Economy – 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.

Unlocking the Secrets Behind the Price Tag

tmmbsonline — Thu, 18 Jan 2024 07:15:17 +0000

Unlocking the Secrets Behind the Price Tag: The Intriguing Reasons Why Private Schools Command a Premium Education Cost

Education is an invaluable investment in your child’s future. The most expensive schools in South Africa provide high-quality education, outstanding facilities, and a conducive learning environment. However, assessing whether the cost aligns with your budget and the value you expect your child to receive is essential. Private schools have long been associated with a premium education experience, offering smaller class sizes, enhanced facilities, and specialized programs. However, the question often arises: Why are private schools so expensive? This article aims to shed light on the various factors contributing to the high costs associated with private education.

Smaller Class Sizes

Private schools’ pride themselves on providing a more personalized and intimate learning environment. With smaller class sizes, students benefit from increased individual attention and a more interactive educational experience. However, maintaining such low student-to-teacher ratios requires employing a larger number of qualified educators, leading to higher staffing costs.

High-Quality Educators

Private schools often attract highly qualified and experienced teachers, professors, and specialists. These professionals are often well-compensated, contributing to the overall cost of running a private institution. The commitment to hiring top-tier educators is seen as an investment in providing a superior education to students.

State-of-the-Art Facilities and Resources

Private schools often boast state-of-the-art facilities, cutting-edge technology, and a wide array of extracurricular activities. These amenities require significant financial investment for construction, maintenance, and continuous upgrades to ensure students have access to the best possible resources.

Specialized Programs and Extracurriculars

Private schools frequently offer specialized programs, ranging from advanced placement courses to unique extracurricular activities like music, art, and sports. These programs not only enhance the overall learning experience but also demand additional resources, equipment, and specialized staff.

Small- Scale Administration

Unlike public schools, private institutions often have smaller administrative staff. While this may seem like a cost-cutting measure, it can lead to higher per-student administrative expenses, as these costs are spread across a smaller student body.

Financial Aid and Scholarships

Many private schools are committed to maintaining a diverse student body and offer financial aid and scholarships. While this is a noble endeavor, it necessitates higher tuition fees for those who can afford to pay, offsetting the costs of supporting students with limited financial means.

Independence and Autonomy

Private schools operate independently, allowing them greater flexibility in curriculum design, hiring practices, and overall decision-making. However, this autonomy comes at a price, as they are solely responsible for funding and sustaining their educational programs without government subsidies.

The following table illustrates the top 5 most expensive day school private schools in South Africa:

Private schools in South Africa have hiked fees for 2024, with at least six now charging more than R350,000 a year for boarding and tuition.

(Source of table: businesstec)

In essence, the high costs associated with private schools are a result of various factors that contribute to the creation of a premium educational environment. From personalized attention and top-tier educators to advanced facilities and specialized programs, these institutions prioritize quality over quantity. While the expenses may seem steep, many argue that the investment in private education yields long-term benefits, providing students with an educational experience that goes beyond the classroom, shaping them into well-rounded individuals prepared for success in an ever-evolving world.

The Raise Of Inflation Rates

tmmbsonline — Thu, 20 Jul 2023 15:17:11 +0000

The Raise Of Inflation Rates

When the South African Reserve Bank raises interest rates, it’s big news. The only way that the SARB can try to pull inflation down is to carry on raising interest rates. This obviously sinks consumer confidence, results in fewer jobs and lower wages and also causes stock prices to fall. StatsSA reported that inflation dropped to its lowest level in 13 months, standing at 6.3% year-on-year in May. This decline was attributed to smaller rises in the prices of food and fuel. The decrease from the previous month’s rate of 6.8% exceeded expectations. The intensity of raising interest rates consequently places the economy into recession. The big question is “why does the SARB raise interest rates?”

