Over 50% of householes benefit from grants
JOHANNESBURG - Dependence on government support has expanded dramatically over the past two decades.
The share of individuals receiving social grants climbed from 12.8% in 2003 to 30.9% by 2019, before spiking to 40-point-1-percent last year.
This sharp rise is largely attributed to the Covid-19 Social Relief of Distress grant.
It was introduced as a temporary measure, but has since become a lifeline for millions facing unemployment and rising living costs.
According to the latest General Household Survey released by Statistics South Africa,
the proportion of households receiving at least one grant increased from 30.8% in 2002 to over 50% last year.
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4 hours ago
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How recent interest rate cuts are alleviating post-pandemic inflation in the property market
With the South African Reserve Bank (SARB) might cutting interest rates, it was decreasing borrowing costs and potentially increasing demand in the property market. Image: Leon Lestrade. While the current interest rates are still more than double what they were during the pandemic, the ongoing reductions signal to the property sector that post-pandemic inflationary pressures are easing and that the South African Reserve Bank (SARB) is actively encouraging investment. On Thursday, the Reserve Bank's Monetary Policy Committee (MPC) cut the interest rates, dropping by 0.25%, taking the repo rate to 7.25% and the prime lending rate to 10.75%. They anticipated that those who adopted a wait-and-see approach over the past year, delaying home purchases or portfolio expansions, would now view this as a favourable time to commit, according to Dr Farai Nyika, an academic at the Management College of Southern Africa (MANCOSA) He said that in addition to the monthly savings on instalment payments resulting from lower interest rates, landlords are also feeling optimistic. 'The previous tightening cycle since the pandemic had placed significant pressure on renters (who are heavily indebted), and the current environment offers some much-needed relief, and it will be easier to collect rentals,' Nyika said. He said that they also anticipated an expansion in property construction and an increase in rental stock coming online over the next year, driven by improved credit extension to investors resulting from lower interest rates-particularly in the Western Cape. 'That province's property market has proven to be highly resilient despite the rate hikes of recent years. However, the current rate cut will not necessarily lead to rental increases below the inflation rate. "This is because demand for property in the Western Cape remains intense, fuelled by the province's desirable lifestyle, quality of services, and growing interest from digital nomads who compete with locals for housing. In short, we foresee a mini property boom over at least the next two years.' With regards to other provinces, Nyika said they expected greater stability, especially in the Eastern Cape and KwaZulu-Natal. He said these provinces face distinct challenges - outmigration in the Eastern Cape, which puts downward pressure on house prices, and natural disasters in KwaZulu-Natal. 'Lower interest rates will certainly support ongoing rebuilding efforts in KwaZulu-Natal following the floods experienced over the past three years.' The property sector also received this rate cut as a welcome boost, particularly as many municipalities have announced their annual tariff and rate hikes. The property sector will welcome the news of a resumption of the Reserve Bank's rate-cutting cycle; however, the 25 basis points reduction indicates that the prime rate remains significantly higher than it was before Covid, when inflation levels were also elevated, according to Dr Roelof Botha, an economist and advisor to the Optimum Investment Group. He said the BetterBond Index of home loan applications remains much lower than before the restrictive monetary policy kicked in at the end of 2021. 