Economic disruption from uneven currency trading in Nigeria and continued electricity shortages in South Africa are set to hold back overall growth across sub-Saharan Africa this year, a Reuters poll of economists found on Thursday.

Since commodity prices collapsed four years ago, the region has largely missed out on the global economic recovery, with growth failing to return to rates seen in previous years and set to remain subdued.

The survey, taken in the past week, shows Nigeria, Africa’s most populous country and largest economy, is expected to grow 2.4 percent this year and 2.8 percent next year. South Africa, the number two economy on the continent, will grow 1.3 percent this year and 1.7 percent in 2020.

The 2019 forecasts for the two countries, which together drive around half of the wider region’s growth, are both 0.1 percentage points lower compared to the last survey for Nigeria in January and March’s poll for South Africa.

“Tepid growth in South Africa is one reason why we expect that growth across Sub-Saharan Africa will remain disappointing in 2019,” said John Ashbourne, an economist at Capital Economics in London.

Creaking infrastructure at South Africa’s state power utility Eskom is taking longer to fix than economists previously thought. Rolling power cuts as it struggles with capacity shortages threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.

In Nigeria, multiple currency exchange rates designed to deal with dollar shortages following a slump in global oil prices in 2015 have undermined its economy.

Ashbourne said that keeping the naira artificially strong in 2015 prevented the economy from adjusting to lower oil prices.

“The foreign exchange system was improved in 2016, when the Bank partially devalued the official rate and launched a new, ‘Nafex’ rate, now used for 70-80 percent of transactions. But it remains complex and open to abuse,” he said.

South Africa’s economy expanded 0.8 percent last year while Nigeria’s economy grew 1.9 percent, its fastest pace since the recession two years earlier.

The economists surveyed expect South Africa’s key interest rate to remain at 6.75 percent until next year while a separate Reuters poll last month suggested Nigeria’s central bank will wait until May 2020 before cutting its main rate by 25 basis points to 13.75 percent.

Ghana is forecast to grow 6.2 percent, faster than January’s survey suggested. Some analysts expect the exporter of cocoa, gold and more recently oil to be the top performer this year.

Growth in East Africa’s biggest economy Kenya is seen slowing to 5.8 percent growth in 2019, compared to a government estimate of 6.1 percent for 2018. The World Bank is more cautious and has warned growth could slow to 5.7 percent due to dry weather patterns.

The International Monetary Fund last week cut its growth projection for sub-Saharan Africa this year to 3.5 percent from 3.8 percent in October. The World Bank is again more pessimistic, with a 2.8 percent forecast.

A separate survey this month showed yield-hungry investors will trade risky emerging market currencies cautiously against the dollar this year despite the Federal Reserve’s recent dovish stance, though there is still demand for them.

Standard Chartered Africa research head Razia Khan expects the Fed’s more dovish tilt to have a positive impact on sub-Saharan African economies in the months to June, allowing stronger domestic recoveries. However, she was cautious about the likelihood of new easing cycles.

 

- Reuters

An elephant has killed a suspected poacher and lions have eaten his remains, with a human skull and a pair of pants all that authorities have been able to recover.

The man and his accomplices entered South Africa's Kruger National Park in order to poach rhinos on April 2, according to South African National Parks.

The family of the man, who is believed to have been trampled to death, contacted rangers who arranged an aerial and foot search the following day and arrested his four accomplices.

However, due to failing light, they were unable to locate the man's body, and with "further information" provided by the suspected poachers, the search continued into Thursday.

"During this search … the remains of a body were discovered," South African National Parks said in a statement.

"Indications found at the scene suggested that a pride of lions had devoured the remains, leaving only a human skull and a pair of pants."

The Kruger National Park, one of Africa's largest game reserves, is renowned for its high density of wild animals, including lions, leopards, rhinos and elephants.

Park managing executive Glenn Phillips warned people against entering the reserve on foot, saying "it holds many dangers and this incident is evidence of that".

"It is very sad to see the daughters of the [deceased] mourning the loss of their father and, worse still, only being able to recover very little of his remains," he said in a statement.

