Under Pressure to Trade Down Vehicles

The nationwide lockdown has had a negative impact and threatens the financial health of 65% of South African car buying consumers.

About 30% need to replace their vehicle within the next month. At the moment, car dealerships are not open for retail, but there is compelling evidence for them to trade under level 4 of lockdown according to George Mienie, chief executive officer of AutoTrader. 

He went on to say that with salary cuts and with consumers losing their jobs, they are showing an urgent need to free up cash or reduce their monthly bills. The search for vehicles under R50 000 have increased by almost 300% compared to pre-lockdown levels. This shows that South Africans are feeling the pressure and are worried about how they will feed their families. 

Mienie said that based on the consumer buying patterns pulled from AutoTrader data, South Africans are trading down across all the categories, even high level income consumers. 

According to anecdotal feedback from dealers that trade using AutoTrader, motorists are trading down from a R730 000 BMW X5 50D to a R500 000 BMW 520d. They are trading down from a R670 000 Mercedes-Benz ML63 to a R300 000 Mercedes-Benz C180. As well as trading down from a R335 000 Ford Ranger to a R160 000 Nissan NP200.

In the first week of May, specific lockdown buying patterns were established through the use of a survey on the platform. 

Mienie said that they have established that 30% of consumers are under pressure to replace their vehicle in the coming weeks. In order to avoid further financial implications for both consumers and dealers the pipeline needs to be managed. It is a case of the sooner the better, as the sooner consumers can trade with dealerships the sooner the financial pressures can be eased. 

It was expected that from May 4th, dealerships would be open to trade and on that day, there was a spike in website traffic. Compared to pre-lockdown levels, vehicle dealership enquires have increased by more than 150%. 

However, the doors are still not open as dealerships are waiting for specific directions from government so that they can start dealing. It is in the best interest of the South African consumer for this to happen soon. 

The government will also need to include independent dealerships as these fall into small to medium enterprise category and are probably the sector currently at risk. Also, used car sales outnumber new car sales by 2:1. 

In order for the proper functioning of the supply chain, all supporting infrastructure will need to operate from vehicle sales, to licence departments, to testing stations to roadworthy centres so that ownership can be transferred from the dealerships to the buyer can be completed under level 4. 

Article Source: https://businesstech.co.za/news/motoring/395553/south-africans-are-trading-down-on-their-vehicles/

Tighter Restrictions Might Be Needed for Joburg and Cape Town

Tighter restrictions might be required for Covid-19 hotspots like Johannesburg, Cape Town and eThekwini as the government begins to take a more granular approach in the assessment of the outbreak in the country.

On Sunday evening, 10thMay, a statement was published where the health minister, Dr Zweli Mkhize said that whilst good progress has been made in dealing with the coronavirus outbreak so far with the peak of infections still to hit and with flu season coming closer, the coming months will be faced with health pressures. 

Mkhize said that we are dealing with a dynamic situation and in various parts of the country they will be monitoring and evaluating the progress. It should be expected that there will be areas that they can’t let everything go back to normal as this will not be the best way. 

There could be instances where they may need to consider lockdowns and other instances where heightened interventions of various forms will need to be considered. 

He went on to say that on these issues they will need our cooperation and support. There is a long way to go, but increased pressure is still to come to our communities, especially with flu season on the horizon. 

The latest sentiments from Mkhize echoed his position on Saturday evening, commenting on the alarming rise of new infections in the Western Cape, where almost 50% of total positive cases have been reported. 

He went on to say that focus must be placed on working with healthcare professionals both private and public to make sure that those who do test positive are receiving the necessary care and are properly isolated. 

Even though the number of infections is rising, experts and several analysts have been calling on government to start opening the economy more rapidly. 

Chief executive of Genesis Analytics, Stephan Malherbe said that the easing of lockdown restrictions in South Arica has been successful in most of the areas identified by WHO, but has failed in taking a logical approach in opening the economy. 

He then said that it is very important to have a differentiated approach with the lockdown to various areas. 

The Western Cape is the epicentre of infections, and residents in smaller towns are begging government to not judge all areas the same. 

For instance, according to a Rapport report, residents of Kuruman in the Northern Cape where they have about 13 000 residents have so far been untouched by Covid-19 and yet must adhere to the same lockdown restrictions placed on the rest of the country. 

This past week, data has been published that shows the damage being done to the economy due to the umbrella lockdown approach. The data includes GDP decline of between 6% and 16%, job losses of between 1 and 7 million people and a potential loss in tax revenue of R285 billion. 

