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The Citizen
4 days ago
- Business
- The Citizen
Nersa's municipal tariff process flawed, says Sapoa
It is currently considering the applications of about 172 municipal distributors, and if approved, these will take effect on 1 July 2025. Most municipalities have applied for double-digit increases and in several cases up to three times SA's inflation rate. Picture: Moneyweb The process energy regulator Nersa is following to determine electricity tariffs for municipal supply areas is procedurally unfair, and meaningful public participation is impossible without access to crucial cost-of-supply (CoS) studies. This is the view expressed by the South African Property Owner's Association (Sapoa) in its submission to Nersa regarding the electricity tariff applications for 2025/26. Nersa is currently considering the applications of about 172 municipal distributors. If approved, these will take effect on 1 July 2025. On 12 June, at the third energy regulator meeting of its kind, it dealt with 45 applications. Municipal electricity tariff determination has been in turmoil for some time with several individual municipalities' tariffs having been reviewed in court and set aside. Read more 30% electricity tariff increase is a reality, says Erasa Last year, the High Court granted an application by AfriForum to review the methodology used by Nersa for more than a decade. It was found to be unlawful and set aside. Nersa however lodged an appeal which was heard, but the ruling is still pending. The City of Cape Town also challenged Nersa's determination of its tariffs for two consecutive years. That matter has also been argued in court with the outcome pending. Following the controversy, Nersa this year for the first time required municipalities to do a formal CoS study and use the results as the basis for its tariff application. ALSO READ: 30% electricity tariff increase is a reality, says Erasa In the past, the regulator simply published a guideline stating the recommended percentage increase and benchmarks for each category of customer – for example residential, commercial or industrial. Only municipalities applying for increases that would exceed the guideline, were subjected to public hearings. In a clear effort to comply with the law, Nersa this year for the first time published all the municipal tariff applications on its website and invited comments from the public. Most municipalities applied for double-digit increases, with many indicating that their CoS studies indicate under-recovery. Limpopo's Blouberg Local Municipality, for example, indicated that it needs an increase of 192% over the next three years to make ends meet. Its CoS study suggested an increase of 43% this year, with 20% and 13% increases in the following two years, respectively. Acknowledging that consumers will not be able to afford that, it tempered the proposed tariff increase for this year to 15.26%. Stellenbosch, asking for 9.95% more, said in its application its CoS requires a 'very high increase' and eThekwini, asking for an increase of 12.72%, says its CoS requires a 20% increase. ALSO READ: Eskom proposes further tariff restructuring to ensure 'transparency and fairness' Above inflation tariff requests Sapoa in its comments objected to the high increases, saying that the proposed municipal electricity tariff increases 'are significantly higher than the inflation rate, with some municipalities requesting increases nearly triple the annual inflation rate' (such as City of Johannesburg at 12.74%, against a 2024 average inflation rate of 4.4%). 'This is deemed unsustainable for commercial properties and their tenants.' Sapoa says its Operating Costs Report for January to June 2024 showed that variable recoveries (water, electricity, property rates) increased by 11.2% year-on-year, while basic rentals increased by only 1.6%. 'Electricity costs are the single biggest contributor to overall operating costs, accounting for 29%, and municipal charges [rates, electricity, water] comprise 59.2% of total operating costs,' it adds. It says operating costs are increasing faster than landlords' gross income, leading to less disposable income for property owners. 'Industrial properties are particularly hard hit, with operating costs increasing by 13.7% year-on-year.' The organisation points out that a substantial number of municipalities did not make their CoS studies available as part of their applications published on the Nersa website, even though Nersa must consider these studies when determining the tariffs. As an example, it names the Buffalo City metro (East London) and Cape Town. Sapoa cautions that commercial lease agreements typically pass utility costs, including electricity, to tenants. 'When occupancy costs exceed approximately 25% of a tenant's monthly turnover, particularly in retail, it can lead to financial hardship, lease non-renewals, or demands for lower rentals, ultimately affecting landlords' ability to keep buildings occupied,' it says. ALSO READ: Nersa slashes Eskom's tariff hike – but consumers could pay the price in taxes Financial mismanagement Sapoa highlights the damning findings of the Auditor General on financial mismanagement, huge water and electricity losses, and weak revenue collections in many municipalities. 