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.

Fly Modern Ark and Cerberus Capital Management – a consortium of local and international investors – have made an unsolicited loan offer to SAA to the tune of R21 billion in return for a 51% stake in the bankrupt airline.
 
In September, media reported that SAA would need R21 billion between then and 2021, when the airline is expected to return to profitability.
 
In his mid-term budget speech in October, Finance Minister Tito Mboweni had announced a R5 billion bailout for SAA.
 
Last month, SAA’s acting chief financial officer (CFO), Deon Fredericks, told Parliament that the airline would need a further R3.5 billion between then and end-March 2019.
 
On Saturday SAA spokesperson Tlali Tlali said lenders had agreed to advance a facility that would see the national carrier through to March next year.
 
In an email sent last week by Fly Modern Ark’s co-founder, Theunis Crous, to various stakeholders – including SAA chief executive Vuyani Jarana and Public Enterprises Minister Pravin Gordhan – Crous confirms that talks regarding the funding were held between his team and airline officials.
 
“As indicated, our company – in partnership with local and international financiers – has engaged with Vuyani Jarana, [former interim CFO] Robert Head and [SAA treasury boss] Lucky Ncobela with regard to funding SAA in the short, medium and long term, which included the potential equity transaction related thereto.”
 
The department of public enterprises has said that SAA needs an equity partner, but has not revealed the size of the stake that it is willing to sell.
 
Crous’ email reads further: “The above discussions culminated in a teleconference with ourselves, our international partners ... These discussions were constructive and fruitful, and we were to engage after the minister of finance’s mid-term budget vote in October 2018.”
 
However, the email shows that following Head’s departure from SAA, the meeting did not happen.
 
Added Crous: “We are firmly of the view that we, as a consortium, would add intrinsic value to the turnaround strategy of SAA over and above the funding requirements.”
 
Gordhan acknowledged Crous’ correspondence via an email written by a person named Selatswa Masenya: “On behalf of Mr Pravin Gordhan ... I hereby acknowledge receipt of your correspondence ... the contents thereof have been noted and will be brought to the minister’s attention at the earliest opportunity.”
 
Crous told Press last week that SAA needed an equity partner.
 
“We are offering them R21 billion as a loan and we are prepared to take 51% and then plough in more money to recapitalise the business. SAA initially expressed an interest in the idea but later went quiet. Cerberus knows how to turn around companies.”
 
Tlali confirmed that a meeting with Fly Modern Ark had taken place in May at the airline’s head office in Kempton Park.
 
“Fly Modern Ark wanted an opportunity to present their capability, which they suggested could be beneficial to SAA’s turnaround strategy, including addressing our liquidity challenges. The discussion with Fly Modern Ark did not include any discussion regarding a strategic equity partner.”
 
He said the troubled airline was not involved in any bid to to find an equity party, adding that if that process did happen, it would be led by the government.
 
Tlali stressed that the discussions with Fly Modern Ark centred on funding, not the acquisition of a stake by the company. He denied that a teleconference took place.
 
Adrian Lackay, spokesperson for the public enterprises ministry, said government was currently not involved in talks to acquire potential partners.
 
“Acquiring an equity partner for SAA would require a significant capital injection from government upfront. For a commitment of this nature to take effect, it is essential that the company is first stabilised operationally in order for government as the shareholder to realise optimal value from a strategic equity partnership.”
 
The ministry, Lackay said, had received various unsolicited bids from companies wanting to acquire a stake in the airline.
 
“In terms of the Public Finance Management Act and the Constitution, such bids cannot arbitrarily be considered, entered into or accepted. It would have to follow due process.”
 
Lackay said that SAA, with government’s support, was working to raise sufficient funding to meet its immediate and medium-term liquidity requirements
 
 
Source: City Express
South Africa’s Competition Commission said on Thursday it had charged retailer Shoprite and its subsidiary Computicket with anti-competitive behaviour, and recommended a fine.
 
The commission said Shoprite and the event ticket seller had signed exclusive agreements that gave Computicket the ability to discriminate between large and small customers on prices.
 
