Business – TMMBS

From Grey to Great: South Africa Regains Investor Trust After FATF Exit

tmmbsonline — Tue, 11 Nov 2025 17:35:27 +0000

From Grey to Great: South Africa Regains Investor Trust After FATF Exit

From grey to great, South Africa’s financial comeback tells a story of determination, reform, and renewed trust — a story that signals to the world that the nation is open for business, stronger and more transparent than ever before. In a landmark development for the nation’s financial credibility and global reputation, South Africa has officially been removed from the Financial Action Task Force (FATF) Grey List, marking a significant turnaround in the country’s efforts to combat money laundering, terrorist financing, and financial crime. This achievement represents not only a technical compliance milestone but also a vital step toward restoring investor confidence, strengthening governance, and unlocking new opportunities for economic growth.

South Africa was placed on the FATF Grey List in February 2023 after the global watchdog identified strategic deficiencies in the country’s systems to prevent money laundering and terrorist financing. The decision sent shockwaves through the financial and business communities, raising concerns about the nation’s risk profile and overall investment climate.

From Grey to Great: South Africa Regains Investor Trust After FATF Exit

Greylisting meant that South Africa was under increased international monitoring, compelling banks, investors, and multilateral institutions to apply heightened scrutiny to financial transactions involving South African entities. This, in turn, led to slower foreign direct investment (FDI) inflows, delays in cross-border banking transactions, and a perception of elevated risk among global investors.

However, the government’s commitment to addressing the FATF’s findings has since proven resolute and effective. Within just over two years, South Africa implemented one of the most comprehensive reform programs in its financial history — a feat that earned recognition from the international community and ultimately paved the way for its removal from the list.

The road to compliance required a multi-faceted approach involving legislative amendments, institutional strengthening, and enforcement improvements. The key reforms included Legislative Overhauls, Beneficial Ownership Register, Strengthened Law Enforcements, and Enhanced Supervision and Cooperation. Collectively, these reforms demonstrated South Africa’s political will and institutional capacity to align with global anti-money laundering and counter-terrorism financing (AML/CFT) standards.

Exiting the Grey List sends a powerful signal to global markets that South Africa is back on a path of regulatory integrity and financial reliability. Analysts predict that the move will have several positive ripple effects across the economy. Finance experts also emphasize that while the FATF delisting is a major victory, the gains must be sustained through continued vigilance, institutional reform, and transparent governance.South Africa’s removal from the FATF Grey List is more than a procedural triumph — it symbolizes a renewed commitment to integrity, accountability, and sustainable economic growth. The focus now shifts from compliance to consolidation: ensuring that the systems put in place remain robust and effective in the long term. By maintaining this trajectory, South Africa can strengthen its financial resilience, attract greater levels of investment, and reaffirm its position as a trusted and competitive player in the global economy.

Sars Escalation of South Africas Counterfeit Crisis

tmmbsonline — Fri, 26 Apr 2024 06:27:49 +0000

Sars Escalation of South Africa's Counterfeit Crisis

Sars Escalation of South Africas Counterfeit Crisis

Counterfeiting remains a pervasive issue across the globe, undermining economies, threatening consumer safety, and challenging the integrity of brands. In this complex landscape, the South African Revenue Service (SARS) has emerged as a key player in the fight against counterfeit policies. With a mission centered on safeguarding authenticity and upholding regulatory compliance, SARS has implemented a multifaceted approach to combat counterfeiting.

With illicit trading also being a major concern and risk, it not only threatens consumers but the revenue service as well. It steals from SARS. Furthermore, companies close down which means that people are losing their jobs and livelihoods which then leads to other forms of criminality. From a personal income tax as well as company income tax perspective, when companies close down it becomes a loss to SARS. Acts which constitute counterfeiting relate to the following:

Being in possession of infringing goods in the course of business;
Manufacturing or producing infringing goods for non-private or domestic use;
Selling, hiring or exchanging of infringing goods;
Exhibiting infringing goods for the purposes of trade;
Importing infringing goods into or through or exporting from South Africa; and
The act of dealing in counterfeit or suspected counterfeit products.

All these acts are criminal offences as they threaten the economy of the country.

Understanding the impact of counterfeiting

Counterfeiting poses multifaceted challenges that extend beyond mere financial losses. It erodes consumer trust, endangers public health through substandard products, facilitates illicit activities, and weakens the economy by depriving legitimate businesses of revenue. In South Africa, like in many other countries, counterfeiting spans various industries, including pharmaceuticals, electronics, fashion, and automotive parts, amongst others. When considering the associated loss of tax revenue, the true cost of counterfeiting could be much higher and the problem seems to be getting worse. Given the current economic climate in South Africa and in many of our neighboring countries, there is a steady increase in the demand for cheaper goods. This demand is often satisfied through the purchase and consumption of counterfeit goods, causing the counterfeiting marketing to grow at a steady and unprecedented rate.

SARS' Strategic Initiatives

SARS recognizes the gravity of the counterfeit issue and has adopted a proactive stance to address it effectively. The agency's initiatives encompass a combination of enforcement measures, collaboration with stakeholders, technological advancements, and public awareness campaigns.

Customs Enforcement: SARS leverages its customs infrastructure to intercept counterfeit goods at ports of entry. Through risk profiling, intelligence gathering, and collaboration with international counterparts, SARS identifies and seizes illicit shipments, thereby preventing these goods from entering the local market.
Collaboration with Regulatory Bodies: SARS collaborates closely with regulatory bodies such as the South African Bureau of Standards (SABS) and the Medicines Control Council (MCC) to ensure that imported goods comply with quality and safety standards. This partnership helps in detecting counterfeit products that pose risks to public health and safety.
Technology Integration: Embracing technological advancements, SARS employs sophisticated tools such as scanning devices, X-ray machines, and data analytics to enhance its detection capabilities. These technologies enable SARS to identify suspicious shipments more efficiently and conduct targeted inspections.
Capacity Building: Recognizing the need for specialized skills in combating counterfeiting, SARS invests in training programs for its personnel. These programs focus on counterfeit detection techniques, understanding emerging trends in illicit trade, and legal frameworks governing intellectual property rights.
Public Awareness: SARS collaborates with the media, industry associations, and consumer advocacy groups to raise awareness about the risks associated with counterfeit products. By educating the public, SARS empowers consumers to make informed choices and report suspicious activities.