'Metropolitan municipalities experienced an average of 18% electricity losses, estimated at R14.52 billion, largely due to inadequate infrastructure maintenance and illegal connections. Merely increasing tariffs without addressing these underlying problems will not resolve municipalities' funding issues,' the organisation says. In addition, Sapoa argues that the public participation process Nersa is following is procedurally unfair. 'Nersa published tariff applications for 172 municipalities within a short timeframe [less than six weeks]. The complexity and variation in tariff components across municipalities make detailed comments extremely difficult,' it says. By the deadline for comments, many municipalities' applications were still outstanding, according to Sapoa. The organisation suggests that Nersa does not grant any municipal tariff applications 'until a meaningful public participation process is completed, allowing sufficient time for detailed evaluation and public hearings'. Sapoa called for electricity tariff increases to be limited to 'no more than 5%', if public hearings are deemed unnecessary. It says this increase level 'is still well above the current and projected inflation rate'. This article was republished from Moneyweb. Read the original here.
The Citizen
11-06-2025
- Business
- The Citizen
More than half of Discovery's medical aid plans saw declines in members last year
Four plans saw year-on-year declines in excess of 5% … Two of the largest plans, Classic Comprehensive and income-limited KeyCare Plus, saw year-on-year declines of 7% and 11% respectively. Picture: Moneyweb A full nine of the 16 core Discovery Health Medical Scheme (DHMS) medical plan options saw declines in members in 2024 from 2023. This is according to the scheme's annual report, which was released ahead of its AGM at the end of June. Seven of its core plans saw increases, but one of these was for the new Classic Smart Comprehensive plan which was launched in 2023 (it removed its Essential Comprehensive plan in 2023). The 16 core plans exclude any 'efficiency' discount options, such as Delta and Regional plans, which provide cover at specific networks of hospitals. Overall, DHMS saw a net membership decrease of 1.05% in the 2024 calendar year and a net beneficiary decrease of 1.9%. It ended the year on 1.359 million members and 2.735 million beneficiaries. Between December 2024 and January 2025, 94.89% of members did not change plans, while 2.89% were upgraded and 2.23% were downgraded. ALSO READ: Discovery has a massive medical scheme problem Four plans saw year-on-year declines in excess of 5%, with two of its largest plans, Classic Comprehensive and income-limited KeyCare Plus, seeing year-on-year declines of 7% and 11% respectively. Its Classic Comprehensive has seen declines in members and beneficiaries for a number of years now. As a measure, in the Covid-19-hit 2020, it ended the year with 111 632 members on Classic Comprehensive. That means it has lost 26% of the member base on that plan in four years. The average age of DHMS members has crept up to 37.59 (from 37). It says 'an increase of less than one year per annum is favourable as this indicates that young people are joining the Scheme'. This is a major looming problem for the scheme. Practically, its only growth over the last decade has been from taking on the administration of restricted schemes, like Bankmed and Sasolmed. DHMS says 'consistent with the stagnant South African economy, the medical scheme industry has also remained stagnant over the past decade, with a slight increase in membership of 0.98% in 2023 compared to 2022'. This means that, structurally, the industry and DHMS as the largest scheme have a looming problem: members are ageing. In the last 16 years, the average age of lives covered by DHMS has jumped from 32.3 to 37.6. ALSO READ: Discovery Group records profit, thanks to Discovery Bank Targeting young professionals In an effort to address this, it launched a new Active Smart Plan with a contribution of R1 350 per month, specifically to target young professionals. It says this is the most affordable option in the open scheme market. Research by Discovery Health shows that 'for members aged 20-29, approximately 7% of their income goes toward medical scheme contributions, whereas for older working adults approximately 4% or lower of their monthly income goes toward medical scheme contributions'. It estimates that 109 000 uncovered young professionals would take up medical scheme cover if there was an affordable option and where contributions amount to roughly 5% of their income. Its Smart plans, which target young professionals (mostly) with young families, remain the fastest-growing plans across its portfolio. Classic Smart grew members by 10% last year, while Essential Smart grew by 