5 important things happening in South Africa today

Here’s what is happening in and affecting South Africa today:

• VAT warning: Economist Azar Jammine predicts the government may be forced to increase VAT come the mid-term budget speech on 1 November. Jammine said this would be done to fund the government’s overspending, which has reached a point where interest owed on the loans it has incurred accounts for 20% of total government revenue. [eNCA]

• Alarm bells over UIF: Business (Busa) and organised labour (Cosatu) have called for the Unemployment Insurance Fund (UIF) to be placed under immediate administration while its investments are investigated independently as the fund sinks deeper into dysfunction and suspicion of corruption grows. UIF investments, managed by Public Investment Corporation, total roughly R130 billion. However, some workers face delays or receive no benefits when trying to access unemployment or maternity leave funds. [News24]

• Post Bank R2 billion loss: The Postbank has reported a net loss of R2 billion for the 2022/23 financial year, according to its annual report tabled in Parliament this week, and it’s lumping much of the blame for this situation on the costs associated with paying social grants. Postbank CEO, Nikki Mbengashe, said there had been intensive costs involved in ensuring that all post offices and over 1,000 payment sites had sufficient cash to make the payments, and this was not sustainable. Despite the bank’s reported loss, compared to a R302 million profit last year, it noted it remains solvent given the value of its assets. [EWN]

• Things are going to get worse: Economist Dawie Roodt warned that South Africans should brace for a rough ride with high inflation, a weak currency, high-interest rates, and political and financial uncertainty ahead. He noted South Africa’s private sector is reaching its limits and will soon refuse to fund the state further. This will result in inflation above 10% and the rand going to R25 or R30 to the US dollar within the next three years. [Daily Investor]

• Markets: The rand traded slightly higher on Wednesday following several days of weakness as the softening of the U.S. dollar supported risk sentiment. The rand has been on a downward trajectory this week, tumbling against a buoyant dollar on Monday and Tuesday to sit around 2% weaker since the start of the month. On Thursday (5 September), the rand was trading at R19.30/$, R20.32/€, and R23.46/£. Brent crude is trading at $86.36 a barrel. [Nasdaq]