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IOL News
28-05-2025
- Business
- IOL News
South Africa's take-home pay growth slows as interest rate decision sooms
Average take-home pay in South Africa decelerated for the second consecutive month in April, intensifying focus on the interest rate decision by the SA Reserve Bank scheduled for Thursday. Average take-home pay in South Africa decelerated for the second consecutive month in April, intensifying focus on the interest rate decision by the SA Reserve Bank (SARB) scheduled for Thursday. The BankservAfrica Take-home Pay Index (BTPI), tracking salaries of approximately 3.8 million workers, reported a nominal average take-home pay of R17 495 in April, down 2.0% from R17 846 in March. Despite this slowdown, pay remains 13.8% higher than the R15 370 recorded a year ago. Shergeran Naidoo, BankservAfrica's head of Stakeholder Engagements, noted that while take-home pay has seen gains since mid-2024, recent global and domestic economic pressures are dampening momentum. 'The upward trend in salaries marked a positive shift after years of stagnation, but escalating global trade tensions are weighing on confidence, slowing economic activity,' Naidoo said. Real take-home pay, adjusted for inflation, also declined by 2.2% to R15 005 in April from R15 344 in March, though it remains above year-ago levels. Independent economist Elize Kruger noted that South Africa's consumer inflation, which dropped to 2.8% in April 2025, has bolstered purchasing power. 'With headline CPI projected to average 3.4% in 2025, down from 4.4% in 2024, we're seeing the lowest inflation since 2020's 3.3%,' Kruger said. She attributed this to a stronger Rand and falling international oil prices, which are expected to drive further fuel price cuts in June despite a recent fuel levy hike. However, economic challenges persist. Early data suggest South Africa's quarterly 2025 real gross domestic product growth may be flat or negative, reflecting global trade war impacts and subdued domestic demand. The repo rate, currently at 7.5%, translates to a real repo rate of 4.1% - well above the neutral rate of 2.8%. This restrictive monetary stance, combined with unchanged tax brackets and new levies from the 2025 National Budget, continues to squeeze households. Kruger said a modest 25 basis-point rate cut at the upcoming SARB Monetary Policy Committee meeting could provide relief. 'Lowering borrowing costs would ease pressure on households and businesses, potentially boosting confidence and investment,' she said. However, she cautioned that a more aggressive cut is unlikely given the SARB's cautious approach. Global trade disruptions and sluggish local growth have trimmed economic forecasts, raising concerns about job and income prospects. Kruger stressed the need for structural reforms to address energy, logistics, and governance bottlenecks. 'These reforms are critical to unlocking growth and shielding the economy from external shocks,' she said. The low inflation environment, supported by a recovering Rand and cheaper oil, offers the SARB room to ease monetary policy, following the lead of other developed and developing economies. Yet, debates over lowering the inflation target band could delay relief. 'Prolonged high interest rates are punishing the economy unnecessarily,' Kruger warned. As South Africans await the SARB's decision, the slowdown in take-home pay underscores the delicate balance between fostering growth and managing inflation. With global uncertainties looming, the central bank's next steps will be pivotal for salary earners hoping for financial respite. BUSINESS REPORT Visit:
13-05-2025
- Business
Stokvels in 2025 are becoming BIG business for banks
It's no surprise that stokvels in 2025 are growing at an exponential rate. Traditionally, the grassroots money-saving groups grow in times of financial distress and institutional mistrust. Interestingly, however, inflow into stokvels in 2025 is occurring mostly at mainstream banks. According to FNB, its stokvel accounts grew by a staggering 66% year-on-year, to more than R13 billion by December 2024 (versus R8 billion in 2023). As a result, South Africans are discovering that saving money in groups can be more effective than going alone. FNB says the positive trend for stokvels in 2025 proves that people want a safe and easy means for saving what meagre income they have. More than a third of FNB's account members are investing in stokvels in 2025. Paradoxically, perhaps, for such a traditional, grassroots saving system, the rise in popularity of stokvels in 2025 is due to digitisation, asserts FNB. Specifically, the digital stokvel account – launched in 2020 as a response to the COVID-19 pandemic – allows members to manage, contribute and share savings with no fees. In light of this growth, many stokvels in 2025 are starting to look at expanding their investment strategies into shares, unit trusts, and more. And while the majority of South Africans still function as a cash-first society, it is encouraging to witness the adoption of digital solutions. Moreover, the National Stokvel Association finds that digital stokvel solutions are increasing. As technology develops to enable real-time payments, digital channels are increasingly displacing cash in lower-value transactions. Specifically, mobile banking apps are replacing older interfaces as preferred payment methods. Not only is this more convenient but it is also safer. Even after it was revealed by the SA Reserve Bank (SARB) that more than 50% of South Africans draw their salaries immediately, Standard Bank says it has seen 20% growth in digital payments in the last year. 'This increase doesn't just reflect heightened consumer convenience, but it represents a fundamental shift in how South Africans handle their finances,' surmised the bank. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
07-05-2025
- Business
WHY the majority of South Africans prefer cash in hand … still