26%. Both plans ended 2023 with around 72 000 members, making them larger (by members) than all but four other Discovery medical aid plans (excluding the income-linked KeyCare Plus plan). ALSO READ: Higher medical aid premiums on the horizon following RAF's legal victory? Contributions DHMS contends that its contributions are 12.7% 'more affordable than the next seven largest open schemes across all plan categories in 2025'. On extensive day-to-day plans, its contributions are 8.2% lower and on limited day-to-day plans, they are 16.5% lower. It says it continues to 'provide exceptional claims cover for members'. In 2022, DHMS paid 96% of in-hospital claims versus 91% for all other open schemes. Detailed data for 2023 has not yet been released by the Council for Medical Schemes. Source: DHMS DHMS notes that utilisation rates have returned to pre-Covid 19 levels. It saw a 7.48% increase in net claims. Source: DHMS It says 'claiming patterns are influenced by a changing burden of disease, demographics and benefit design'. 'Based on an analysis of the Scheme's claims experience, cardiovascular remains the disease episode with the highest risk spend, accounting for the highest proportion of the Scheme's overall claims cost. 'While tumours have surpassed musculoskeletal claims (which have remained proportionally consistent from 2022 to 2024), increase in the former is partially driven by benefit availability.' This article was republished from Moneyweb. Read the original here.
Daily Maverick
09-06-2025
- Business
- Daily Maverick
After the Bell: Scamming is a big business — be alert and make sure you're safe
The world is awash with people trying to steal your assets. Even big-name investors have been duped. Be careful out there. I am sure that whatever money you have wasn't easy to get – you and your family worked really hard for it. But have you ever noticed how so many people are trying to steal it from you? There are some days when it seems that literally everyone is out to take it. So often, there is a news report of someone who has fleeced people of their money. The latest was a News 24 report about Mark Kretzschmar, who claimed he could make money for people and who was able to run away with about R30-million. Moneyweb has done important reporting about the company Kleuterzone and its founder, former singer Anthonie Bougas. He now appears to be in Thailand, but is not paying the money owed to investors. Like so many of these cases, he makes certain claims that always amount to the same thing: someone else is responsible, not him. If you have been paying attention to this sort of thing, you will know about Banxso, which was a scam from the start. There are so many ways our society enables this. For a start, regulators find it tough to take any action, or to do it early enough to stop people from losing their money. I have some sympathy for the Financial Sector Conduct Authority here. I mean, no one will complain about losing their money until they've lost it. And by that point, it is usually too late. This means that in some cases, a group of people are giving money to someone, all at the same time, and it's only when one of them realises it's gone that they lodge a complaint. There would have to be an investigation of some kind, and only after that can the FSCA say anything. But I have no time at all for the digital platforms that allow themselves to be used to market these thieves. For several months, there were videos on YouTube of SABC TV presenters supposedly talking about a new investment product. Elon Musk was another who was deep-faked. Now, YouTube e arns more than $30-billion in revenue every year. Is it too much to ask that it does some checking to see if it is taking money from a thief? And to have a proper complaints mechanism where a TV presenter who is being deep-faked can make sure her image is removed immediately? I do wonder how much revenue for YouTube is from simple scams, whether it be a lose-your-money-quick scheme, or that guy who clearly can't sleep at night because he's so worried about my belly fat. If this has happened to you, you shouldn't think it was because you were stupid. Recently, big-name investors, including Sanlam Investments and Old Mutual Alternative Investments, lost up to R700-million after being conned by a company called Enable Capital. The Public Investment Corporation lost another R100-million in the same scam. The person behind it, Reuben Oliphant, seems to have… you guessed it… disappeared. And sometimes, someone appears to have almost found a way to scam someone out of their money legally. Last week, the JSE publicly censured Iqbal Surve's AYO Technology Solutions and issued a suspended fine of R500,000. This was because AYO had withheld information from shareholders about its settlement with the PIC that involved it re-purchasing some of its shares. But it seems the people, sorry person, behind AYO will get away with it. Much of the money the PIC put into AYO through its investment was taken out in the form of dividends. Dividends that make no sense compared with