The commission said the discrimination had forced third parties to engage with Computicket, excluding its competitors.
 
“The Commission has asked the Tribunal to impose an administrative penalty of 10 per cent of Computicket and Shoprite Checkers annual turnover,” the commission said in a statement in Johannesburg.
 
Shoprite was not immediately available to comment.
 
As a result, shares in the country’s biggest supermarket chain fell more than 4 per cent after the announcement, but had recovered to 183 rand, a decline of 1.84 per cent in early trading.
 
The case marks the second time the commission has referred Computicket to the Competition Tribunal, with a decision on similar charges.
 
This is the first time that Shoprite has been added as a respondent to the charges.
 
 
Source: PmNews
Several South African liquor outlets are apparently running out of Castle Lager beer, as a shortage of bottles affected production.
 
Refilwe Masemola, South African Breweries director of external communications, said a shortage of reusable bottles has slowed the production process. There have been delays in returning these bottles to SAB, Masemola said, without giving more details.
 
“Our production teams are [however] hard at work to ensure that those outlets that may be affected are well stocked over the coming days,” Masemola told Business Insider South Africa. 
 
“We are in fact ahead of our production schedule, which should bring some comfort to our customers.” 
 
Castle Lager is one of South Africa’s most consumed beers and was for the first time named the 25th most valuable beer brand in the world in 2018. 
 
South Africa is, on average, one of the world’s highest liquor consumers, and consumption tends to increase considerably over the festive season.
 
 
Source: Business Insider

Thousands of Cadbury chocolates have been sold to the public despite being past their best.

The chocolate, some of it months beyond its best-before date, was sold at a major KwaZulu-Natal South Coast wholesaler, which supplies spaza shops and trading stores, including in rural Eastern Cape areas.

And tens of thousands of rands worth of short-dated chocolate was dispatched to wholesaler clients hidden among newer stock.

These claims were made in the labour court in Durban last week.

 

It was alleged that ambitious sales targets led to massive overstocking in wholesalers.

Most resulted in multimillion-rand returns across KwaZulu-Natal of popular Cadbury brands, including Dairy Milk slabs and Lunch Bars.

A food health expert emphasised there was no risk in eating chocolate past its best-by date.

But a legal expert questioned the ethics of selling such products without clearly informing consumers.

The matter came to light when a sacked sales representative, Hans van Tonder, took his former employer, Diplomat Distributors, to court, claiming he had been victimised and that his dismissal was “automatically unfair”.

Mondelez SA, owners of Cadbury, contracts Diplomat, a logistics company, to distribute its products to wholesalers.

Diplomat fired Van Tonder in April 2016 for gross dereliction of duty after a company hearing found an instance where he failed to timeously report that chocolate at a Port Shepstone client was nearing its best-by date.

But Van Tonder produced emails that show Diplomat had been told by the client that it had been receiving stock with “mixed expiry dates”, which he argued was outside his control.

“It is a major concern as the inner stock on the pallet is short-dated,” wrote a buyer for the wholesaler, who asked what would be done to eradicate the problem.

Van Tonder, who had represented Cadbury products for 16 years, produced a dossier in court, including national stock return figures, emails and other documents which allegedly pointed to widespread problems with overstocking and short-dated stock.

Van Tonder was fired over a R21 835 loss to Diplomat at the Port Shepstone wholesaler.

This was the value of chocolate that had to be removed from the wholesaler in early 2016 after it had past its best-by dates, as well as money spent discounting and promoting the chocolate in a late bid to sell it.

A witness for Van Tonder told the court the R21 835 was “like chalk and cheese” compared with returns of hundreds of thousands of rands of Cadbury chocolate from many other wholesalers across the country.

Shadrach Chinniah, who resigned as a Diplomat rep in October 2016, said: “I thought it was absolutely ludicrous he was dismissed for R21 000 and my store had [old stock worth] R310 000 … why didn’t they dismiss me?”

