the country next month.

The 0.7% growth forecast by Moody’s adds weight to Mboweni’s pursuit of more money for the state.

‘Negative growth’

South Africa’s economy continues to receive “negative growth” forecasts from various corners. The World Bank earlier cut economic growth to 0.9%  for 2020 due to electricity concerns. The bank cited electricity supply and infrastructure constraints as impediments to domestic growth.


source: tradingeconomics.com

It is without a doubt that the minister faces an unenviable task to try to increase revenue in the economy.

Tax specialist Joon Chong highlights that an increase in Capital Gains Tax (CGT) could be insight for the minister.

“A potential area that could bring in more revenue would be the CGT inclusion rate for individuals. Currently, the rate is at 40% and for companies at 80%. So there could potentially be the CGT inclusion rate for individuals could potentially increase to perhaps 60% or perhaps even to make it the same as 80%, the same as companies.”

The majority of South Africans are keen to find out how Mboweni’s pronouncements will affect their pockets, labour unions will also anxiously monitor the speech.

Joon suggests that pursuing tax increases does not hit all sectors of the economy equally.

“Other taxes that could come in, could be tabling of a wealth tax… And perhaps what would be an easy source of revenue, although not a popular source of revenue at all, would be half a percent increase in VAT or even a 1 percent increase in VAT. The difficult thing about that is it’s very unpopular.  It does not impact all sectors of the economy equally. And it is a year where the election is imminent. So all in all, increasing revenue is vitally important and this has to be balanced with incentives and measures to promote growth in the economy.”

AUDIO: Tax Specialist Joon Chong on pursuing tax increases


2020 Budget Speech
24 February 2020, 4:25 PM
#Budget2020: ‘Substance over Bluster’
24 February 2020, 4:25 PM

By Busi Mavuso

There is much riding on the contents of this week’s budget speech. Perhaps a little more this time because of a slide into full-blown “junk” status, which is a very clear and present danger.

What I am expecting from an understandably exasperated Finance Minister in Tito Mboweni is some strong words against the state’s bloated wage bill and warnings about the continued bailing out of troubled state-owned enterprises. A valiant cause, but we are now at a point where details are needed of just what actions will be taken.

We need the actual numbers and for the first time, the speech will matter a whole lot less. On the matter of the wage bill, Treasury indicated in the medium-term budget statement that it would find some R150 billion in savings over the medium term and deliver details next week.

Now these are savings that will no doubt have depended on negotiating steep reductions in the wage bill with unions. But in the four months since that promise, there has been little evidence that there has been any formal let alone any informal talks with the ANC’s alliance partner, Cosatu, whose strength now lies predominantly in the public sector.

There’s a credibility risk of putting in anything when there is no firm position having been put to unions and no entering of negotiations at the bargaining council.

These are the sort of details that Moody’s Investors Services, the last ratings agency to have us hanging on by a thread to investment grade, will want to see from Treasury. My fear is that the speech along with the budget review documents will continue to walk a narrow tightrope of what is credible and what is not.

We’d best hope that the strong words from Minister Mboweni are indeed followed by his staff, who have in recent history proved risk-averse against pencilling anything in that has not been politically agreed. And an issue such as that of public sector wages, we know to be a particularly hot potato.

Within political corridors, there is little to no political space for a meaningful shift on the expenditure side either as part of macroeconomic policy or indeed on specifics like public sector wages. The ANC NEC has not provided any kind of sign off for such. As such all that is available is for Treasury staff is the matter of fiddling with what you can.

But it can’t be business as usual, there’s no tar left to continue kicking that can down the road.

With government revenues under pressure and expenditure at elevated levels, there’s simply no getting round focussing on matters such as the wage bill. But as business, we are mindful that a drastic cut in staffing numbers is undesirable in a climate of such heightened unemployment and low growth. It would only serve to further dampen demand in an economy that is in desperate need of its stimulatory effects.

To mitigate these perhaps unavoidable consequences on reduction if not the amount of workers but their remuneration, as business we have already committed to participating in government’s R500 billion infrastructure fund that would be hosted by the Development Bank of Southern Africa. This plan was mooted in Octobers’ medium-term budget speech, its details are urgent.

What’s been mooted in the market is the possibility of yet another VAT hike to boost falling revenues. With local elections more than a year away and other ANC contests further down the line, economists have suggested that there may be room for a rise. It’s a tiny window and one feels that to politically damaging for the Presidency.

As regards to our state-owned enterprises, not enough can be said on the threat that these ailing giants on the sovereign and the future competitiveness of the economy. However, these past four months have seen some tough calls made on South African Airways such as placing it in business rescue, that do signal a change in government thinking. Long overdue it may have been, but it at least showed some level of a state to facing up to some hard realities.

In much a similar vein, the fact that the government is now willing to listen and accept that fixing the issue of load-shedding is more long-term nature is a welcome change. For a period of between 18 months and a full two years, Eskom will have to follow a schedule of load-shedding if the power utility is to finally overcome its maintenance backlog.

It will no doubt be a weight on the country’s growth prospects and may even possibly a slide into recession, but it would at least provide some level certainty to the market. For the utility itself and it’s recently appointed chief executive officer, Andre de Ruyter, it allows the space for an operational focus. Measures previously suggested to ease pressure off Eskom include the energy regulation act to be amended to lift the license exemption from 1MW to 10MW.