Legal framework and international cooperation

Counterfeiting is a global issue with far-reaching consequences. It undermines international trade relations, impacts investor confidence and is even associated with the funding of criminal and terrorist organizations. Despite the challenges faced in combatting counterfeiting in Africa such as porous borders, non-specific legislation and limited resources, there is renewed commitment at national levels throughout Africa to combat the importation and sale of counterfeit goods, specifically to protect intellectual property rights, encourage foreign investment and curtail the loss in tax revenue.

SARS operates within a robust legal framework that empowers it to take decisive action against counterfeiters. The agency enforces laws such as the Counterfeit Goods Act, which prohibits the manufacture, sale, and distribution of counterfeit goods. Section 15 (1) entitles an owner of intellectual property to apply to the SARS Commissioner to seize and detain goods incorporating specific intellectual property rights during a particular period and calculate the infringement that might exist in terms thereof, or assist with the protection of that right for that period. Additionally, SARS participates in international forums and partnerships to strengthen cooperation in combating transnational counterfeit networks.

SARS' efforts have yielded significant successes in curbing counterfeit activities. Seizures of counterfeit goods, arrests of perpetrators, and successful prosecutions demonstrate the agency's commitment to upholding authenticity. However, challenges persist, including the evolving nature of counterfeiting techniques, the proliferation of online platforms for illicit trade, and the need for continuous adaptation to emerging threats. As SARS continues its mission against counterfeit policies, innovation and collaboration will remain crucial. Embracing emerging technologies such as blockchain for supply chain transparency, fostering public-private partnerships, and harmonizing efforts with global stakeholders will strengthen SARS' ability to combat counterfeiting effectively.

SARS' unwavering dedication to safeguarding authenticity and combating counterfeiting underscores the agency's pivotal role in protecting consumers, supporting legitimate businesses, and upholding the rule of law. Through a comprehensive approach encompassing enforcement, collaboration, technology, and awareness, SARS stands as a formidable force in the ongoing battle against counterfeit policies

Beware the Rise of Scandals: Employing Individuals with Fake Qualifications

tmmbsonline — Tue, 09 Apr 2024 05:01:57 +0000

Beware the Rise of Scandals: Employing Individuals with Fake Qualifications

Some job seekers and academics have developed a deadly disease called the “Fake Qualification Syndrome”. South African Qualifications Authority CEO, Ms Nadia Starr, believes that misrepresentation by a person of his or her qualification represents an act of fraud. The “key crisis” is that not enough people are scrutinizing qualifications presented to them. The council which sets and monitors standards for general and further education, Umalusi, has warned the public about the rise in fake qualifications either bought from fraudsters or received through unaccredited private institutions. Umalusi is seriously concerned about the mushrooming of bogus [learning institutions – particularly private] as well as the increase in the reported cases of fake certificates being sold to unsuspecting members of the public.

Such certificates received this way have no value because they do not appear in the certification databases of Umalusi and the National Learners` Records Database (NLRD) which is managed by the South African Qualifications Authority. The three main assessment bodies accredited by Umalusi to offer the National Senior Certificate are the DBE (Department of Basic Education), IEB (Independent Examinations Board), and SACAI (South African Comprehensive Assessment Institute).

In today's competitive job market, the pressure to hire qualified and skilled individuals can sometimes lead employers down a dangerous path. Recent years have seen a troubling rise in scandals involving the appointment of individuals with fake qualifications, posing significant risks to businesses, their reputation, and even legal repercussions. This article serves as a warning to employers, urging them to exercise due diligence and implement robust verification processes to avoid falling victim to such scandals. With the proliferation of online education and certification programs, it has become easier for individuals to obtain fraudulent qualifications. Diploma mills, websites offering fake degrees for a fee, and forged certificates are just some of the methods used by unscrupulous individuals to deceive employers. The consequences of hiring someone with fake qualifications can be severe. Not only does it undermine the integrity of the hiring process, but it can also lead to incompetence in crucial roles, financial losses due to poor performance, and damage to the organization's reputation.

Several high-profile cases have brought this issue to the forefront. One such example is the scandal involving a major technology company that hired a senior executive claiming to have an advanced degree from a prestigious university. It was later revealed that the degree was fake, leading to public embarrassment for the company and the dismissal of the executive. Similarly, in the healthcare sector, there have been instances where individuals with forged medical licenses or credentials were employed, putting patients' lives at risk and exposing healthcare providers to legal liabilities.

The Impact on Businesses

The repercussions of employing individuals with fake qualifications extend beyond immediate operational challenges. Businesses may face legal consequences for negligent hiring practices, damage to their brand reputation, loss of customer trust, and decreased employee morale. Moreover, in regulated industries such as finance or healthcare, regulatory bodies may impose hefty fines or revoke licenses for non-compliance with verification standards.

Best Practices for Employers

To mitigate the risk of hiring individuals with fake qualifications, employers should adopt the following best practices:

Thorough Background Checks

Conduct comprehensive background checks, including education verification, employment history, and professional credentials. Verify documents directly with issuing institutions rather than relying solely on copies provided by candidates.