He told the court a Diplomat manager “cleared” the R310 000 in minibars from a major Durban wholesaler “after it expired”.

The court heard the minibars failed in the marketplace nationally and the line was discontinued.

Chinniah alleged there were:

. Cover-ups by management;

. A lack of support for markdowns to move short-dated stock; and that

. Short-dated stock was hidden among newer stock before delivery, making it hard for merchandisers and reps to keep tabs on best-by dates.

Placed before the court were photographs that were said to show pallet loads of chocolates, all of which were beyond their best-by dates, “being sold on special” at the same Port Shepstone wholesaler, months after Van Tonder’s dismissal.

The pictures, apparently taken in June, show marked-down PS chocolates that had expired on May 25 2016 and Lunch Bars that had expired on April 25 2016.

However, these claims were not examined.

Early on the second day of the hearing, Bongani Khanyile, attorney for Diplomat, applied for the matter to be sent to the Commission for Conciliation, Mediation and Arbitration (CCMA).

He argued Van Tonder was seeking relief for an “automatically unfair” dismissal but had not made a case for this.

Judge Benita Whitcher agreed it was an “ordinary unfair dismissal case” rather than one that involved arbitrary discrimination and ruled her court would not sit on the matter.

An emotional Van Tonder stormed out of the courtroom.

“Three years of this,” he shouted. “They have been lying. I am going to go outside and break down.”

Whitcher later gave a written order directing the CCMA to expedite the matter.

No order was made for costs.

Yinon Ben Anat, chief executive of Diplomat SA said: “Diplomat’s policy is clear in that we do not purchase or sell expired stock [beyond its best-by date].”

He did not comment on claims of overstocking and declined to give details on Diplomat’s contractual relationship with Mondalez.

City Press sent Mondalez a list of questions on overstocking and its policy on the sale of best-by goods. The company declined to comment, saying the matter was before the courts.

“Mondelez SA abides by local legislation and we are focused on bringing the highest-quality products to our consumers,” it said.

 

Source: CityExpress

There are still opportunities for South Africans to start businesses despite the recession, says  Siphethe Dumeko, chief financial officer at start-up lender Business Partners.
 
South Africa's economy shrank by 2,2% in the first quarter, and 0,7% in the second quarter of 2018, landing the country in a recession.
 
Dumeko said that entrepreneurs starting companies will, however, face an uphill battle.
 
“Procuring capital to start a new venture is predicted to become increasingly difficult, as the majority of funding institutions are expected to adopt an increasingly risk-averse stance,” Dumeko said.
 
Still, Dumeko believes three sectors could prove recession-proof for entrepreneurs. 
 
Security:
“In spite of the continued underperformance of the country’s economy in recent years, private security has become an R45 billion industry with a growth rate of 15 percent per annum,” Dumeko said. He said this is because, during a time of economic recession and uncertainty, individuals tend to be more risk-averse.
 
Death-care services:
Dumeko said, as morbid as it might sound, that businesses offering services related to death, including funerals, cremation, burial, and memorials, are usually some of the most recession-proof operations. “Deathcare services usually have a steady stream of business, regardless of the economic climate,” he said. South Africa’s funeral industry is estimated to be valued between R7.5 billion and R10 billion.
 
Education:
Despite economic pressures, the underperforming public education sector has fuelled demand for alternatives, Dumeko said. It is also reported, he said, that South Africa is experiencing skills shortages in almost all of its sectors, emphasising the need service providers that offer more effective, affordable and accessible adult education. “Businesses that offer accredited online training platforms have especially seen increasing interest in South Africa, as well as on the rest of the African continent.”
Although South Africa’s poaching levels fell slightly 1,028 rhino were poached in 2107. We lose up to three rhino a day to poaching; if this rate continues the species will be extinct by 2025. (Jay Caboz)
Reopening the trade on rhinoceros and tiger parts is looking more and more like a betrayal across two continents.
China has defended its move to allow such trade for the first time in 25 years, but conservationists are appalled.
According to a South African wildlife photographer and investigator, the fix is in-between China and South Africa's Wildlife Department - the professionals who are supposed to be protecting the endangered animals.
 