BASA, Business for SA has stated that a quick move to level 2 would save 1 million jobs, whilst allowing people to stay safe and follow Covid-19 protocols. 

Article Source: https://businesstech.co.za/news/government/396487/cape-town-and-joburg-may-need-tighter-restrictions-mkhize/

Ready for Back to Work? Here is the Checklist That Employers Need to Ensure Compliance

There are many businesses that might be heading back to work under Level 4 of lockdown, which creates a renewed risk for Covid-19 spreading.

All employers will have the safety of their team at the forefront of their minds, which will include decontamination and stringent Covid protocols like PPE, hand sanitation, regular cleaning of touch points and social distancing. 

Here is the checklist for all businesses going back to work and to ensure themselves, employees and customers are safe during this time. 

Decontaminate The Environment

The transmission of Covid 19 is through droplet spread, which means surfaces can be contaminated quickly. To ensure that a workplace is coronavirus free, having a decontamination protocol in place is the best way. The process involves the microbial fogging of all surfaces, workstations, production lines, floors, walls and ceilings with specialised chemicals and the areas are then air dried. The team responsible for decontamination is specially trained and kitted with the necessary PPE. Disposable PPE is immediately gotten rid of in a biohazard bag and is treated as a Health Care Risk Waste. 

Your Risk Analysis

If decontamination is done before your employees return to work then a risk analysis will need to be done afterwards, otherwise, this should already be in place. 

The assessment will determine high touch points and the cleaning regime required to maintain the hygiene standards. At a minimum, cleaning should occur daily with attention to mapped touch points. 

Having the Right Stuff

You will need to have the correct chemicals that are used in daily cleaning. Solutions high in alcohol work well for sensitive equipment and hard surface sanitising of small areas. Walls and floors should be cleaned with solutions containing sodium hypochlorite like bleach. 

Training Your Team

Every employee will need to comply with the rules, which means that all team members must be trained on the best personal hygiene practices. These behaviours rely on discipline and must be embedded within your staff. You need to ensure that hygiene reminders are posted everywhere.

The Right PPE

Businesses will need to ensure that they have an abundance of masks, gloves and hand sanitizers available. There will need to be strict protocols in place regarding the putting on and removing of PPE as well as its disposal. For single use items, there should be biohazard waste disposal mechanisms in place and fabric masks need to be washed and rotated often.

Social Distancing

Social distancing is a must and work zones will need to be designated, highlighted and well spaced. You can use tape to mark these zones or stickers for queues. Communal spaces need to be restricted or not is use like meeting rooms. There needs to be clear policies in place of how team members should interact with one another and with customers. 

Test Temperatures

Daily temperature testing should be enforced through the use of infrared thermometers. Also, ask questions in relation to health and find out if employees are experiencing cough, fever, sneezing, breathing difficulties, runny nose or general unwell feelings. You can log the results daily. 

Drills for Scenarios

Like fire drills, you should conduct drills on how to handle positive cases, breach of hygiene, a security incident and so on. Everyone will feel more prepared if anything were to happen. 

Having Support in Place

Employees will feel anxiety, stress and uncertainty, so employers should consider free counselling services during this time. 

Article Source: https://businesstech.co.za/news/business/393774/here-is-a-back-to-work-checklist-for-employers-to-ensure-compliance/

Legal Challenges Taken Against South Africa’s New Lockdown Rules

There are a number of legal challenges on the horizon for the South African government around the level 4 lockdown restrictions due to them being seen as overreaching on key issues. 

One of the main issues in the prohibition on the sale of tobacco products. The government has indicated that this point will not be referred for mediation as they don’t believe that there is anything to negotiate. 

The largest cigarette manufacturer, British American Tobacco has given Nkosazana Dlamini-Zuma until the 4thMay for the decision to be reversed or they will face court.

The Fair Trade Independent Tobacco Association has also been consulting with its attorneys and has said that they will also be fighting this decision. 

Fita chairperson, Sinenhanhla Mnguni has said that illicit cigarettes are coming into the country through its borders and the government is losing billions, which could have been used in the fiscus. He also said that South Africans should be able to choose if they smoke or not. 

Overreaching of the NCC

There is also a legal challenge against President Ramaphosa over the role of the country’s National Command Council or NCC. 

Reported by The Sunday Independent, a group of attorneys are arguing that the NCC has effectively displaced statutory and constitutional bodies and in terms of the formation of restrictions they are overreaching. In a column for the same paper, Vuyani Ngalwana an advocate said that there needs to be clarity in terms of the power and legality of the NCC. He also said that the body appears to have no real legislative or constitutional existence. 