Use of Third-Party Services

Engage reputable third-party verification services that specialize in authenticating educational and professional credentials. These services have access to databases and contacts with educational institutions to verify the legitimacy of qualifications.

Interview and Skills Assessment

Supplement credential verification with thorough interviews and skills assessments to gauge candidates' actual knowledge and capabilities. Look for inconsistencies or gaps in their qualifications during the interview process.

Educate Hiring Managers

Train hiring managers and human resources personnel on spotting red flags indicating fake qualifications. Encourage a culture of transparency and ethical hiring practices within the organization.

Regular Audits and Compliance

Conduct regular audits of employee credentials to ensure ongoing compliance with qualification requirements. Establish clear policies and procedures for handling discrepancies or suspected fraudulent activities.

The rise in scandals related to fake qualifications underscores the importance of diligence and vigilance in the hiring process. We advise all employers both in the public and private sectors to consider verifying their current and future employees’ qualifications through the verification agencies whose contact details are available on the website of Umalusi.

Employers must prioritize authenticity and integrity to safeguard their organizations from reputational damage, legal liabilities, and operational disruptions. By implementing robust verification measures and promoting ethical hiring practices, businesses can mitigate the risks associated with hiring individuals with fake qualifications and maintain a trustworthy and competent workforce. Finally, employment contracts and policies should explicitly state that falsifying qualifications is unacceptable, “and the consequences of such misconduct should be clearly stated.

Beware the Rise of Scandals: Employing Individuals with Fake Qualifications

Understanding the Amendments of the Employment Equity Act

tmmbsonline — Thu, 20 Jul 2023 15:27:21 +0000

Understanding The Amendments Of The Employment Equity Act

The Employment Equity Amendment Act 4 of 2022 has been signed into law in South Africa with the purpose of promoting diversity and equality in the workplace. The Amendment Bill seeks to advance transformation of South Africa's workforce by setting equity targets for economic sectors and geographical regions, and requiring enterprises to develop transformation plans. The amendments restrict the application of certain sections of the Employment Equity Act to a reduced group of employers, relieving the administrative burden on smaller employers. Furthermore, the amendments introduce sectoral numerical targets which aim to ensure equitable representation of historically disadvantaged groups based on race, gender, and disability at all occupational levels in the workforce.

The amendments made to the EEA include the definition of the term “designated employer” which is seen to restrict the application of sections 12-27 to a reduced group of employers and relieve some of the administrative burden on smaller employers. The EEA prohibits discrimination against an employee based on race, gender, religion, marital status, political opinion, just to name a few.

The important questions that one needs to ask themselves in order to understand the purpose of the amendment to the EEA are as follows:

What is the purpose of the introduction of sectoral numerical targets?

Section 15A has been introduced to the EEA. It therefore introduces sectoral numerical targets. Its purpose is to ensure the equitable representation of people from designated groups (historically disadvantaged groups of people based on race, gender, and disability) at all occupational levels in the workforce. The amendment empowers the Minister of Employment and Labour to identify national economic sectors for purposes of the administration of the EEA and set numerical targets for each such sector.

How will the sectoral numerical targets be determined?

The sectoral numerical targets will be determined by the Minister in consultation with the Employment Equity Commission. All proposals in relation to identifying sectors (an industry or service or part of any industry or service) and setting numerical targets for sectors will have to be published in order to afford interested parties a period of at least 30 days to comment on the proposal. The sectoral numerical targets also have an impact on the designated employer’s employment equity plan in the sense that, the amendment to section 20 of the EEA (which deals with employment equity plans) links the sectoral numerical targets to the numerical targets set by a designated employer in its employment equity plan. A designated employer will be required to set numerical targets in line with the applicable sectoral targets set by the Minister. An amendment to section 42 aligns the assessment of compliance with employment equity with the new requirements relating to sectoral numerical targets.

Do the amendments offer any clarity relating to a designated employer’s obligation to consult with a trade union?

Yes. An amendment to section 16 of the EEA clarifies the consultation process between a designated employer and its employees. Where there is a representative trade union the designated employer must only consult with that trade union, and not with its employees. The consultations relate to the implementation of an employment equity plan, the analysis conducted by a designated employer to identify employment barriers which adversely affect people from the designated groups, and the content and submission of the employment equity report.

How will these amendments affect employers?

The amendments to the EEA will have a notable impact on employers in South Africa. Understanding these effects is crucial for businesses to ensure compliance and effectively navigate the changing landscape of employment equity. Here's how the amendments will affect employers: Firstly, with the revised definition of Designated Employer Status, employers will be considered designated employers for affirmative action purposes only if they employ 50 or more employees. This change means that smaller businesses with fewer than 50 employees will no longer have the same obligations and reporting requirements as larger organizations. However, it's important for employers of all sizes to review their current status and ensure compliance with the revised criteria. Secondly, with regards to Sector-Specific Targets, the Minister of Employment and Labour now has the authority to set numerical targets for specific economic sectors. This development means that businesses operating in these sectors will be subject to specific equity goals and transformation objectives. Employers in sectors like education, agriculture, finance, insurance, and others have already undergone consultations, and additional sectors are yet to be addressed. Employers should stay updated on the targets relevant to their sector and take proactive steps to meet them. Lastly, the introduction of the certificate of compliance requirement has significant implications for employers seeking agreements with the State. To enter into contracts with government entities, designated and non-designated employers must obtain a certificate of compliance issued by the Department of Employment and Labour. This certificate signifies adherence to employment equity obligations, including compliance with sectoral numerical targets, submission of annual employment equity reports, absence of findings of unfair discrimination, and no outstanding CCMA awards for non-payment of the national minimum wage. Employers must ensure they meet these criteria to access opportunities for state contracts.It is crucial for employers to adapt their policies, procedures, and reporting mechanisms to align with these amendments. Non-compliance can result in legal repercussions and reputational damage.