China has quickly found itself on the defensive after copping a flurry of global hate mail over its remarkable decision to betray a long-standing ban on the rhinoceros horn and tiger bone trade.
The state Council - the cabinet of the Chinese government and the power base of Premier Li Keqiang - made public a decision to permit the controlled sale of rhino and tiger products, tossing out a 25-year ban and seemingly walking back on China's recent commitments to wildlife protection.
 
Only last year China finally banned the trade in ivory, extending a much-needed lifeline to endangered species.
 
It seemed like a landmark moment after years of being kicked about for running amok with animal welfare. Here was an example of China adopting a path of engagement on universal values through multinational consensus.
 
But on Monday, the legislative body quietly announced that limited trade in body parts obtained from "farmed rhino and tigers" would be OK to use for scientific, medical, and cultural requirements, according to Agence France Presse.
 
The Council announced:
 
"Rhino, tigers and their related products used in scientific research, including collecting genetic resource materials, will be reported to and approved by authorities. Specimens of skin and other tissues and organs of rhino and tigers can only be used for public exhibitions.
 
Rhino horns and tiger bones used in medical research or in healing can only be obtained from farmed rhino and tigers, not including those raised in zoos. Powdered forms of rhino horn and bones from dead tigers can only be used in qualified hospitals by qualified doctors recognised by the State Administration of Traditional Chinese Medicine."
 
Needless to say this is bad news if you are a rhino or a tiger.
 
A few years back, the price for rhino horn peaked at around $65,000 (about R950,000) per kilogram. That makes it more valuable than gold and many times more valuable than elephant ivory.
 
Opening trade and creating a demand will most likely place pressure on supply, risking sourcing moving beyond farmed animals to the remaining endangered populations.
 
While the council did not specify what those medical, cultural or scientific requirements might be, it is widely understood the high restorative value Chinese-medicine practitioners place in the powdered or condensed forms of exotic animal parts. The rhino horn and tiger parts have obvious connections to virility and strength and have been used without Western scientific basis on ailments from back pain to arthritis.
 
The horn is made of keratin, like human hair and fingernails, but has been associated with a salve for fever, a miracle cancer compound and a very costly and roundly ineffective hangover cure.
 
Of course, what drives its ongoing value and desirability is its potency as a status symbol.
 
The foreign ministry spokesperson Lu Kang said on Tuesday that China's 1993 ban on rhino horn and tiger bone products did not take into account the "reasonable needs of reality," adding that China has improved its "law enforcement mechanism."
 
Those comments have been edited out of Kang's.
 
Unsurprisingly, animal advocates have been stupefied by the decision to open trade up for scientific research, education, and medical grounds.
 
"The resumption of a legal market for these products is an enormous setback to efforts to protect tigers and rhinos in the wild," Margaret Kinnaird, of the World Wildlife Fund (WWF), said in a statement on Monday.
 
And Iris Ho, a senior programme specialist at the International Humane Society said the Chinese government "has signed a death warrant" for imperilled rhino and tigers.
 
"This is a devastating blow to our ongoing work to save species from cruel exploitation and extinction, and we implore the Chinese government to reconsider."
 
Brown envelopes?
But perhaps the most deflating critique came from the South African writer, investigative journalist, and photographer Don Pinnock, who  connected the timing of China's lifting of the ban with a desire in South Africa's Department of Environmental Affairs to eke out some wiggle room for itself on wildlife trade.
 
"Could it be synchronicity or careful planning that this week saw China announce that it would legalise domestic trade in antique tiger bone and rhino horn - reversing a 25-year-old ban?" he wrote in an article published by Daily Maverick.
 
By opening to the trade on bone and horn products from captive-bred animals, Pinnock reckons the very officials in place to protect animals at the source, are eyeing potential profits out of China.
 
"The department's approach is what it calls "demand management.' It sounds smart, but it's nuts."
 
