Newsletter No 31/19August 2022
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Reserve Bank says above-inflation wage deals risk causing a price spiral
By Linda Ensor
Reserve Bank governor Kuben Naidoo. Picture: Freddy Mavunda
Productivity gains do not offset higher wages, leading to inflation and requiring stronger monetary policy response
Worrying wage rises above the Reserve Bank’s inflation target range of 3%-6% raise the prospect of a price spiral with second-round effects on inflation, which could call for tighter monetary policy, deputy Reserve Bank governor Kuben Naidoo warned in parliament on Wednesday.
Unions are demanding a 6.5% pay rise for public servants and are undertaking a strike ballot this week.
In the second quarter, the average wage settlements for sections of the manufacturing sector and the mining, transport and utilities sectors was 6.3%, with the highest of 7.3% being for the leather sector, followed by 7% for textiles and Eskom.
Naidoo said the average rise in collective bargaining agreements in the latest Andrew Levy survey, which identifies trends in wage bargaining, was 6.1%.
“We are beginning to see that wage increases are starting to be pegged slightly above the inflation target range and that is worrying. If salary increases are not compensated for by productivity gains, then that does lead to inflation, and that would require a stronger monetary policy response,” said Naidoo. He also expressed concern over the rise in inflation expectations, which could further stoke inflation.
He was speaking during a briefing by himself and Bank governor Lesetja Kganyago to parliament’s finance committee on the global and domestic economic situation and the annual reports of the Bank and the Prudential Authority. He said the Reserve Bank was still in a cycle of hiking interest rates.
The central bank, like others worldwide, has embarked on monetary tightening, raising the repo rate by 75 basis points at the July meeting of the monetary policy committee (MPC), taking it to 5.5%. The nominal repo rate is projected to continue rising into 2023. The Bank has forecast a consumer inflation rate of 6.5% for 2022.
“Domestic inflation risks are tilted to the upside, and the MPC has had to respond forcefully to protect purchasing power,” Naidoo said.
While inflation may be nearing its peak, its return to the target range is likely to be sluggish, requiring a more forceful monetary policy tightening.
Naidoo said very low positive growth was forecast, with a contraction expected for the second quarter due to the mining strike, load-shedding and the floods in KwaZulu-Natal.
Growth of 1.9% was recorded in the first quarter.
Load-shedding this year has broken all previous records and its intensity in the second quarter is expected to have shaved 0.3% off GDP growth in 2022.
“Going forward, we are expecting positive growth, but very low positive growth. We still see very weak potential GDP of less than 1%,” Naidoo said. The global economic slowdown will play a role in holding back domestic growth, which is expected to slow sharply.
Kganyago addressed the issue of a possible greylisting by the Financial Action Task Force (FATF), the international body that sets standards for the combating of money laundering and terrorism financing. It has found SA’s regime deficient. He said that the Reserve Bank was confident it and the Prudential Authority could demonstrate significant progress and compliance by the end of the year, ahead of the January meeting at which the FATF will decide on whether to greylist SA.
But this would not cover deficiencies in law enforcement and prosecutions identified by the FATF. Changes need to be made across the government if SA is to avoid being greylisted.
Kganyago warned that greylisting could lead to the rand weakening and inflation rising, as well as increased due diligence, a higher cost of borrowing and even a complete denial of access to some foreign capital markets.
“The implications for the economy are massive. The cost of borrowing in this economy will go higher,” Kganyago said. SA’s risk premium could have already increased in anticipation of a possible greylisting. BD
Local Fashion Police competition seeks to celebrate SA design
The Local Fashion Police online competition was launched in Johannesburg on 10 August 2022.
Members of the public have until the end of the day on 7 October 2022 to post photos or selfies of themselves on social media wearing South African fashion – be it locally made ready-to-wear garments or designer couture – while showing the label of origin in the picture. Participants are also encouraged to tag the store and/or designer they bought their outfits from!
If your submission catches the eye of one of the ‘police’ – fashion designers Biji Gibbs from Biji La Maison de Couture, Sello Modupe from Scalo, Hangwani Nengovhela from Rubicon Clothing and Gavin Rajah of Gavin Rajah Atelier – you stand a chance of winning one of four R20,000 fashion vouchers, redeemable from the four designers.
“It’s time for South African quality and design excellence to reclaim its rightful place in our hearts and minds,” said Proudly SA chief marketing officer Happy maKhumalo Ngidi. “‘Locally made’ is not synonymous with ‘poor quality’ – quite the opposite, in fact. Our clothing sector produces high-quality garments, and South Africans may be surprised to learn that much of our designer couture is affordable enough to allow you to step out for that special occasion in style.”
She says Proudly SA encourages people to buy local, support local jobs and celebrate South African design excellence because of the sector’s vast capability for economic growth, innovation and creativity. The clothing, textiles, footwear and leather (CTFL) sector is labour-intensive and creates thousands of jobs which our country desperately needs, she adds.
“The garment sector in South Africa holds immense potential to create and sustain jobs. That’s why Proudly SA has launched the second instalment of Local Fashion Police to promote our clothing, textiles, footwear and leather industry, and show South Africans that wearing local is really, really lekker. So, consider this an invitation to show us how you rock that Mzansi style!” Ngidi said.
The Local Fashion Police 2022 online competition will culminate in an awards ceremony and fashion show on 27 October, during which the four winners will have their chance to shine and will feature a fashion showcase by the four celebrity designers. During the event, Proudly SA will also celebrate its 21st anniversary with a showcase of local music to complement the fashion on display.
