25 September 2024 - Grownish Woes

Western Cape’s Resilient Rental Market Breathtaking view of the rocky cliffs by the ocean captured in Cape Town, South Africa

Western Cape’s Resilient Rental Market

Staff Writer Posted on 1 week ago

Western Cape’s Resilient Rental Market: Lessons from South Africa’s Evolving Vacancy Landscape

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Despite increasing vacancy rates across South Africa’s rental markets, the Western Cape remains a stronghold of resilience, showing the lowest hike in vacancies. The latest Residential Vacancy Survey Report by TPN reveals that while other provinces grapple with supply-demand imbalances, economic pressures, and consumer behavior shifts, the Western Cape stands apart with a marginal vacancy increase. What are the driving forces behind this trend, and what lessons can be learned by investors and tenants?

Economic Pressures and Market Dynamics:

The TPN report indicates that South Africa’s rental market has faced mounting challenges since 2018, driven by an oversupply of rental properties and fluctuating consumer confidence. With persistently high interest rates and economic instability, rental demand should have surged. However, the reality paints a complex picture.

In Gauteng, KwaZulu-Natal, and the Eastern Cape, vacancy rates skyrocketed due to increased supply and softened demand, especially in lower rental bands. Meanwhile, the Western Cape’s vacancy rate only saw a marginal increase from 1.51% to 2.33%, suggesting a more balanced supply-demand dynamic.

Western Cape’s Unique Market Strength:

The Western Cape’s rental market strength index improved slightly, underscoring its continued demand for rental properties despite broader economic pressures. With supply declining and demand holding steady, the province’s rental market has managed to sidestep the rapid vacancy rate increases seen in other provinces. This raises questions about what makes the Western Cape unique. The answer could lie in several factors:

1. Economic Stability: The Western Cape’s economy, bolstered by strong tourism, tech, and financial sectors, continues to attract a steady flow of tenants, especially in mid- to high-value rental bands.

2. Lifestyle Appeal: The province remains a desirable destination due to its quality of life, making it a preferred location for students, professionals, and retirees, contributing to sustained demand.

3. Regional Policy and Investment: Strategic development and planning policies have potentially played a role in maintaining demand and preventing an oversupply of properties in key areas.

Provinces Facing Higher Vacancy Challenges:

KwaZulu-Natal and the Eastern Cape saw sharp vacancy increases, driven by an imbalance between supply and demand. KwaZulu-Natal, in particular, experienced a jump from 11.2% to 17.61% in vacancies, signaling market weakness.

In contrast, Gauteng saw a more moderate rise in vacancy rates but still maintained a stronger rental market due to continued demand outstripping supply. This highlights that demand patterns in the rental market remain region-specific, and economic factors like employment rates, urban migration, and property development play a critical role in shaping these trends.

The Future of Rental Properties in South Africa:

As the country’s economy fluctuates, understanding regional vacancy trends will be key for landlords and investors seeking to navigate the rental market. The Western Cape may serve as a model for how other provinces can address oversupply and maintain demand, even in turbulent times.

To stabilize vacancy rates, property owners and developers might need to adapt their strategies, potentially exploring more flexible rental agreements, adjusting pricing, or focusing on high-demand areas. For tenants, opportunities lie in regions where vacancy rates are rising, allowing for more competitive rental pricing and negotiation power.

As vacancy rates across South Africa fluctuate, the Western Cape’s resilience offers important insights. By focusing on economic stability, lifestyle appeal, and careful market management, the province has managed to maintain a relatively strong rental market. As other provinces face significant challenges, learning from the Western Cape’s approach could prove crucial in balancing supply and demand while addressing the growing vacancy issue.

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Sources: IOL News

The Ripple Effects of Eskom’s Proposed 36% Electricity Price Hike electricity high voltage pole and sky

The Ripple Effects of Eskom’s Proposed 36% Electricity Price Hike

Staff Writer Posted on 1 week ago

The Ripple Effects of Eskom’s Proposed 36% Electricity Price Hike: A Balancing Act Between Sustainability and Affordability

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Eskom, South Africa’s state-owned power utility, has proposed a 36% electricity price increase for the 2026 financial year, far outpacing the country’s inflation rate of 4.4%. With its financial challenges mounting and previous bailouts failing to secure long-term sustainability, Eskom’s proposed hike has raised concerns about the broader impact on the economy, consumers, and businesses.

