currency_pexels-photo-315788.width-800Have you joined, or been tempted to join in, the “Bitcoin frenzy”? If so, read on.

Bitcoin and Ethereum are probably the best known of the cryptocurrencies, but (as at 10 April 2018) there were over 1,565 of them, and that number is growing.

Whether Bitcoin and its cousins are good investments is a matter for you and your financial advisers to puzzle over but let’s have a look at a few legal aspects –

Expect grey areas and big changes

Governments, Tax Authorities, and Central Banks around the world are struggling to get to grips with cryptocurrencies and how to treat them. Some countries allow them; some have banned or restricted them. Expect ongoing uncertainty and a lot of future change in these official positions, including attempts to regulate alternative currencies in general.

Are cryptocurrencies legal?

The short answer seems to be yes, there’s nothing to stop you buying, holding, using or selling them. The Reserve Bank’s official position is that they can be traded and used as “a medium of exchange, a unit of account and/or a store of value”, but they aren’t “legal tender” (“bank notes and coins in RSA which can be legally offered in payment of an obligation and that a creditor is obliged to accept”). What that means is that Joe Plumber is free to accept payment from you in Bitcoin if he wants to. He just can’t insist on it, nor can you.

SARS’ view (see “Income Tax and VAT” below) is probably going to be your greater area of concern for the moment.

What if you need help from a court?

The Reserve Bank warns that you acquire cryptocurrencies at your own risk and that you “have no recourse to South African authorities”.

What that means in practice remains to be seen (would SAPS really refuse to investigate a theft of Bitcoin?), and whilst there is no precedent to confirm that our courts will indeed help you if you have to sue over, for example, a Bitcoin transaction gone wrong, the majority view seems to be that they will.

Must you pay Income Tax and register for VAT?

From the horse’s mouth so to speak, this is some of what SARS says (all highlighting is ours) –

  • It will “continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.”
  • “The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”
  • “…cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.”
  • “Determination of whether an accrual or receipt is revenue or capital in nature is tested under existing jurisprudence (of which there is no shortage).”
  • “Taxpayers are also entitled to claim expenses associated with cryptocurrency accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade. Base cost adjustments can also be made if falling within the CGT paradigm.”
  • “…VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies.”

There’s more, and you don’t want to take any chances here, so consult an expert in need.

The Endgame: Leaving Bitcoin in your Will

Your cryptocurrency holdings are assets in your estate and you will want your heirs to get them. Your executor must deal with them together with all your other assets (both physical and digital).

Remember however that your holdings will be lost forever if your heirs/executors don’t know about them or can’t access your digital cryptocurrency wallet. They will need all your digital keys – both “public” (wallet address) and “private”.

In whatever manner you plan to leave your heirs/executor a record of these keys on your death, avoid disaster with these tips –

  1. Do it now – no one knows when they’ll die.
  2. Do it securely – anyone with your private key can clear your wallet out, and criminals know that.

This article is for general information purposes and should not be used or relied on as legal or other professional advice.

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2594“I have established a family trust for estate planning purposes to make sure my children are looked after when I pass away. I was wondering though if the trust can be terminated after my death, and if so, when? I wouldn’t like all my planning to be for nothing because the trust just ended.”

In South African law one must distinguish between two general types of trusts, namely a testamentary trust (established in your will) and an inter vivos trust, established in terms of a trust deed. The latter type includes your family trust.

Both types of trust do not ‘die’ or terminate because of disuse. In general a trust will continue to exist in perpetuity. This is supported by the fact that our Trust Property Control Act 57 of 1988 (“the Act”) which governs the operation of trusts in South Africa, does not explicitly provide for when and how a trust is terminated. This said, it does not mean that a trust can never be terminated, as there are a number of events that can occur during the lifetime of the founder, the trustees or the beneficiaries of a trust which could provide for grounds for the termination of a trust.

When considering the termination of an inter vivos family trust, the first step will always be to turn to the provisions of the trust deed. Often the trust deed will govern when the trust will or could be terminated. Some of the most common provisions to this effect encountered in trust deeds are:

• It may terminate once all of the trust assets have been distributed to the beneficiaries.
• It may terminate after a certain period of time or upon the happening of a specific event.
• It may terminate at the discretion of the trustees and/or through a resolution passed by the beneficiaries.
• It may terminate once its primary objective has been achieved.
• It may terminate in the event that it becomes impossible to achieve its main objective.