How to enter
Buy a locally made clothing item (shop-bought or designer wear) or slip on an existing South African-made item from your wardrobe
Snap a selfie of yourself wearing the item, including the label of origin (showing that it’s made in Mzansi), and the tag of the shop and/or designer. Strut your stuff and show us your #ProudlySouthAfrican attitude!
Post the photo on Twitter, Facebook or Instagram
Use the hashtags #WearLocalEveryDay and #BuyLocalToCreateJobs
Tag Proudly South African ( Twitter, Facebook, Instagram) and, if relevant, the label or designer in question
You will be notified before the finale on 27 October 2022 whether you made the shortlist
Terms and conditions may be found on here. Bizcommumity
Sew What Now? Gert-Johan Coetzee Bursary Program
Celebrating an empowering initiative that has been 10 years in the making.
His name is synonymous with the greatest personalities and influences of our time, and his heart is as big as his presence. Gert-Johan Coetzee is one man whose talents put him in high demand by fashion enthusiasts and celebrities alike. From dressing some of the most recognised and powerful people like Oprah Winfrey, Zozibini Tunzi, and Kourtney Kardashian just to drop a few names, his craftsmanship, creativity, and hard work have seen him soar to heights unimagined.
Still in his pursuit to excel and continue being an inspirational national treasure, Coetzee founded and partnered up with the North West School of Design in 2009 to establish a bursary program that now celebrates its 10-year anniversary. For the 2023 academic year, Gert has once again opened the chance for 1 lucky design hopeful to apply for the bursary with the aim to develop and nurture South African talent in the fashion field and allow students the opportunity to start lucrative careers in the space. The chosen candidate will study for 3 years with the North West School of Design and will be required to enrol in 2 internship programs each year during recess at the Gert-Johan Coetzee studios.
“The reason I ignited the program is that I noticed how there are so many great bursary programs out there that offer immense knowledge and it simply just ends there. That information is never followed through into the workforce and that is the reason I wanted my bursary program to be different and more focused on the internship that I offer. The student not only gets to study where I studied and familiarise themselves with the foundation that I received, but they also get the opportunity to come to my studio in Bryanston to experience the practical side of design execution, the creative processes around it as well as the grit it takes to run a fashion business.”
Who can apply
Matriculants interested in pursuing a career in fashion are welcome to apply given that the below pre-requisites are met:
Applicants must be South African citizens
Applicants must be fluent and be able to write English
Applicants must have completed matric or are currently in their matric year.
How to apply:
Hopefuls can apply for this momentous opportunity through the Gert Johan-Coetzee website: https://www.nwsd.co.za/gert-johan-coetzee-fashion-bursary/
Winners will commence their first semester in January 2023 at the North West School of Design and hopefuls are encouraged to submit their applications before the official closing date.
Truworths – trading statement
Notwithstanding the challenging trading conditions referred to in the business update, the Group announced that headline earnings per share (‘HEPS’) and earnings per share (‘EPS’) for the period are estimated to increase as follows:
53 weeks to 3 July 2022 (cents)
*HEPS – 760c to 785c
*EPS – 775c to 800c
Estimated increase on prior period: 53 weeks (%)
*HEPS – 46% to 51%
*EPS – 61% to 67%
The Group expects to publish its audited annual results for the period on or about Thursday, 1 September 2022.
HomeChoice interim results June 2022
Revenue for the interim period rose 4% to R1.8 billion (2021: R1.7 billion) and operating profit jumped 29.5% to R228 million (2021: R176 million). Profit and total comprehensive income for the period attributable to owners increased by 26.4% to R153 million (2021: R121 million). Furthermore, headline earnings per share went up 16.6% to 144.8 cents per share (2021: 124.2 cents per share).
Dividend
Notice is hereby given that the board of directors has declared a final gross cash dividend of 64.0000 cents (51.2000 cents net of dividend withholding tax) per ordinary share for the six months ended 30 June 2022. The dividend has been declared from income reserves.
Looking forward
The group is well positioned to drive the growth ambitions of the board and deliver the vision for a diversified digital consumer services group.
Our Retail business is demonstrating good momentum to return to improved levels of profitability. Digital transactions are growing at a faster rate than the contact centre. There is a critical focus on rebuilding a more profitable credit customer base and transforming our technology to be future-fit, as we provide customers with a one-stop shopping homewares shopping destination.
Weaver Fintech has a strong track record of product innovation and is well positioned to accelerate our product road map to scale the FinChoice app, launch a retail instalment credit product offered at merchants’ point of sale, pilot a short-term facility product for PJN and a virtual MobiMoney wallet card. With the strong growth in Weaver Fintech customers, the product cross-sell opportunities present existing opportunity for future growth.
Oldest professional fashion model (female)
Professional model Daphne Selfe (UK, b. 1 July 1928) of Baldock, Hertfordshire, UK, was a professional model as of 22 April 2014, aged 85 years 295 days. Her modelling career spans more than 60 years and includes appearances for the likes of Dolce & Gabbana, Gap, Nivea, Olay, Tata-Naka and Michiko Koshino. As well as featuring in Vogue and Marie Claire, Mrs Selfe has been photographed by some of the most renowned fashion photographers, including Mario Testino, Nick Knight, and David Bailey.
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