How will These Amendments Affect Employees?

The amendments to the EEA will have a significant impact on employees, aiming to enhance their rights, promote equality, and create a more inclusive working environment. Here's how these amendments will affect employees: Firstly, with regards to Affirmative Action Opportunities: the revised definition of a designated employer, businesses employing 50 or more employees will have a specific obligation to implement affirmative action measures. This change aims to create more opportunities for historically disadvantaged individuals, including marginalized racial and gender groups, by promoting their representation in the workplace. As a result, employees from these groups may have increased access to employment and career advancement opportunities. Secondly, based on Sector-Specific Transformation, the Minister's authority to set numerical targets for different economic sectors means that transformation objectives will be tailored to each industry. This targeted approach seeks to address specific challenges and historical imbalances within each sector. As a result, employees working in sectors such as education, agriculture, finance, insurance, and others will likely witness increased efforts by employers to foster diversity and inclusion, providing them with a fairer and more equitable working environment. Lastly, with regards to the Enforcement of Employment Equity, the introduction of the certificate of compliance requirement signifies a strengthened commitment to enforcing employment equity. Employers must obtain this certificate to enter into agreements with the State, demonstrating their compliance with equity obligations. This measure helps ensure that employers uphold fair practices, including the absence of unfair discrimination, adherence to sectoral numerical targets, and submission of annual employment equity reports. Consequently, employees can expect increased accountability from their employers, fostering a more equitable workplace and minimizing discrimination.

Overall, these amendments aim to provide employees with a working environment that values diversity, promotes equal opportunities, and safeguards against unfair discrimination. By striving for compliance with the amended Employment Equity Act, employers can create inclusive workplaces where employees can thrive, contribute meaningfully, and benefit from a fair and equitable employment experience. To monitor the implementation of sector targets, the Department of Employment and Labour will introduce a new online assessment system. This system will assess employers' progress towards meeting their targets and flag any shortcomings.

The introduction of sector-specific targets has generated contentious debate, with trade union Solidarity reportedly raising concerns about the constitutionality of the amendments. Solidarity has addressed a letter to the President, urging him not to sign the Bill into law and to refer it back to Parliament for review. In the event that the President signs the Bill into law, Solidarity has expressed its intention to seek legal recourse through the courts. Despite these concerns, the Department of Employment and Labour’s statement suggests that the President is inclined to proceed with signing the Bill into law. Consequently, it is crucial for employers to familiarize themselves with the amendments and understand how they may impact their respective businesses.

The Domino Effect: Exploring the short-term and long-term impact of a decrease in the GDP

tmmbsonline — Wed, 15 Mar 2023 16:23:12 +0000

The Domino Effect: Exploring the short-term and Long-term impact of a decrease in the GDP

The term Gross Domestic Product (GDP) refers to the measuring of a country’s economic output. The term “output” means measuring the performance of a country’s economy. How the GDP is calculated is by taking the monetary worth of a country’s goods and services after a certain period of time, usually 1 year. The GDP represents economic production and growth which has a large impact on everyone within the economy. When the GDP growth is strong, firms hire more workers and can afford to pay higher salaries and wages, which leads to more spending by consumers on goods and services. Firms also have the confidence to invest more when economic growth is strong, and investment lays the foundation for economic growth in the future. When GDP growth is very low or the economy goes into a recession, the opposite applies (workers may be retrenched and or paid lower wages, and firms are reluctant to invest).

Africa’s most industrialized nation, South Africa, has been declared as a State of disaster as rolling blackouts imposed by Eskom transpire. Its GDP has declined by 1.3% after the energy crisis which has led to power cuts strangles the economy. Other factors include the finance and trade sectors which are also the biggest contributors to the economy’s decline. To combat the energy crisis, President Cyril Ramaphosa has appointed Kgosientsho Ramokgopa as electricity minister to tackle the crisis. The decline in South Africa’s GDP means it has been largely flat since the end of 2019, even as the country’s population has increased by 3.5%. The deadly riots that transpired in 2021 wrecked critical infrastructure in the country’s two most economically important provinces, Kwa-Zulu Natal and Gauteng. The country’s economic growth is not only affected by Eskom’s current challenges but by the Covid-19 pandemic, which amplified joblessness and poverty, in one of the world's most unequal countries. Economic growth slowed down for about 2 years. Expenditure on real GDP decreased by 1.3% in the fourth quarter of 2022.

The Domino Effect: Exploring the short-term and Long-term impact of a decrease in the GDP

With regards to expenditure on GDP,according to the StatsSA report, households spent 0.9% more on goods and services, which contributed 0.6% to the overall change in expenditure on GDP. Spending on the “other” category, restaurants and hotels, and furnishings, household equipment, and maintenance contributed positively to the increase, while spending on food, alcohol, and tobacco, transport, and recreation had a negative impact. The government’s final consumption expenditure decreased by 0.7%, while total gross fixed capital formation increased by 1.3%, mainly due to increases in transport and machinery equipment. The report also indicated that there was a R29 billion inventory build-up in three industries – mining and quarrying; manufacturing; and trade, catering, and accommodation. Net exports contributed negatively to GDP growth due to a decrease in exports of goods and services, mainly in base metals, mineral products, and paper.