It is not the first time a suspected poacher has fallen victim to their prey in the Kruger National Park.

Last year lions killed and devoured a man believed to have been poaching animals in the park, leaving behind only "his head and some remains".

Elephants in the reserve have also been known to react violently to the presence of humans.

In 2014, footage emerged of an elephant overturning a car, seriously injuring a woman when one of its tusks ripped open her thigh.

The elephant was later put down and was discovered to have been in musth, a condition that usually affects male elephants once a year when testosterone levels, aggression and sexual activity increase.

 

Credit: ABC News

In the early hours of Saturday, South Africa again avoided a massive blow: its government bonds were not downgraded to junk.

In a surprising move, Moody’s did not release any report – but just said that “ratings were not updated” for South Africa.

Friday was the scheduled day for an announcement on South Africa’s credit rating. The next date is in November – but Moody’s can change its ratings at any time.

 
 

Moody’s postpones it’s potential scheduled review on South Africa, similar to October 2018. This was a growing possibility in my view the past few weeks. It’s in the best interest for an agency to have as much information as possible.

 
48 people are talking about this
 
 

Moody's: Brief update on their website has South Africa listed under "Ratings that were not updated for issuers on the calendar for 29 March". That's it. Certainly their prerogative to issue no review, but a slightly more expansive statement and future date would be courteous.

 
32 people are talking about this
 

South Africa currently has a Baa3 rating, the last step before “junk”, with a stable outlook. Polls among economists showed they were split on whether Moody’s would change South Africa’s outlook to “negative” (from stable) – and some predicted it would go all the way to “junk”. A “junk” rating means the agency believes there's is a bigger chance that government won’t be able to pay back its creditors.

 

Gov. fails on promises, yet another Moody's reprieve. Sterling work from Treasury team under very difficult circumstances. Risks ahead.

 
See Hugo Pienaar's other Tweets
 

The two other big ratings agencies, Fitch Ratings and S&P Global, lowered South Africa's credit rating to "junk" in April 2017 after Pravin Gordhan was fired as minister of finance.  

If SA lost its investment rate grade from Moody’s as well, it would have cost the country its place in the most important group of government bonds. The Citigroup’s World Government Bond Index contains only bonds that are investment grade. 

All the many overseas investment funds that are only allowed to invest in investment grade bonds would have been forced to sell their South African government bonds. 

Bank of America previously estimated that South African bonds would have been sold off to the tune of $14 billion (R200 billion).

This would have lowered the value of our bonds, and make it much more expensive for government to borrow money to keep the country afloat. 

What are government bonds?

A bond is basically an IOU, with the borrower agreeing to repay an amount plus interest. If a bond issuer is seen as riskier, investors will demand higher interest rates. If South African bonds were rated as junk, government would have to pay higher interest rates. This means the state would have to pay billions more in interest, at the cost of investments in local roads, hospitals and services. 

Retaining our investment grade rating, which SA has held since 2001, should mean the following: 

1. The rand will get some respect

A sell-off of government bonds would have meant a massive outflow of money out of the country – putting pressure on the rand.

A weak rand affects everything, starting with fuel prices. Oil is South Africa’s biggest import. If the rand weakens, oil (which is priced in dollars) becomes basically immediately more expensive.

Imported electronics and machinery are pricier if the rand is weak. And South Africa’s maize and wheat prices are also linked to the global dollar prices.

The rand remained relatively stable following the announcement at R14.48/$.

2. Interest rates

A weak rand means higher inflation, as more expensive fuel and other imported products push prices higher.

Given that some of the pressure on the rand should ease, this means that inflation will be contained. And this gives the Reserve Bank some leeway to perhaps cut interest rates as a much-needed boost to a comatose South African economy.

3. Banks can breathe more easily

The credit ratings of Standard Bank, Absa, Nedbank and FirstRand are all tied up to the rating of South Africa, where they make most of their profit. S&P downgraded seven local banks directly after it cut South Africa to junk. This means that banks have to offer higher interest rates when they borrow money. 

By law, banks are also forced to hold government bonds, which would have hurt them in case of a bond sell-off.