In the event that the trustees and/or beneficiaries wish to terminate a trust pursuant to circumstances that are not provided for in the trust deed itself, another option available would be to approach the High Court with a request to terminate the trust in terms of the Act.

There could be a number of reasons why the termination of a trust may be justified, such as that it has become uneconomical to continue to manage the trust on behalf of the beneficiaries or there is not sufficient value left in the trust, or even that the relationship between the beneficiaries and the trustees have deteriorated to the point where the management of the trust has become impossible. Each situation would however have to be considered on its own merits by the court.

For the termination of a trust, it is important that the assets be formally distributed to the beneficiaries in accordance with the trust deed. Once all liabilities have been settled and trust assets distributed to the beneficiaries, the trust can be considered terminated. Importantly though, the trust is not upon termination simultaneously deregistered as well. Deregistration has to be applied for separately at the Master’s office where the trust was first registered. The Master will require a list of documentation to verify that the trust has indeed been terminated, such as proof that the trust bank account has been closed and all of the assets have been distributed after which the deregistration of the trust will be approved.

In general however, if you have a well drafted trust deed that clearly provides for the grounds when the trust may be terminated, there should not be cause for concern about a random termination of your trust which leaves your beneficiaries unprotected. If you are unsure about your trust deed’s current termination provisions, consult your attorney or estate planner and discuss your trust deed and any concerns you may have.

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articles-South_Africa_523234102South Africa’s economy will get a boost from perkier commodity prices, a benign inflation outlook, and better rains for the agriculture sector this year, a Reuters poll found on Thursday last week.
The 27 economists in the poll suggested growth in SA would accelerate to 1.1% this year and 1.6% next year. The South African Reserve Bank (SARB) estimated GDP expanded 0.4% last year.

“Higher commodity prices in combination with lower inflation, stable interest rates and a recovery in the agricultural sector should drive 2017 growth somewhat stronger than in 2016,” said Elize Kruger at NKC African Economics. Twelve of 14 economists believed that growth in SA has left the slow expansion trap seen in previous quarters.

SA’s growth has been choppy in the past two years, with negative quarterly performances three different times on an annualised basis since 2014. However, KPMG’s Christie Viljoen says positive growth is expected, though it will be very low.

Economists back their claims with the annualised growth rate in the SARB’s leading indicator, which has turned positive, but they caution about the risks that lie ahead.
SA’s economy relies heavily on the wellbeing of the eurozone, its biggest trading partner as a single region, and China, its biggest trading partner as a single country.
South African Reserve Bank keeps repo rate at 7%
Meanwhile, SA’s Reserve Bank (Sarb) governor Lesetja Kganyago announced on Tuesday that the repo rate will remain unchanged at 7%.

The prime lending rate, which is the figure charged by banks to customers, will remain at 10.5%.
The central bank’s Monetary Policy Committee (MPC) has left rates unchanged at 7% since March last year.

“The MPC remains focused on the medium to long-term inflation outlook, but the deterioration of the shorter term outlook requires increased vigilance,” says Kganyago.

He says the bank is concerned about climbing inflation, but expects it to stabilise later this year and return to the target range of between 3 and 6%.

Kganyago also says growth remains a concern.

“While some improvement is anticipated over the forecast period, growth is expected to remain below potential.”

By: SA Commercial

The area of zero-rated VAT for a commercial property transaction can be confusing and must be properly understood if one wishes to avoid confusion and delays.

“Previously, it was common industry practice that a brief clause or addendum was utilised with the agreement of sale for a commercial property transaction in order to apply for the zero-rating of VAT,” says Jason Gregoriades, a member of the Rawson Property Group’s Commercial Business Development Team in Cape Town. These previously used methods are, however, no longer acceptable due to a more stringent set of requirements by SARS.

Misconceptions

Some misconceptions must first be dispelled, with regard to zero-rated VAT transactions, before looking at this subject in any depth. “The structuring of the sale of a commercial property with the VAT rated at 0%,” Gregoriades explains, “is a benefit offered by SARS to the seller and buyer of a specific property, should certain criteria be met to their satisfaction.”

First, it is often presumed that if VAT is applicable to a commercial property transaction, it will be simple to structure the Agreement of Sale in order to qualify for the VAT to be rated at zero percent. Sadly, this is not the case.