Controlling Inflation: One of the primary reasons why the SARB raises interest rates is to control inflation and to reach its inflation target. When an economy experiences high inflation, the SARB may increase interest rates to reduce the money supply, slow down spending and borrowing, and cool down the economy. By making borrowing more expensive, higher interest rates discourage consumers and businesses from taking on excessive debt and engaging in excessive spending, which can contribute to inflationary pressures.
Exchange Rate Stability: Another factor that may influence the SARB's decision to raise interest rates is to maintain stability in the country's exchange rate. If the local currency is weakening significantly, the central bank may raise interest rates to attract foreign investors seeking higher returns on their investments. This can help strengthen the currency and stabilize the exchange rate.
Capital Inflows and Outflows: The SARB might raise interest rates in response to significant capital inflows or outflows. When a large amount of capital is flowing into the country, higher interest rates can make local investments more attractive, encouraging foreign investors to keep their funds within the country. Conversely, if there is a sudden outflow of capital, increasing interest rates may help retain or attract foreign investment, thereby stabilizing the financial markets.
Managing Economic Growth: The SARB may adjust interest rates to manage economic growth. If the South African economy is growing rapidly and there is a risk of overheating, the SARB may raise interest rates to moderate the pace of growth and prevent the economy from entering an unsustainable boom. Higher interest rates can help curb excessive borrowing and investment, temper inflationary pressures, and ensure more balanced economic growth over the long term.
Global Monetary Policy and External Factors: The SARB also takes into consideration global economic conditions and monetary policy decisions made by other major central banks. If other central banks, especially those in advanced economies, raise interest rates, it can lead to capital outflows from emerging markets like South Africa. To avoid destabilizing effects, the SARB might choose to raise interest rates as well.
Market Expectations and Credibility: The SARB strives to maintain its credibility and anchor market expectations. If inflation expectations are rising or there is a perception that the central bank is not acting swiftly to control inflation, raising interest rates can help restore confidence in the central bank's commitment to price stability. By demonstrating its willingness to take necessary measures, the SARB can shape market expectations and influence long-term inflationary trends.

Ordinary South Africans cannot access the interest rates on the excess reserves but it still affects them. It's important to note that the impact of rising interest rates on consumers can vary depending on individual circumstances, such as the level of debt, income levels, and the overall health of the economy. Additionally, the magnitude and timing of interest rate increases, as well as other factors influencing the economy, will determine the extent of the effects on consumers. Increasing interest rates can have both advantages and disadvantages for consumers.

Although the status quo of raising interest rates seem to be negatively impactful on the pockets as well as the lifestyle ordinary people, its somehow advantageous. It is advantageous in the sense that these interest rates have the ability to control inflation, consumers can earn more interest on their savings, helping to grow their wealth, stabilize the Rands purchasing power and improving financial security and increased foreign capital inflows can benefit consumers indirectly by boosting the economy, creating job opportunities, and contributing to overall economic growth.

The main disadvantage with regards to raising interest rates is that higher interest rates can reduce consumer spending and business investment, leading to a slowdown in economic growth. This can result in job losses, reduced income opportunities, and increased financial uncertainties for consumers.

A little inflation is ok. It basically means keeps the economy moving at a sensible speed but inflation that stays to high for long is a problem. Higher prices means that employees will need higher wages pushing up costs for businesses. That could drive prices further potentially leading to an upward spiral of prices and wages.

The SARB's decision to raise interest rates is typically based on a thorough assessment of economic indicators, inflationary pressures, growth prospects, exchange rate dynamics, and global economic trends.

The Impact Of Sanctions On The South African Financial System

tmmbsonline — Thu, 20 Jul 2023 14:57:22 +0000

The Impact Of Sanctions On The South African Financial System

Sanctions can have a significant impact on the South African financial system, affecting various sectors and aspects of the economy. The specific impact of sanctions on South Africa would depend on the nature, scope, and duration of the sanctions imposed, as well as the response of the South African government and financial institutions. Due to the war between Russia and Ukraine, the SARB is worried about Russia-linked sanctions as they have the potential of crippling the financial system thus affecting financial stability. Here are some of the potential impacts of sanctions on the South African financial system:

Trade and Investment: Sanctions can restrict or prohibit trade and investment between South Africa and the countries imposing sanctions. This can limit South Africa's access to international markets, disrupt supply chains, reduce foreign direct investment, and hinder economic growth. Reduced trade and investment flows can lead to a decline in export revenues, job losses, and lower economic output.
Financial Institutions: Sanctions may target specific financial institutions in South Africa, restricting their access to international financial markets and transactions. This can impede their ability to raise capital, conduct cross-border transactions, and maintain correspondent banking relationships. Financial institutions may also face increased compliance costs and reputational risks, as they navigate the complex regulatory environment associated with sanctions.
Currency and Exchange Rate: Sanctions can impact the value of the South African currency, the rand. Restrictions on trade and investment can lead to a decrease in foreign currency inflows, which may put downward pressure on the rand's exchange rate. A weaker currency can result in higher inflation, increased import costs, and reduced purchasing power for businesses and individuals.
Capital Flows: Sanctions can affect capital flows into and out of South Africa. In response to sanctions, investors may withdraw funds from South African markets, leading to capital flight. This can result in a decline in foreign reserves, a decrease in liquidity in the financial system, and potential instability in the banking sector. Restrictions on capital flows can also limit South Africa's ability to access international financing for infrastructure projects and economic development.
Sovereign Debt: Sanctions can make it more challenging for South Africa to borrow from international markets and refinance existing debt. The increased risk perception associated with sanctions can lead to higher borrowing costs and reduced investor appetite for South African sovereign bonds. This can result in a higher debt burden and potential fiscal challenges for the government.
Economic Growth and Development: The cumulative impact of sanctions on various sectors of the South African economy can hinder economic growth and development. Reduced trade, investment, and capital flows can hamper job creation, limit technological advancements, and impede the country's ability to address socio-economic challenges such as poverty, inequality, and unemployment.

The SARB is now watching for a direct impact from the war on the South African financial system, by way of an expression of anger by Western nations. Sanctions that have already been imposed on South African companies by the US includes being banned from benefiting from the reconstruction of Ukraine. The possibility of sanctions that could affect the banking system rather than just, say, construction companies, came up in the diplomatic fight about the supposed transfer of South African weapons to the Russian ship but, the US made it clear that cutting South Africa out of the African Growth and Opportunity Act (AGOA) would come first.

The general sanctions that are commonly imposed by countries or international bodies serve as a basis for understanding the potential measures that might be taken:

Diplomatic Sanctions: Diplomatic measures may include the expulsion or restriction of diplomats, the suspension of diplomatic relations, or limitations on official visits between countries. These sanctions aim to express disapproval and exert political pressure on the targeted country.
Economic Sanctions: Economic sanctions can take various forms and target different sectors of the economy. Some possible measures include:
- Trade Restrictions: Imposing trade barriers, such as import or export bans, tariffs, or quotas on specific goods or sectors. These restrictions can disrupt trade flows, impact supply chains, and reduce the export/import revenues of the targeted country.
- Financial Sanctions: These measures typically involve freezing the assets of targeted individuals, companies, or financial institutions, preventing them from accessing international financial systems. Financial sanctions can also include restrictions on financial transactions, such as limits on international money transfers or the use of certain currencies.
- Technology and Arms Embargoes: Restricting the export or import of specific technologies, military equipment, or dual-use goods. This aims to limit the targeted country's access to advanced technology and military capabilities.
- Investment Restrictions: Imposing limitations on foreign direct investment (FDI) or imposing divestment requirements. These measures can discourage foreign investors from engaging with the targeted country or existing investors from expanding their operations.
Travel Bans and Visa Restrictions: These sanctions can involve denying entry or imposing travel bans on individuals associated with the targeted country. They can affect government officials, business leaders, and individuals involved in specific sectors.

Should sanctions be imposed, though, the result could be a catastrophic financial crisis for South Africa, especially if it is banned from transactions in not only dollars but also in British pounds and euro. SA is highly dependent on investment inflows to fund its trade deficit, and that money comes mostly from the US, EU, and UK. It's important to note that the implementation of sanctions is a complex and politically driven process. The specific measures, if any, and their severity would depend on the geopolitical dynamics, the perceived threat or behavior, and the response of other countries and international organizations.

The insufficient and unreliable electricity supply is a significant drag on economic growth. It entrenches and contributes to the challenge of slow and inequitable domestic growth. As with sanctions, the SARB is required to prevent such trouble as it is legally obliged to take steps to avoid the materialization of such a risk.

The effects of fuel prices on the economy

tmmbsonline — Thu, 30 Mar 2023 18:37:44 +0000

The effects of fuel prices on the economy

The year started on a good note with price cuts of more than R2 per litre for petrol and diesel in January. However, in February and March motorists were hit with hikes. With inflation still on the rise, there will be no reprieve for consumers with another rate hike predicted for later this month as stipulated by the Governor of the South African Reserve Bank, Lesetja Kganyago. The good news is that, we are at least edging closer to April’s excitement about the price changes of petrol and diesel. However, the catch is that there will be an increase of R0.30 in petrol prices, with a decrease of R0.15 for diesel. The stipulated fuel price adjustments are merely predictions made by Central Energy Fund (CEF) which are not law and may change faster than the wind. The CEF is a state-owned energy company which reports to the Department of Energy. Its function is to contribute to the security of the energy supply of South Africa as well as that of the sub-Saharan African region. It is also involved in searching for appropriate energy solutions to meet the needs of both South Africa and the sub-Saharan African region. This includes oil, gas, electrical power, solar energy, low-smoke fuels, biomass, wind and renewable energy sources.