4. Further income tax and VAT hikes may be limited

If government has to pay more in interest on its debt, it will need more money from you to cover its basic expenses. This can only mean one thing: higher taxes.

 

Source: Business Insider SA

 

We survive yet another announcement.

Guess it's back to Stage 4 loadshedding on Monday ??‍♂️.

 
See Johann Biermann ??'s other Tweets
 

Retailer Steinhoff will provide the necessary documents to South Africa's capital markets watchdog to enable it to investigate alleged market transgressions, the Financial Sector Conduct Authority (FSCA) said on Thursday.

Steinhoff admitted "accounting irregularities" in December 2017, shocking investors who had backed its reinvention from a small South African business to a multinational retailer at the vanguard of the European discount furniture retail industry.

Findings from an independent report by PwC said earlier this month that Steinhoff had overstated profits over several years in a $7.4 billion accounting fraud involving a small group of top executives and outsiders.

The FSCA said it had met with representatives of Steinhoff who agreed to provide them with all relevant documents, without waiving confidentiality agreements from the PwC report, which Steinhoff has repeatedly refused to share in full with regulators.

The FSCA added that Steinhoff had confirmed the disclosure will enable it to act against all persons implicated in the transgressions.

Steinhoff said it could not comment on the FSCA's investigations or beyond what was released in the PwC report.

Former Steinhoff Chief Executive Markus Jooste and seven others were named by the new CEO as being involved in a 6.5 billion euro ($7.4 billion) accounting fraud, during a session in parliament.

News of the irregularities in 2017 wiped about 85 percent off its market value and threw the company into a liquidity crisis.

 

