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IOL News
5 days ago
- Business
- IOL News
Trump tariffs upon us and the Sarb tightens our belts
President Donald Trump holds a chart on reciprocal tariffs during an event titled 'Make America Wealthy Again', at the White House in Washington, DC. Image: Brendan Smialowski/AFP The South African Government has 'pulled out all the stops' during a flurry of trade delegations and counter offers but is now making arrangements to deal with the expected fallout, including the establishment of an export-support desk that will provide updates and advisory services to exporters, and a rumoured package of Treasury-backed incentives for some affected sectors. Trump tariffs prompt Africa's recalibration These matters are, as always, subject to change. In April the Trump administration announced a 31% tariff on South Africa, which was then suddenly dropped to 10%. Lesotho, somehow, evaded its scheduled 50% tariffs this week, which would have halved its economic growth this year and again the next. Lesotho now faces 15% tariffs, but the damage done by the US here and elsewhere won't immediately be forgotten. In Maseru layoffs have already occurred, and textile manufacturers are energetically looking for new markets. 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 ✕ Meanwhile, China announced plans to eliminate all tariffs on imports from 53 African states, expressly positioning itself as Africa's preferred trading partner. The global order is being firmly shaken. Who will be best placed to pick up the pieces? Will the Sarb's new inflation anchor drag against growth? After the 31 July SARB Monetary Policy Committee meeting, the Reserve Bank Governor Lesetja Kganyago announced a 25-basis point lowering of the interest rate and that the SARB would be revising its inflation target to 3% from its previous 3–6% range. The revised target makes it unlikely that we'll see any more interest-rate cuts this year, meaning borrowing will remain more expensive than many households and businesses might have hoped. Kganyago emphasised that the SARB expected the new target to enhance credibility with global investors – making borrowing for the state less expensive – and protect the rand (which has fallen to a several-month low nonetheless). StatsSA will release its CPI inflation data around 20 August, which will give SMEs some guidance in terms of input-cost planning in this tightening market. Upcoming indicators will show the effect of uncertainty on business conditions Economic indicators scheduled for release in August will provide useful guidance for SME planning. The S&P Global South Africa PMI announced on 5 August 2025 serves as a single-figure snapshot of operating conditions in the private-sector economy. Recent PMI performance showed improvement to 50.8 in May 2025, marking the first growth since November 2024, and indicating the fastest business activity expansion in four years. The Bureau for Economic Research conducts its quarterly business confidence survey mid-August, with questionnaires distributed to manufacturing, retail, wholesale, and construction sectors. Results, typically published in early September, will influence Q4 2025 business planning. Current confidence levels fell to 40 points in Q2 2025 from 45 points in Q1, remaining below the long-term average of 43 points, suggesting cautious SME sentiment, and who's to blame them. Global government representatives arrive in SA to discuss the plight of the SME Deputy President Paul Mashatile delivered the closing remarks at the Global SME Ministerial Meeting on 24 July 2025 in Boksburg. The event, themed 'Navigating New Business Frontiers', brought together representatives and Ministers from more than 100 countries to 'address the most pressing issues hindering SMEs from reaching their full potential.' Deputy President Mashatile emphasised the importance of the African Continental Free Trade Area Agreement to the continent's entrepreneurial landscape, and of the SME sector in general, but could reference nothing concrete the government was doing to support them, apart from the R100 Billion Transformation Fund touted by Trade, Industry and Competition Minister Parks Tau, with public comment currently being reviewed by the dtic. GNU passes a national budget In some good news, the GNU continues to make its way unsteadily forward, with the National Council of Provinces effectively passing the 2025 National Budget. All GNU partners approved the Appropriation Bill that allowed the budget process to be concluded. When tough conditions prompt pragmatic alignment amongst our political leaders, at least there's some room for optimism. Miguel da Silva, Group Executive: Business Banking at TymeBank. Miguel Da Silva. Image: supplied.