The Financial Context: Why a 36% Increase?

Eskom’s financial woes are no secret. The company has accumulated over R400 billion in debt, and government bailouts have become a recurring lifeline to keep the utility operational. However, these bailouts have come with strict conditions, including restrictions on further borrowing. Eskom now finds itself under pressure to implement “cost-reflective tariffs” that align with its financial obligations and operational costs.

Calib Cassim, Eskom’s CFO, defended the proposal by emphasizing the need for the price hike to cover operational costs and maintain reliable electricity supply. He noted that while government support has addressed liquidity issues, it has done little to enhance long-term financial sustainability.

Yet, a 36% increase in electricity prices is likely to hit South African households and businesses hard, exacerbating already rising costs of living and production. Many South Africans are already grappling with the effects of electricity price hikes that have tripled in the past 14 years.

The Impact on Households and Businesses: A Challenging Landscape

South Africa’s middle-class households, in particular, face mounting financial pressure, as electricity price increases outpace wage growth. Lower-income households, already struggling with inflationary pressures, will likely feel the brunt of the hike. Many have turned to alternative energy solutions, but the transition remains costly and unattainable for many.

For businesses, especially those heavily reliant on energy, the proposed hike threatens to drive up operating costs. While Eskom has managed to prevent major blackouts in 2024, the scars of the record blackouts of 2023 still linger. Many businesses have already invested in clean energy solutions, but not all have the financial capacity to make such a shift. For these businesses, Eskom’s price increase could further slow economic recovery and growth.

Balancing Financial Sustainability and Affordability

Eskom’s request for above-inflation increases beyond 2026, including 11.8% in fiscal 2027 and 9.1% in 2028, signals that the utility’s challenges are far from resolved. While government officials have pushed for Eskom to adopt cost-reflective pricing to ensure financial sustainability, the social and economic repercussions of such hikes need to be considered carefully.

The challenge lies in balancing Eskom’s need for financial stability and the public’s ability to afford electricity. Without adequate reforms and innovative solutions to reduce operational inefficiencies, South Africa may face a scenario where its electricity prices continue to rise, leaving many behind.

Looking Ahead: What Can Be Done?

To mitigate the adverse effects of these proposed hikes, the government and energy sector must explore strategies beyond pricing increases. Diversifying the energy supply through renewable energy projects, investing in infrastructure, and enhancing Eskom’s operational efficiency could provide some relief to consumers. Additionally, targeted subsidies for lower-income households and small businesses could help cushion the blow of rising prices.

As South Africa moves forward, the conversation around Eskom’s sustainability must also address its role in securing the country’s economic future, ensuring that the utility can provide reliable, affordable electricity for all.

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Source: Daily Investor

The Green Entrepreneur: Tebello Khanya’s Vision for Eco-Friendly Living image_editor_output_image-2063965348-1724234720360

The Green Entrepreneur: Tebello Khanya’s Vision for Eco-Friendly Living

tshepisosishuba Posted on 1 week ago

In the dynamic world of entrepreneurship, few stories are as compelling as that of Tebello Jeanette Khanya, the founder of Bonolo Scents. Tebello is more than just a businesswoman; she’s a visionary entrepreneur who has turned a simple idea into a mission-driven enterprise. Her journey from starting a laundry business in her parents’ garage to creating a brand that prioritizes environmental consciousness is a testament to her entrepreneurial spirit. Through determination, creativity, and a deep commitment to eco-friendly practices, Tebello is not only shaping her business but also leading a movement towards sustainable living. Her story is one of overcoming challenges, seizing opportunities, and making a lasting impact in the industry, making her a standout entrepreneur in the competitive world of manufacturing.

The Genesis of Bonolo Scents

The origin of Bonolo Scents is deeply intertwined with Tebello’s entrepreneurial spirit and her response to a pressing problem during the COVID-19 pandemic. In 2020, facing unemployment, Tebello turned adversity into opportunity by starting a laundry service, LetsWash Laundry Services Pty Ltd, from her parents’ garage. However, the challenges she encountered—particularly with the detergents that damaged her equipment—led to a pivotal shift in her career.

“In 2022, after struggling with machine breakdowns due to the detergents we were using, I realized I needed a solution that was not only effective but also kind to my machines and the environment,” Tebello recalls. “That’s when I decided to explore eco-friendly alternatives, and the idea for Bonolo Scents was born.”

