News in South Africa 10th October:
1. SA on the brink of disaster:
Former reconstruction and development minister Jay Naidoo says South Africa is in serious trouble and is showing signs of a failed state.
Naidoo is a seasoned politician who was the founding general secretary of the Congress of South African Trade Unions (Cosatu).
He also served in former President Nelson Mandela’s cabinet as minister of Reconstruction and Development and Post, Telecommunications, and Broadcasting between 1994 and 1999.
Speaking to WorldView, Naidoo said South Africa is showing signs of a failed state and is basically at ground zero.
He added that record unemployment levels and the fact that many young people will not find a job in their lifetime show the country is in serious trouble.
In the same discussion, Efficient Group chief economist Dawie Roodt said the country is in deep trouble, and things will get worse.
“We have a hugely destructive government, without real ideologies or policies, and which borders on criminal,” Roodt said.
The state sector is also inefficient, and state-owned enterprises like Eskom and Transnet are poorly run.
The result of the poor government is that South Africa has record levels of unemployment and rising levels of poverty.
He added that unemployment and poverty would get much worse before it gets better.
Roodt said the high levels of poverty and unemployment with rising food costs is a recipe for mass unrest and disorder. It puts South Africa on the brink of disaster.
“My biggest fear is that a spark can make the situation explode. It is a highly volatile situation waiting to explode,” he said.
Roodt argues that you first have to solve the country’s political problems to solve the country’s economic problems.
“We must get rid of the destructive tripartite alliance and replace it with something better.”
Naidoo added that South Africans must put tremendous pressure on the government to do their job because “we pay them well”.
South Africans are the kind that gets pushed and pushed but then takes a stand. I am hoping that point has arrived,” he said.
2. Emerging-market uptick:
The moment emerging-market investors have been waiting for as they endured the worst rout since the 2008 global financial crisis has finally come into view.
It’s a combination of two peaks. One, in inflation: Developing nations from India to Brazil are reporting declines in consumer-price growth, early victories in a war that’s gone on for two years. Two, monetary tightening: From the US to UK and Europe, wagers on rate hikes that kept surging until last month are now moderating.
It’s still early days and a lot of turbulence could hit before these two trends consolidate, but expectations for a peak in borrowing costs next year are encouraging investors to dip their toes back into emerging-market assets.
When monetary tightening does wind down, investors may find the developing world more attractive because equity and bond valuations are cheaper than in rich nations, real yields higher and beaten-down currencies brim with carry.
“We are more inclined to selectively add risk at this point,” said Lewis Jones, a debt manager at William Blair Investment Management in New York.
“Emerging-market currency valuations are very attractive and central banks, particularly among the higher-yielding basket of countries, have tightened very aggressively, and successfully in terms of expected levels of inflation next year.”
Benchmark gauges of emerging-market bonds, in both dollars and local currencies, are rallying in October after posting declines in eight of the nine months this year. The equity benchmark is recovering from the worst monthly slump since March 2020, while the currency index is bouncing off the longest streak of losses since 2019.
Part of the gains came from euphoria at the start of the month that bad economic data will push central banks including the Federal Reserve to make a dovish pivot. While those hopes have since been dashed – with policymakers reaffirming their fight against inflation and the US labour market staying strong – the case for at least a halt to tightening next year continues to find support.
3. Load shedding returns:
National power utility Eskom has announced it will implement Stage 2 load shedding from Monday (10 October) until Wednesday (12 October).
Eskom said that load shedding would take effect between 16h00 and 00h00. The company stressed that it would attempt to limit load shedding to only night-time to best suit the country’s economy and people.
“The load shedding will be used to replenish emergency generation reserves during the night to bolster generation capacity. Eskom will publish a further update on Wednesday afternoon or as soon as any significant changes occur,” said Eskom.
The ugly truth about load shedding:
On 6 October 2022, power utility Eskom added another bleak record to its growing list of firsts related to load shedding. The day marked the first time in history that rolling blackouts continued for 30 consecutive days.
