South Africa: Unpacking Economic Recovery Support Interventions

South Africa: Unpacking Economic Recovery Support Interventions

The Department of Trade, Industry and Competition (the dtic) has unpacked the R3.75 billion Economic Rebuilding Package for the restoration of businesses adversely affected by the violent looting and unrest that took place in KwaZulu-Natal and Gauteng recently.

“Government has set aside funds to ensure that businesses are able to rebuild as quick as possible… It will be distributed through the department, the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF),” the department’s Deputy Director-General (DDG) Susan Mangole said on Friday.

Addressing a webinar on the economic recovery support interventions, Mangole said the Economic Rebuilding Package is part of the broader R38 billion relief package that was announced by the Minister of Finance.

The funding package to support business recovery efforts for the dtic amounts to R2 billion.

“The IDC has tailored a comprehensive package that includes funding for business and communities affected by the unrest. The considered response comprises a total recovery package totalling more than R1.5 billion,” Mangole said.

About R1.4 billion has been set aside for the Post Unrest Business Fund to assist all businesses (existing and new clients) that operate in sectors the IDC funds.

The funding will be available at concessionary rates to ensure significant development impact.

A grant allocation for R100 million is to provide technical and financial assistance to small businesses in townships, rural areas and small towns that have been affected by the unrest and associated supply chain disruptions.

Corporate Social Investment (CSI) initiatives have been allocated R10 million to support food security and recovery efforts in affected communities.

“This funding will cater for school infrastructure rebuilding, support for care facilities and clinic. The IDC will focus mainly on rural, outlying and less developed areas that now face increased vulnerability. The IDC will be working with its established NGO partners to ensure reach and impact

“In addition, the IDC will be administering the (dtic’s) R400 million Manufacturing Competiveness Enhancement Programme (MCEP) Economic Stabilisation Fund to support manufacturing companies affected by the unrest and offer concessionary funding to affected companies through interest free loans,” Mangole said.

Close Sign up for free AllAfrica Newsletters Get the latest in African news delivered straight to your inbox Top Headlines Governance Business South Africa By submitting above, you agree to our privacy policy. Success! Almost finished… We need to confirm your email address. To complete the process, please follow the instructions in the email we just sent you. Error! Error! There was a problem processing your submission. Please try again later.

The National Empowerment Fund (NEF) in partnership with the dtic has established the Economic Stabilisation and Rebuilding Fund to support businesses that were adversely affected by the unrest.

“Support will be provided in all sectors of the economy with the focus on manufacturing, retail and services businesses. The NEF will support any business that has been adversely affected in all sectors of the economy for an amount of R250 million,” she said.

In addition, the Unemployment Insurance Fund (UIF) has established a Temporary Financial Relief Scheme aimed at providing financial relief to vulnerable workers.

“It is targeted at workers not paid (partial or in full) remuneration owing to the closure of a workplace as a result of the unrest in KZN and Gauteng. Workers qualifying under this relief scheme will receive a monthly flat rate of R3 500,” UIF Director for Communication and Marketing Makhosonke Buthelezi said.

The benefit is intended to be paid from 9 July until 15 December.

“To avoid any in-person employee applications for the temporary financial relief under the scheme, an employer who has had to close its business as a result of the unrest must apply for temporary financial relief under the scheme for and on behalf of its affected workers in accordance with these regulations,” Buthelezi said.

Applications can be submitted online at www.uifecc.labour.gov.za.

BRICKS & MORTAR: Swift economic recovery in Romania supported real estate investments

Investment volumes in Romania’s real estate market have remained healthy since the start of the pandemic, a new report from JLL showed.

JLL reported a property investment volume of around €309mn in Romania in the first half of 2021, which was almost 22% lower than in the same period of 2020. This was due to smaller deal size — the average size dropped to €21mn — while the number of transactions increased.

“Transactions started during the pandemic were closed in H1 2021, proving that investors are still having appetite for commercial properties in Romania, encouraged by the swift macro-economic recovery,” said the report.

The capital Bucharest remains the preferred investment destination in Romania, accounting for around 69% of the total transaction volume in H1 2021. Other popular cities are Timisoara, Iasi and Oradea.