The true deciders of the price, the Department of Energy, decide on the final cost. The fuel predictions for April 2023 are as follows:

Petrol 95: increase of 1 cent per litre (R0.01)
Petrol 93: decrease of 1 cent per litre (R0.01)
Diesel 0.05%: decrease of 55 cents per litre (R0.55)
Diesel 0.005%: decrease of 56 cents per litre (R0.56)
Illuminating Paraffin: decrease of 113 cents per litre (R1.13)

This is preliminary data based on the current oil price and rand-dollar exchange rate, but could change before month end, said the CEF. The weakness of the rand has an effect on the changes of fuel prices. Factors that weaken the rand are: the dollar trading stronger, local factors like persistent loadshedding and South Africa being greylisted (increasing the risk of trade) are being priced into markets.

The effects of fuel prices on the economy

Loadshedding is not the only issue that needs to be mitigated. Businesses as well as the consumers that are dependent on those businesses are strongly affected by the increase and decrease of fuel prices. With regards to the fuel price increase, it calls for an urgent intervention as it shows inflation spiralling out of control. In Gauteng, consumers will pay more than R26 per litre, which paints an disturbing picture regarding transport cost and the overall cost of living. Since the beginning of the year, fuel prices have spiralled out of control. There has been a call for intervention on the government, not only by United Association of South Africa (UASA) but also by consumers. Though there has been a fuel levy relief for the past two months, what is needed is a permanent solution to this monthly crisis. As South Africans, we cannot keep pleading with government each month on the same challenge.

The fuel increase has a strong impact on consumers’ pockets as the current cost of living makes it challenging for people to manage their finances. The reality is people need to commute to work, transport their children to school and run other errands. During this time, we advise consumers to consider planning their day-to-day or weekly travel, join or start a work lift club and even pack lunch to help in saving any bit of money. The increase of fuel prices has motorists feeling uncertain about what the next few months have in store. It also creates uncertainty around the price of food and other commodities. Consumers will have to tighten their belt on shopping by spending money mainly on their necessities.

The price of fuel has an impact on businesses as well. Ultimately the price increase of fuel will result in even the price of transport going up. This means that goods being transported by road will now cost you more. The fuel price increase will also have an impact on employees traveling to work. For many “the hybrid and work from home” was seen as a relief in the tough economic times without having to fill up the tank in a bid to drive to work. But now that Covid-19 regulations have been relaxed there are more staff getting to work using their vehicles.

Businesses would need to look at an alternative to stay ahead of the economic turbulence that the fluctuating fuel price brings with it. Here are some ways a business can improve its services to its customers as well as improve its operations:

Tighten the budget on unnecessary travel. As much as companies need to get their goods delivered and they need to collect stock from suppliers. It is time to re-evaluate the traveling taking place in your business. Instead of making supplier trips daily cut it down to once or twice a week. The same can be said for delivery services that are being offered. If you offer delivery on goods to your customers, try to change it from daily to perhaps once or twice a week. Ensure that the delivery is worth the amount the customer has purchased for.
If it is possible, allow staff members to continue working from home. This might be a good idea for bigger businesses. The daily commute could be the reason why staff members might feel challenged to come to work. The price in petrol increases will put employees under pressure and as a result they might not be performing their best. Offering the team an alternative to “hybrid or work from home” might be a solution to keep the staff morale up.
Try to relook at virtual interactions for meetings and client interactions. Instead of having sit down meetings at offices outside your workspace that might require you to drive out, try to schedule them virtually. It is important to monitor and maintain resources in the businesses, but it is also essential to manage those resources correctly. Try to prevent unnecessary trips and look at moving your operations more digitally to improve the use of resources in your business.

