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South Africa to Remove Luxury Duty on Smartphones Under 2,500 Rand

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South Africa’s government has proposed removing the luxury excise duty on smartphones priced below 2,500 rand (approximately $136.37) starting from April 1, 2025. The move, announced in the National Treasury’s budget statement, aims to increase smartphone affordability for low-income households and promote digital inclusion across the country.

Currently, a 9% ad valorem excise duty is applied to smartphones, but this will only affect higher-priced devices once the proposal is implemented. This change is expected to significantly reduce the cost of entry-level smartphones, making them more accessible to a broader segment of the population.

Key Factors Behind the Proposal:

  • The proposal is part of South Africa’s efforts to encourage digital adoption, particularly among low-income groups.
  • By eliminating the duty for smartphones under 2,500 rand, the government aims to bridge the digital divide and enhance access to technology for underserved populations.
  • This initiative coincides with South Africa’s plan to phase out 2G and 3G networks by December 31, 2027, to make room for 4G LTE and 5G networks.

Concerns and Criticism:

Some critics expressed concerns that phasing out 2G and 3G networks might worsen the digital gap for low-income users, particularly those in rural areas who cannot afford the latest devices designed for faster networks. Communications Minister Solly Malatsi noted that the high cost of smartphones, partly due to the excise duties, has been a barrier to accessibility and that discussions with the Treasury were already underway to address this issue.

The move is expected to positively impact the country’s push for greater digital inclusion and accessibility in the coming years.

Brazilian Fintech Meliuz Adopts Bitcoin Reserve Strategy, Shares Surge

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Meliuz, a Brazilian fintech company, has adopted a bold new strategy allowing it to allocate part of its cash reserves into bitcoin, potentially making the cryptocurrency the main asset of its treasury in the future. This announcement has had an immediate impact on the company’s São Paulo-traded shares, which surged more than 25% on Thursday.

In a securities filing, Meliuz revealed that it aims to capture long-term returns from its bitcoin investments, drawing inspiration from prominent firms like U.S.-based MicroStrategy and Japan’s Metaplanet, both of which have significant bitcoin holdings. The company has committed to allocating up to 10% of its cash reserves into bitcoin, having already purchased 45.72 bitcoins for around $4.1 million.

Founded in 2011, Meliuz initially started as a cashback service for online purchases, later expanding into physical retail, app usage, and offering free digital accounts and credit cards. Although the company went public in late 2020, its stock had faced difficulties, mainly due to Brazil’s high interest rates. Despite this, Meliuz currently has over 240 million reais ($41.72 million) in net cash.

Chairman Israel Salmen explained that while allocating capital to fixed-income investments might seem prudent, Meliuz believes this strategy represents a significant opportunity cost. He emphasized that the bitcoin reserve strategy would not only strengthen the company’s financial position but also help it lead in a global financial transformation already underway.

Meliuz will further analyze the potential of adopting bitcoin as its main strategic asset. UBS BB analysts noted that while the approach is new for Brazilian companies, it aligns with a growing global trend seeking alternative stores of value. They added that, if successful, Meliuz’s strategy could attract crypto-focused investors, though it may also bring increased volatility to the company’s results.

Yellen Raises Concerns About China’s Cyber Activity in Meeting with Vice Premier He Lifeng

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U.S. Treasury Secretary Janet Yellen held a virtual meeting with Chinese Vice Premier He Lifeng on Monday, during which she raised serious concerns about “malicious cyber activity” attributed to Chinese state-sponsored actors, according to a Treasury Department statement. This follows the Treasury’s announcement last month of a significant breach involving Chinese hackers who compromised several of its computers after a security incident at its contractor, BeyondTrust, which provides cybersecurity services.

The breach is part of an ongoing series of cyberattacks on U.S. government agencies that have been blamed on Chinese state-sponsored hackers. Although a briefing on the breach has been requested by Congressional aides, no date has been set.

Despite the escalating cyber tensions, the Biden administration has made efforts to improve communication and manage the competitive dynamics between the U.S. and China, including the establishment of economic and financial working groups. During her discussion with He, Yellen expressed her grave concerns over the cyber activities and its negative impact on the bilateral relationship, describing the conversation as candid and constructive.

Additionally, the two officials reviewed economic developments in both countries and discussed progress in the working groups. Yellen reiterated her long-standing concerns regarding China’s non-market practices, policies, and industrial overcapacity, highlighting that these issues would continue to strain the U.S.-China economic relationship unless properly addressed.

During her visit to Beijing in April, Yellen similarly warned He about the need to manage industrial capacity to avoid worsening trade tensions. She also warned of the “significant consequences” Chinese companies would face if they supported Russia’s war against Ukraine.

With President-elect Donald Trump set to assume office on January 20, he has threatened to impose higher tariffs on Chinese imports, including a 60% tax, which would be a significant escalation from tariffs introduced during his first term.