 
The rand closed at R14.38 on Wednesday.
Here's how the day ended: 
USDZAR 14.3794
EURUSD 1.1357
EURZAR 16.3225
GBPUSD 1.3195
GBPZAR 18.9480
AUDZAR 10.1870
CADZAR 10.7630
CNYZAR 2.1462Z
ARJPY 7.7422
CHFZAR 14.3974
R186 8.75%
US 10 Year 2.59%
JSE -1.06%
FTSE -0.15%
S&P 500 -0.25%
  15:57
US stocks slip before fed announcement
US equities slipped Wednesday as cautious investors awaited the Federal Reserve policy decision and further news on U.S.-China trade talks.
Ten-year Treasury yields slipped.
The S&P 500 Index opened lower as FedEx tumbled after cutting its annual profit forecast. The dollar ticked higher after three days of losses, while two-year Treasury yields remained below the top of the Fed’s policy target range amid expectations of a dovish tone from the central bank. Apart from a hold on rate increases, markets will watch for any word on plans to end the Fed’s current bond-portfolio run-down.
“All eyes will be on the dot plot this afternoon, as most FOMC participants have signaled they are on board with the Fed’s new ‘patient’ guidance and those who have talked about it in terms of rates have indicated they expect no hikes or one hike this year,” Chris Low, chief economist at FTN Financial, wrote in a note to clients.
“The Fed is likely to reveal the end date for balance sheet runoff today, but may not yet be quite ready to reveal the disposition of maturing assets once runoff ends.”In Europe, a series of negative corporate news stories dragged down the Stoxx Europe 600 Index. Germany’s DAX Index led the retreat as BMW warned earnings would fall and chemical maker Bayer headed for the biggest drop in 15 years after losing the first phase of a U.S. trial over claims its weed killer caused cancer. In Asia, Japanese shares finished higher, while most other markets dipped.
The pound fell as UK Prime Minister Theresa May sought to extend the Brexit deadline to June 30, while the opposition called for the public to have the final say over the country’s EU exit. The euro held steady after German producer prices missed estimates. European sovereign bonds were mixed.
Elsewhere, emerging-market currencies and shares were steady. West Texas crude slid before the release of the weekly U.S. oil inventory report. - Bloomberg
  12:08
South Africa CPI came out at 4.1% YoY and 0.8% MoM which was in line with expectations.
TreasuryONE said this will likely support the decision that the SA Reserve Bank will keep rates on hold next week. 
The rand is currently trading at R14.51 to the greenback.
  09:26
Andre Botha, Senior Dealer at TreasuryONE said in a morning note to clients that the rand was in for a rough ride, particularly in terms of the impact of load shedding.
By 09:26, the rand was trading at R14.48 to the greenback.
“As we stated yesterday the rand is facing some tough headwinds which could lead to an interesting time for the rand in the short term," he said.
Botha said the rand lost about 15 cents on the back of Public Enterprises Minister Pravin Gordhan's briefing on Eskom yesterday and the news, revealed by Fin24, that the power utility and government was planning for Stage 5 and Stage 6.
"The rand closed around the R14.50 level after looking to push stronger in morning trade. The move lower was due to some positive sentiment in the market as we expect the US Fed to be dovish in tonight's press statement.
"Further headwinds that started to blow yesterday was the bump that the US-China trade talks suffered from China looking at not sticking to their commitment to buying several Boeing 737 aircraft. This has caused a little uncertainty in the market with the leaders of the two countries only meeting in April.
"Coupled with the uncertainty on whether the UK will get the desired extension from their March 29 deadline of Brexit has thrown more uncertainty into the market melting pot.
"The latest development in the load-shedding conundrum will make Moody's rating review at the end of the month a bigger event than we expected a couple of weeks ago.
"The headwinds faced by the rand will surely see the rand gain less ground than its EM peers should the Fed be dovish tonight, but in the same breath weaken more if the Fed surprises markets. Locally, we have CPI data out this morning but the main event will be the Fed later on this evening.”
Peregrine Treasury Solutions's Bianca Botes also said that the rand remained on the back foot as SA's electricity woes weighed heavily on the local unit.
"Local CPI data is expected to show an uptick in inflation as a weaker ZAR and increasing fuel prices take their toll. All eyes will be on the Fed later today with markets expecting the same dovish and patient tone with an unchanged federal funds rate.
"Any deviation will lead to some volatility in the currency markets. The rand opened at R14.50/$ today and the expected intraday range is R14.44 to R14.58," she said.
  08:06
Asian stocks mixed before fed
Asian stocks traded mixed early Wednesday as investors held back from making big changes prior to the Federal Reserve’s policy decision.
Treasuries and the dollar steadied.
Shares in Japan, South Korea and Australia edged lower. A rally in US stocks earlier sputtered out after a report that US and Chinese negotiators remain at odds on aspects of their current trade talks soured sentiment.
A rally in oil stalled. Money managers will be looking for clues on future policy from the Fed Wednesday after its dovish shift in recent months helped reboot global equities on bets that interest-rate hikes will be put on hold to support the economy.
News that the Trump administration is concerned that China is pushing back against US demands threatens to curb hopes of a deal.
Elsewhere, a senior European Union official said the bloc is likely to tell Theresa May that she must decide by mid-April whether to extend Brexit until 2020 or risk leaving in three months without a deal.
The euro edged higher as data showed German investor confidence rose for a fifth straight month.
  08:05
Palladium tops $1 600
Palladium topped $1 600 an ounce for the first time, and there’s little sign of the rally slowing as global supply tightens.
The price of the metal - mainly used in autocatalysts in gasoline vehicles - has almost doubled from a recent low in August. Demand has remained robust as manufacturers scramble to get hold of palladium to meet more stringent emissions controls, particularly in China, even as auto sales in key markets slow.
 
 
 
Credit: TreasureOne

Travel & Tourism in South Africa contributed 1.5 million jobs and ZAR425.8 billion to the economy in 2018, making it the largest tourism economy in Africa, according to the World Travel & Tourism Council’s (WTTC) annual review of the economic impact and social importance of the sector released today.

For over 25 years, WTTC, which represents the global private sector of Travel & Tourism, has compared the Travel & Tourism sector across 185 countries. The 2018 research shows that the South Africa Travel & Tourism sector:

  • Contributed ZAR425.8 billion to the country’s economy – the largest of any country in Africa. This represents 8.6% of all economic activity in South Africa
  • Generated 1.5 million jobs, or 9.2% of total employment
  • Was primarily driven by leisure travelers: 64% of the travel economy was generated by leisure visitors and 36% from business travelers
  • Is roughly balanced between international and domestic travel: 44% of the tourism spend came from international travelers and 56% from domestic travel

Commenting on the numbers, Gloria Guevara, WTTC President & CEO said: “Travel & Tourism contributes more to the South Africa economy than in any other African country. In total our sector contributes ZAR425.8 billion and 1.5 million jobs which makes it a formidable part of the economy.

