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IOL News
28-05-2025
- Business
- IOL News
The VAT whiplash: why SA can't afford to ignore the real cost of policy uncertainty
This article explores the effects of proposed VAT increases on South African consumer behaviour, highlighting the fragility of financial resilience and the importance of real-time insights for lenders. Image: Armand Hough / Independent Newspapers When the South African Government floated the proposition of a 0.5% VAT increase earlier this year, only to cancel it at the eleventh hour, the economy may have avoided an official tax hike, but the damage had already been done. Even before the proposal could be tabled in the Budget Speech, the mere suggestion of higher VAT triggered a psychological and financial ripple effect. Consumer sentiment shifted almost instantly, with many fearing potential retail activity dips and increased credit card usage, with many South Africans, particularly in the middle-income group, looking to tighten their belts in anticipation of rising costs that never formally materialised. This moment offers a sobering reflection on the state of financial resilience in the country. It wasn't the implementation that sparked anxiety, but the uncertainty. The mere suggestion of a VAT increase was enough to trigger a reaction in households and ripple through lending institutions. This kind of market sensitivity underscores a deeper fragility: one where consumer confidence is worn thin, and policy signals - real or speculative - can tip the scale from financial coping to financial crisis. When policy uncertainty hits home While VAT hikes are not new in South Africa, the reaction to this latest proposal felt particularly acute. Wages have stagnated, unemployment remains high, and the cost of basic goods continues to climb. In this context, even a small increase in indirect tax feels like a direct threat. Consumers responded accordingly. Spending signalled a slowdown across various sectors, particularly in discretionary categories. This wasn't about affordability alone; it was largely about caution. And when spending slows but everyday costs remain, many turn to short-term solutions, namely credit. However, for lenders, these behavioural shifts are not just theoretical; they represent a real risk, particularly when they happen suddenly and at scale. The ability to understand and track how economic announcements shape credit behaviour, whether the announcements are confirmed or not, is now business-critical. The credit cushion is wearing thin Recent XDS studies paint a clear picture of how South Africans are managing the squeeze. Credit card utilisation has risen steadily, not just as a function of increased spending, but as a stopgap for essential purchases such as groceries, utilities, clothing, and fuel. Over the past five years, there has been a 13% rise in credit card utilisation, even as credit limits for new cards have dropped by 21%. This means many consumers are accessing more of their available credit, even with reduced ceilings, underscoring a growing dependence on revolving credit to cover essentials like food, fuel, and utilities. Notably, the average number of new credit cards issued per month has surged by 39% - a clear signal that households are turning to credit more frequently to buffer against economic uncertainty. For many middle-income households, credit is no longer a financial tool, but a survival mechanism. This trend isn't restricted to VAT announcements; it reflects a broader, more troubling reality: households are living closer to the financial edge, with fewer buffers in place. When a single policy proposal can stall retail spending and increase debt reliance, it becomes clear just how precarious the balance really is. And yet, most lending frameworks still rely on backward-looking data and quarterly trends. By the time changes in consumer behaviour are reflected in reports, the impact may have already been embedded in default rates and missed payments. It's a delayed response to a fast-moving problem.
