The Extra Costs of the New Driving Demerit System

The Administrative Adjudication of Road Traffic Offences Act was signed into law in August 2019, but now South African watchdogs have unearthed hidden costs when draft regulations were published on Friday by the Department of Transport, which introduced a number of controversial charges. 

These seem to be geared towards revenue collection rather than creating a safer driving environment in South Africa according to the Automobile Association of South Africa (AA).

Here are the most notable changes.

R100 Penalty Automatically Applied to Each Fine

An Infringement Penalty Levy will be introduced according to the AA. This means that for every infringement notice issued, a fee will be added to this. No matter what the amount is for the fine an extra R100 is added, which is then a tax for actually receiving the fine. According to Outa, there is no discount available on this R100 levy. 

Pay to Find Out How Many Demerit Points You Have

If you want to find out how many demerit points you have then you will need to pay up to R240 according to the AA. This also means that fleet operators and companies could be looking at paying thousand to enquire. Also, to get a copy of infringement reports, motorists can expect to pay R60 per report according to Outa. 

Pay for Challenging Fines

According to Outa, those that pay their fines within 28 days will be able to get a 50% discount, however, if you pay late or challenge your fine then you will face some extra fees. Your first reminder letter could cost R100 and another R100 fee is issued for an enforcement order confirming the fine and demerits. 

Paying for E-Tolls

Even though the government has been quiet recently on the status of e-tolls, Outa has said that the new draft regulations will open the door for this controversial tolling system. 

According to Outa, schedule 3 of the regulations include charge codes that say that failure to comply with the direction conveyed by a road traffic sign by using a toll road without paying the toll charge will be fined. Vehicles that do not require a roadworthy certificate will receive a discounted fine of R125 and no demerits and vehicles that do require roadworthy certificate will receive a discounted fine of R250 and one demerit point.  

Article Source: https://businesstech.co.za/news/motoring/347884/south-africas-new-driving-demerit-system-here-are-the-extra-costs-you-can-expect/

Common Reasons Why Loans Are Rejected in SA

Personal loans can help to pay for those big purchases or can provide relief in an emergency. You can also use a personal loan to consolidate your debt, so that you have just one lower monthly payment. 

Many of us have probably applied for a personal loan at some point, but not everyone is successful in getting one. 

One of the main reasons for this is because the consumer is over indebted according to the executive head of online comparison website, Hippo.co.za, Vera Nagtegaal. She went on to say that credit providers have a responsibility to ensure that applicants can pay back the loan and don’t end up in a spiralling debt pit. 

South Africans have over R1.7 trillion of consumer debt and in an attempt to try and diminish this, president Cyril Ramaphosa signed the National Credit Amendment Bill that could write off the debt of millions of South Africans. 

The controversial legislation aims to give debt relief to those that earn up to R7500 per month and have up to R50 000 of unsecured debt. Debt relief is provided by suspending part or all of the debt. 

However, Nagtegaal pointed out that whilst those that qualify could have their slate wiped clean, it shows on their credit record. This could then affect their approval chances for any loans in the future. A financial institution will not lend money if there is a chance that it can’t be paid back. 

When financial institutions are considering issuing a loan there are some key factors they look at. 

Employment Status

Your application will only be considered by many providers if you have a permanent job and have been working in your place of employment for 6 months or more. 

Others just need you to have a steady income, but if your income history is irregular then a lender might be reluctant to provide you with a loan. 

Bank Account

You will need to have a South African bank account where your salary is paid into directly each month. If you are paid weekly or fortnightly then you can still apply for a loan, but you may need to submit your four latest payslips with your application. 

Affordability

When providers look at your financial position they check to see if you can afford to repay the loan. Your affordability is based on your income, your expenses and any other debt you may have. If they find that you will not be able to pay the loan, then you will be rejected.