Second, there is the misconception that if one correctly structures the agreement of sale that the transaction qualifies for a zero-rating of VAT, that there are no additional costs relating to the transfer of the property. This is also most definitely not the case.

Facts

To begin with, a tax clearance certificate is required for the transfer of a property, thus problems and delays may arise in the event where either of the legal entities’ tax affairs are not up to date. Thereafter, SARS has a number of specific criteria which must be met in order for a commercial property transaction to be considered for a VAT rating of 0%. “The agreement of sale must be properly structured,” states Gregoriades, “containing all the necessary information and specifics.

Regarding the other costs applicable to the transfer of the property, such as the Deeds Office fee and the additional respective clearance certificates, these costs will still be applicable and payable should SARS permit the transaction to benefit from a zero-rating for VAT.

SARS Requirement

“SARS’ current requirements for the transaction of a commercial property sale to be considered for a zero VAT rating,are quite specific and important to know,”says Gregoriades.

These requirements include, but are not limited to the following:

All necessary information to be provided as part of the original agreement of sale and not as an addendum or annexure.
Both parties must be VAT vendors, thus, it is recommended that both parties include in the agreement their VAT registration numbers, a declaration that they are still registered for VAT and that their tax affairs are up to date.
The nature of the contract must take the form of a sale of business which includes the property, as opposed to the traditional sale of property only. Both parties must state their agreement that the enterprise will be sold as a going concern and that a zero rating of VAT will be applied. In this case, the business practice is the letting of space within the property and the business itself is often described as a rental enterprise.
The entire business, including any part of it which is capable of separate operation, must be disposed of as part of the transaction. In other words, the sale of the enterprise must include the property and all existing contracts must remain in place, such as the cleaning and security services.
The business must be an income generating enterprise at the time of sale, with a strong likelihood that this income generation will continue up to the date of transfer and beyond.
The Risk

Should the application for a zero VAT rating be deemed unsuccessful by SARS, they have the authority to effect that the full VAT amount be applicable to the sale. A clause to this end must be included in the agreement, stating that the purchase price will increase to cover the potential addition of VAT to the sale price. “Buyers and sellers must be aware of the implications of this possibility,” says Gregoriades, “should their submission be rejected by SARS for whatever reason.”

“One needs a well-constructed agreement of sale, making sure all the boxes are ticked,” suggests Gregoriades, “to take advantage of the zero-rated VAT benefit offered by SARS.” In order to ensure all the criteria are met, it is recommended that you enlist the aid of an experienced commercial agent.

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A closer look at listed property and buy-to-let residential property investments.
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The year 2016 has seen volatile financial markets globally with the commodity cycle still in recovery mode, economic growth in many countries still faltering and the roller-coaster political landscape.

Arguably, investors cannot be blamed for their conservative appetite for risk as finding investment gems is increasingly becoming difficult when the immediate future looks uncertain.

At a time when equities, bond and currency markets are under pressure, market watchers continue to find value in real estate markets during tough times – whether hitching their  wagons to physical properties or listed property stocks.

On the latter, investors would be normally investing in a property company, which owns physical property assets and collects rental income from its tenants that can be distributed as dividends payouts.

“That’s why listed property is much more defensive than any other sector on the JSE,” said Stanlib’s head of listed property funds Keillen Ndlovu at the Liberty Retire Well Masterclass last week.

Although SA’s listed property sector did not initially pique the interest of many investors, who often had a bias toward equities, the sector has since courted a strong following.

Listed property firmly outperformed equities (JSE All Share Index), bonds (ten-year government bond) and cash over the past ten years in terms of total returns. This has since firmly entrenched the asset class as a bellwether.

The sector has also seen a flurry of JSE listings – from having only 20 property companies on the bourse five years ago to 44-odd companies that invest in student accommodation, shopping malls, office, industrial and residential properties.

Ndlovu said the listings have offered investors choice as SA’s property market has opened up to offshore markets, giving investors access to hard-currency earnings.

Underscoring this is figures from Stanlib which reveal that ten years ago the sector had no exposure to offshore markets and so far this year, 37% of earnings derive from markets including the UK, Australia, Central and Eastern Europe. “If you invest in some SA-focused companies, you are also getting exposure to offshore markets,” he explained.