Zawya
03-04-2025
- Business
- Zawya
XDS Datacentres & Fulcrum Consulting: Powering SAP business transformation through strategic partnership
RELATED TOPICS TECHNOLOGY RELATED COMPANIES Sahab Eng Consl Fulcrum Cnsltg XDS Nutanix Lenovo Group United Arab Emirates: Unlocking Value Through Collaboration - XDS DATACENTRES and FULCRUM Consulting GmbH have joined forces to deliver a seamless, end-to-end SAP ECC6 to S4/HANA transformation journey, combining world-class datacentre with SAP consulting expertise. This strategic partnership is designed to empower enterprises and government entities with secure, high-performance and fully compliant SAP solutions. Why Partner with XDS & FULCRUM Consulting ? End-to-End SAP Solutions: From pre-assessment to S4 HANA migration and ongoing managed services, we offer a one-stop solution for SAP transformation. Regulatory Compliance & Data Security: Ensuring adherence to UAE & KSA government regulations for data residency and security. Optimized SAP Performance: High-availability, disaster recovery, and scalable cloud hosting ensure superior system performance. Proven Track Record: Decades of experience in successful SAP implementations and digital transformation projects. Our Combined Expertise XDS DATACENTRES: Industry-leading High-Performance infrastructure built by SAHAB will provide secure, compliant, and private cloud hosting for SAP workloads. XDS offers high density compute with Bare Metal Services. FULCRUM Consulting: As a certified SAP GOLD Partner, FULCRUM Consulting specializes in consulting, implementation, seamless migration, and continuous optimization services, ensuring efficient and successful SAP transformations Delivering Measurable Business Value Accelerated Cloud Adoption: Helping businesses transition to the cloud efficiently with RISE with SAP for Private Cloud. Cost Optimization: Reducing infrastructure overhead with scalable and flexible hosting solutions. Risk Mitigation: Comprehensive pre-assessment, compliance validation, and ongoing security enhancements. Business Continuity: 24/7 monitoring, disaster recovery, and proactive performance tuning. SAHAB Customers will be offered immediate bare metal services out of the SAHAB data hall where customers can start their transformation from SAP ECC6 to S4. XDS will offer SAP certified stack with Nutanix cluster running on Lenovo SR650 hardware fully immersed. XDS & FULCRUM Consulting will provide full end to end SAP managed services. No other collaboration in region is providing these services for SAP customers. The data hall is located in the Sharjah Research Technology & Innovation Park ( SRTIP ) Let's Build the Future Together XDS DATACENTRES with FULCRUM Consulting will work with customers to migrate their customized SAP ECC6 platforms to S4/HANA, provide next generation compute to support customer workloads with substantial performance improvements using Liquid Immersion Cooling. The XDS NITRO server racks with alternative energy sources will provide substantial performance improvements above and beyond air-cooled compute . Your SAP is best run with XDS & FULCRUM Consulting. ABOUT SAHAB: SAHAB engineer and construct Tier 3 compliant next generation liquid cooled datacentre facilities to meet rising demands of Artificial Intelligence workloads. SAHAB provide alternative energy sources allowing real time workloads to determine the best source of energy. Chairman Mr Ali Al Shamsi states that SAHAB will build a world first liquid immersion datacentre specifically for XDS that caters for the current Artificial Intelligence demands leading to Artificial General Intelligence applications over the coming decades. ABOUT XDS DATACENTRES: XDS DATACENTRES will operate a SAHAB built datacentre providing next generation facilities offering high density racks, liquid immersion, direct to chip, end to end datacentre migrations, managed services, security & network operations. XDS has been specifically established to meet rising demands of Artificial Intelligence Applications and in addition to provide Data Science, Data Engineering, Virtual Reality, Meta Verse, Augmented Reality, GPU as a Service, Super Computer as a Service, Infrastructure as a Service, Software as a Service. CEO Ghufran Hamid mentioned that no datacentre around the world provides the level of services XDS will provide its customers. Our collaboration with Fulcrum Consulting provides a compelling offering to in region SAP customers who want to host their infrastructure in a private cloud with full SAP managed services. ABOUT FULCRUM Consulting GmbH: FULCRUM Consulting GmbH is SAP GOLD Partner with over two decades of expertise in supply chain management and ERP solutions. Headquartered in Vienna, Austria, the company has been expanding its global presence since 2004, with offices in the United Arab Emirates and multiple locations worldwide. Specializing in SAP transformation projects, FULCRUM Consulting is a trusted expert in S/4HANA implementations. Through its partnership with XDS, the company delivers comprehensive, end-to-end roadmaps for seamless S/4HANA transitions. As DI Peter Weiss, Founder and Owner of FULCRUM Consulting, states, 'With our XDS partnership, we enable our customers to focus on their core business while we manage their SAP transformation as a service.'