How these sectors have been affected by the decline in the GDP are as follows:

Finance, real estate and business services: According to the latest Stats SA report, the finance, real estate, and business services industry fared poorly in the last part of the year, as it went down by 2.3%. This made the GDP growth go down by 0.6%. Within this industry, activities like banking, insurance, and other related services like pension funding and auxiliary activities, also did not have much business going on.
Trade, catering and accommodation industry: The trade, catering and accommodation industry decreased by 2.1% in the fourth quarter, contributing -0.3 of a percentage point to GDP growth, Stats SA said. Decreased economic activity was also reported for wholesale trade, catering and accommodation industries.
Mining and quarrying: The report also revealed that the mining and quarrying industry went down by 3.2%. This decrease resulted in a negative impact of 0.1% on the GDP growth. The report stated that this could have resulted from the production of diamonds, iron ore, and platinum group metals (PGMs) going down.
Agriculture, forestry and fishing: The agriculture, forestry and fishing industry decreased by 3.3% in the fourth quarter, contributing -0.1 of a percentage point to GDP growth. Decreased economic activities were reported for field crops and horticulture products.

Manufacturing: The manufacturing industry went down by 0.9%. Out of the 10 manufacturing divisions, five reported a decrease in growth rates during this period. The food and beverages division played the biggest role in the decrease. The basic iron and steel, non-ferrous metal products, metal products, and machinery division also had a significant contribution to the decline in this industry.

The 1.3% decline in South Africa’s GDP means that the value of all goods and services produced within the country’s boarder has affected its economy. When an economy’s GDP declines, it can have both short-term and long-term implications on the country and its citizens. The short-term implications of a decline in the GDP growth are often felt immediately. The implications are as follows:

This decline in the GDP slows down economic activity, which can lead to a decline in employment and income. Household spending has increased by 0.9%. Although more was spent on food, alcohol and tobacco, transport and recreation, South Africans received less for their money. This contributed negatively to the slow GDP growth. The result is a vicious cycle of reduced economic activity that can lead to recession.
One of the most important short-term effects of the decline in the GDP is unemployment. If companies are not making as much money, they may have to lay off workers or reduce their working hours. This leads to spending by people with lower incomes, which can further reduce economic activity.
Another short-term effect is a decline in government sector revenues. Again, if companies are do not make much money, they can pay less taxes. Also, when people loose their jobs, they may need government assistance in the form of unemployment benefits or other social security programs. This therefore strains state budgets and lead to a reduction in the public sector.

The long-term implications of a decline in GDP growth are often more difficult to predict and can be more serious than the short-term implications. The implications are as follows:

One of the most important long-term effects is the effect on economic growth. If economic activity is lower, it may be difficult for companies to invest in research and development or new technology which can limit future growth.
Another long-term effect is on the country’s standard of living. When economic activity weakens, people may not be able to afford basic needs such as food, housing and health care. This can lead to the deterioration in the quality of life of citizens and also affects their health.
A decline in international trade also has an effect in a country’s GDP growth. If a country’s economy is struggling, it becomes less attractive to foreign investors, which can lead to fewer exports and less foreign investment. Furthermore, if a country exports more than it imports, its economic value is also severely affected.

How Is (GDP) Calculated? there are three methods of calculating the figure: the production approach, the income approach, and the expenditure approach; and they should all in theory add up to the same number. The production approach is the sum total of market value of final goods and services produced in a country during 1 year. In comparison, the income approach simply adds the sum total of all incomes of all individuals living in a country during that same year. The most commonly used method however is the expenditure approach. With the expenditure approach, we calculate the sum of all consumption, investment, government spending, and net exports (exports minus imports).

An important question is,” will South Africa’s weak economy grow?” the country’s economic growth cannot be easily predicted because it is affected by multiple factors. The most important factor is with regards to politics.

Responding to South Africa’s budget, delivered by Finance Minister Enoch Godongwana last month, it seems like the failing electricity sector, with record levels of load-shedding, are likely to lead to lower growth this year and next than the government currently forecasts. In short, it can be said that the decrease in GDP can have significant short-term and long-term implications on the economy and the citizens of the country and the government and policy makers must act to address these issues and support economic growth to avoid a prolonged recession. A manner in which they can deal with this is to ensure that they work hard and diligently to being removed from the greylist, and deal with the energy crisis.

What greylisting entails and what it means for south africas economy

tmmbsonline — Thu, 02 Mar 2023 14:43:48 +0000

What greylisting entails and what it means for south africa’s economy

What greylisting entails and what it means for south africas economy

Financial crime is a serious concern for many countries around the world as it threatens the safety and soundness of financial systems world-wide. In the effort to combat money laundering, terrorism financing and other financial crimes, international organizations such as the Financial Action Task Force (FATF) and the European Union (EU) have established a set of standards that countries are expected to meet. Failure to meet these standards can result in a country being greylisted, which has significant implications for the economy. For a country to be declared greylisted, it is placed under valuation by the Financial Action Task Force (FATF).

Essentially, what greylisting means is that a country has been recognized as having compliance issues but has committed to address strategic inadequacies to counter money laundering and terrorist financing within a given timeframe. When a country has been put onto the grey list, the country is monitored by the FATF and strict regulations are imposed on them. When a country is greylisted, it means that its government has adopted an action plan or strategy to address its deficiencies identified during its mutual evaluation after an observation period, and to implement such an action plan within a defined time period, and with FATF monitoring such implementation. The implications of being placed onto the grey list is an indication that a country faces serious potential problems such as a subsequent shrinking economy, a downgrade of ratings, and a lack of trade opportunities.

What greylisting entails and what it means for south africas economy

What is greylisting ?

The Financial Action Task Force (FATF) is an inter-governmental body that supervises money laundering and terrorist financing around the globe. It also finances the proliferation of weapons of mass destruction. The purpose of the FATF is to prevent these illegal activities and the harm they cause to society from transpiring. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. A country may be greylisted for a variety of reasons:

Lack of Adequate Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) Measures. Countries are expected to have effective AML/CTF measures in place to prevent money laundering, terrorism financing and other financial crimes. If a country is found to have insufficient measures, it may be greylisted.
Insufficient Cooperation with other countries. Countries are expected to cooperate with each other in combatting financial crimes. If a country is found to be uncooperative, it may be greylisted.
Presence of high-risk industries. Countries with high-risk industries for financial crimes, such as casinos, may be more likely to the greylisted.
Lack of political will. In some cases, a country may lack the political will to enact and enforce the necessary AML/CTF measures.

