Just over 32 years ago in 1987, Clem Sunter published a book entitled The World and South Africa in the 1990s . For South Africa, he played the ‘High Road’ scenario where proper negotiations between the real leaders of the major parties would produce a political settlement that allowed the country to return to the world stage. However, he made it clear that in the long run a thriving economy in which everyone participated was a precondition for the country to become a winning nation.
Over the last few months, Minister Mboweni has made a number of telling tweets that has caused the ruling party to distance themselves from his tweets and haul him over the coals! However it would appear that the minister is being a realist and his tweets are more like an impassioned plea for all to understand the predicament we are in. An extract from a recent speech by Minister Mboweni, points out the key reforms that are needed to facilitate the following:
A good start to the new year when the Reserve bank announced a surprise reduction of 25 basis points to the repo rate. Good news for those with borrowings and the forecast is that we should get another cut in the 4th quarter 2020.
South Africa will be holding its breathe at 14h00 Wednesday 26th February 2020 as Minister Mboweni presents his Budget for the 2021 financial year. There literally can only be bad news as the whole country is going to be affected by whatever reforms will be announced, but without these reforms South Africa will undoubtedly fail, so we need to make short to medium term sacrifices. There will be increased taxes, what shape or form is anyone’s guess. But this needs to be accompanied with a reduced Government wage bill and holes plugged in our leaking State-Owned Entities.
A recent report from STATSA states that annual inflation eased further in November, falling to 3,6% from October’s 3,7%. This is the third successive month of disinflation, which means that the pace of price increases is slowing down.
Gazetting of the Carbon Offsets Regulations in Terms of the Carbon Tax Act and Related Draft Regulations for Public Comment
The Carbon Tax Act (Act No. 15 of 2019) was signed into law by the President in May 2019 and came into effect from 1 June 2019. In terms of section 19(c) of the Carbon Tax Act, the Carbon Offsets Regulation was gazetted on Friday 29 November 2019 (Gazette No. 42873) and is available on the National Treasury website.
South Africa is a resilient country. It has survived internal strife and looked into deep and dark abysses in the past yet has always come out on top - or at least with positive intent to rebuild on the foundations of our society. But it has been a long time since such negativity has prevailed with the ongoing saga of state capture and failure after failure of State-Owned Entities.
Large fiscal deficits incurred over the years, although providing short-term support to the economy, have not resulted in commensurate long-term economic growth. This has led to sharp increases in the government’s debt-to-GDP ratio, which currently stands at 60.8 per cent, and is expected to rise to 71.3 per cent in 2022/23. The growing proportion of limited public resources spent on interest payments are crowding out spending on social and economic investment.
In February 2019, the president announced the separation of Eskom into three distinct entities: generation, transmission and distribution. The primary objective being to allow each entity to focus on enhancing efficiency, reducing costs and optimising investment on a specific function, rather than trading off efforts amongst all three. In addition, the capital structure will ultimately be amended to end all reliance of Eskom on government support. Functional separation to wholly owned subsidiaries with independent Boards is scheduled to be complete by March 2020, with legal separation of the distribution and generation functions by December 2021.
Policy certainty and a conducive business environment are critical to support the confidence of businesses and households. A robust monetary policy framework has provided certainty but needs to be complemented with a range of reforms that are within government’s control and do not require significant funding. These would help to raise long-term growth.
The 2019 MTBPS has been presented by Minister Tito Mboweni. His opening statement was a reference to the Aloe Ferox plant he brought to Parliament when presenting the February 2019 budget.
South Africa has limited growth potential in the short term. While government gets its house in order, we need to make sure that, as business owners, we have the correct strategy in place to meet the challenges that face us. Real value lies in the process of putting the plan together. The act of planning helps you think things through thoroughly, and to critically re-assess your assumptions and ideas. A good strategy needs to be short, sharp and coherent, with a strong opening paragraph illustrating where you are going and how you aim to get there.
The latest social media phenomenon in South Africa is a Facebook page started just over a month ago which now has 750 000 followers! It’s a collective of positive sentiments about South Africa from people of all walks of life. Now it looks set to play a role in job creation and stimulating the economy. A positive step in any one’s books!
In a very recent public spat, the board of Old Mutual and its CEO have had an acrimonious relationship, with the CEO wanting to declare the entire board of Directors delinquent after having been fired for conflict of interest. Being declared a delinquent director is not a common occurrence and we thought it may well be of interest to list the ground for Delinquency.
The Minister of Finance, Tito Mboweni, will deliver the MTPBS on the 29th October 2019 at 14h00. This speech is seen by most as a watershed moment. If dramatic action is not taken to address all the current economic ills of South Africa, the ramifications could be dire with ratings agencies and international investors effectively turning their back on South Africa.
The Minister of Finance, Mr Tito Mboweni, called on members of the public to make comments on a paper titled: “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa”.
Unlike conventional trusts, which are taxed at a flat rate of tax, a special trust is taxed on the same sliding scale applicable to natural persons. For tax purposes the following types of special trusts are recognised:
Many may think that they are not old enough or wealthy enough to warrant doing any estate planning. However, if a person is over the age of eighteen, no matter how small their estate is, it is advisable to begin the process. Where an estate planner is “at” in life, will determine your strategic plan for your estate, and which techniques to use in order to implement in the plan. An estate planner may be single, married, divorced, or separated. You may have minor children or adult children. You may be married for a second or third time, with children from previous marriages. You may own assets with a strong growth potential.
Much has been publicised about the potential implementation of prescribed investments and resultant impact on investment returns. This policy was previously followed by the Nationalist Party but abolished in the late 1980’s.
The NHI Bill was recently promulgated amid a mixed reaction sentiment, positive and negative. While one can identify strongly with the rationale, affordability is paramount as is the management of such a fund.
Since the 1980’s there has been a global movement towards sustainability and sustainable development – as countries and governments have realised that economic development at the cost of destroying the planet’s natural resources and social equity does not lead to long-lasting prosperity.
News channels throughout South Africa are bombarding us daily with negative news on the South African economy. While it is pretty much a global issue, our situation is compounded by the ravages of state capture and the abuse of taxpayer’s money. From a global perspective, South Africa is the 67th most competitive nation in the world out of 140 countries ranked in the 2018 edition of the Global Competitiveness Report published by the World Economic Forum. Competitiveness Rank in South Africa averaged 51 from 2007 until 2018, reaching an all-time high of 67 in 2018 and a record low of 35 in 2007.
There are a number of important submission deadlines over the next few months. Make a note of the following and should you require assistance please do not hesitate to contact us for professional advice.