Having listed property in your investment portfolio helps to boost returns. For example, Ndlovu’s figures show that if your portfolio is 60% invested in equities, 30% in bonds and 10% in cash over 15 years – you would have achieved a 13.7% annualised total return.

“If you add 5% of property exposure, you get a total annualised return of 14%. Add another 5%, you get 14.6% and add another 5% you get as much as 15% in total returns. But you have to focus more on the long-term.”

He believes that listed property allocations in an investment portfolio should be 10% to 20%. But this depends on your risk profile.

Despite SA’s worrying state of the economy and the pesky rand, SA’s listed property sector is achieving an average forward yield of 7% and property companies are expected to post inflation-beating dividend growth of 8% average for the next 12 months.

Investment property

Residential buy-to-let properties continue to be beset by humdrum rental growth and property returns that have dimmed the allure of owning a rental property as an investment.

Latest figures from credit bureau Tenant Profile Network (TPN) and FNB show a rise in buy-to-let rental yields since two years ago.

National gross rental yields (before the rental properties’ operating costs such as electricity, water, maintenance, rates and taxes are accounted for) marginally rose to 8.6% in the second quarter of 2016 from 8.5% in the first quarter.

Rental yields are a key metric for a rental property’s return on investment, expressed as rental income over costs associated with the property.

To make matters worse for landlords, the upkeep costs of a rental property continue to rise faster than rental growth, eroding returns.

Finding value in the rental market is fast-becoming area specific.  For example, if landlords are looking for better rental yields, TPN and FNB figures suggest that they might have better luck Johannesburg (9.51%) than in Cape Town (7.71%).

Despite tenants facing the sustained rise in living costs, interest rates, and unemployment, TPN MD Michelle Dickens said the national rental payments trend is still stable.

Dickens said 66% of tenants nationally and across all rental value brackets are paying rent on time and in full; 6% are in the seven-day grace period; 10% are paying their rent partially, and nearly 6% of tenants are not paying rent at all.

The best performing rental value bracket is the R3 000/month to R7 000/month bracket, which makes up 55% of the rental market share.  The below R3 000/month is performing badly due to affordability issues.

“Investment property is still bricks and mortar, and you are still having capital growth albeit it’s not great at the moment. But ultimately it’s about the management of that property,” she added.

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The Opulent Living Concept Store & Gallery has launched on Kloof Street in Cape Town.

 Much like the high streets of popular European cities, Kloof Street has become one of Cape Town’s most opulent_living_concept_store_and_gallerycelebrated design quarters, and the beautiful old building at No 24 has been remodelled under the expert guidance of top interior designer Sarah Ord. Renowned for her bold and cosmopolitan interiors, Ord’s designs for the Opulent Living Concept Store & Gallery features walls in striking emerald green, offset in places by rich sapphire blue. “It’s the perfect fit for our brand,” says Opulent Living co-founder, Barbara Lenhard. “I have always loved Sarah’s work, and we are so excited to have worked with her on this important project.”

The Opulent Living Concept Store & Gallery has opened its doors on the 1st of November 2016 and customers can expect to discover a range of exclusive items in various price ranges. These include handcrafted jewellery from ANPA, known for its custom-made contemporary designs, and the Legacy Collection, which uses pieces of the original fence from Robben Island prison.

Exquisitely crafted handbags from luxury ostrich leather house, Mvari, as well as colourful creations from the Italian-made Save My Bag range. Beautiful Taunina bears, each handmade and embroideopulent_living_concept_store_and_gallery_kloof_streetred by local women, will grace the shelves, too.

There’s also designer menswear from British fashion label Grays London, established in 1927, recently launched in South Africa, as well as the colourful women’s wear collection, Resort. A bespoke range of Opulent Living lifestyle products will be launched and customers will be treated to exquisite items. Works by prominent South African artists, Jean Doyle, Jimmy Law, Marieke Prinsloo, Richard Scott, Michaela Rinaldi and German-born wildlife art photographer, Klaus Tiedge, are currently on sale.

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The ratings agencies have been circling for months with many fearing a downgrading to junk status, and South Africa’s economic growth rate has been narrowed from 0.8% in February to 0.5%.

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It’s fair to say that South Africans are feeling the pressure of a struggling economy – something that’s set to continue into 2017 and beyond.