“South Africa has long grasped the potential of Travel & Tourism to drive economic growth, create jobs and promote social development and I would like to acknowledge the leadership of Minister of Tourism, H.E. Derek Hanekom. That is why we welcome President Ramaphosa’s ambition to double the number of people directly employed in T&T in South Africa. 

“Looking to the future, I believe that Travel & Tourism is South Africa’s greatest resource and the country’s strategy for expansion which priorities regional integration, environment sustainability and putting the community at the heart of decisions will make for a successful combination.”

 

Credit: TravelDailyNews

Corruption in South Africa isn’t simply a matter of bad morals or weak law enforcement. It’s embedded in processes of class formation – specifically, the formation of new black elites. This means corruption is primarily a matter of politics and the shape of the economy.

In a recently published paper, I attempt to shed fresh light on the unconvincing narratives that have been presented in the media, NGOs and academic circles about the events of the past 10 years.

These narratives generally depict events as a struggle between two opposing forces. On the one side are a network of politicians, officials, brokers and businessmen centred on former President Jacob Zuma and the Gupta family. All are bent on looting, state capture and self-enrichment. On the other are a band of righteous politicians and citizens. This group is seen as drawing together the “old” ANC, activists, “good” business and citizens in general. They are intent on rebuilding institutions and good governance, the rule of law, international credibility and fostering growth and development.

I argue that a much deeper set of social forces underlies and shapes the struggles within the governing party, the African National Congress (ANC), and the society more broadly. These political struggles are inseparable from struggles over the shape of the economy.

Limited access

The primary process to change the economy has been the drive to accelerate the emergence of new black elites. But institutional interventions, such as black economic empowerment, have been insufficient.

Already, during the Thabo Mbeki period as well as the presidency of Nelson Mandela, an alternative informal political economic system was emerging at national, provincial and local levels. Through this, networks of state officials, ambitious entrepreneurs as well as small time operators, were rigging tenders or engaging in other kinds of fraud so as to sustain or establish businesses, or simply to finance self-enrichment.

Because of a number of factors there was little alternative for channelling the aspirations and burning sense of injustice of black elites and would be elites in post-apartheid South Africa. These factors include the property clause in the Constitution, the conservative strategies adopted by the ANC government and the fact that large corporations and white owned businesses dominated the economy.

This means that opportunities are few, demand is high and competition is fierce. In this context, the state is where people who are locked out are most likely to gain some access.

This links to the issue of violence. The emergence of new elite classes is often a ferociously contested, ugly and violent affair. South Africa is no different from many other post-colonial countries – or indeed the histories of the Euro-American elites that currently dominate the globe.

In South Africa this violence takes the form of burning down homes and state facilities, intimidation, assault, the deployment of the criminal-justice system to protect some and target others, and, increasingly, assassination.

I argue that this set of practices constitutes an informal political economic system. By a system I don’t mean a structure which is centrally coordinated or planned. What I’m referring to is a pervasive and decentralised set of interlocking networks that reinforce and compete with one another in mutually understood ways, and include the use of violence as a strategic resource.

Former South African president Jacob Zuma in court on corruption charges. EPA-EFE/Rogan Ward / Pool

This system preceded Zuma’s presidency, and extended far beyond the Zuma-Gupta network. The recent revelations about corruption at the Zondo commission into state capture, VBS mutual bank or in the book, How to steal a city by Crispian Olver, make this abundantly clear.

It should also be abundantly clear that the informal political-economic system necessarily entangles President Cyril Ramaphosa’s core network of institution builders.

Ramaphosa’s challenge

Ramaphosa’s key challenge is to build a stable coalition within the ANC so as to embark on his project of institution building. His trajectory, and the future shape of corruption in South Africa, will be determined by the character of the coalition he can forge – or that will be forced on him – among party barons within the ANC.