'A significant percentage of residential property sales are related to owners who cannot afford the sharp increase in the debt service costs/disposable income ratio, which is still 33% higher than at the beginning of 2022. The past three years have witnessed a relentless rise in the prime rate (via the repo rate), despite the complete absence of demand inflation,' Botha said. He said that with the current real prime rate (prime minus inflation) at a level of 156% higher than the average during the tenure of Gill Marcus, the previous Governor of the Reserve Bank, it is clear that the buyer's market will remain intact in the property sector. Interest rates will have to be lowered faster and more aggressively before a meaningful recovery can be expected in the property market, he added. The economist warned that unless the economy manages to recoup the loss of 245 000 jobs that occurred in the first quarter of this year, it would be tantamount to self-inflicted economic sabotage if the MPC does not continue with its rate-cutting cycle, which he said is progressing at a snail's pace. The benefit to the property sector is gradual, as a significant portion of South African debt is hedged at high rates, with the full earnings benefit materialising when interest rate swaps or caps mature and are renewed at lower rates, according to Ridwaan Loonat, a senior analyst for Property at Nedbank. 'The SARB has also implicitly announced its preference for a 3% inflation target. If this target is reached, then this could potentially see another 125bps of cuts in this cycle. We forecast another 25bps cut in July 2025,' Loonat said. The Monetary Policy Committee's (MPC) decision to cut interest rates was largely anticipated and underscores a greater emphasis on domestic fundamentals, according to Siphamandla Mkhwanazi, a senior economist at FNB. He said inflation remains below the bottom of the inflation target range and high-frequency data reflects a weak start to 2025 from a productive sector perspective, which will be worsened by faltering global prospects. He added that ultimately, the macroeconomic outlook is benign, providing ample space for a continued cutting cycle. 'That said, the impact of heightened uncertainty on investor confidence and capital flows will likely continue to drive gyrations in capital and currency markets, exacerbating external vulnerabilities and keeping the South African Reserve Bank (SARB) cautious. "Furthermore, South Africa's difficult fiscal trajectory is delaying any improvements in sovereign risk and borrowing costs. The outlook on interest rates will continue to reflect these risks. "Should muted local inflation, and expectations that the Fed will resume its cutting cycle before year-end prevail, our current view that another 25bps cut is probable this year would be supported,' Mkhwanazi said. The MPC's decision to cut the interest rate by 25 basis points is a welcome relief for consumers and is expected to bolster homeowner sentiment, according to Nondumiso Ncapai, the managing executive at Absa Home Loans. She said the recent Absa overall homeowner sentiment index showed a slight decline in the overall homeowner confidence by 2 percentage points to 85% in the first quarter of this year. 'This rate cut is expected to improve affordability for current and aspiring homeowners; however, consumers' finances remain strained in the short term, with time needed for consumers to gradually recover financially. "Absa's baseline view is for one further interest rate cut of 25bp at the July MPC however, the ongoing global policy and economic uncertainty will remain top of mind for the MPC,' Ncapai said. Nyika said it is still a bit early to say with certainty what the outcome of the next MPC announcement will be in three months. At this stage, he said he was undecided on whether there would be a further interest rate cut or if rates would remain unchanged. He said this uncertainty stemmed from two main factors: US President Donald Trump's global tariff hikes and the future of the African Growth and Opportunity Act (AGOA). 'The tariff increases could have a deflationary and potentially recessionary impact on the global economy. If that materialises, the South African Reserve Bank may opt to cut rates further to support a weakening economy. "Additionally, if South Africa loses its AGOA status within the next three months, the Reserve Bank may also be prompted to cut rates in response to the resulting economic strain. However, if neither of these scenarios occurs, I expect interest rates to remain unchanged. "Governor (Lesetja) Kganyago is generally regarded as hawkish, so I would not be surprised," Nyika said. Independent Media Property
IOL News
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The merger of KZN's Gold Circle and Cape Racing has birthed Race Coast.