During his medium-budget address Minister Pravin Gordhan announced that additional taxes to the tune of  R43bn will be raised over the next two years, with R13bn being raised next year to bring the total tax increase to R28bn in 2017/2018. Whether these taxes will be in the form of company or personal taxes, sugar taxes or VAT remains to be confirmed, what is certain is that it will all feed down to households at some point.

“Admittedly Minister Gordhan has limited space to manoeuvre within the current framework and we support his call for a tightening of belts. That said, the proposed tax increases will certainly place the residential property market under further pressure”, believes Bruce Swain, MD of Leapfrog Property Group.

According to the FNB Property Barometer; “The housing market slowdown has become more broad-based, with a loss in quarter-on-quarter house price growth momentum across all 4 Major Metro Area Value Bands recently”. John Loos, FNB Household and Property Sector Strategist, attributes this to mounting financial constraints due to “house price inflation exceeding per capita income growth, rising interest rates, and growing concern amongst consumers about their economic and financial future in a very weak economy. As yet, though, there is not widespread financial stress”.

Advice to Home Owners and Buyers Alike

“At this point my advice to homeowners and buyers saving up to purchase a home is to assess their fixed costs – adjusting their budgets accordingly. It’s almost certain that utilities like water and electricity and petrol prices will increase over the next few months as well as the tax increases. As such it’s crucial for households to review their budgets to ensure that they’re able to cover the basics. It’s also critical to settle as much debt as possible to avoid further pressure on household finances”, says Swain.

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IMG_5154Congratulations to Joshua van Zyl & Johan Foster for both achieving Top 20 Industrial broker status for Growthpoint deals in 2016. They have won a fabulous prize which includes a trip to the Masai Mara in Kenya to witness the Great Wildebeest migration. This is the second year in a row that they have won this prestigious award!

‘Inflation expectations remain at uncomfortably high levels.’Repo Rate

PRETORIA – The South African Reserve Bank (Sarb) has elected to keep the repo rate unchanged “for now” at 7% per annum, Sarb governor, Lesetja Kganyago announced on Thursday.

Five members of the Sarb’s Monetary Policy Committee (MPC) elected for ‘no change’ in the repo rate, with one voting for a 25 basis point increase, he noted.

Despite some improvement in the medium-term inflation outlook, Kganyago said the MPC remains concerned about the extended breach of the Bank’s 3-6% target range, with risks assessed to be on the upside.

Inflation is expected to fall within the target range for the first time during the third quarter of 2017.

While year-on-year consumer price inflation (CPI) moderated slightly in April, food price pressures continue “unabated”, Kganyago highlighted, with food and non-alcoholic beverages inflation accelerating to 11% in April, up from 9.5% in March.

Food inflation is expected to peak at 12% in the final quarter.

Core inflation, which excludes food and fuel, measured 5.5% in April, down from 6.4% in March.

Inflation is expected to average 6.7% in 2016, compared with 6.6% previously, while core inflation is expected to average 5.9%, compared with 6.2% previously.

Lower exchange-rate pass-through as well as lower electricity price inflation will be countered to some extent by higher near term food price forecasts and upward inflation in the international oil price, Kganyago said.

The risks to South Africa’s economic growth outlook are expected to be on the downside, with mining and manufacturing figures expected to weigh on first quarter growth numbers, the governor noted.

Constrained household spending, reflected in subdued retail sales, is indicative of a lack of demand pressure in the economy, Kganyago said.

Sub-Saharan Africa has seen a consistent deterioration in its growth outlook and is expected to underperform the global economy in 2016 for the first time in 16 years, as the effects of lower commodity prices take their toll.

The weak rand, which resumed its weakening path following a few weeks of strength, continues to pose upside risks to the inflation outlook, Kganyago said.

“Pass through remains subdued but there are indications that this may be increased,” Kganyago said, with risks of earlier-than-expected monetary policy tightening in the US also on the Reserve Bank’s radar.

“More recently, heightened political uncertainty has impacted negatively on the currency,” Kganyago said.

In line with other emerging markets, South Africa has seen strong equity outflows. Since the beginning of the year, non-residents have been net sellers of local equities to the tune of R56 billion.

They have been net purchasers of government bonds, however, with purchases amounting to R23 billion year-to-date. “Although the past two weeks has seen net sales,” Kganyago said.