The price of petrol and diesel is a critical factor for many people, as these fuels power much of our transportation and industries. When the price of fuel decreases, it can have significant effects on the economy, consumers as well as businesses. These effects are as follows:

Lower Transportation Costs: One of the most immediate effects of a decrease in petrol and diesel prices is the reduction in transportation costs. This can benefit both consumers and businesses. The advantage is that consumers will save on daily commute, whilst businesses reduce their transportation costs leading to lower prices for goods and services. The reduction of transportation costs can also help boost the economy in the sense that businesses will have more money to invest in other areas.
Increase in Disposable Income: A decrease in petrol and fuel prices can also result in an increase in disposable income for consumers. This means that people will have more money to spend on other things besides their necessities. This leads to an increase in consumer spending which can stimulate the economy. The extra spending benefits, as they have more customers with disposable income to spend.
Reduction in Inflation: Another effect is a reduction in inflation. Transportation costs make up a significant part of the overall cost of goods and services. When transportation costs decrease, the prices of goods and services can also decrease, leading to a reduction in inflation. This is particularly beneficial for people with fixed incomes, as their purchasing power can increase.
Decrease in Revenue for Oil Producing Countries: The decrease in petrol and diesel prices can also have negative effects, particularly for oil producing countries. These countries rely heavily on the sale of oil to generate an income. When the decrease of oil prices transpires, their revenue can also decrease which then results to economic challenges. This can have knock-on effects on other industries and the overall global economy.
Swift Towards Alternative Fuels: A decrease in petrol and diesel prices can lead to a swift towards alternative fuels. However, when petrol and diesel prices decrease, the incentive to switch to alternative fuels may also decrease. Nonetheless, environmental concerns and government policies promoting the use of alternative fuels can still be powerful motivators for individuals and businesses to make the switch.

The effects of a decrease in petrol and diesel prices is complex and varied, depending on a range of factors, including the state of the economy, global oil prices, and government policies. While a decrease in petrol and diesel prices can have positive effects on consumers, it can also have negative effects on oil producing countries. Ultimately, the long-term effects of a decrease in petrol and diesel prices will depend on how individuals and consumers respond to change, and the policies put in place to manage the transition to alternative fuels.

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.

E-Visas and their effects on the tourism industry

tmmbsonline — Tue, 18 Oct 2022 12:31:28 +0000

E-Visas and their effects on the tourism industry

Benefits of the e-visa:

South Africa has been preparing for the rolling out and implementation of the electronic visa system since 2018. The aim of this online system is to allow visitors to apply for visas and provide biometric data online -which will make it simpler for visitors to enter the nation. As it stands, according to Minister of Tourism Lindiwe Sisulu, a significant backlog in changing the paper-based system to a computerized one is impeding the introduction of e-visas to ease travel to the country. The visa policy in South Africa has previously been one of the barriers to travel, thus the introduction of e-visas will be good for both visitors and the local economy. The technology will also help consumers save a ton of time because they won't have to spend as much time waiting for administrative approval at airports.

Minister Lindiwe Sisulu mentioned that they have made a commitment to get on the e-visa issue as soon as possible, but the backlog is huge. Just converting what they have on paper to being computerised is taking a lot of time. On the other hand, Zambia has recently made an announcement on waiving visa requirements for tourists from various overseas markets, many of which are key source markets for most destinations within the southern African region. This goes to show that many countries are adapting and implementing great concepts to ensure sustained growth in the tourism industry.

With the advent of the online method, the turnaround time is significantly shortened. The applicants no longer have to travel to the embassy or consulate, wait in lines for hours, and pay transportation costs there and back in order to receive travel authorizations to visit South Africa. Consequently, it is a time- and money-saving technique of getting a visa.

Furthermore, there is no deadline or restriction for applying, and the entire application process lasts no more than ten minutes. This implies that you can submit an online application from anywhere in the world at any time. Several elements, including your nationality, the reason(s) or nature(s) of your visit (such as tourism or business) and the length of time you plan to stay in the nation, will determine whether you need to apply for an eVisa or not. You will need to provide various supporting documentation, depending on the nature of your visit, to verify your justification for visiting South Africa.

Some nations are recognized as not requiring visas. You do not need to submit an online visa application for South Africa if you are a citizen of these nations. Only individuals who do not come from a nation exempt from visa requirements should get one before visiting South Africa. The tourism industry is a resilient industry and with access to technology especially in terms of travel marketing. The pandemic accelerated the digital aspects of our life, transforming how we search, purchase, work, and play. Because the ordinary consumer relies on technology to identify, book, and pay for their accommodations, technology will play an even bigger role in how travel is marketed in the future. Travel SMMEs must therefore adapt or risk falling behind if they wish to prosper.