And What About Schools

Another legal challenge that the government is facing is over the early reopening of the country’s schools. On Tuesday, the Department of Basic Education will be taken to court to prevent the reopening of schools during level 4 according to the City Press. 

The case is being brought by the African Institute for Human Rights and Constitutional Litigation and The Tebeila Institute for Leadership, Education, Governance and Training as they believe that you can’t keep parents at home to prevent the spread of the virus whilst sending children to school to save the academic year. 

The Department of Basic Education, on Thursday, adjusted its proposed school calendar for 2020 to later in the year because of the ongoing concerns around Covid-19. Minister of Basic Education, Angie Motshekga said that there isn’t a date yet for when pupils will go back to school and that from the 4thMay only the schooling sector will be open. Once administrative work is completed and has received approval from cabinet, then only the final dates for the school calendar will be published. 

Article Source: https://businesstech.co.za/news/government/394720/south-africas-new-lockdown-rules-face-major-legal-challenges/

Will Schools Reopen in May? Here is the Plan

There is a new plan that is proposing that matrics and students in grade 7 and 12 go back to school on May 6th. TimesLIVE saw a document, which is based on the extended lockdown being lifted at the end of the month. The document was written by a committee which comprised of heads of the provincial education departments. The paper said that the proposals are contained in the department of basic educations draft for the recovery plan after Covid-19 lockdown. 

It’s reported that the document states that the remaining grades will be phased in as an attempt to salvage the academic year. 

In the document the proposed dates are:

  • Grades 7 and 12 – May 6th
  • Grades 6b and 11 – May 20th
  • Grades 5 and 10 – June 3rd
  • Grades 4 and 9 – June 17th
  • Grades 3 and 8 – July 1st
  • And grade R – July 15th

Due to the high risk involved with large gatherings, the phased in approach is being considered by the DBE. Critical grades will start and other learners will remain at home and will begin in stages. 

Social Distancing will be a Challenge

It will be a challenge to maintain social distancing among pupils said Chris Klopper, Chief executive of the Suid Afrikaanse Onderwysers Unie. He went on to say that it is possible to save the year for grade 12 because so far only 24 school days have been lost. You will win three weeks if the June/July exams are cancelled and it is possible to find another week somewhere else. There then shouldn’t be a big problem for grade 12. 

There Will Be Change

Recently reported by The Sunday Times is that the Department of Basic Education is looking at several options to try and salvage the South African school year. This could include earlier starts, evening and weekend classes, scrapping the June and September holidays and scrapping non-essential parts of curriculums in certain subjects.

Angie Motshekga, education minister is due to make the final proposal this week in a special cabinet meeting. 

A committee is also looking at if the June exams for grades 1 to 12 should go ahead or be postponed. 

What’s Happening with the School Calendar?

With the lockdown extended until the end of April, the government has had to look at other options to save the school year. 

One such measure is that SABC is now broadcasting school lessons. These began on the 9thApril and are broadcasted across three SABC channels and 13 radio stations and includes online support.  The lessons focus on learners grade 10 to 12 as well as Early Childhood Education. Subjects covered include Physical Sciences, Maths, English First Additional Language, Accounting and Life Sciences. The early childhood development package also includes a variety of African languages. 

The Plan for Higher Education

On Tuesday, 21stApril, Parliament’s Portfolio Committee on Higher Education will hold a virtual meeting to determine the impact that the lockdown has had on the higher education sector. 

Dr Blade Nzimande, minister of Higher Education, Science and Technology will present plans in the briefing from the department, universities and Technical Vocational Education and Training colleges to rescue the academic year. 

Issues that are thought to be covered in the plan are:

  1. Online teaching and learning and what will happen to the mid-term examinations
  2. Plans to rescue the academic year for universities and TVET colleges. 
  3. The impact that the lockdown has had on the National Student Financial Aid Scheme for qualifying students
  4. The accommodation of students at university residences. 

Article Source: https://businesstech.co.za/news/government/390617/a-plan-to-reopen-schools-in-may-report/

The Rand Starts Off the Week Weaker

As fears grow over the economic growth, the appetite for riskier assets has submerged. The rand opened weaker on Monday morning reflecting that of what was happening to other emerging markets. 

Early on Monday, the rand was trading at 18.91 to the US dollar which is about 0.6% weaker than when it closed on Friday. 

The rand fell by more than 4% to the dollar last week, which was due to the interest rate cut, which came as a surprise as well as the predictions that the economy would suffer a major contraction due to the coronavirus pandemic. 

