News in South Africa 13th March:

1. South Africa is in trouble:

Whether South Africa is pushed into a full recession in 2023 or not, the country’s economy is in trouble, say economists at the Bureau for Economic Research (BER).

South Africa is in trouble
Photo by David Peinado

The country was hit with a barrage of bad news last week – starting with a lacklustre cabinet reshuffle, moving on to a nasty surprise in the quarterly GDP figures, and ending with a credit rating outlook shift from S&P Global.

While these were the main low-lights of the week, other bad news was mixed in – business confidence took a hit, and South Africa’s current account balance reverted to a calendar year deficit for the first time in three years during 2022.

However, the biggest indicator of South Africa’s economic troubles is the GDP data, which came in three times worse than expected. While market consensus expected South Africa’s Q4 data to show a contraction of 0.4% for the period, the final figure came in at -1.3%.

Seven out of the ten major sectors shrank in the last three months of 2022. In terms of the large quarterly GDP decline, the biggest drag came from the finance sector – down by 2.3% and shaving off 0.6% pts – due to lower fee income in the commercial banking sector, lower value added in the insurance sector and reduced volumes of bond and financial derivatives trading.

“In terms of the demand side of GDP, exports made the biggest negative contribution to real GDP in Q4 (-1.4% pts), in part due to logistical constraints caused by the more than ten-day Transnet strike during October,” the BER said.

“Persistent power outages also took a heavy toll on industrial activity in 2022Q4 with over half of Q4’s load-shedding at stage 3 and above,” it said.

The shock GDP data threw up red flags for a recession in South Africa, with most commentary feeding the line that the country has already hit the point of a technical thanks to persistent high-stage load shedding every single day since the start of the year, pointing to another quarter of decline in Q1 2023.

“Given even more intense load-shedding so far in 2023Q1 relative to 2022Q4, South Africa is in a technical recession,” the BER said, adding that pressure on the economy is mounting.

2. Eskom intelligence dossier reveals corruption:

Former Eskom CEO Andre de Ruyter’s explosive interview on ENCA was followed by damning corruption claims based on a secret intelligence dossier.

De Ruyter revealed in the interview that he launched a private investigation in 2022 using money from donations.

The private, intelligence-driven investigation was needed because of the poor support Eskom and De Ruyter received from official law enforcement agencies.

An intelligence dossier was distributed to prominent media houses, and reports emerged about widespread corruption involving high-level politicians.

Carte Blanche reported that the dossier contained monthly intelligence reports with a detailed organogram about a criminal network involving a top politician.

Other prominent components include a henchman, a murder squad, a propaganda machine, and corrupt cops.

The City Press reported that two cabinet members were implicated in corruption and have been reported to Minister of Public Enterprises Pravin Gordhan.

The implicated ministers allegedly used trusted partners and distant family members to funnel the ill-gotten gains to them.

When De Ruyter reported the corruption to one minister, he was told, “I guess it was inevitable that it would come out anyway”. “It suggests that it was not news,” the former Eskom CEO said.

The Mail & Guardian reported that the board of Eskom, Pravin Gordhan, energy minister Gwede Mantashe and even President Cyril Ramaphosa were aware of the corruption.

Apart from telling Gordhan about the corruption, De Ruyter also briefed President Cyril Ramaphosa’s national security advisor, Sydney Mufamadi.

News24 reported that Ramaphosa’s spokesperson, Vincent Magwenya, said Mufamadi confirmed being briefed by De Ruyter and the head of the investigation firm on two occasions.

However, he said, “he was never briefed on any individuals or given names of people who were or are being investigated”.

News24 reported that De Ruyter also personally briefed the highest-ranking police officer in the country on allegations of corruption at Eskom.

The former Eskom CEO explained that there is a direct connection between theft, sabotage, procurement irregularities, and local and national politics.

3. RAF appeals ruling against non-payment:

The financially distressed Road Accident Fund (RAF) is appealing a judgment that declared unlawful its directive that no payments be made to claimants if their medical aid scheme has already paid for their medical expenses arising from a road accident.

Discovery Health CEO Dr Ryan Noach told Moneyweb the RAF applied to the Supreme Court of Appeal (SCA) on 20 February for leave to appeal the judgment.

“Discovery has filed its answering affidavit and expects a ruling from the SCA within four to six weeks,” he said.

In addition, on 3 March Discovery Health applied to the Pretoria High Court in terms of Section 18(3) of the RAF Act to compel the enforcement of the unlawfulness of the RAF’s directive, Noach added.

Responding to a request for comment, RAF senior manager media & PR Linda Rulashe said: “The RAF has no comment on this matter at this stage.”

The RAF’s SCA application follows the High Court in Pretoria in January this year, dismissing its application for leave to appeal against the court’s judgment, declaring the directive unlawful and interdicting and restraining the RAF from implementing it.

The directive was issued by the RAF’s acting chief claims officer on 12 August 2022, and declared unlawful on 27 October 2022, following an urgent application by Discovery Health.

There has been widespread condemnation of the directive.

4. Municipalities bleeding cash:

The eThekwini Municipality is losing large amounts of cash, as five municipal departments spent R3.6 billion on overtime pay in five years.

Even employees who did not qualify for overtime were paid – a contravention of South African labour law.

According to the BCEA, workers may not work more than 10 hours of overtime in a week or more than 40 overtime hours in a month.

The department of electricity was the worst offender, spending R1 billion in overtime pay over the five years.

5. Strike action to intensify:

The National Education, Health and Allied Workers’ Union’s (Nehawu’s) general secretary, Zola Saphetha, said on Sunday the government must take responsibility for any lives lost during strike action, not the union.

He was speaking during a media briefing in Johannesburg, where the union also vowed to intensify strike action on Monday, as the impasse over salary increases looks set to continue.

Health Minister Joe Phaahla made the claims of lives lost while at Charlotte Maxeke Hospital during a site visit at the height of the strike last Wednesday.

However, Saphetha said the union had acted legally and that the allegations were misplaced.

This as some staff on duty at affected hospitals claimed to have been intimidated by striking workers affiliated with Nehawu.

Emergency teams are also believed to have been unable to respond to some emergency calls as access to some facilities remained blockaded.

A preliminary report by the Department of Health found that the standoff resulted in deaths.

“There’s no conclusive finding that points to us,” said Saphetha.

Instead, he placed the blame squarely on the government.

All information sourced from articles posted by: BusinessTech, DailyInvestor, Monyweb, News24, and EWN.

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