According to the ‘CEE Investment Market’ report, the number of deals increased in the first half of 2021, with the office sector accounting for almost 64% of all transactions. Office deals were followed by industrial space (24%), hotels (9%) and retail (3%).

The biggest deal during the first six months of the year was the sale of the Campus 6.2 & 6.3 buildings in Bucharest for around €97mn.

The first half of 2021 also saw the sale of the first phase of The Light, and the acquisition of Bucharest Financial Plaza, as well as several smaller deals in secondary and tertiary cities.

The largest industrial transaction in H1 2021 was the acquisition of the Catalyst industrial portfolio, with assets in Timisoara, Arad and Caransebes.

Industrial and logistics space has been in demand. However, as noted by JLL, “the limited investment activity in this segment is due to lack of product as the market is dominated by strategic players who very rarely sell”.

The report noted that prime office yields in Romania are at 7.00%, prime retail yields at 7.25% and prime industrial yields are at 8.00%. For office and industrial space, this is the same as 12 months ago, but retail yields have increased by 25 bps over the year. “Romania is still well positioned from a yield perspective, as the current values are still well above those registered in the last peak (2007) and those currently quoted in the rest of the region,” said the report.

“We expect that investment volumes in 2021 will be close to the total registered in 2020, although in this period accurate predictions continue to be difficult to make,” according to JLL.

“Nevertheless, with the vaccination process going strong and considering the significant amount of sidelined capital targeting real estate, these forecasts may improve. Prime yield may come under pressure for logistic and potentially office, in line with regional evolutions, but this will also depend on debt availability and terms.”

Red states leading US economic recovery from the coronavirus pandemic

States with Republican governors are leading the U.S. economic recovery from the coronavirus pandemic, while those run by Democrats – which tended to impose lengthier and stricter lockdowns on businesses – are faced with significantly higher unemployment rates.

Labor Department data published last week shows the 10 states with the lowest unemployment rates are all led by GOP governors – while the 10 states with the highest percentage of out-of-work Americans are run by Democratic governors.

Blue states including Nevada (7.7%), New York (7.6%), New Mexico (7.6%), California (7.6%) and New Jersey (7.3%) had substantially higher unemployment rates than the national average of 5.4% in July, the data shows. By comparison, red states – such as Nebraska (2.3%), Utah (2.6%), New Hampshire (2.9%), South Dakota (2.9%) and Idaho (3%) – were well below the national average.

THESE STATES ARE ENDING $300 UNEMPLOYMENT BENEFITS - HERE’S WH

In fact, of the 20 states with the lowest unemployment rate, those led by Republican governors account for a vast majority: 16. Twenty-five of the 27 GOP-led states gained jobs in the last month, the data shows, while two of the states – Idaho and Utah – actually have more jobs than in February 2020, before the pandemic hit.

Conversely, just 13 states led by Democrats have recovered at least two-thirds of the jobs lost during the pandemic.

Overall, the average unemployment rate in red states is 4.3%, while the average jobless rate in blue states is 5.9%, above the national average.

The data comes less than one month before supplemental unemployment benefits – first established in March 2020 and renewed twice by Congress – are poised to expire on Sept. 6 under the $1.9 trillion relief plan that Democrats passed in March. Some 7.5 million workers are expected to lose their benefits, according to a recent report published by the left-leaning Century Foundation.

The Biden administration has maintained that it’s “appropriate” for the three relief programs to end on Labor Day, but encouraged states with high unemployment rates to continue repurposing federal funds to extend the assistance.

CONSUMER PRICES SURGE 5% ANNUALLY, MOST SINCE AUGUST 2008

“Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh wrote in a Thursday letter to Democratic congressional chairmen.

Already, 23 states – all but one of which is led by a Republican governor – have ended the unemployment programs, a move intended to help businesses that are struggling to hire workers. (Arkansas, Indiana and Maryland were ordered by state judges to reinstate the relief programs.)

Critics argue that other factors, such as a lack of child care, are the reason for lackluster hiring and have said that opting out of the relief program before it’s officially slated to end will hurt unemployed Americans, leaving them with no income as they search for a new job.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

The data released Friday shows little statistical evidence that prematurely ending benefits had a disproportionate impact on employment. And although they continued to pay out the benefits, nine states and the District of Columbia all saw a decline in unemployment last month.