Credit Score

A key component to determine whether you will be approved for a loan is your credit score and payment history. If these are bad then you will most likely be rejected. Your credit score is based on the kind of debt you have, your payment history and debt usage. You will have a low credit score if you have missed payments, have multiple defaults or judgements on your account. 

Under Debt Review or Blacklisted

Once you have been blacklisted or are under debt review then you will not be able to get any credit or you will have a very hard time getting credit.

You can only apply for a loan that is for yourself and you are not allowed to apply for a loan on behalf of another person. 

If you are already carrying a lot of credit, then credit providers will deem you too risky and you will most likely not be approved for a loan. 

Article Source: https://businesstech.co.za/news/finance/347982/the-most-common-reasons-why-loans-are-rejected-in-south-africa/

There is a Doctor Shortage in South Africa

Dr Zweli Mkhize, Health Minister said that due to lack of funding, South Africa is facing a doctor and nurse shortage. 

In a recent Q&A, Mkhize said that the main reason for the shortage is that in the past 10 years, the budget for the public health sector has not increased in real terms, which means that the number of staff that can be appointed has been impacted. 

He went on to say that the country is going through an increased demand for health services, however, this change has not been addressed by additional funding. The increase in demand is mainly due to the increasing burden of disease and the increase in immigration into the country. 

South Africa is not the only one facing a shortage as it seems to be a global issue. However, the shortage is more noticeable in countries with low to middle income. This is because heath workers are more likely to emigrate to countries’ that are upper to middle income in the hopes of finding better working and living conditions. 

What About the NHI?

Another factor that may influence whether doctors choose to stay in the country is the incoming National Health Insurance. 

Critics of the NHI plan have said before that the major risk to the scheme is the leaving of medical skills. Some surveys have shown that 43% of respondents in the medical field would consider leaving the country once the scheme has been implemented. 

Craig Comrie, Profmed medical aid chief executive has said that they are already seeing health professionals emigrating. The general measure of 17% leaving the country each year rose to 30% in June and July. 

Mkhize said in an interview on the 8thOctober that the Department of Health is working on several plans to ensure that the required skills are in place for the successful implementation of the NHI. He was also asked how the government would be incentivising private sector doctors to work under the NHI and his response was simply to pay them.

Article Source: https://businesstech.co.za/news/government/346538/south-africa-is-a-facing-a-doctor-shortage-heres-why/

SA’s New Energy Blueprint to Go in Favour of Solar and Wind

The latest Integrated Resource Plan that shows the energy mix of the next decade shows how coal is on the way out and solar and wind are in. The plan shows that by 2030 the electricity production capacity will significantly increase and the bulk of this increase will come from renewable sources. 

South Africa is facing pressure to switch to more green energy as they aim to meet emissions-reduction targets. At the moment 95% of the nation’s power is produced by Eskom, but the bulk of this comes from coal fired power plants and many of these are reaching retirement age and do not comply with environmental standards. 

The first version of the resource plan was adopted in 2011. The government said that the plan would be updated regularly and published several drafts, however, they were never adopted. 

The Mineral Resources and Energy Minister, Gwede Mantashe released the latest blueprint on Friday. The plan sees that wind will create an additional 14 400 megawatts of power, 6000 megawatts from photovoltaic solar plants, 3000 megawatts from gas, 2500 megawatts from hydropower and 1500 megawatts from coal by 2030. 

The plan also refers to the completion of a project to extend the life of Koeberg by 20 years to 2044, which is the sole atomic plant in the nation. Also, nuclear capacity will be installed at a scale and pace that the country can afford with investment being made in more efficient coal technology. 

Coal isn’t completely out though as it will still play a significant role in electricity generation by producing 59% of output. Nuclear will account for 5%, hydropower will contribute 8%, wind will account for 18%, photovoltaic solar will contribute 6% and gas and storage will account 2%. 

