Macro Review
The Macro Review is a monthly report providing insight into the current trends shaping a specific social, environmental, economic, or political risk in South Africa. This report unpacks the numbers to indicate how political risks are evolving, and the way in which this may impact the business environment and social stability in South Africa.
Lockdown: SA’s capacity to deal with the Covid-19 crisis
This edition of the Macro Review highlights the key areas of vulnerability that will ultimately determine the effectiveness of South Africa’s response to the Covid-19 pandemic.
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The report is divided into four sections:
- Overview of the pandemic globally and its domestic effects
- An analysis of the social profile of South Africa, including demographics and living conditions
- A diagnostic of SA’s current healthcare resources, personnel and infrastructure
- The economic impact of the crisis and the consequent fiscal and monetary responses
Kicking the can down the road
In this edition of the Macro Review – ‘Kicking the can down the road’ we look at the 2020 Budget delivered by the Minister of Finance, Tito Mboweni on 26 February 2020.
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Key takeaways:
- Budgeted revenue for 2020/21 is R1.58 trillion or 29.2% of gross domestic product (GDP), while budgeted expenditure is R1.95 trillion (36% of GDP).
- The budget deficit is forecast at an estimate of 6.8% of GDP in 2020/21, 6.2% in 2021/22 and 5.7% in 2022/23.
- Economic growth is expected at 0.9% in 2020, forecast to rise to 1.3% in 2021 and 1.6% in 2022.
- Gross national debt is estimated to approach R3.56 trillion or 65.6% of GDP in 2020/21.
- The Value Added Tax (VAT) remains unchanged and there is a marginal cut in Personal Income Tax (PIT), while ‘sin’ (alcohol, tobacco) and environmental (carbon, plastic) taxes are up.
- The annual limit on contributions to tax-free savings accounts is up from R33 000 to R36 000.
Taxman at Your Door
This edition of the Macro Review looks at South Africa’s tax regime, incorporating data on government finances within the context of the country’s economy, the different forms of tax collection, as well as key sources of revenue.
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Key takeaways:
- In 2018/19 total tax revenue amounted to R1.3 trillion — 26.2% of the country’s Gross Domestic Product (GDP) of R4.9 trillion.
- Personal Income Tax (PIT), Corporate Income Tax (CIT) and Value-Added Tax (VAT) make up some 80% of national tax revenue.
- Only 1.1 million or 16.6% of assessed individual taxpayers earn above R500 000, but contribute 67.6% to individual tax assessed. A mere 6 664 or 0.1% earn above R5 million, while paying 7.9% of individual tax assessed.
- Companies with taxable income greater than R100 million amount to just 706 in number or 0.09% of companies assessed for tax, but account for 62.7% of corporate tax assessed.
- For almost forty years, South Africa has been dogged by consistent budget deficits (expenditure outstripping revenue), which show no sign of letting up in the near future.
South Africa in brief
This edition provides an overview of key statistical trends in South Africa drawn from the CRA’s upcoming Socio-Economic Survey of South Africa 2020.
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Key takeaways:
- South Africa’s race profile shows that the White population (which was previously the second biggest cohort after the Black population) has been overtaken by the Coloured population.
- There were 382 people per police officer and 116 people per private security officer in 2018/19. The murder rate was 36 per 100 000 people.
- Diseases/conditions which are the leading causes of death are: tuberculosis for the Black population; diabetes among Coloured and Indian/Asian people, and ischaemic heart disease for the White population.
- There are 16.3 million employed people; 6.7 million unemployed people (according to the official/strict definition); and 10.2 million unemployed people (according to the expanded definition — which includes people who have given up looking for work).
- South Africa’s economy relies heavily on the tertiary sector, which contributes 68% to gross value added (GVA), compared to 21.1% for the secondary sector and 10.9% for the primary sector.
- Salaries are the main source of income for more than two thirds (64.8%) of households and, for some 45.2% of households, grants are the main source of income.
South Africa’s Quality of Life
This edition of the Macro Review updates the Quality of Life Index (QOLI) first developed by the CRA in 2017. The Index is designed to enable users to gauge South Africa’s progress in improving the quality of life of its residents, and to draw comparisons between South Africa’s nine provinces and the four race groups.
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Key takeaways:
- The Quality of Life Index (QOLI) benchmarks South Africa’s progress in improving the quality of life.
- The QOLI draws comparisons between South Africa’s nine provinces and the different race groups.
- Indicators used in the index are: the matric pass rate, expanded unemployment, monthly expenditure of R10 000+, tenure status, access to piped water, use of electricity for cooking, access to a basic sanitation facility, irregular or no waste removal, medical aid coverage and the murder rate.
- The best quality of life is in Gauteng and the Western Cape — each province has a QOLI score of 6.4.
- White South Africans continue to have the highest standard of living, followed by Indian/Asian, Coloured and Black people respectively.
The whole nine yards: profiling South Africa’s provinces
This edition of the Macro Review provides comparative data on South Africa’s nine provinces across various key areas: demographics, the economy, education, health and social security, living conditions, as well as crime and security.
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Key takeaways:
- Gauteng is the smallest province covering just 1.5% of South Africa’s land area, but accounts for 25.8% of the total population. The Northern Cape is the largest province, covering 30.5% of the country but is home to only 2.2% of South Africa’s population.
- Together, Gauteng, KwaZulu-Natal, and the Western Cape contribute almost two thirds (63.9%) to national Gross Domestic Product (GDP) and are home to just under two thirds (65.2%) of assessed taxpayers in South Africa.
- The labour absorption rate — the proportion of the working-age population that is employed — is highest in Gauteng (48.9%) and the Western Cape (53.8%).
- In 2018, Gauteng had the highest matric pass rate of 87.9%, followed by the Free State (87.4%) and the Western Cape (81.4%).
- In 2018/19, the Western Cape had the highest rate (1 229 per 100 000 people) for drug-related crimes, Gauteng had the highest motor vehicle theft rate (165 per 100 000) and the Eastern Cape had the highest murder rate (61 per 100 000).