The Citizen
05-08-2025
- Business
- The Citizen
Here are economic and geopolitical factors to affect SMEs
SMEs will receive useful guidance from the economic indicators set to be released during August. Small and medium enterprises (SMEs) should brace for impact as some economic and geopolitical factors will lead to unfavourable outcomes, while some will offer relief. As things stand, a 30% US tariff will be implemented on 7 August 2025 on exports, which is not very good news for businesses. But on the brighter side, the South African Reserve Bank (SARB) Monetary Policy Committee (MPC) has decided to cut interest rates, which can offer some relief to small businesses. Tariffs Miguel da Silva, Group Executive: Business Banking at TymeBank, said that with the upcoming implementation of the US tariffs, the South African government is making plans on how to mitigate the fallout. 'The South African Government has 'pulled out all the stops' during a flurry of trade delegations and counteroffers but is now making arrangements to deal with the expected fallout, including the establishment of an export-support desk that will provide updates and advisory services to exporters, and a rumoured package of Treasury-backed incentives for some affected sectors.' He, however, notes that the tariffs that matter are subject to change. In April, the Trump administration announced a 31% tariff on South Africa, which was then suddenly dropped to 10%. ALSO READ: US tariff of 30%: Rand weakest in 3 months, thousands of jobs in danger Sarb cuts interest rate The Reserve Bank Governor Lesetja Kganyago announced a 25-basis-point lowering of the interest rate on 31 July, and that the Sarb would be revising its inflation target to 3% from its previous 3–6% range. 'The revised target makes it unlikely that we will see any more interest-rate cuts this year, meaning borrowing will remain more expensive than many households and businesses might have hoped. 'Kganyago emphasised that the SARB expected the new target to enhance credibility with global investors, making borrowing for the state less expensive, and protect the rand (which has fallen to a several-month low nonetheless).' The release of the Consumer Price Index (CPI) inflation data from Statistics South Africa will give SMEs some guidance on input-cost planning in this tightening market. Uncertainty on business conditions He highlighted that SMEs will receive useful guidance from the economic indicators set to be released during August. The S&P Global South Africa PMI serves as a single-figure snapshot of operating conditions in the private-sector economy. While the recent Purchasing Managers Index (PMI) performance showed improvement to 50.8 in July 2025, marking the first growth since November 2024, and indicating the fastest business activity expansion in four years. 'The Bureau for Economic Research conducts its quarterly business confidence survey in mid-August, with questionnaires distributed to manufacturing, retail, wholesale, and construction sectors. 'Results, typically published in early September, will influence Q4 2025 business planning. Current confidence levels fell to 40 points in Q2 2025 from 45 points in Q1, remaining below the long-term average of 43 points, suggesting cautious SME sentiment, and who's to blame them.' ALSO READ: SMEs need to brace for reduced orders due to a 30% US tariff Global SME Ministerial Meeting Deputy President Paul Mashatile emphasised the importance of the African Continental Free Trade Area Agreement to the continent's entrepreneurial landscape during the Global SME Ministerial Meeting on 24 July 2025 in Boksburg. The meeting had representatives and Ministers from more than 100 countries to address the issues hindering SMEs from reaching their full potential under the theme 'Navigating New Business Frontiers'. However, da Silva noted that Mashatile did not mention any concrete measures the government is taking to support SMEs, apart from the R100 Billion Transformation Fund touted by Trade, Industry and Competition Minister Parks Tau. GNU passes a national budget 'In some good news, the government of national unity (GNU) continues to make its way unsteadily forward, with the National Council of Provinces effectively passing the 2025 National Budget. 'All GNU partners approved the Appropriation Bill that allowed the budget process to be concluded. When tough conditions prompt pragmatic alignment amongst our political leaders, at least there's some room for optimism,' he added. NOW READ: Repo rate cut no help for consumers on brink of financial disaster
Mint
26-06-2025
- Business
- Mint
Is the Fed Ready for an AI Economy?
Federal Reserve presidents have been clear about their concerns regarding artificial intelligence's possible effects on productivity, banking customer service, and upheaval in the labor market. But the Fed may be ignoring another AI issue that could turn out to dwarf all others: AI's coming ability to create money and credit—and thereby determine the money supply in our economy. This may sound like science-fiction, but AI will likely begin to control the extension of credit, and in effect the money supply, in the next few years. That's a major issue for the Fed if it can't easily observe the manner in which AI makes its decisions or constrain it to follow the central bank's underlying interest-rate policies. Here's how it will work: Individual users will start with personal-assistant AIs, as many of us already have. As guardrails are established on AI's behavior and their actions refined, users will employ them as purchasing agents, giving them the authority to use credit on behalf of the user. On the banking side, business operations on the decision to extend credit or not will start to be tasked to AIs. These AIs will assess creditworthiness and make an assessment to create a loan or authorize a credit purchase. The aggregation of millions of such decisions will make AI a major influence on the expansion or contraction of the money supply. Most likely this will first take place in the 'shadow banking" part of the economy—lightly regulated fintech companies that are experimenting with new forms of credit creation—which is outside the direct purview of the Federal Reserve. The Genius Act, which passed the Senate last week, makes these events even easier to envision. The act would formalize the stablecoin industry. Stablecoin is a Treasury-backed cryptocoin that allows transactions to move onto the blockchain, a decentralized digital ledger outside the traditional banking sector. Companies like Amazon and Walmart have thrown their hats into the ring to create their own stablecoins, skirting the traditional banking system in all transactions. With these elements in place, the Federal Reserve will face the problem of an AI purchasing agent talking to an AI credit agent with the only constraint on them being the underlying code dictating their behavior and the instructions users give them. Further, these two agents may conduct transactions using a form of currency that is lightly regulated and doesn't move through the traditional banking system. Since these interactions would take place in the shadow banking sector, the Fed won't see first movements in where the money supply is expanding or contracting, one of the main things central bankers need to observe to do their job correctly and guide the economy. And as AIs make financial decisions, how can anyone be certain that they will respond to Fed policy in the same way as our historical data tells us humans respond to Fed policy? There are possible private-sector solutions to mitigate some of this, like insurance issued on the behavior of AIs making decisions. But if the Fed doesn't have a clear picture of money creation by AIs or a direct way to intercede in AIs' ability to change the money supply, it is in for a world of problems in an AI-driven economy. The Fed needs to address this sooner rather than later. If the Genius Act becomes law, it will only make the problem more urgent. The pace at which personal AI products are being rolled out signals that this reality is fast approaching. If the Fed doesn't have clarity on these innovative areas of the shadow banking sector and a playbook to deal with AI money creation, then it will realize the depth of this problem far too late to do anything about it. Mr. Horstmeyer is a professor of finance at George Mason University.