Eskom, is one of the biggest hindrances in South Africa with R450 billion of debt and relies on government bailouts to remain solvent. Since Wednesday, Eskom has reintroduced rotating blackouts after a series of breakdowns at plants. The energy blueprint, doesn’t show how the utility will be fixed, but this is to be addressed in separate plans that the government intends on releasing at the end of the month. 

Article Source: https://www.moneyweb.co.za/news/south-africa/coal-to-play-significant-role-in-sa-power-mix-minister/

Eskom Could Change Forever with These 5 Key Decisions

For months the government has been promising that they will fix Eskom, which is in over its head in debt, made monumental losses and relies on the government for bailouts to carry on being solvent. However, even though little progress has been seen, there are key decisions on the horizon. 

A New Chief Executive Officer is to be Appointed

Eskom provides 95% of the country’s power and since Phakamani Hadebe quit in July, it has been without a permanent CEO. Currently, chairman, Jabu Mabuza, has been temporarily filling the position, which has said that his replacement will be named at the end of the month. There have been three candidates shortlisted and among them are Andy Calitz the former LNG Canada CEO and Jacob Maroga, who was the CEO of Eskom from 2007 and 2009. 

Policy Paper Release

Pravin Gordhan, Public Enterprises Minister is overseeing the drafting of a special policy paper that will outline the governments envisioned Eskom future. The proposal will expand on the split of Eskom into generation, transmission and distribution units under a state holding company. The policy paper could be released as soon as the end of the month. 

The Re-Organisation of Debt

As it stands, Eskom owes R450 billion and isn’t able to generate enough cash to pay the interest. At the end of last month, Freeman Nomvalo, the chief restructuring officer submitted a report that would recommend how the debt should be reorganised. One of the options was to move the majority of the debt onto the government’s balance sheet. The other options haven’t been disclosed. 

Energy Blueprint Finalisation

According to Mineral Resources and Energy Minister, Gwede Mantashe, the Integrated Resource Plan, maps out the next decade of South Africa’s energy mix, which is going to be discussed by the cabinet on Wednesday, which will then be released to the public for comment. According to a March draft, the nation’s electricity output volume by 2030 could rise by more than 40% to 78344 megawatts, where the bulk of this will come from renewable sources. 

Mid-Term Budget

Over the next three fiscal years, the government has allocated R128 billion to Eskom, so that it can pay its bills. The mid-term budget, which will be released on October 30thby Finance Minister, Tito Mboweni, will show where the money will come from. According to the National Treasury, there will be cost cuts in government departments. There have been 28 conditions set by the Treasury in order for Eskom to secure the aid, which include providing daily updates on its cash position, provide clarity on the costs and benefits of two new power plants and to strengthen its board. 

Article Source: https://www.fin24.com/Budget/five-key-decisions-expected-soon-that-could-change-eskom-forever-20191014

Threats to Your Retirement Plan That You Might Not See

Many investors believe that the greatest threat to their retirement savings is poor returns, volatile markets and stagnant economies, however, some of the biggest threats to a retirement fund can be closer to home. Here are threats to your retirement fund that you may not see.

Divorce

Even though most couples in their 40s and 50s don’t anticipate divorce, the numbers are actually quite disturbing. Divorce can have disastrous effects on a retirement fund. A couple needs to know that they are not able to divorce without it having a serious effect on their retirement plans in the process. Going through a divorce later on in life will disrupt financial independence and will force both parties to make lifestyle changes. As the retirement plan was devised for both parties and planned together it will need to be recalculated for each individual. 

Second Homes

Whilst both spouses are still working it may seem affordable and practical to buy a second home, especially when the bond on the primary residence has been settled. Usually, a second home is a family’s holiday home. However, being able to fund a second home from a retirement income, which is less than your working income can cause anxiety. On top of this, there is the financial pressure of maintenance and upkeep on a second home. Also, if the equity in a second home is needed to supplement other retirement investments then the sale of the second home could be instrumental to secure retirement cash flow. Your nest egg could then be compromised if you are forced to sell your second home at a bad time. 