In 2021, the FATF conducted a mutual valuation which was concluded in October 2021. The valuation found holes in South Africa’s strategic systems to combat money laundering and terrorist financing. This was due to low levels of transparency and inadequate internal capabilities and systems, which led South Africa to be placed under review by the FATF and on the brink of being greylisted. South Africa found itself on a verge of being greylisted largely due to the collapse of commercial crime investigation and prosecution during the State capture period. South Africa is facing the consequences for its failure to implement effective prosecutions for crimes like money laundering and terrorist financing. Sadly, on February 24 2023, South Africa together with Nigeria were officially declared greylisted. The decisions were announced by the FATF. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed time frames. The average time spent under greylisting is 3 years, but the range is very wide, from a minimum of 1 year to a maximum of 7 years.

What greylisting entails and what it means for south africas economy

Furthermore, the length of time a country remains on the FATF grey list depends on the speed in which it resolves the shortcomings identified in its AML/CFT framework. South Africa has committed to resolve the remaining eight strategic actions by January 2025 on the condition that regular updates be provided, which creates an opportunity on set intervals to have South Africa’s greylisting reviewed by the FATF. However, the government hopes to address them sooner, possibly in 2024.

The initial mutual evaluation report had 67 recommended actions which South Africa had to action. In February 2023, at the time the greylisting decision was made, the FATF acknowledged the significant and positive progress made, and concluded that 15 actions remain open, linked to eight strategic actions.

The threat of greylisting was first announced in 2021, and as result, President Cyril Ramaphosa’s government has worked hard to address the concerns raised by the FATF in its mutual evaluation report, and has submitted an action plan to this end, while also participating in regular follow-up evaluations to assess progress. Some of the key actions coordinated by various stakeholders since 2021 include:

Passing several pieces of legislation aimed at improving the country’s financial crime laws, including the General Laws (Anti-Money Laundering and Counter Terrorist Financing) Amendment Bill in December 2022.
The mandate of the Financial Intelligence Centre Act (FICA) has already been widened to include more effective monitoring and detection capabilities.
The establishment of the Fusion Centre, which brings together bodies like the NPA, SIU, SARS, the Hawks, Crime Intelligence, State Security Agency and the FIC. Since its inception the work of the Fusion Centre has led to the preservation and recovery of approximately R1.75 billion in criminal assets.
In the Mid-Term Budget Policy Statement, Treasury made R14bn available to capacitate agencies that are critical in the fight against crime, including those that fight financial crimes.

The biggest concern is the impact that greylisting has on consumers, businesses and the country as a whole.

Being greylisted can have significant implications for the economy of a country. Some key implications include the following:

Damage to Reputaion. Being greylisted can also damage the reputation of a country. This is the main implication on a greylisted country. It makes it difficult for the country to attract tourists and foreign investors, and can also impact the country’s ability to negotiate favorable trade agreements. Furthermore, a country’s ineffectiveness in combatting financial crimes like corruption and money-laundering as well as terror financing is deemed to be below international standards.
Reduced Foreign Investment. Being greylisted may also lead to loss of confidence by foreign investors. This can result in a reduction of foreign investment in a country, which can have a negative impact on economic growth.
Increased Cost of Capital. If a country is greylisted, it may find that the cost of borrowing money increases. This can make it more expensive for the government and business to borrow money, which can make it more difficult for them to finance their operations.

With regards to the impact that greylisting has on the economy, President Cyril Ramaphosa stipulated that the strategic deficiencies identified by the FATF are not directly related to the financial sector which means that financial stability and costs of doing business with South Africa will not be seriously impacted by the greylisting. The President’s word gives South Africans some assurance however, the greylisting came at an unfortunate time because it represents bad news heaped onto the worsening energy crisis and other critical failings in areas such as transport and water which are essential to a functioning economy.

When looking at greylisting from a business and consumers point of view, transactions made by companies and individuals from South Africa will be seen as high-risk transactions, prompting difficult administrative and compliance obligations, and may reduce international trade with South Africa. South Africa’s biggest traders such as the UK will immediately impose a high risk category on the country, which will have a negative impact on investment flows. Investment flows are important, because it is through foreign direct investments that the country is able grow its economy and combat high levels of unemployment.

The money that South Africa has or is been using to pay for the risk premium imposed by the global Development Finance Institutions (DFIs), could have been used to address South Africa’s developmental needs such as health-care, education, infrastructure and job creation. However, it is not the end of the world for South Africa seeing that it’s on the grey list. The positive side of being greylisted is that, although the greylisting increases government’s foreign-funding costs and weigh on trade flows, it’s unlikely to “significantly” affect South Africa’s creditworthiness. It also grants the government a “wake-up” call in the need to increase its international cooperation on the law enforcement side and the use of financial intelligence. So all that useful information that financial institutions are providing by way of suspicious transaction reports and activity- that all needs to be made much better use of by law enforcement. If South Africa continues to make significant improvements in effectiveness and swiftly exits the grey list, it will have a limited impact on financial stability and costs of doing business with South Africa, particularly if South Africa moves speedily to get out of greylisting.

2023 Budget Speech

tmmbsonline — Mon, 27 Feb 2023 08:48:46 +0000

The fundamental changes and its implications: revenue and tax proposals

Finance minister Enoch Godogwana delivered the 2023 budget speech on 22 February 2023. He touched on multiple points, including the current state of the country’s economy and its growth estimates; Impact of load shedding on small growing businesses; the social wage as well as the new tax proposals. When delivering his speech, the finance minister was trying to strike a balance between spending priorities and the limited resources available to the National Treasury.