what the company has actually produced. As a result, the money is gone. The PIC will never get it back and someone has clearly benefited. The real poison of this kind of thing is that it makes the scheme look almost legitimate. In a society where so few understand how markets, capital and investments work, it's easy to simply think people are rich because they were born rich – or because they stole their money from someone else. This kind of incident, where someone can literally lie to shareholders (thus possibly depriving them of money) and get away with it, will consolidate that view. Scamming is now big business. In Myanmar alone, there are thought to be around 150,000 people being held against their will in what amounts to prison camps, and forced to try to scam people online. Just think about that number for a moment. It is simply unbelievable how big this industry has become. To run prison camps for that many people requires capital. They wouldn't do it if they weren't making serious cash out of it. Can you imagine the nightmare of being a person who has been, you guessed it, scammed into going there, and finding themselves in one of these camps? I'm not qualified to tell you how to keep your money safe. But please. Please, please, please, make sure that you do. DM
The Citizen
04-06-2025
- Business
- The Citizen
KleuterZone kingpin Anthonie Bougas sequestrated
Court documents show he used large sums of investor money to bankroll personal indulgences – including gambling, international travel and luxury vehicles. Anthonie Bougas, founder and director of the now-defunct KleuterZone franchise group, was officially sequestrated by the Pretoria High Court on Tuesday (3 June). The court granted the final sequestration order following an application by Mathys Krog Attorneys, acting on behalf of the joint liquidators of KleuterZone Operations – Rikus Hartman and Susan Lapoorta. The liquidation of KleuterZone Operations was made final on Wednesday 14 May. Bougas, along with his parents, fled South Africa for Bangkok on 23 February amid the collapse of the nationwide nursery school franchise. He did not oppose the sequestration of his personal estate. ALSO READ: KleuterZone CEO provisionally sequestrated The beginning of the end Moneyweb began probing KleuterZone after being approached by concerned investors who claimed to have been promised exceptionally high returns – sometimes up to 72% – on what was portrayed as a fast-growing national chain of nursery schools. Despite repeated requests, Bougas declined to provide financial statements, and it soon became apparent that the schools did not generate the income to support the investment returns promised. Moneyweb also uncovered that share certificates were issued for companies that didn't exist or whose registration numbers didn't match. Shortly after Moneyweb began publishing its articles, the scheme began to unravel as investors failed to receive the dividends they had been promised. Evidence from ongoing liquidation proceedings points to an operation resembling a Ponzi scheme, where funds from new investors were used to pay existing ones. ALSO READ: KleuterZone's collapse: Parents of founder also facing sequestration Gambling habit Court documents submitted by the liquidators further reveal that Bougas used large sums of investor money to bankroll personal indulgences, including gambling, international travel and luxury vehicles. According to a report by Rapport, Bougas channelled nearly R80 million through a gambling account, although the total amount may still rise as further bank statements are obtained. The elaborate corporate structure of KleuterZone, which included numerous subsidiaries and trading entities, allowed Bougas – who was the sole director – to transfer money between the businesses freely, including into his own personal accounts. This setup complicated the financial oversight and masked the redirection of funds. ALSO READ: Another KleuterZone company in provisional liquidation More to come In addition to Bougas's sequestration, the Western Cape High Court provisionally granted the sequestration of the joint estate of his parents, Rensche and Anton Bougas, who are married in community of property. The application, brought by Hannes Muller and Madelein Kuilder – the provisional liquidators of KleuterZone (Pty) Ltd – alleges that the Bougas parents acted in concert with their son in attracting investor funds under false pretences. In an affidavit, the liquidators argue that Rensche Bougas played a pivotal role in marketing the KleuterZone franchise and was key to sustaining the illusion of a thriving and profitable business. Meanwhile, the liquidation process continues to unfold. So far, three companies linked to the KleuterZone group have been placed in final liquidation. Two more are expected to return to court, on 4 and 11 June respectively. The sequestration of the estate of Kobus Schoeman, KleuterZone's former CEO, is also due for court consideration later this month. This article was republished from Moneyweb. Read the original here.