Adult Children

One of the biggest threats to a retirement fund is adult children that always ask to borrow money from their parent’s nest egg. Many parents help their adult children with the purchase of their first property or will assist financially with a new business venture to give them a stronger financial footing. However, the problem comes in when this financial assistance happens continuously and it becomes a form of annuity income for the adult child that is oblivious to their parents decreasing resources. 

Adult children that are financially dependent present two major complexities. The first is that the parents usually feel too guilty to withdraw funding from their child because they know they will suffer and the second is that the adult child assumes that the parents have a surplus of money as they continue to lend them money. 

Starting a Business

Retirees often find the temptation to start a business, but this can lead them to dig into their much needed retirement capital. Even though the idea to start a new business or try innovation is tempting, very few will earn what they could have if they leave their funds invested. 

Start Your Financial Journey the Right Way with these 8 Steps

When it comes to managing your personal finance there is more to it than just drawing up a budget and saving for a rainy day. It’s about creating a balance between protecting your income and building wealth at the same time. You will need to be able to overcome instant gratification so that you can achieve sustainable goals. 

Here are 8 steps that will help you to start your financial planning journey the right way. 

Have Goals

You will need to set goals that are important to you. Separate your goals and categorise them so they are easier to manage like retirement goals, saving and investment goals, estate planning goals and risk protection goals. You should not let affordability put you off from setting your goals. At the start of your career, you will probably not be able to afford all the financial solutions that you need, but once you have created your goals, you can prioritise them and implement them as your finances allow. 

Draw Up Your Budget

Once you have your goals down, you will next draw up your budget. You will find that not all your goals will be achievable at first, but having a budget will help you to manage your cash flow. Your goals should be a priority and your money should be channelled to your most important goals.

Protect Your Risk

Once you have analysed your goals in terms of your risk and taking into account what would happen in the event of your death, ill-health or disability then you need to look for solutions. There are plenty of insurance companies and it can be overwhelming, which can make it difficult to make an informed comparison. An independent financial advisor can help you with this by comparing insurance companies for you and advise on the best and most cost-effective solution. 

Manage Your Debt

You will need to understand the difference between good and bad debt before you undertake a debt payoff strategy. Good debt is low interest loans for a home or education, which you need so that you can pay for these as they would otherwise be unaffordable. On the flip side, debt that is incurred due to buying clothes, tech and other goods is expensive debt because of the high interest rate. 

debt management

If you have amassed debt on credit cards and store accounts, then you need a strategy in place to eliminate this debt. It is almost impossible to save and invest whilst you are paying off high interest debt. 

Start Your Emergency Fund

An emergency fund is used to protect yourself from unexpected expenses. If you do not have an emergency fund, then you will need to borrow money to pay for these expenses. This can then create a debt cycle that is hard to get out of. This is why you should start an emergency fund. It does take time to create one, but setting aside even a small amount at the beginning can help in the long run. As a rule, you should have at least three months of your salary in your emergency fund. 

Have a Retirement Fund in Place

You not only need to prepare for the now and the close future, but you also need to prepare for your long term future and you should start investing early on in your career.

With a longer investment timeline, compound interest has more time to work. With long-term investing, you can achieve financial freedom when you do retire. A newer retirement annuity choice is unit trust based retirement annuities that offer investor flexibility, greater cost-effectiveness and transparency. 

A retirement annuity (RA) is also tax efficient as you can build capital during your working years, so that once you retire, you will have enough money to enjoy the same standard of living. It then makes sense to maximise your RA contributions. 

Have a Will

No matter your net worth, age or marital status it is advisable to have a will. Your will is only valid if it meets certain requirements, so you shouldn’t make your own will. 

You may also want to consider a living will or advance directive, which is a declaration of your non-consent to artificial life support if you are not in a position to declare in person. A living will is not part of your last will and testament. 

