Your guide to surviving 2019

(Graphic: John McCann/M&G)

(Graphic: John McCann/M&G)

Chances are 2019 will be better than 2018, during which the economy contracted for at least two quarters. It is projected to grow, although not by much. Globally it’s hard to say what will happen with the orange bigot in the White House.
It’s likely that he will become more unpredictable as the long arm of the law reels him in. At home, the elections will dominate the headlines. Here’s our round-up of the outlook for electricity, taxes, fuel, wages and the economy


Electricity: Insulate yourself

To kick off, load-shedding is likely early next year. When electricity is available, it is going to cost more. But there is one, albeit small, consolation — South Africans have been through this before and can prepare for it.

Eskom, according to its latest multiyear price determination, has applied to the National Energy Regulator of South Africa (Nersa) for an increase of 15% for the coming three years. Also, in its latest regulatory clearing account (RCA) application, it wants to claw back almost R21-billion for the 2017-2018 year. Public hearings on both applications will take place during January and February and a decision by the regulator is expected in March.

At the same time, three previous RCA applications, which have already been granted by Nersa, will kick in early next year, increasing electricity prices by 4.4% for the coming four years.

Nersa typically does not give Eskom everything it asks for but, regardless of the magnitude, price increases are on the cards.

Becoming more energy-efficient is a way to save on electricity costs and can reduce demand on the grid, reducing the risk of load-shedding.

Steps such as switching to gas or installing solar water heating can reduce your electricity consumption and cost. But, if you don’t have the money to invest in alternatives like these, then get back to basics.

According to Eskom’s Andrew Etzinger, an obvious saving tip, especially if you go away for long periods, such as during the festive season, is to switch off your geyser. Switch to energy-efficient light bulbs. Always remember to switch off lights and appliances that are not in use. Appliances such as TVs and decoders that stay in standby mode are “energy vampires”, says Etzinger, so turn them off. For those with swimming pool pumps, find out what the optimal minimum running cycle is.

Insulate your life by finding out when your suburb is scheduled to load-sheaded and plan accordingly. Make sure your cellphone is charged and switch your garage door and gate to manual to avoid getting locked in or out.

If you have a back-up generator, create separate circuits, one for essential appliances during load-shedding and another for those that are not. For example, keep a few lights going and some plug points, such as for your fridge. The use of energy-efficient lights and appliances can also help to extend the life of your generator. — Lynley Donnelly

Elections: Tax benefit

Feeling battered by higher value-added tax (VAT), other taxes and fuel levies announced in last year’s budget? The good news is that economists do not predict any new taxes in 2019 because the fiscus is contained and new taxes in an election year are unlikely.

“The election is this year so it won’t be a popular move for the government to hike taxes, particularly because there is little indication that the VAT increase was received well both fiscally and in terms of people’s ability to recover the costs or absorb those costs,” says Lebohang Pheko, a senior research fellow at the nonprofit organisation Trade Collective.

The term of the current National Assembly and provincial legislatures ends on May 6 and the Constitution requires elections to be held within 90 days thereafter, which is before August 5.

Lumkile Mondi, an economist and senior lecturer at the University of the Witwatersrand, says the country is in a “credit crunch” and, instead of increasing taxes for corporates and consumers, the government will have to beg the World Bank and the International Monetary Fund for money to finance its affairs.

“Consumers are financially restricted and in debt while an increase in corporate taxes will stifle investment.”

Mondi says the economy will need a complete restructuring before things get any better. “It’s painful [but] there is no option; we need pain. And, after the pain, it might get better depending on the political economy and who is in power, and who is making the right decisions for the country and not for a political party.” — Tshegofatso Mathe

Fuel: Take a breather

The reprieve from rising petrol prices that motorists experienced in December will be sustained in January.

In its mid-month predictions issued in December, the Automobile Association of South Africa estimated petrol will go down by R1.19 a litre, and diesel will drop by R1.44. This will be a result of lower international product prices, which will account for 95% of the decline. Economist Mike Schussler foresees prices remaining relatively low for the first three months of the year. The possibility of the United States going into a recession in 2019 and continued disruptions caused by Donald Trump’s trade war mean the dollar could weaken and the rand pick up. He predicts the rand will stabilise at between R13.75 and R14 to the dollar.

He says the decision by the Organisation of the Petroleum Exporting Countries (Opec) and its allies to reduce production by 1.2-million barrels a day will not affect prices much. Opec members tend to cheat, so the full cut never happens. Iran, which is subject to US sanctions, has been exempt from reductions. — Tebogo Tshwane

Wages: Minimum increase

As of January 1, there is a new minimum wage. In November, President Cyril Ramaphosa signed the National Minimum Wage Act into law, requiring most employees to pay workers at least R20 an hour, excluding benefits such as transport, food, bonuses and accommodation allowances.

“This legislation sets a historic precedent in the protection of low-earning workers and provides a platform for reducing inequality in society and decreasing huge disparities in income in the national labour market,” he said in a statement.

More than six million South Africans, who make up almost half of the workforce (47%), earn below the R20 an hour minimum.

Part-time workers are also covered by the law; if they work for less than four hours a day, the Act stipulates that they should be compensated for at least four hours, which is R80.

But domestic workers, farm workers and those employed in the extended public works programme will earn lower hourly rates of R15, R18 and R11 respectively. This will be adjusted after two years.

Cosatu’s parliamentary co-ordinator, Matthew Parks, says that, although it is baby steps, the trade union federation expects the new law to have a huge effect on many South Africans’ lives. “It isn’t a living wage … but you have workers currently earning R8, R12 and R14 an hour,” he says. — Tebogo Tshwane

Economy: Muted growth

Ramaphosa has declared the country is open for business, setting the target of attracting at least $100-billion in new foreign investment in the next five years. But are investors biting? Will the money flow in?

The president hosted an investment conference in October, at which many companies, including Anglo American, Mercedes Benz SA, Vedanta, Mondi, Sappi, Naspers, Ivanplats, Mara and Rain Mobile, pledged to invest a combined R290-billion in their South African operations.

Econometrix’s Azar Jammine says he is waiting to see what materialises.

“It was just talk, talk, talk. I have not seen it in practice. I am looking to see it being transformed into jobs or more activity, and I am not seeing it. Beyond what was agreed upon, I do not know that there is all that alacrity to actually undertake investment. Businesses did commit themselves to a number of projects; let’s see whether it happens.”

He added: “I am convinced that things will not necessarily change after the elections, and there is a risk of a significant downturn in the world economy in the wake of a trade war, rising interest rates and the slowdown in the Chinese economy.”

He foresees local growth of 1.5% to 2% in 2019, but this might deteriorate because of the elections and slower global growth.

The treasury and the International Monetary Fund expect the local economy to grow between 1.4% and 1.7%.

Globally, the outlook is bleak. According to Bank of America, Merrill Lynch’s December fund manager survey, it is the worst since October 2008, with 53% of respondents expecting global growth to weaken over the next 12 months. — Tshegofatso Mathe

Tshegofatso Mathe
Tebogo Tshwane

Tebogo Tshwane

Tebogo Tshwane is an Adamela Trust financial journalism trainee at the Mail & Guardian. She was previously a general news intern at Eyewitness News and a current affairs show presenter at the Voice of Wits FM. Tshwane is passionate about socioeconomic issues and understanding how macroeconomic activities affect ordinary people. She holds a journalism honours degree from Wits University. 
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