There’s certainly a shift in just how the state views its state-owned enterprises, but SAA, SA Express, Eskom and South African Post Office still all need financial support. Never mind the irritation that will be evident in Mboweni’s speech about these institutions. Eskom’s more than R450 billion debt, being the most pressing emergency of all.

In this budget speech, it’s all about substance over spectacle. It will determine whether Moody’s takes action next month or that it gives the country another chance. The agency has already downgraded our growth forecast, which wasn’t surprising. A downgrade will not rotate on this.

It’s a close-run thing of whether Moody’s will downgrade the country now or later in the year. What dictates whether it happens in March is whether the speech next week comes with substance to Treasury’s cause.

Busi Mavuso is the CEO at Business Leadership South Africa

Mboweni might not please everyone in his #Budget2020
20 February 2020, 1:59 PM

By Yolandi Esterhuizen 

On 26 February, Finance Minister Tito Mboweni will deliver what may be one of the most important South African budget speeches of the past 20 years. As he has indicated in public remarks over the past few weeks, he is keenly aware that government is rapidly running out of time and space to revive economic growth and put public finances on a sounder footing.

With the sword of a potential (some might say likely) downgrade of South Africa’s sovereign credit rating hanging over his head, near-record levels of unemployment, and limited fiscal room, Minister Mboweni is under pressure to deliver bold reforms. And to restore investor and business confidence he may need to take some steps that will be unpopular with taxpayers and constituencies like the trade unions.

Here a few points I am keen for the Minister to address in the Budget Speech:

  1. Inequality and the national minimum wage

A national minimum wage came into effect in South Africa on 1 January 2019 after several years of political debate. Despite concerns from unions that it is not a genuine living wage, and from businesses about affordability, a minimum wage that sets a baseline for industries that did not previously have a regulating measure was a step in the right direction.

I’d be interested in seeing the statistics on employer compliance. Trade unions are pushing government to hike the minimum wage by 12.5% this year – will government concede when unemployment is so high and growth so low?

With the recent changes in employment equity reporting requirements, government will have more accurate data about wage disparities between the highest and lowest paid employees in local companies. Given better information about wage gaps into different industries, government may be better placed to set benchmarks for different sectors.

  1. Tax increases

According to the Minister’s medium-term budget policy statement in October 2019, government debt will most likely exceed 70% of GDP by 2022/23 without any policy adjustments. National debt is expected to balloon from R3,2 trillion to R4.5 trillion in the next three years. Government needs an additional R150 billion in the same timeframe to meet its fiscal targets.

Between state owned enterprises burdened with debt, new spending priorities like National Health Insurance (NHI), and the ongoing need to invest in infrastructure and services, government has to raise more taxes and cut back on spending. Higher sin taxes and fuel levies are a given, but it also seems possible that we will see further personal income tax increases or a VAT increase or possibly both.

Room for manoeuvre is severely limited. According to SARS, only about 3 million taxpayers paid 97% of income tax last year and taking more money out their pockets could dampen economic growth and in turn reduce tax receipts in future years. And severe cutbacks on government spending would not only be politically unpopular, but also harm economic growth — Minster Mboweni has a delicate balancing act to pull off.

  1. Youth unemployment

With unemployment at around 29% and youth unemployment of over 50%, joblessness is a major source of suffering and a threat to social stability in South Africa. The outlook is grim, with companies in sectors as diverse as financial services, retail, telecoms and technology announcing plans to retrench thousands of employees over the past few months.

I am hoping to hear that government is taking drastic steps to address this crisis. A good place to start would be to streamline the administration of the Employment Tax Incentive. While well-intentioned, many small businesses find it so burdensome to administer this incentive that they prefer not to claim.

There are other schemes that should also be better explained and marketed – for example, the Youth Employment Service programme (YES), which is a partnership between business, government and labour. YES aims to create one million jobs for youth. In this process, firms can gain one or two levels on their B-BBEE scorecard.

  1. Annuitisation of provident funds

To recap, National Treasury several years ago harmonised how all types of retirement funds (pension, provident and retirement annuity) are treated under South African tax law.

An employer’s contribution towards any pension, provident or retirement annuity fund are now all treated as a taxable fringe benefit for the employee. Plus, a tax deduction is allowed for both the employee contribution and the fringe benefit of these funds, subject to certain limits whereas no deduction was allowed in the past for provident fund contributions.

National Treasury also proposed that the treatment of pay-outs should be aligned. In the same way as members of other retirement funds, provident fund members would only be permitted to take one third as a lumpsum on retirement and obliged to annuitise two thirds. Implementation of this annuitisation requirement was postponed several times, most recently to March 2021.

I’m curious to see if government will finally bite the bullet on this issue, despite trade union opposition. Ultimately, if the pay-outs for all classes of retirement fund cannot be standardised, the reforms may need to be rolled back and contributions may need to be treated in the same way as they were in the past.

Yolandi Esterhuizen is a registered tax practitioner & Compliance Manager with Sage Africa & Middle East



SABC © 2020