With a background in Human Resource Management from Flavius Mareka TVET in Sasolburg and experience from her internship at SAPS Sasolburg, Tebello’s journey into the world of manufacturing was unexpected yet driven by necessity. Encouraged by the positive results of her research into eco-friendly detergents, Tebello embarked on a new venture—manufacturing her line of environmentally friendly laundry products.

Building Bonolo Scents: A Vision for Sustainability

Bonolo Scents stands out in the market for its commitment to creating products that are both effective and eco-conscious. “Our mission is to provide effective cleaning solutions while minimizing environmental impact,” Tebello explains. The company’s products, including fabric softeners, laundry liquids, and washing powders, are crafted from bio-based ingredients that are gentle on both the skin and the planet.

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“Our fabric softener is hypoallergenic, cruelty-free, and plant-based. It’s mild enough for the most sensitive skin, making it safe for babies and children,” Tebello adds. The emphasis on natural ingredients and the absence of artificial dyes or brighteners make Bonolo Scents a preferred choice for eco-conscious consumers who seek to reduce their environmental footprint.

Challenges on the Road to Success

Like many entrepreneurs, Tebello faced significant hurdles in the early stages of her business. Loadshedding, a common issue in South Africa, posed a major challenge to her production process. “I had to stop production at times and wait for the power to return, which slowed down my turnaround time and cost me some valuable contracts,” she says. Despite these setbacks, giving up was never an option for Tebello. “The support from my family and the positive feedback from my clients kept me going during those tough times.”

Funding was another critical challenge. Tebello initially used her savings and borrowed money from her parents. However, realizing the need for additional support, she applied for grants from DESTEA and received assistance from SEDA, The Innovation Hub, and CHEMIN. These resources helped her scale Bonolo Scents and navigate the complexities of starting and running a manufacturing business.

Strategic Growth and Marketing

Marketing played a crucial role in Bonolo Scents’ growth. Tebello leveraged social media to build her brand, increase visibility, and connect with customers across the country. “Social media played a big role in our marketing strategy, but attending exhibitions and expos was also key to gaining exposure,” she notes. The creation of a website and the ability to sell products online further expanded her reach, and securing a billboard provided significant visibility.

Tebello’s approach to business is rooted in continuous learning and adaptation. “Business is not easy—each day comes with different challenges,” she says. “Information is key, and I’ve learned that not everyone will understand my vision, and that’s okay.”

Learning and Growth: Embracing Change and Innovation

Marketing and visibility have been critical components of Bonolo Scents’ strategy. “Social media played a big role in my marketing strategy, as did attending exhibitions and expos for exposure and visibility,” Tebello explains. The company’s online presence, combined with a well-designed website, has allowed it to reach customers across the country. A significant milestone was achieving billboard advertising, which provided immense exposure for the brand.

Learning has been a continuous process for Tebello, both in terms of business and product development. “Some key lessons I learned are that information is key and that business is not easy; each day comes with different challenges,” she notes. She’s also learned that not everyone will understand her vision or be her customer, a reality every entrepreneur must come to terms with.

Balancing Life and Work

Balancing the demands of running a business with personal life is no easy feat, especially for someone as dedicated as Tebello. “Business is all I do, but I am trying to do other things to relax, like taking a walk, staying off my phone, and spending time with my daughter,” she says. This acknowledgment of the need for balance is vital for maintaining her well-being and sustaining her long-term success.

Advice for Aspiring Entrepreneurs

Tebello’s journey is filled with lessons that she’s eager to share with other aspiring entrepreneurs. “My advice is simple: show up. You never know the opportunities that are waiting for you if you don’t put yourself out there,” she emphasizes. She also highlights the importance of compliance for product-based businesses. “If you have a product, focus on compliance—that’s the most important thing.”

Her Vision

Looking ahead, Tebello has big plans for Bonolo Scents. “In the next 5-10 years, I see Bonolo as a national household brand and also moving to the borders of Africa,” she envisions. Her goal is to expand her brand’s reach while maintaining the core values that have driven its success.

Reflection and Legacy

Reflecting on her journey, Tebello takes pride in her achievements, particularly the official launch of Bonolo Scents. “My proudest moment was the first official launch of Bonolo Scents. I was so proud of myself for starting and putting a product out there that has received such a positive reception,” she recalls. Another significant milestone was being a Top 10 finalist in the Seeds of Change competition by Food Lover’s Market, which affirmed the impact of her work.