While there are a seeming handful of rhino left in the wild, South Africa and other African governments have encouraged the private farming of animals like the rhino and tiger.
 
The World Wildlife Fund says there are fewer than 4,000 tigers living in the wild, but there are some 6,000 captive tigers, farmed in about 200 government-sanctioned locations across China.
 
"Selling legal horn will signal that it's ethically okay to buy it, boosting sales. The stocks of the few rhino farmers and sale of state stockpiles would soon be overwhelmed and poaching of wild rhinos - already shockingly high - would rise."
 
The only sensible approach to this problem is to reduce demand in every way possible.
 
"Without detailing how it intends to do so, the department told South Africa's parliament it would instead attempt to manipulate Asian consumer behaviour to choose legal horn over poached horn. Plans for this mammoth PR task were not in evidence, but maybe the department knew China planned to legalise bone and horn sales - we also sell China lion bones," Pinnock added.
 
What appears to be happening at the other end of China's trade link, is the South African wildlife department is angling to increase the sale of rhino horn with one hand while coming down on poaching with the other - eliminate illegal trade, but at the same time, stimulate a parallel legal market.
 
In simple terms, stop the bad guys so the good guys can make a profit.
 
 
Source: Daily Maverick 
 
JOHANNESBURG - President Cyril Ramaphosa says the money pledged at the Investment Conference will translate directly to more jobs in the sectors that contributed.
 
President Cyril Ramaphosa declared the conference an overwhelming success that will yield thousands of jobs for the people of South Africa.
 
At the end of the conference on Friday, Ramaphosa announced a combined amount of R290 billion in investments In South Africa.
 
Over 1,000 local and international investors attended the conference at the Sandton Convention Centre.
 
Anglo American, the Brics Development Bank and automotive traders were the big contributors, investing R71 billion, R29 billion and R40 billion, respectively. Vodacom announced R50 billion in investment.
 
President Ramaphosa says prominent among these announcements are the themes of beneficiation, innovation and entrepreneurship.
 
“The number of new jobs and people who will be employed is going to be phenomenal and unprecedented in the history of our country.”
 
He says the country has battled with bringing in investment to generate growth.
 
 
Source: News24
Naspers is planning to increase its stake in Indian online food-delivery business Swiggy as the startup plots its third fund-raising round of the year, according to people familiar with the matter.
 
Africa’s largest company by market value has indicated that it intends to support a financing that could raise more than $600 million, Swiggy’s biggest to date, according to the people. There’s also an opportunity to buy stakes from investors such as Bessemer Venture Partners, they said, asking not to be identified as the information isn’t public.
 
Tencent, the Chinese internet giant in which Naspers owns a 31% stake, is also planning to invest in the fundraising, according to one of the people.
 
Naspers declined to comment. Swiggy, Tencent and Bessemer didn’t immediately respond to emails seeking comment. The story was first reported by VC Capital website.
 
Swiggy’s value has risen to more than $2 billion after Cape Town-based Naspers led two previous funding rounds to become the firm’s biggest shareholder, according to the people. Naspers had a 22% stake as of the end of March. The company hasn’t made a final decision on whether to take part in the latest financing and may yet opt against it, one of the people said.
 
Naspers has targeted India for investments as the company seeks to replicate a blockbuster early bet on Tencent. The company made a $1.6 billion profit from the sale of its 11% stake in Indian e-commerce startup Flipkart earlier this year, and also has shares in travel business MakeMyTrip and classifieds business OLX.
 
Food delivery has been a favorite industry of Naspers, with assets including Germany’s Delivery Hero AG and iFood in Brazil. The company plans to invest in another Indian food company called Hungerbox, a tech-enabled corporate catering company, said one of the people.
 
Naspers shares have fallen 22% this year, valuing the company at 1.2 trillion rand ($83 billion), as a record slump in Tencent’s share price dragged down its South African investor. Naspers fell 4.% in Johannesburg on Tuesday.
 