With load shedding having been suspended on Saturday (8 October), the group stopped at a record 32 days – but the suspension didn’t last for long, with Eskom announcing a return to stage 2 load shedding on Monday, 10 October.
South Africans know that load shedding is bad and likely getting worse due to an ageing power fleet and multiple technical issues, but it’s difficult to grasp the extent and how it has hit them individually.
Data from Eskom Research, Testing and Development shows that an estimated 4,115 GWh has been cut this year – far above the 1,776 GWh cut in 2021.
Popular load shedding notification app, EskomSePush, meanwhile, has put out data tracking the total hours the country has been thrust into darkness – now sitting well over 2,000 hours, collectively.
However, neither of these data points show exactly how individuals have been impacted by the blackouts.
According to independent data analyst Pieter Jordaan, while total load shedding hours is a quick way to see if load shedding, collectively, is getting worse, it doesn’t take into account the intensity of the various stages of load shedding and how individual households are affected.
Schedules
For people living in the major metros, load shedding schedules are available here:
- City of Johannesburg
- City of Ekurhuleni
- City of Tshwane
- City of Cape Town (PDF)
- Nelson Mandela Bay
- eThekwini
- Manguang
- Buffalo City
For access to other load shedding schedules, Eskom has made them available on loadshedding.eskom.co.za.
4. Germany doubles climate change funds:
Germany on Friday announced a fresh round of development funding for SA of €355 million (about R6.2 billion) in a combination of grants and subsidised loans over the next two years, most of which is dedicated to the fight against climate change.
The new funding doubles what German will contribute to SA’s energy transition.
The German government has a long history of development co-operation with SA, dating back 30 years. The latest cycle of funding will focus on five areas, including building a peaceful and inclusive society, climate and energy, economic development, training and employment and health.
But the lion’s share – about €301 million- will be dedicated to funding for energy and climate change. The money is a combination of grants (€31 million) and preferential loans of up to €270 million.
This amount comes on top of the funding that Germany has already committed as its contribution to SA’s Just Economic Transition Partnership (JetP). The JetP – a landmark transaction announced at COP26 a year ago – will see five international partners raise $8.5 billion towards SA’s transition to cleaner energy sources.
A spokesperson for the German embassy in Pretoria Christopher Schmidt said in reply to questions over the weekend that Germany’s JetP contribution would be €300m in the form of sovereign loans. This is already in the process of being delivered, he said.
The composition and blend of financing for the JetP has not been announced but is expected to include only a small portion of grant funding, supported by loans. The other countries that are part of the JetP’s International Partner Group are France, the EU, the UK, and the USA.
5. Transnet strike threatens jobs:
The South African berry industry has called for an urgent intervention to end the ongoing strike at state-owned rail freight entity, Transnet.
The industry says the wage dispute must be resolved as 30 000 jobs and R3 billion in revenue hang in the balance.
Days before the strike began, Transnet had reassured Berries ZA that wage talks were under control but the parastal lost a bid to interdict the strike in the Johannesburg Labour Court on Saturday.
The latest strike action comes on the back of a series of operational issues linked to the aging and out of service infrastructure.
Over a third of local berry producers are currently not profitable, which means their survival and their livelihoods are under severe threat.
Chief Executive Officer at Berries ZA, Brent Walsh said the strike could not have come at a worse time.
“The open-ended strike has occurred during the peak of the berry export season, impacting the entire berry value chain and 30 000 livelihoods who depend on the industry as well as the projected R3 billion in export revenue this season,” said Walsh.
Meanwhile, the South African Transport and Allied Workers Union (SATAWU) and United National Transport Union (UNTU) released a joint statement confirming that the strike will continue on Monday.
All information sourced from articles posted by: DailyInvestor, Moneyweb, BusinessTech, Fin24, and EWN.