For Tebello, Bonolo Scents is more than just a business—it’s a platform for change. “I want to make people aware of the environmental impact of the products we use every day and how choosing eco-friendly options can make a difference,” she says. “I don’t want to be remembered as just a detergent manufacturer but as someone who was eco-conscious and didn’t harm the planet.”

The Road Ahead

As Tebello continues to build Bonolo Scents, she remains focused on the future. “One thing I would do differently is definitely changing the courses I studied,” she reflects. However, she has no regrets about the path she has chosen, and she’s excited about what lies ahead. “The future looks bright for Bonolo Scents. We are currently preparing to supply Food Lover’s Market, which is very exciting. Keep an eye on our socials for updates!”

Tebello’s journey is guided by her faith and the belief that preparation today leads to success tomorrow. “God is within her, she will not fail,” she quotes Psalm 46:5, a verse that encapsulates her determination and resilience. With her unwavering commitment to sustainability and her drive to succeed, Tebello Jeanette Khanya is indeed a self-made entrepreneur who is making a lasting impact on the world.

Connect with Tebello

Instagram: jeanettekhanya | bonolo_scents

Contact: 0786596908 | info@bonoloscents.co.za

Website: www.bonoloscents.co.za

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Navigating Tax Implications of South Africa’s Two-Pot Retirement System Closeup shot of a person wearing a suit holding some cash in his hand

Navigating Tax Implications of South Africa’s Two-Pot Retirement System

Staff Writer Posted on 1 week ago

South Africa’s new two-pot retirement system, now in effect for over three weeks, has enabled individuals to tap into their savings with newfound flexibility. While this new structure was designed to offer greater accessibility for those needing funds, there’s a critical element that many may overlook: the tax implications. Early withdrawals from the savings pot, particularly, could result in a significant tax surprise, pushing individuals into higher tax brackets.

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The Mechanics of the Two-Pot System

The two-pot system splits retirement savings into two portions. Two-thirds of the contributions are allocated to a retirement pot, which cannot be touched until retirement. This portion is intended for long-term financial security, enabling individuals to invest in annuities or similar products upon retirement. The remaining one-third is directed to a savings pot, which individuals can withdraw from annually to cover emergency expenses.

This system seems straightforward at first glance. However, many South Africans may not be aware of the potential tax consequences of tapping into their savings pot.

The Taxation Surprise

The key issue lies in the marginal tax rate—this is the tax rate individuals pay based on their income bracket. Actuarial specialist Paul Menge from Momentum Investments explains that any income, including withdrawals from the two-pot system, counts towards your total income for the year. Therefore, if your annual income is close to the top of your current tax bracket, withdrawing funds from your savings pot could push you into a higher tax bracket.

For instance, someone earning R600,000 annually could see their marginal tax rate increase from 36% to a higher rate if they withdraw a significant amount from their savings pot. This could result in a larger tax burden when the South African Revenue Service (SARS) conducts its yearly assessment in July.

This is where the “nasty tax surprise” comes into play. Even if your tax directive accounts for a certain amount when making the withdrawal, you could still owe more at the end of the tax year. The result? A potentially vicious cycle where you may have to withdraw more funds to settle your tax bill, leading to further increases in tax liabilities.

The Long-Term Implications

The issue with early withdrawals goes beyond immediate tax concerns. Tapping into your retirement savings early could have long-term consequences for your financial security. If withdrawals are not done strategically and only in cases of true emergency, individuals risk jeopardizing their future retirement outcomes.

Additionally, the economic impact on the country cannot be ignored. Early withdrawals have the potential to reduce the pool of savings available for long-term investments, which can slow economic growth. South Africa is already witnessing billions of rands being withdrawn under the new system, with most of it expected to flow into consumer spending rather than debt repayment or emergency expenses.

Financial Discipline and Building an Emergency Fund

Menge advises against withdrawing from the two-pot system unless it’s a genuine emergency. Not only does it affect your retirement plans, but the tax burden could outweigh the immediate financial relief. He suggests that the unpleasant experience of paying additional taxes might serve as an incentive for individuals to prioritize building an emergency savings fund outside of their retirement pots.

While the two-pot retirement system offers greater flexibility, it’s important to understand the tax implications and long-term risks associated with early withdrawals. Careful planning and financial discipline will be crucial for South Africans navigating this new landscape.

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Source: IOL News