Invest Extra Income

Any additional income should be invested. You can invest in a tax free savings account, unit trusts and endowments. 

Unit trusts or collective investments provide growth to your investment and an independent advisor can help you with this process. 

The amount of time that you want to invest will determine how you will invest. If you want to invest money for a two year period because you are saving towards buying a property, then a low risk fund like a money market might be best. If you want to invest for three to five years then a fund that is stable with some share exposure but retains a large portion in low risk investment and cash might be a good option. A five to ten year investment might benefit from a balanced fund and longer term investment will warrant a greater exposure to shares and property as you can tolerate more investment risk. 

Get your finances organised, know where you stand and start building your wealth for the now and the long term future. 

New R6 Billion Precinct in Pretoria is Underway

Atterbury a commercial, residential and retail property developer has started construction on the first phase of Castle Gate, a new multi-use Pretoria precinct that will cost billions.  

Image Source: https://businesstech.co.za/

In total, Castle Gate will be 100 000sqm of office space, 40 000sqm of specialist medical facilities, a hotel, 1100 residential units as well as a 23 000sqm convenience retail centre. On top of this, the precinct will include walking and running trails on protected green areas, which will be 8 hectares. 

The development is expected to cost R6 billion in total and create 20 000 permanent jobs. 

Castle Gate was first announced in 2016. Atterbury partnered with the Erasmus family to develop the last portion of Waterkloof farm. 

Castle Gate will be about a 15 minute drive from Pretoria CBD. The site is situated between R21 and the N1 with easy access to all urban key points around Pretoria and Johannesburg.

Castle Gate will also be accessed easily from Solomon Mahlangu Drive that is already undergoing an upgrade. 

A new highway bridge across the N1 will be introduced during the second phase of the project and will accommodate dual directional double lanes on Solomon Mahlangu Drive between Hoërskool Waterkloof and Castle Gate.

It is expected that in September 2020 a convenience centre will open, which will include medical consulting rooms, offices, retail and a gym.

The lifestyle centre according to Atterbury will include latest store concepts for Dis-Chem, Woolworths, Checkers and Builders Warehouse as well as 10 restaurants including Spur, Rocomamas, Ocean Basket, Doppio Zero, Burger King and Nando’s. There will also be a Planet Fitness gym with a swimming pool and the nature area will have outdoor walking and a running track.

Castle Gate will be developed over the next 10 years and in mid 2020 the second phase for the precinct will begin. 

South Africans Are Lowering their Monthly Car Payments by Doing These 2 Things

Sales data has been published for September 2019 by the National Association of Automobile Manufacturers of South Africa, which shows that vehicle sales have only declined by 0.9% year on year to 49191 units this also means that this is the biggest month for sales this year so far. 

WesBank executive head of motor, Ghana Msibi, commented on the data and said that there could be three economic factors that have contributed to the numbers those being that Consumer Price Inflation came within target at 4.3%, the interest rates stayed unchanged but hope remains that there will be another cut before the end of the year and confidence was raised by GDP data for the second quarter presented growth of 3.1%.

Msibi went on to say that WesBank’s inflation data largely mirrors that of the general economy with the average deal size being slightly above the South African number. This shows that new and used car price inflation falls within the affordability range of already hard-pressed South Africans. 

According to WesBank data, the average value of new cars financed was R329580, which is up from September 2018, which was R314120. 

However, WesBank said that a number of their customers are struggling to finance their cars. It appears that consumers are doing two things in an attempt to bring down their monthly payments, which could be pointing to more worrying trends. 

Consumers are making their car repayment terms longer to the maximum of 72 months and they are adding balloon payments so the monthly repayment is less. 

Instead of overextending themselves, consumers should rather look at more affordable options, so that they can avoid using other finance mechanisms so that they can fall within their budget. 

Article Source: https://businesstech.co.za/news/motoring/343988/2-things-south-africans-are-doing-to-lower-their-monthly-car-payments/