The Citizen
22-05-2025
- Business
- The Citizen
Pressure on Sars to prevent tax increases in 2026
And reprioritised government spending must lead to 'positive outcomes'. All eyes are on Sars to make good on its promise to reduce the tax debt book, which currently sits at R400bn. Picture: Moneyweb The pressure is on the South African Revenue Service (Sars) to collect sufficient outstanding revenue to prevent additional tax increases of R20 billion in 2026. Finance Minister Enoch Godongwana said in his third budget for 2025 that he believes Sars will be able to raise an additional R35 billion that will be sufficient to close the current revenue gap. Kyle Mandy, a tax partner at PwC, says the R20 billion additional tax, which has not yet been specified, is probably the most contentious issue in the budget. There is now a lot of pressure on Sars to collect outstanding taxes on the back of the R7.5 billion over the medium-term additional investment from the National Treasury. Sars has indicated that it will be able to collect tax debts of between R20 billion and R50 billion per year. It was able to collect R95 billion in tax debt in 2024/25. ALSO READ: Sensible or underwhelming? Economists react to Godongwana's Budget 3.0 'There is clearly a reluctance on the part of National Treasury to pencil in revenue expectations from the investment in Sars until such time that Sars proves that they can deliver,' says Mandy. He explains that from a fiscal point of view, revenue is only accounted for when it lands in Sars's bank account. Currently, the tax debt book is around R400 billion, and all eyes are now on Sars to make good on its promise to reduce the debt book. Kabelo Moutloatse, tax accounting specialist at Latita Africa, welcomed the increased investment in Sars to ensure higher tax collections and compliance. 'That is something that we need to see more of to ensure that those who are operating outside of the system are brought in. There has been leakage in the past and that should be worked on.' ALSO READ: SA loses R30 billion in revenue due to illicit trade in cigarettes and liquor Growth-enhancing reforms Business Leadership SA (BLSA) says the focus on growth-enhancing structural reforms is encouraging, with the minister confirming the second phase of Operation Vulindlela's priority areas, which includes seeing through existing reforms in energy, water, logistics, and the visa regime, with new reform areas being local government, digital transformation, and addressing spatial inequalities. 'The R1 trillion allocation over three years on critical infrastructure is retained, which is important to support many of the above reforms and lift growth prospects.' ALSO READ: Godongwana cuts government spending to offset VAT shortfall Lower growth and inflation Budget 2.0 and Budget 3.0 made no inflationary adjustments for bracket creep or medical aid tax credits. In March, Treasury expected income of R19.5 billion from individual taxpayers, but this has now been revised downwards to R18 billion. Government has revised downwards the forecasts for economic growth and inflation, which will have a knock-on effect on revenue. 'So they are pencilling in lower-than-expected increases for salaries and wages,' says Mandy. He adds that removing the inflationary adjustment for the general fuel levy was not unexpected, given the withdrawal of the Vat rate increase of 0.5%. Moutloatse says this will certainly impact lower-income households. ALSO READ: Budget 3.0: First fuel levy increase in three years – Here's by how much Many businesses, particularly smaller businesses, will pass this increase on to consumer, reducing their already stretched disposable income. He adds that one of the key things in Godongwana's third take is the reprioritisation of spending, moving away from any tax increases. 'We need to see more accountability with programmes and when government spends money it should lead to positive outcomes.' This article was republished from Moneyweb. Read the original here.