President Cyril Ramaphosa’s cabinet is expected to discuss the new measures to contain the economic impact of Covid-19, which will include if the ailing SAA should be closed, which has had a major drain on state resources. 

Before the first case of Covid-19 was detected in the country, the public finances of South Africa, were already in a bad state, which constrained its ability to provide stimulus. 

At the time of writing, 3158 coronavirus cases were recorded and as of Sunday, there have been 54 deaths. 

In early trade, it was mixed for South African government bonds. The yield dropped to 10.29% down by 6 basis points for the 2030 instrument after rising earlier. 

Article Source: https://af.reuters.com/article/southAfricaMarketNews/idAFL8N2C811A

Perfect Storm Ahead for South African Home Buyers Due to the Coronavirus

Many analysts expect that the economy will be weighed down by the post-lockdown recession, but it may prove to be a boon for the property market according to Samuel Seeff, chairman of the Seeff Property Group. 

He believes that there will be a pent-up demand in the primary residential market when the emergence phase begins. He went on to say that he expects there to be a perfect storm for homebuyers once we emerge from the lockdown with buyers eagerly waiting to take advantage of the market conditions, especially in the R1.5 million range and even up to R3 million in some areas. 

The purchasing conditions right now are highly favourable. 

Across the board, transfer duty is down and as banks continue to compete there will be a favourable lending climate ahead. 

In March, the interest rate was cut by 1%, which means that buyers could save between R650 and R1300 per month on home loans of between R1 million and R2 million. This with the flat price growth means that buyers might be able to get into a property or suburb that they may not have been able to afford a year ago. 

Stock is up and after a long wait, sellers will be keen to sell, which means that buyers will be able to negotiate further discounts. 

Seeff has said that they have already done virtual deals at some branches with a price agreed, but the offers are subject to a physical viewing. As soon as the lockdown lifts, agents will be able to move on these potential deals. 

On top of this, there should be a encouraging boost for foreign buyers as the rand depreciated, which means these buyers will get more value. 

However, Seeff said that there probably won’t be a flood of buyers.

Covid-19 has caused an economic fall out, which means that the demand for second homes internationally may mean that there isn’t an uptake in sales above R20 million or any foreign sales in the near future. 

The property market overall, will show both the challenges and the broader macro-economic trends in the country, but in the end, people will need somewhere to live. Those that want to buy will and will have plenty of motivation to do so. 

Article Source: https://businesstech.co.za/news/property/388567/the-coronavirus-has-created-the-perfect-storm-for-south-africas-housing-market/

The Sale of Alcohol, Cigarettes and Fast Food During the Lockdown will be up for Discussion this Week

There is a plan underway by the government to breathe life back into South Africa’s economy and to avoid any more job losses following the outbreak of the coronavirus.

This follows the extension of the nationwide lockdown by a further two weeks in an attempt to curb the spread of the virus. 

There will be a discussion by the national command council to alleviate some of the restrictions placed during lockdown according to The Sunday Times. These discussions will include lobbies made by the alcohol and tobacco sectors as well as hearing the call to reopen fast food shops.

It is expected that the results of these discussions will be taken to cabinet later this week where several proposals will be tabled including a comprehensive financial package that is looking at how to scale up the essential goods production.  

The Call to Sell Beer

The Beer Association of South Africa (BASA) who represents South African Breweries has called for the reopening of off consumption beer trade. 

This means that a licence is granted for the sale of alcohol for consumption off of the premises where it is sold. Such premises include distribution centres, liquor stores and wholesale entities.

If the restrictions continue, then there could be major job losses for the industry warned BASA. 

Over the last 15 days, there has been news of many beer outlets shutting doors with several people being retrenched. The industry employs almost 250 000 people, who are now at risk. 

The shutdown also affects secondary industries like glass and bottle companies, retailers, transportation, print and design companies, equipment manufactures and so on. 

There has been several submissions made by the association along with other liquor associations to the president as well as ministers with proposals as to how to keep the industry surviving. 

This includes off-consumption outlets to be able to sell beer, which will be under the requirements of social distancing and for trade hours to be restricted. As well as allowing on consumption outlets to be able to trade as off consumption outlets through the use of a special dispensation, who will also need to adhere to social distancing requirements and with restricted trading hours, which will also include the licenced taverns to support the township economy. 

To put into place restrictions on volumes sold per consumer, placing hand sanitizers at outlets, allowing for the delivery of beer online with quantity controls in place and restricted hours of trade. 