Despite the sharp digitsation of banking, the majority of South Africans prefer cash transactions. New data suggests that digital transactions may be on the rise for wealthier residents/businesses, but the majority of South Africans prefer cash in hand. Impressively, even with the rise in digital banking, cash transactions have not decreased over the last decade. As a result, the lower-income majority in South Africa still prefer dealing in hard currency. Many informal traders and spaza shops are simply unable to transact digitally. Image: File As interesting as it sounds, the fact that most South Africans still prefer cash is rather a large issue for the SA Reserve Bank (SARB). According to the latest insights, this trend suggests that most residents simply don't trust banking institutions. Moreover, because nearly 45% of South Africans receive some form of SASSA grant, many want to keep additional income undisclosed, or 'off the books.' Likewise, the sentiment seems to be that money recorded in a bank account may draw attention from SARS. A key reason why many low-income residents draw their money immediately is so it remains undisclosed to SASSA. Image: File However, there is also a strange divergence occurring at a retail level in South Africa. Because, in middle- to high-income areas many merchants are going cashless. While, in the informal economy, many shops shun card transactions. This means there is a large amount of cash circulating South Africa. Far higher than other comparable emerging economies. Standard Bank's Nthabiseng Mohale revealed broadly the same amount of currency has been circulating the country since 2009 – roughly R171 billion. Therefore, 'Cash remains deeply embedded in the country's consumer psyche,' said Mohale. Informal saving 'stokvels' is another reason why South Africans prefer cash in hand. Image: File Furthermore, the SARB says broadly half of all adults withdraw all their salary money as soon as it is deposited in their accounts. Conversely, digital payments in South Africa have enjoyed an 8% increase annually. This represents a clear value proposition to retailers and consumers who don't wish to handle money, too. Nevertheless, the majority of South Africans prefer cash because it represents a tangible, familiar way of managing one's finances. Many are wary of hidden fees or unauthorised/bounced debit orders. Likewise, cash is also perceived as a safeguard against unforeseen financial burdens. Which side of the fence do you sit? Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
IOL News
06-05-2025
- Business
- IOL News
Moody's lowers South Africa's growth forecast to 1. 5% amid global uncertainties
Budget 2025 The ratings agency on Tuesday said South Africa's gross domestic product (GDP) for 2025 will only grow by 1.5%, a 0.2 percentage points decrease from its previous forecast. Moody's Ratings agency has lowered South Africa's growth forecast for 2025 on the back of expected slow global growth, driven by tariff uncertainty and trade tensions. The ratings agency on Tuesday said South Africa's gross domestic product (GDP) for 2025 will only grow by 1.5%, a 0.2 percentage points decrease from its previous forecast. This growth forecast is in line with the 1.7% estimate from the SA Reserve Bank partly to subdued demand, and partly to lingering supply-side fragilities, but more optimistic than the downwardly revised 0.8% forecast by the International Monetary Fund last week. In its Global Macro Outlook 2025-26 Update, Moody's said global growth slowdown was underway as policy uncertainty added risks to the global economy. 'Policy uncertainty weighs on a global economy that was already slowing. Uncertainty surrounding global economic policies is likely to take a toll on consumer, business and financial activity,' Moody's said. 'Despite a pause and reduction in some tariffs, policy uncertainty and trade tensions — especially between the US and China — are likely to dampen global trade and investment with consequences across the G-20. 'We lowered our global growth projections for 2025 and 2026. We expect US GDP growth to cool to 1% in 2025 and 1.5% in 2026 and China's real GDP growth to slow to 3.8% in 2025 and 3.9% in 2026. 'We also cut growth forecasts for Canada, Mexico, Germany, France, Italy, the UK, Australia, Korea, Japan, India, Indonesia and South Africa.' Moody's said its forecast adjustments in this May 2025 update accounted for these effects on the global economy. While the final tariff rates have yet to be determined, Moody's said a complete reversal to pre-April levels was unlikely. It noted that US Treasury Secretary Scott Bessent, in recent public commentary, reiterated the administration's desire to bring back industrial activity and manufacturing jobs to the US. Bessent also framed US trade policy in the context of global imbalances, suggesting the administration's policy push for a different trading regime and smaller US current account deficits will continue. In addition, the administration sees tariffs, which tax imported goods, as a fiscal revenue generation tool. Moody's said that in some sectors, US trade policies could bring select activities back on shore. However, it said that as long as US domestic savings were surpassed by investment, the tariffs were unlikely to close the US current account deficit, which reflects the country's saving and investment imbalances. 'We expect tariffs to generate fiscal revenue, albeit unlikely to levels that would materially reduce the US fiscal deficit. The tariff increases on all countries — especially China — along with high sectoral tariffs on products such as steel and aluminum will weigh on global trade and investment decisions with considerable growth consequences for most G-20 economies,' Moody's said. 'The effects on trade are already visible in some data. In the first 20 days of April, Korea's export volumes fell by 5.2% compared with the same period last year. Although weekly shipment data are volatile, bookings from China to the US dropped sharply in the first three weeks of April and were only partially offset by increased bookings from other Asian economies.' Moody's said China's growth outlook was clouded amid mounting trade tensions. China's real GDP grew by 5.4% year-on-year in the first quarter of 2025 on the back of a particularly strong boost from exports and the stabilizing impact of the government's fiscal and monetary measures. 'While tariffs in both directions between China and the US will likely be lowered, paving the way for negotiations, they will remain considerably restrictive. We therefore expect China's real GDP growth to decelerate in the coming quarters,' it said. 'As it has in the past, China will likely continue to implement fiscal stimulus to bolster growth. Regardless of the external environment, the government will continue to invest in industrial technological development, especially in new and green technologies of the future.' BUSINESS REPORT
