Tag Archive for: Department of Finance

The below statement was published by Business Unity SA.

Business Unity SA (BUSA) notes with dismay the decision by Moody’s Investors Service to downgrade SA to “junk status”.
It is an indictment on our country that BUSA needs to say this is not unexpected. Moody’s was the last of the major rating agencies to rate SA above junk status and had been indicating for some time their concerns about our lack of economic growth, bloated public expenditure, state of our SOE’s, our inability to make necessary structural changes in the economy and our labour market structure.

This rating downgrade comes at a time that the country is in the midst of pulling all its resources and capacity together to mitigate the impact of Covid-19 across economic, social and health sectors. The country’s resources and capacity are being stretched in addressing this extraordinary situation and the downgrade opens another major challenge for SA.

This is not the time for pointing fingers or starting blame games. We need to concentrate all the resources and capacity of our country towards the compact that is coming together to beat this virus. We recognise the urgency with which SA must respond to the Moody’s downgrade, but we do, as a country, need to mitigate the immediate economic impact of Covid-19.

If we fail in our endeavours to mitigate the negative impact of Covid-19 on our economy, we will be in a far worse position to resuscitate our economy post the Covid-19 crisis, thus making it virtually impossible to rebuild our economy to be rated again as investment grade.

So, we must commit to working together to deal with Covid-19, but also commit to work together to rebuild our economy post Covid-19. In making such commitment, the following remains pertinent and critical:
• Necessary structural changes in the economy
• The bloated public sector expenditure
• The wastage of scarce resources into SOE’s and other state structures that have no potential to deliver either social or economic returns
• Accelerating the processes at ESKOM to restructure the organisation so that it is fit for purpose and plays a critical role in a diversified energy generation and distribution environment. This includes urgently addressing the energy mix, accelerating the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) and implementing the Integrated Resource Plan (IRP)
• Ensuring legislation that erodes investor confidence is not considered or implemented
• Ensuring a single cohesive message from government, which must be that the most critical issue for SA is to do everything necessary to be rated again as an investment grade country, with this being the only focus.

We have come together as a country in the last few weeks to fight the Covid-19 outbreak. This “compact” must form the platform from which we now address the crisis of the downgrade. We have now got to channel all our resources and capacity to addressing these two crises. The critical component for this is decisive and urgent leadership from the President, his Cabinet and government. BUSA stands ready to work with stakeholders under such leadership.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].

Following the recently announced rules from the Payments Association of South Africa (PASA) to reduce the maximum value of cheque limits to R50,000, businesses are urged to adopt electronic banking channels.

The updated rules come into effect in May 2020, with an eight-month grace period to be granted for cheques that are yet to be processed by the due date.

Kenneth Matlhole, FNB Business Spokesperson, said several businesses and public institutions that still have cheques built into their operations will be heavily impacted by the decision. This ranges from schools, churches, scrap metal dealers, agriculture, motor industry, fiduciary services and auctioneers, among others.

Matlhole unpacked important factors for businesses to consider as they reduce their reliance on cheques, prior to the implementation of the new rules:

Act now – depending on the nature of the business or institution, moving away from a traditional payments system may result in cash flow disruptions. Business should allocate enough time for migrating to new payments systems. It is also essential to ensure that staff members are trained accordingly.

Business to business transactions – whether the business is receiving or issuing cheques, it is advisable to communicate and inform business associates and suppliers about the new payment systems/ arrangements and reach a mutual understanding.

Businesses can offer discounts or incentives for suppliers or business associates to adopt electronic banking channels, to help speed up the process.

Moreover, when considering the administration process, storage of physical paper, and the cheques clearance waiting period, migrating to electronic payments which are more efficient will no doubt be an incentive to migrate to electronic payments.

The same guiding principles for alternative payment adoption should be applied to inter-company funds transfer where cheques have been used as a mechanism to allow for money flow between linked franchises and business entities.

Adopt electronic banking channels – once a thorough analysis of how the business uses cheques has been conducted, the next step is to identify the most appropriate and efficient electronic banking channel to use. Furthermore, businesses that are still receiving B2B cheque payments should ensure that their systems are updated and ready to accept electronic payments.

“Given the reduction of cheque limits due to several issues including fraud, it may not be viable for businesses to continue using cheques.

“Regardless of the final decision to be taken by businesses, on thing is clear, the imminent reduction of cheque limits to R50,000, leaves businesses and institutions with no choice but to ultimately reduce their reliance on cheque payments,” Matlhole said.


For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Matthew Kwong [1], [2].