Yahoo
26-03-2025
- Business
- Yahoo
More Premium Bond cuts on the horizon, says finance expert
Savings giant NS&I recorded a bumper net inflow of £5.5 billion between October and December 2024, leading one finance expert to suggest that more Premium Bond cuts could be in the pipeline. The Treasury-backed provider is set a net financing target, which for the current financial year (2024/25) is £9 billion, with a margin of plus or minus £4 billion. The total it has raised so far across the first three-quarters of this year is £8.9 billion. Net financing takes into account money coming in, including deposits and interest, minus money going out from withdrawals and interest or Premium Bonds prize draw payments. NS&I has a duty to balance the interests of savers with those of taxpayers and broader market stability. Wednesday's spring statement confirms that NS&I is now expected to raise a total of £10.5 billion in 2024/25 – a total which is in line with its target. NS&I's overall net financing performance for 2024/25 will be announced as part of its annual results later in 2025. The spring statement also confirmed that NS&I will have a 2025/26 net financing target of £12 billion, with a margin of plus or minus £4 billion. The target continues to exclude proceeds from Green Savings Bonds, which sit outside net financing. NS&I said that, against a backdrop of recent Bank of England base rate reductions and changes made by the wider market, it has responded with a series of interest rate reductions to its variable and fixed-term products. In February, it announced that fewer big money Premium Bonds prizes will be available from the April draw, when the prize fund rate is slashed from 4% to 3.8%. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'Premium Bond woes may continue even after the NS&I fundraising target increases. 'NS&I had a massive third quarter, delivering £5.5 billion, which explains the raft of recent rate cuts. It meant the organisation had almost entirely filled its boots for the current tax year, when it had three months left to run. 'We're yet to get the latest of these cuts – the Premium Bond prize cut set for April – when it falls from 4% to 3.8%. The question for many savers is whether this will be the last. 'On the one hand, the fundraising target will rise to £12 billion. On the other, we're expecting savings rates to fall across the market, and the prize rate is likely to fall in step with it. 'The rush into NS&I in the third quarter shows how much pent-up demand there is.' Ms Coles added: 'Sadly for bond holders, it means this is unlikely to be the last of the cuts to the prize rate.'
The Independent
26-03-2025
- Business
- The Independent
More Premium Bond cuts on the horizon, says finance expert
Savings giant NS&I recorded a bumper net inflow of £5.5 billion between October and December 2024, leading one finance expert to suggest that more Premium Bond cuts could be in the pipeline. The Treasury-backed provider is set a net financing target, which for the current financial year (2024/25) is £9 billion, with a margin of plus or minus £4 billion. The total it has raised so far across the first three-quarters of this year is £8.9 billion. Net financing takes into account money coming in, including deposits and interest, minus money going out from withdrawals and interest or Premium Bonds prize draw payments. NS&I has a duty to balance the interests of savers with those of taxpayers and broader market stability. Wednesday's spring statement confirms that NS&I is now expected to raise a total of £10.5 billion in 2024/25 – a total which is in line with its target. NS&I's overall net financing performance for 2024/25 will be announced as part of its annual results later in 2025. The spring statement also confirmed that NS&I will have a 2025/26 net financing target of £12 billion, with a margin of plus or minus £4 billion. The target continues to exclude proceeds from Green Savings Bonds, which sit outside net financing. NS&I said that, against a backdrop of recent Bank of England base rate reductions and changes made by the wider market, it has responded with a series of interest rate reductions to its variable and fixed-term products. In February, it announced that fewer big money Premium Bonds prizes will be available from the April draw, when the prize fund rate is slashed from 4% to 3.8%. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'Premium Bond woes may continue even after the NS&I fundraising target increases. 'NS&I had a massive third quarter, delivering £5.5 billion, which explains the raft of recent rate cuts. It meant the organisation had almost entirely filled its boots for the current tax year, when it had three months left to run. 'We're yet to get the latest of these cuts – the Premium Bond prize cut set for April – when it falls from 4% to 3.8%. The question for many savers is whether this will be the last. 'On the one hand, the fundraising target will rise to £12 billion. On the other, we're expecting savings rates to fall across the market, and the prize rate is likely to fall in step with it. 'The rush into NS&I in the third quarter shows how much pent-up demand there is.' Ms Coles added: 'Sadly for bond holders, it means this is unlikely to be the last of the cuts to the prize rate.'