 
Source: The Routers
All KPMG partners - even those who have jumped ship - could be held liable for a potential claim of R1.89 billion following the firm's disastrous audit of VBS.
The firm has indemnity insurance, but it may not pay out in case fraud was committed.
Meanwhile, KPMG International will send foreign execs to South Africa to prop up the firm.
The already deeply troubled KPMG South Africa could be liable to pay a claim exceeding R2 billion because of its work on VBS Mutual Bank – and its individual partners could be personally liable for the money.
 
Last week, advocate Terry Motau recommended that the SA Reserve Bank and VBS' curators launch "an auditor's liability claim" against KPMG for damages. The same report found that at least R1.89 billion in "gratuitous payments" from VBS went to 53 individuals – not counting legal and other costs that have been mounting since the bank was placed in curatorship.
 
And much of that money, experts agree, could be sought from KPMG, which signed off on the VBS books.
 
While there is a limit on liability for advice work – an audit firm typically may have to pay back twice their fee – there is no limit on how much could be claimed back for losses due to audit work, a senior partner at one of the biggest audit firms in South Africa confirmed to Business Insider South Africa, on condition of anonymity.
 
And because KPMG is a partnership, everyone who was a KPMG partner at the time of the audit would be liable for the amount. This means that the many KPMG partners who have jumped ship in recent months could still face a claim.
 
KPMG South Africa has professional indemnity insurance to cover the liability. However, depending on the terms of the contract, the policy may not pay out if it was found that the KPMG partner committed fraud – and that is unequivocally alleged.
 
"I accordingly find that Malaba committed fraud," Motau summarised one of his findings, referring to former KPMG senior partner Sipho Malaba, alleged to have received more than R33 million from VBS irregularly. Malaba has slammed the report and may take legal action. 
 
Business Insider asked KPMG if its global parent company would fund a legal claim against it.
 
"KPMG South Africa has appropriate professional indemnity insurance to support the firm in the event a claim is made," said spokesperson Nqubeko Sibiya.
 
Asked if that insurance covers fraud by a partner, Sibiya simply referred to the same answer again.
 
If all the partners at a firm are involved in fraud, professional indemnity (PI) insurance will not cover a claim, Russell Kayton, of specialist professional indemnity insurance broker Picara, told Business Insider.
 
"The insured should always try and ensure that their PI insurance policy provides cover for fraudulent and dishonest acts by a partner / director of the practice which ensures that the innocent partners / directors are protected. Some policies, however, do not provide this cover while others may only provide cover for an employee, not a partner or director."
 
By law, auditors are protected from liability claims up to the point where they are proven negligent. After that, say if a firm was involved in brazen and large-scale fraud by way of its senior partner, various legal and auditing experts concur, a claim against an audit firm becomes a normal civil matter – and the size of the claim is unlimited.
 
There have been various attempts to set limits to that liability, including by KPMG itself. In 2005, in comments on what was then the Auditing Profession Bill, KPMG South Africa warned that it was "becoming increasingly difficult for auditors of major corporations to fully insure against their exposures".
 
"Unlimited liability results in auditors being the easy target to sue even when corporate failures are unrelated to any audit failure.," it said.
 
KPMG argued that an audit company's liability should be limited to "an agreed multiple of fees" or by way of "ring fencing of liability to a corporate entity as appropriate" – which would protect individual partners.
 
KPMG's future:
The VBS report findings, and the recommendation that National Treasury, the curator of VBS and the Prudential Authority should claim damages from KPMG, may be the “death knell” of KPMG South Africa as we currently know it, one senior audit professional predicted.
 
The person said that it may make sense for KPMG to completely dissolve the partnership of KPMG South Africa, and constitute it anew, with new partners and new staff.
 
Sibiya confirmed to Business Insider that KPMG International will nominate a number of senior KPMG partners from across the international network to serve on the KPMG South Africa board and in executive positions, as well as in senior client service roles.
 
Asked if KPMG was contemplating exiting South Africa, or closing down its current partnership to create a new one, spokesperson Sibiya said: "KPMG is firmly committed to South Africa and still has much to offer the country and the business community."
 
 
Source: Business Insider
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