For the purpose of building institutions and attracting investment, it will be necessary to establish as stable a coalition as possible. This means it will have to be a broad coalition. One thing is sure: the coalition will include corrupt figures. It already does. The informal system of patronage politics will remain pervasive.

Even so, Ramaphosa’s power is precarious in the ANC. The odds are stacked against success in establishing stability. For the medium-term the trajectory of politics is likely to be characterised by multiple contestations over material opportunities, political power and symbolic representation. This will give rise to an increasingly volatile, unstable and violent political space.

To return, then, to the prevailing narrative and its misreading of the politics of corruption.

Deep structural issues

The problem with the narrative is that it assumes it’s possible simply to remove some “rotten apples”“, and it sets standards Ramaphosa cannot possibly match.

Perhaps, though, it is a useful fiction for the mobilisation of civil society, journalists and judges, which at the very least may contribute to containing corruption?

There is some validity in this. Yet it fails to direct attention to the deep structural issues which give rise to corruption as an aspect of class formation.

The only long-term and stabilising solution would be to draw into the formal system some of the purposes of the informal system. This would require a much more fundamental redistribution of assets and wealth, which could be deployed in the large-scale formation of a new black business class, primarily located in manufacturing and agriculture, as well as to fixing the education crisis. The result would be the formation of professional, scientific and technical middle classes.

This kind of solution will not emerge from the Ramaphosa administration, which is much more fixed on reproducing the policies of the Mbeki era. The problem is that these were what created the opportunity for the rise of Zuma in the first place.The Conversation

 

Karl von Holdt, Senior Researcher, Society Work and Politics Institute, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Suburbs across Johannesburg, South Africa’s economic hub, were hit by widespread power outages on Friday that electricity providers were unable to explain.
 
“Technicians are on site to determine the cause of the outage,” Khulu Phasiwe, a spokesman for state-owned power utility Eskom Holdings SOC Ltd., said via Twitter.
 
There’s no estimated time for the restoration of electricity at this stage, he said.
 
Eskom has not implemented rolling blackouts in the city, Andrew Etzinger, Eskom’s acting head of generation, said via a mobile phone text message. A spokesman for Johannesburg’s City Power wasn’t immediately able to comment.
 
Eskom said earlier on Friday that there was a risk of blackouts because the power system “remained tight and vulnerable” and the power could be cut at short notice if there was a shift in plant performance.
 
“This could include a significant loss in generating plant due to unplanned technical breakdowns,” Eskom said in the statement.
 

South Africa’s central bank says rising fuel and electricity prices posed a domestic risk to the inflation outlook and impact on its 2019 growth.

The apex bank governor, Lesetja Kganyago, gave the remarks on Wednesday after the latest fourth-quarter data showed an annualised growth of 0.8 per cent.

Besides, Kganyago said the impact of the volatile Rand currency and tightening global financial conditions were also being monitored for possible inflationary impacts.

The governor, however, maintained that he expected the economy to grow by 1.7 per cent this year and two per cent in 2020.

A total of 40 South Africans workers were killed in accidents in gold mines last year – half of the total 81 lives lost in mines across the country, according to statistics released by the department of mineral resources on Friday.
 
However, there are positive signs of improved mine safety.
 
By this time last year, 14 mine workers had died at work. There have been five fatalities so far this year.
 
Platinum mines were still the second-largest contributor to fatal accidents, with 12 deaths, but this was at least less than 2017’s toll of 29 lives lost.
 
The company with the most to answer for is Sibanye Stillwater, which saw two mining disasters at its operations last year.
 
A disaster is defined as an incident where five people are killed at once.
 
In May, a fall of ground incident led to the death of seven people in the company’s Driefontein gold mine. In June, five mine workers were killed in a “heat-related” accident at the adjacent Kloof gold mine.
 
The Palabora Mining Company, South Africa’s only copper miner, also had a disaster when six workers were killed in an explosion in July.
 
Other accidents in mines leading to injuries but not deaths decreased last year by 12% to 2 350.
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