The bank has revised its GDP growth forecast for 2016 down from 0.8% to 0.6%, followed by growth of 1.3% and 1.7% in 2017 and 2018, respectively.

“The MPC remains focused on its inflation mandate but sensitive to the state of the economy,” Kganyago said.

 Article by
Money Webb

 

 

South Africans are already under a deluge of shopping centre space before the opening of the biggest shopping centre on the continent, the R5 billion Mall of Africa in Midrand.articles-Mall_of_Africa_Waterfall_City_415991939

The question, however, is whether SA can support another mall. Many consumers are cash strapped, and already SA has the sixth highest number of shopping centres in the world — almost 2,000 — and floor space covering 23mm².

Still, some believe the market can take it.

Dirk Prinsloo of Urban Studies, a market research company specialising in shopping centre research, said that though consumers are under pressure, “the shopping centre cake is getting bigger, with growth taking place in the emerging market. We have about 5m additional households and tremendous [potential for expansion] in the retail space.”

One of the problems with newer centres, like the Mall of Africa, is that they are diverting consumers from existing ones. In smaller towns, where there hasn’t been a mall before, a brand-new shopping centre often draws retail spending away from high street shops. And Prinsloo says the market is overtraded in smaller convenience centres, where “you’ll find three or four grocery stores or supermarkets on as many corners”.

Regional or superregional malls keep on expanding because that’s where the big overseas retailers such as Cotton On, Zara and H&M as well as several more popular local brands are keen to set up shop.

A large part of the mall boom is due also to the trend of people moving to cities to get jobs — altering the complexion of society from a far more rural-based existence decades ago.

Says Prinsloo: “Urbanisation now sits at 64%, and it will grow to at least 68% by 2030.” He adds: “A lot of centres have moved very close to consumers to serve their needs. The fact that we are number six in the world confirms that the cake is getting bigger and that the black market has become the big spenders.”

However, Harri Kemp, an economist at the Bureau for Economic Research, says: “We don’t think it will [continue to] be so good given [the situation in] SA and the general economic climate. Indications are that conditions are tough in retail.”

The picture looks different for big retailers than for smaller ones.

“Those retailers that have one or two stores and cater for low-income consumers are not doing very well, and the smaller guys are coming under increasing pressure. Low- and middle-income consumers spend a large proportion of their budget on food and electricity.

“With rising prices for these goods, these consumers will have less money to spend on other products,” Kemp says.

Consumer Goods Council CEO Gwarega Mangozhe says the retailers are trying to mitigate the impact of high inflation, but it’s a tough ask.

“The aim remains to serve customers while retaining and growing market share,” he says.

The Mall of Africa is the largest shopping centre built in a single phase in SA. So what are its prospects?

“There is some potential still in the highincome group, and retailers catering for high-income consumers will probably do all right,” says Kemp. “But if things worsen, even the high-income guys will have a bit less money to spend.”

That’s a nasty scenario, and the consequences would be serious.

For one thing, according to an economic impact study commissioned by the Consumer Goods Council, no less than 23.7% of SA’s job market is in the retail sector — from the shop assistants to the packers and the truck drivers who make deliveries to the shops. That represents 2.9m jobs — crucial posts in a country where unemployment represents a bubbling crisis.

No fewer than 600,000 people work in shopping centres.

The following are examples:

Whitey Basson’s Shoprite Group employs 136,076 people, of whom 116,219 work in SA.

Woolworths employs 29,033 workers in SA. Edcon employs over 39,000 people, including 29,000 in SA.

Pick n Pay has 48,700 employees at owned stores, and 23,000 employees at franchises. It has pledged to create 5,000 jobs a year until 2020.

David North, Pick n Pay’s group executive of strategy, is positive about the future, despite the negative indicators.

He believes his company will continue hiring more people.

“We’re creating jobs because we’re opening more stores, serving more customers, and the overall spend on food and grocery products is increasing.

“Retail will continue to grow and employ more people in this country.”

Government will be hoping North is right, and the retail sector can absorb more of the country’s unemployed people — because elsewhere, the news is grim.

According to Statistics SA’s Quarterly Employment Statistics survey for the third quarter of 2015, total formal employment did not register any year-on-year growth. The “wholesale, retail and motor trade, hotels and restaurants” sector, on the other hand, grew by 1.2%.

With that sector stripped out, formal employment actually fell by 0.3% in the third quarter.

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