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IOL News
3 days ago
- Business
- IOL News
SA Reserve Bank cuts interest rates: What it means for consumers
South African Reserve Bank Governor Lesetja Kganyago. Image: Thobile Mathonsi / Independent media. South African consumers cheered as the South African Reserve Bank (Sarb) cut the interest rate this past week, however, a wider view shows that the relief could be undone by other costs increasing. Sarb Governor Governor Lesetja Kganyago decreased the repurchase rate for the country by 25 basis points (BPS), dropping the repo rate from 7.50% to 7.25%, effectively taking the prime lending rate to the country to 10.75%, from 11%. Hayley Parry, Money Coach and Facilitator at 1Life's Truth About Money told Business Report that the cut could not have come at a better time. Parry said, "What that means is that, for anyone paying back any debt, it means that you are going to be able to save on your debt repayment. For example, for every million Rand you have in a home loan for instance you are now going to be paying R515 less per month at this new interest rate, thanks to the reduction in the interest rate." "It could not come at a better time because there has been a lot of pressure on South African consumers, with increasing electricity prices kicking in. This is great news for anyone who has been feeling the pinch and been struggling to make ends meet. Hopefully, this is going to provide a little bit of breathing room. If you happen to have any money leftover thanks to this reduction in the interest rate, my advice as always is to make sure you put aside extra cash into your emergency fund because you never know when that may come in handy," Parry added. Tando Ngibe, a senior manager at Budget Insurance said, 'This move offers some relief to consumers, particularly those managing debt, as it slightly reduces the cost of borrowing on home loans, personal loans, and credit facilities. This modest cut should be seen as a chance to reinforce, not relax, responsible financial habits. We urge consumers to use any savings from lower repayments to prioritise essential expenses, reduce high-interest debt, and build emergency funds. While the rate cut may support economic activity, it's important to remain cautious. Inflation risks still persist, and returns on savings may decline. Consumers should continue to budget carefully in order to remain financially resilient in these uncertain times.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Consumers still drowning in debt Meanwhile, Neil Roets, CEO of Debt Rescue gave a more scathing view on the Sarb's rate cuts. Roets said that the announcement of the 25BPS cut, may be good news for economists but will not shield South Africans from the burden of the fuel and sin tax levies introduced by Finance Minister Enoch Godongwana within his Budget 3.0 projection. Roets said, "Increased taxing of the workforce is not the answer, the fuel-tax levy and raising sin taxes even higher, will put further financial strain on households, driving them to new depths of despair. This, at a time when they are buckling under the weight of multiple unsustainable inflation-related living costs. The reality is that the Finance minister's decision to impose new tax measures will hurt lower-income families most, as they will bear a proportionally higher burden, thus forcing them to make impossible lifestyle choices with the little disposable income they have left." "The reality is that the slow pace of the country's repo rate reductions is perpetuating the debt trap that millions of ordinary South Africans find themselves in, leaving millions with no option but to survive on credit. This scenario has been escalating since the prolonged tightening cycle began towards the end of 2021, when the Monetary Policy Committee raised the repo rate by a cumulative 4.75% between November 2021 and May 2023, taking it from 3.50% to 8.25%, the highest level since 2014. Sadly, this means more and more South Africans are relying on their credit and store cards to put food on the table and keep the lights on," Roets further said. "The likelihood is that they will default on debt and fall into an even deeper trap, as the cost of credit rises due to existing debt. This is most evident with big purchases like home and car loans. South Africans need real financial relief. This is a glaring red flag that should be at the top of the list of concerns of the authorities," Roets said.
IOL News
25-04-2025
- Business
- IOL News
R515 million TERS audit sparks outrage among SA companies over alleged mismanagement by Labour Department
The TERS administered by the Unemployment Insurance Fund (UIF), was implemented to assist employers in paying employees who were employed but not working because of the lockdown. Image: File Hundreds of companies are up in arms over a 'mismanaged' audit process, worth R515 million, launched by the Department of Labour and Employment (DEL) to probe potential theft of benefits provided to workers across South Africa during Covid-19. The Temporary Employee Relief Scheme (TERS), administered by the Unemployment Insurance Fund (UIF), was implemented to assist employers to pay employees who were employed but not working because of the lockdown. The TERS program, administered by UIF, paid out R57 billion to 13.4 million workers through 1.1 million companies during the pandemic, according to minutes from a November 2021 Standing Committee on Public Accounts Parliamentary Committee Meeting. These benefits, research by UNU Wider states, saved at least two million jobs. However, Corruption Watch, summing up various investigations by law enforcement officials, stated in March this year that R351 million was siphoned off during the scheme's two-year run, with only R229 million recovered. Criminal investigations are set to conclude in December. Among the fraudulent types of activities already uncovered included the use of fake ID documents, ID documents from dead people, claims for people who were temporarily employed, and benefits being claimed for 'former employees, whom the Special Investigating Unit found to have been incarcerated at the time,' said Corruption Watch. The latest investigation – awarded to 26 private 'audit' companies at a cost of R515 million – aims to reclaim more funds but has sparked fury over chaotic execution, privacy breaches, and procedural failures. The probe, initiated via tender UIF6/2023 published in February 2024, saw firms appointed in July last year. Seven months later, companies who had facilitated TERS benefits were abruptly ordered to submit 18 pieces of sensitive documentation – including employees' bank statements, and ID numbers – within three days. 'The sheer scale of this bureaucratic nightmare has left businesses scrambling to meet impossible deadlines, with intimidation tactics now seemingly standard practice,' the National Employers' Association of South Africa (NEASA) said in a March statement. It said that the 'unrealistic audit requests [are] followed almost immediately by threats of severe consequences for those who hesitate to comply'. Within a week of the audit's launch, NEASA received over 350 complaints from employers. Sanja Botha, Policy Advisor at NEASA, told IOL that, since auditors sent the requests for information 'we've seen a continuous influx of complaints and queries via email and telephone. The number of businesses being subjected to these audits is staggering and could be in the thousands.' She added: 'The volume of complaints received from employers reflects serious mismanagement and procedural inconsistency on the part of the appointed auditing firms.' Botha stated that 'some audit firms have demanded extensive and sensitive documentation, such as employees' personal bank statements, within unreasonably short timeframes, sometimes as little as 24 hours. This approach is not only impractical but adds insult to injury.' What is more worrying is that there is no mechanism in place to safeguard the employees' private information. While the auditors signed a one-page confidentiality declaration under the Protection of Personal Information Act, the lack of 'clarity or security protocol for how this data is to be transferred or protected' is 'deeply concerning', said Botha. Moreover, said Botha, 'many businesses are unsure whether the audits are even legitimate, as no formal verification mechanism exists to confirm the credentials of these auditors'. Among the issues NEASA has identified include that audit letters are sent for entirely different companies, some, who never even applied for TERS, are being audited, while auditors also arrive on-site without prior notice or any proof of appointment. In multiple cases. 'Employer-appointed independent auditors have found significant errors in the UIF's audit assessments, raising serious questions about the credibility and integrity of the entire process,' said Botha. NEASA has repeatedly raised concerns with the DEL and UIF since March, but 'we have received no responses from either the Minister of Employment and Labour or the UIF,' Botha said. IOL sought comment from both entities on April 7. The UIF initially acknowledged receipt, stating the DEL would respond due to 'centralised communications.' Despite several follow-ups, neither provided answers as the time of writing. IOL