With the country facing its current challenges, i.e., unemployment, inflation, poverty, Eskom’s power cuts amongst other things, according to economic analysts and researchers, there has been a growth in the country’s economy. However, with the International Monetary Funds projects decreasing from an estimated 3.4% in 2022 to 2.9% in 2023 including the ongoing war in Ukraine, therefore causes global economic risks which have the potential of impeding the country’s economy.

When looking at the revenue and tax proposals stipulated within the budget speech, there has been a change welcomed by consumers and businesses alike. With SARS being under the leadership of Commissioner Edward Kieswetter, there also has been gross tax revenue projections which have been revised upwards by over R10 billion. This therefore serves as a testament that SARS has improved significantly in its tax collection efforts thus bearing fruit.The increase of the tax-to-GDP ratio from 25.4% to 25.7% is marginal but this does not mean that ultimately more revenue will be taken out of the hands of businesses and consumers in terms of the GDP.

2023 budget speech

What this means is that there were no major tax proposals for the year 2023.

The finance minister stipulated that the personal income tax bracket will be fully adjusted for inflation which will increase the tax-free threshold from R91.250 to R95.750.
With regards to the promoting investments in renewable energy, the general fuel levy together with the Road Accident Fuel levy will not be increased this year. This will take effect from 1 April 2023 for 2 years. This is viewed as a ‘tax relief’ intervention.
Medical tax credits will be increased by inflation, to R364 per month for the first 2 members, to R246 for additional members.
The retirement tax table will be adjusted upwards by 10%. What this means is that the tax-free amount that can be withdrawn at retirement increases to R550 000. This is good news for the country’s retirees who will enjoy moderate retirement fund lump sum withdrawal benefits with inflationary adjustment- this brings welcomed relief for the man on the street.
Transfer duty will be increased by 10%, allowing properties under R1.1 million to avoid any transfer duty payments.
For renewable energy, two tax incentives has been introduced to encourage both individuals and businesses to invest in renewable energy and help the power utility Eskom by increasing the generation of electricity. In the SONA, President Cyril Ramaposa stipulated that people will get a 25% rebate on the cost of installing rooftop solar panels at home. The rebate in this regard is capped at R15 000. This therefore can be used to reduce their tax liability in the year 2023-2024. As of 1 March 2023, businesses will be able to reduce their taxable income by 125% of the cost of an investment in renewable energy. Businesses can deduct 50% of the costs in the first year, 30% in the second and 20% in the third for qualifying investments in wind, concentrated solar, hydropower below 30 megawatts, biomass and photovoltaic projects above 1 megawatt. There will be no thresholds on the size of projects that qualify. This incentive will therefore be available for two years to stimulate investment in a short term.
The government intends to publish a revised draft legislation on the two-pot retirement system. This system will be implemented from 1 March 2024 and any withdrawals from the accessible “saving pot” will be taxed as income in the year of withdrawal.
Finally, there will be an increase in excise duties on alcohol and tobacco of 4.0% which is in line with inflation.

2023 budget speech

Furthermore, the zero increases in corporate tax, personal income tax, VAT, fuel levy, and Road Accident Fund will go a long way to help ease cashflow pressure on businesses. Over the last 18 months, businesses have had to navigate challenging economic conditions including worsening loadshedding and increasing interest rates. Having the necessary support and assistance from the government to stimulate the economy is key to survival.

How the repo rate affects you

tmmbsonline — Wed, 01 Feb 2023 15:15:50 +0000

How the repo rate affects you

The repo rate is defined as the rate in which the central bank of a country being the South African Reserve Bank in our case, lends money to commercial banks like ABSA, FNB, Discovery Bank, just to name a few, in the event of any shortfall of funds. The term “shortfall” means that there is a short availability of funds. Furthermore, it is the amount by which the liability exceeds the required amount of cash that is available.

In essence, the repo rate is a tool used by monetary authorities to control inflation. A question that then comes to mind is how is the repo rate and inflation in sync? The South African Reserve Bank uses the repo rate to limit commercial banks from borrowing money from the central bank which ultimately reduces the money supply in the economy thus arresting inflation.

How the repo rate affects you

Though the repo rate seems to be somehow advantageous as it limits commercial banks from borrowing money thus allowing the government to control the money supply within the economy, it also affects the lives of ordinary people. How does the repo rate affect you? After a lengthy debate by the monetary policy committee of the Central Reserve Bank, a conclusion has been drawn that a 25 basis point increase should transpire.

The repo rate now sits at 7.25% whilst the prime lending rate sits at 10.75%. The Prime Lending Rate is that the cost at which banks are willing to lend money to consumers. The repo rate has a direct impact on the prime lending rate, which is the repo rate plus the amount which the bank adds to ensure sure they make a profit on their loans. The lower the repo rate, the lower the prime interest rate.

The inflation rate which is above 7% is the cause of the increase. As a result, this inevitably affects the consumer. What this means is that if for example, a consumer is paying a mortgage of R2 000 000 over a period of 20 years, he or she will be paying about R337 more. The repo rate is probably one of the most important considerations when it comes to applying for a bond. It affects not only the monthly repayments, but also how much interest will be paid over the entire period of the loan. A drop in the repo rate will mean a lower prime lending rate, and this will decrease the monthly bond payment.

For some consumers, the increase of the repo rate and prime lending rate might not seem like it’s a lot but it actually is considering the current economic status quo which has increased the cost of food, electricity and fuel prices.