While we wait on the E-visas to come in effect, in 2022, having a relevant internet presence is essential. When it comes to marketing to potential customers, travel and tourism SMMEs cannot afford to cut corners on a website or disregard the power of social media. Small businesses in the tourism industry will profit from investing in their online presence to boost visibility and accessibility because technology is unquestionably an enabler.

There are a range of offerings in the South African tourism industry to meet different needs. It is important for SMMEs to conduct research on what travellers will desire in the coming year and beyond to improve profitability and value.

Importance of a cost benefit analysis for your business

tmmbsonline — Mon, 08 Aug 2022 07:26:31 +0000

Project A or Project B? Which one will it be?

Every time you need to make a decision for your business, you must always compare your options. Between Project Y and Project Z, or between Project Z and doing nothing at all. The simplest method of weighing your options to decide whether to move forward with a project is to perform a cost-benefit analysis. The goal is to compare project costs and benefits and choose the course of action that will provide the greatest return on investment.

An approach for analysing decisions as objectively as possible is the cost-benefit analysis. It entails calculating the advantages of a project, an investment, or a plan of action, and contrasting those advantages with the costs involved. You've already carried out a cost-benefit analysis in its most basic version if you've ever taken a piece of paper, drawn a line down the center, and listed the benefits of a suggested course of action on one side and the drawbacks on the other.

By making you list every conceivable cost and benefit connected to a project, cost-benefit analysis can reveal less-obvious aspects like indirect or intangible expenses. Business decisions are by their very nature difficult. The cost-benefit analysis helps simplify this predicament by reducing a decision to costs against benefits.

While a cost-benefit analysis can help you identify the anticipated costs and advantages of a business action, it can be difficult to foresee every factor that could influence the result. Unpredictable changes can occur in market demand, material costs, and the overall business environment—especially over an extended period of time. Cost-benefit analysis has a larger chance of falling short for projects or commercial choices with longer durations for a number of reasons. One reason is because, as you move further into the future, it becomes increasingly difficult to make precise forecasts. Additionally, it's possible that factors like inflation won't be properly taken into account in long-term estimates, which could affect the analysis's overall accuracy.

How to develop a successful Cost Benefit Analysis:

Organize Your Analysis Using a Framework:

You must first set the framework for your analysis in order for it to be as precise and feasible as possible. The characteristics of your company will determine how this framework appears.
Describe the aims and purposes you hope to achieve with the proposal. What must you achieve for the project to be deemed successful? This will be crucial in evaluating the findings of your investigation and can help you identify and comprehend your expenses and advantages.

Determine Your Benefits and Costs:

The next thing you should do is sit down and create two distinct lists, one of all the anticipated costs and the other of all the anticipated advantages of the proposed project or course of action.
You'll probably start by adding up the direct costs, which are costs directly associated with creating or developing a good or service (or the implementation of a project or business decision).
After those specific charges have been determined, it is similarly crucial to comprehend any potential advantages of the suggested course of action or undertaking. Some of the benefits may include:
- Direct benefit: More money and sales brought in by a new product
- Increased consumer interest in your company or brand
- Intangible benefit: increased staff morale
- Competitive advantage: being a pioneer in a particular sector or business

Assign a monetary value or amount to each benefit and cost:

Once you've compiled a comprehensive list of all costs and benefits, you must assign a rand value to each one to determine the appropriate monetary units. It will be difficult to compare costs and benefits if you do not assign a monetary value to each.
Direct costs and benefits will be the most straightforward to quantify. In contrast, indirect and intangible costs and benefits can be difficult to quantify. But that doesn't mean you shouldn't try; there are numerous software options and methodologies for assigning these less-than-obvious values.

Calculate and compare the total value of benefits and costs:

You can compare the two lists once each cost and benefit has a rand value next to it.
If the total benefits outnumber the total costs, you have a business case to proceed with the project or decision. If the total costs exceed the total benefits, you should reconsider the proposal.

In the end, cost-benefit analysis shouldn't be the only business analytics tool or strategy you use in determining how to move your business into the future. Cost-benefit analysis isn’t the only type of economic analysis you can do to assess your business’s economic state, but a single option at your disposal.