The merger of Gold Circle's operations in KwaZulu-Natal and Cape Racing from the Western Cape has given rise to an exciting new entity known as Race Coast. Founded under the auspices of the uMhlanga-based South African sports betting company Hollywoodbets, this collaboration has been met with resounding support from the nation's leading horse trainers, who believe it represents a bright future for the sport. Prominent South African champion trainer Justin Snaith, along with the globally-renowned horse racing ambassador Mike de Kock and accomplished trainer Dean Kannemeyer, have publicly endorsed Race Coast. Their collective enthusiasm highlights a refreshing wave of optimism within the racing community. The Cape Town-based Snaith emphasised that this initiative promises not only to elevate the standards of racing but also to foster a deeper connection between the sport and its fans. He reflected on the initial success in his province of a similar initiative, RaceCape, initiated by Cape Racing and Hollywoodbets. Snaith is celebrating a half-century of KZN winter season assaults for the famous family operation. His father Chris, still a key member of their team, first raided with a string from the Cape in 1975. 'That structure has proven a tremendous success! It has not only boosted ownership and field sizes in the Western Cape but has also provided trainers with additional funding to enhance their operations. "Now we mark the historic beginnings of Race Coast, which is another generous initiative by Hollywoodbets, aimed at promoting ownership in KwaZulu-Natal and the Cape while boosting the horse population,' said at the launch of Race Coast. Snaith reminded us of the past, recalling that many feared that horse racing in South Africa might not survive after the COVID-19 pandemic. 'However, the dedicated efforts of a few individuals have not only saved the sport but have also paved the way for an exciting future. It is a future that we can shape and reinvent, making it better for all stakeholders involved. "Race Coast marks the beginning of something special for the province and the future of horse racing in South Africa. On behalf of all our owners, staff, and horses, we want to express our sincere gratitude,' he concluded. Mike de Kock, hailed as one of the great trainers of his generation, echoed this sentiment. He expressed confidence that Race Coast would invigorate South African racing and attract a new generation of enthusiasts, emphasising the intrinsic value of promoting racing as both an entertainment platform and a cultural cornerstone. De Kock, who recently joined forces with his son Mathew in a training partnership, said: 'De Kock Racing has been around for a long time, but as a new training partnership, Mathew and I are excited to be involved with the innovators behind Race Coast. "We have already seen the evidence of their vision and commitment, and we have positioned ourselves to grow with them. We look forward to what the future holds.' Three-time Hollywoodbets Durban July winning trainer Kannemeyer said a refreshing wave of enthusiasm and hope have been felt tangibly in the horse racing fraternity. 'The improvement and upliftment have been in bricks and mortar, communication, and incentives and stakes across the spectrum in the Cape, and looking at the rejuvenated Hollywoodbets Greyville landscape. It is a revelation and a passion-driven work-in-progress, in simple terms," he said. "The Hollywoodbets Team have made a difference in a short time, and one gets a very warm feeling that the sport is in good hands. We are all united under the flag of future prosperity, and, on behalf of our owners and the DKR team, I extend sincere onward and upward best wishes to Race Coast.'
Eyewitness News
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Treasury stands firm on unaffordability of continued extension of SRD grant
CAPE TOWN - Treasury is standing firm on the unaffordability of the continued extension of the social relief of distress (SRD) grant introduced during the COVID-19 pandemic. It has budgeted R35.2 billion to pay the grant in this financial year, while also appealing a high court ruling that it relaxes its criteria for eligibility to include thousands more people. Delivering the second version of the budget in March, Finance Minister Enoch Godongwana announced that the grant would be extended for yet another year. That is unchanged in the current version of the budget. ALSO READ: • SARS expects to see impact of increase in tax collection efforts from Q2 • Expanding list of tax-free food items won't benefit poorer households: Treasury • Treasury defends fuel levy increase However, responding to public submissions on the budget in Parliament on Friday, Treasury's head of public finance, Rendani Randela, said that Treasury has no choice but to appeal January's high court ruling that it include thousands more to receive the monthly R370 stipend. "That judgment is a fiscal risk on its own. And again, we are looking at the bigger picture here. Social assistance is not the only programme that we have, we also have other social assistance programmes outside the Department of Social Development." With 61% of the national budget going towards the social wage, Randela said Treasury believes that the existing social support net covers many of those also eligible for the SRD grant and double-dipping has to be avoided. Government is yet to take a decision on persistent calls from civil society for the SRD grant to become a basic income grant. "There's no way that we can't have a mechanism to filter out undeserving recipients of these social assistance programmes. That's why we are appealing that judgment because the way it is, if we don't challenge it, it is unaffordable."