Call to Reopen Some Business Sectors

The South African Chamber of Commerce and Industry (Sacci) has called for the reopening of certain business sectors. 

The business body has a membership of about 20 000 small, medium and large enterprises, who commended the president on his leadership and management of the current crisis. 

However, Sacci has suggested a staggered return to business beginning with businesses that can display a high level of health control and social distancing, for instance, the Fast Food Outlets (FFOs) industry. 

More than 150 000 people are employed by FFOs in South Africa. Alan Mukoki, Sacci chief executive officer said that many businesses will likely close down and as a result, there will be major job losses. He went on to say that to protect the SA economy from a total collapse we need to look beyond the lockdown as the only option. 

Article Source: https://businesstech.co.za/news/government/389051/ramaphosa-to-discuss-the-sale-of-cigarettes-alcohol-and-fast-food-during-lockdown-report/

As the Number of SA Covid-19 Cases Rise, the Rand Sell-Off Continues

During the early trade on Monday, the rand sell-off continued, as it further weakened from the initial lows on Friday. 

The sell-off is mainly due to the pandemic of Covid-19 as well as that in a week two rating agencies have downgraded the country according to Bianca Botes, the executive director at Peregrine Treasury Solutions. 

After Fitch downgraded the country’s credit rating, the local unit on Friday surrendered 3% to the dollar, which caused it to an all time worst level and went above R19.

The downgrade for South Africa’s long term foreign currency debt went from BB+ to BB with a negative outlook. The reason being that there isn’t a well-defined path concerning government debt stabilisation as well as noting the impact that Covid-19 is having on growth. 

The South African Reserve Bank has said that it will be buying debt in the secondary market to boost liquidity. The central bank is now carrying the burden as the government lacks the fiscal space and resources to provide stimulus. However, even with these efforts, the central banks on there own will not be able to stimulate the regional economy out of a coronavirus crisis according to Bloomberg. 

It was noted that it could take up to three years for African economies to recover from the slowdown and the continent will need emergency stimulus of $100 billion including debt servicing waivers. 

Charlie Robertson, Renaissance Capital’s global chief economist has said that the governments probably feel they aren’t able to afford a larger fiscal response unless they are given the support they need from the G7. He went on to say that the virus is a global threat, so there are good, selfish reasons for the West to support African efforts to fund the suppression of the virus. 

According to Bloomberg Economics new global GDP tracker, the global economy is already contracting and is losing steam quicker than in the start of the financial crisis. 

The March tracker reading shows that the global economy contracted at an annualised rate of 0.5%, which is down from 0.1% in February and is down from the start of the year by 4.2%.

However, the March reading is probably not the worst of the downturn as lockdowns over March are set to stay in place in April. 

The rand at the start of Monday was trading dollar/rand at R19.28, pound/rand at R23.57 and euro/rand at R20.85.

Article Source: https://businesstech.co.za/news/business/387647/rand-sell-off-continues-as-sa-covid-19-numbers-rise/

In Case You Missed It – South Africa Delves Deeper into Junk by Fitch Downgrade

On Friday, the rand broke through R19 to the dollar and ended the week in a weaker position. 

On the 27thMarch, Moody’s downgraded the economy as the country entered into a 3-week lockdown. In the wake of the global coronavirus pandemic, global markets have plummeted. South Africa has been tarnished by consistently weak economic growth, policy uncertainty, high levels of unemployment and ongoing power outages that have been a constant economic drain over the last few years. 

Many economists and analysts say that Moody’s downgrade was long overdue, but it does mean that South Africa will be forced out of the Government Bond Index, which could lead foreign investment of R88 billion being erased from the economy. 

After the downgrade by Moody’s, Fitch who downgraded South Africa to junk in 2017 took the country down one level on Friday, 3rdApril. Fitch adjusted its assessment of the country from BB+ to BB with a negative outlook. 

Among the reasons for the further downgrade, Fitch noted the lack of clarity towards government debt stabilisation plus the impact of the coronavirus on public finances and growth.

South Africa’s finance ministry recognised the downgrade and said that to address the weak economic growth, structural reforms would be implemented. 

In a statement by Finance Minister, Tito Mboweni, he said that the government holds the task of addressing and minimising the impact of Covid-19, setting government finances on a sustainable trajectory and to implement measures to improve economic growth. 

Due to the 21-day lockdown, Fitch expects the South African economy to contract by 3.8% in 2020. 

Article Source: https://businesstech.co.za/news/finance/387517/rand-ends-first-week-of-lockdown-over-r19-to-the-dollar-after-fitch-pushes-south-africa-deeper-into-junk/