Protecting your current and future income

tmmbsonline — Tue, 22 Nov 2022 10:43:50 +0000

Protecting your current and future income

Have you been to the mall recently? I am sure you’ve noticed that the Christmas trees are out again. The festive season is almost upon us, and while we plan and prepare to have several colours with our loved ones, it is also in good spirits to have the future in mind. As individuals, we may experience the loss of a loved one, relative, breadwinner, etc and as a business entity, we may find ourselves with one less partner or a key individual. Death is inevitable but and it is important that we plan and prepare accordingly. Therefore, it is important to put measures in place to protect your current and future income.

From a business point of view, it is always important to do some introspection regarding the future of the business. Be able to answer questions such as: what would happen to the business if so and so had to pass away, do you have a good understanding of your ownership model, would there be any conflicting priorities and future plans for the business between you, other business partners and the deceased’s family? These are critical points to consider and find solutions to.

Protecting your current and future income

Below are some measures you can put in place to protect your income as a business:

Key man insurance: key man insurance protects the business from financial consequences of a key individual passing away, becoming disabled or contracting a critical disease. The most important asset in any business is its people. The loss of a key person constitutes a risk for the business. Insurance can help businesses cope with the loss of a key person in their organisation, such as a manager or staff member. Loss of income due to specific knowledge, additional costs incurred to recruit and train a replacement, and loss of goodwill can put pressure on an organisation's finances.
Another option is taking out a buy and sell agreement: when a co-owner in a business dies, the affected owner's estate can be left severely exposed. The remaining owners might not have the resources to purchase the shares from the estate. The spouse may not want to participate in the business which means that he/she is left at the mercy of the existing owners. A buy-and-sell agreement is an agreement between two or more co-owners of a business. The purpose of the agreement is to provide the surviving co-owner with cash to purchase the interest of a deceased member of the family who owns shares in the business.

Protecting your current and future income

Individuals also have options available to them on how to protect their income:

Having an emergency fund: Savings are a good back up for short-term or relatively minor setbacks. You could keep these funds in an easily-accessible savings or cash account with the best interest rates. Saving is a way to insure yourself against setbacks, such as losing your income or unforeseen emergencies.
Income protection policy: Income Protection insurance is intended to replace a portion of your monthly earnings if you are unable to work for an extended period of time due to illness or injury. This may cover your day-to-day living expenses, allowing you to concentrate on your recovery.
Boost your current earnings: Increasing your regular earnings may improve your current financial situation and make it easier to save. You may be providing financial protection against income loss or unforeseen emergencies by doing so. It may even allow you to pursue your passion as a secondary source of income. Some people supplement their income by working part-time as a tutor or coach, while others create and sell arts and crafts at local markets or online. With so many options available, there's bound to be something that suits you.

As the saying goes, ‘uncertainty is the only certainty!’ As a result, it's always a good idea to contact a financial planner, who is well-positioned to help manage potential risks and build a business continuity plan to financially future-proof your business. It is now time to take stock. Is your last will and testament updated, do you have key-man insurance and a business succession plan in place. Does your risk plan have disability and accidental injury to protect your ability to earn an income?

Protecting your current and future income

Building sustainable partnerships and joint ventures

tmmbsonline — Tue, 25 Oct 2022 21:58:32 +0000

Building sustainable partnerships and joint ventures

As the old saying goes, two heads are better than one, right? When it comes to entrepreneurship, that may be true - having a partner means having someone to bounce ideas off of, perhaps someone with complementary skills, or even much-needed financial support. However, a poorly established and managed partnership could be the reason your business fails. The key to a successful partnership is to get it right from the start. That necessitates some difficult discussions and planning.

You will be contractually bound to that person for as long as your company exists (there are ways out, but they are difficult). So, you'll want to find someone who shares your goals and vision for the company, preferably has the same work ethic as you, is dependable, committed to the company's success, and has something to offer. Essentially, having them on board should benefit the company.

Building sustainable partnerships

A partnership is relatively simple to establish in South Africa. It is similar to a sole proprietorship in that the assets and liabilities of the business are linked to those of each partner (meaning that the profits are part of your personal income tax and that if the business fails, your personal assets can be used to service any debt), and it does not need to be registered with the Companies and Intellectual Property Commission. A partnership does not have legal status. While it is not a legal requirement, it is strongly advised that you put the terms of your partnership in writing. This is referred to as a Partnership Agreement. You can draft this agreement yourself, but you should consider hiring a lawyer to ensure that the terms comply with South African partnership laws.

Part of the benefits of a partnership is that it can help your company grow faster, increase productivity, and generate more profits. Some of the other advantages include:

Gain access to new markets and distribution channels
Cost sharing and with a partner there is access to new knowledge and expertise
Access to more resources, such as technology and finance

Building sustainable partnerships

Disadvantages of a partnership are as follows, but not limited to:

Having more employees in a company can also complicate decision-making and reduce profits.
Disagreement between equally sharing partners is one of the leading causes of company dissolution.
Losing a partner will be expensive because you will have to value that person's assets as well as replace someone who has taken on a lot of liability/responsibility.

The difference between joint ventures and partnerships is that joint ventures are created with a specific goal in mind. Each party contributes their fair share to a task that has been agreed upon. Joint ventures frequently enable growth without the need for borrowing or seeking outside investors. You might be able to do the following:

Building sustainable partnerships

Market your product using the customer database of your joint venture partner.
Provide your existing customers with your partner's services and products
Combine purchasing, research, and development efforts

Joint ventures can pose significant risks in terms of liabilities and the possibility of partner conflicts and disputes. There are likely to be issues if:

The venture's goals are not clear.
Communication between partners is poor.
The partners have different expectations for the joint venture; the level of expertise and investment is not evenly distributed; and the work and resources are not distributed equally.
Different cultures and management styles create barriers to cooperation, and leadership and support are lacking in the early stages.

Collaboration with another company can be difficult. Building the right business relationship takes time and effort, and even then, it can be difficult to completely avoid all issues.

Building sustainable partnerships