News in South Africa 13th November:
1. SA’s ‘too white’ farms may lose export access:
South African farms deemed “too white” will no longer be able to export their produce to the UK and the EU, according to postings in the Government Gazette, the Johannesburg-based City Press newspaper reported.
Under the rules, farmers must meet specific Black economic empowerment targets to continuing obtaining export permits.
The guidelines will apply to agricultural businesses with a minimum annual turnover of R10 million or more. Milk, cream, butter, fruit, nuts, sugar, jam, fruit purée, fruit juices, yeast, table grapes and wine are among the products affected, according to the notice.
Southern African Agri Initiative (Saai), a farmers’ lobbying group, told City Press that the rules will undermine investor security, job creation and growth in the nation’s agricultural sector.
Further, the measures fall “far outside the framework of internationally acceptable protocols, and the lobby will fight against it in every local and international forum, in courts and multilateral agencies of the UN and the African Union,” City Press reported, citing Theo de Jager, head of Saai.
Democratic Alliance, the biggest opposition party in South Africa, lodged a complaint with the trade offices of the EU and the UK, arguing that the regulations violate the rules of fair trade. South Africa’s agreements with the EU and the UK are explicitly premised upon protecting human rights, democratic principles and the rule of law, the alliance said.
South African agricultural exports were about R240 billion in 2022, with 20% headed to the EU and 4% to the UK.
South African companies have been encouraged to adopt Black-empowerment plans to comply with government policies aimed at redressing financial inequality stemming from the apartheid era.
2. SA readies for a growth slowdown:
Economic data for the third quarter of the year is not looking positive, say economists at the Bureau for Economic Research (BER), with indications pointing to a significant slowdown in growth – if not stagnating altogether.
“Last week’s two domestic production data releases firmed up our view that South Africa’s economic growth slowed materially, if not stagnated, in Q3,” the BER said.
“High-frequency mining and manufacturing data both show a quarterly contraction in production relative to Q2.”
This is despite load-shedding being somewhat less intense in Q3 – indeed, electricity production rose by 0.7% q-o-q in Q3, following a 1.2% contraction in Q2, the BER noted.
According to Stats SA, manufacturing production plunged by 4.3% y-o-y in September, following a downwardly revised 1.5% increase in August.
While a worsening in the Absa PMI foreshadowed the decline in September, it was more pronounced than market expectations for a 2.6% y-o-y contraction.
Seven out of the ten main subsectors contracted, with the most significant drag coming from the production of food and beverages (-10.5% and shaving off – 2.6% pts) and motor vehicles (-19.7%; -2.3% pts).
Moreover, seasonally adjusted (as) manufacturing production fell by 0.5% m-o-m in September, compared to a 0.4% m-o-m increase in August.
Together with the notable monthly contraction recorded in July, this resulted in real manufacturing production falling by 1.2% q-o-q in Q3.
As such, the sector is set to subtract from quarterly real GDP growth in Q3.
“Unfortunately, the October Absa PMI suggests the sector also experienced a tough start to Q4,” the BER said.
Regarding mining sector activity, production declined by 1.9% y-o-y in September, slightly better than expected, and marginally improved from an upwardly revised 2% y-o-y drop in August.
The biggest drag on annual growth stemmed from the production of diamonds (down by 61.4% and shaving off 2.9% pts), followed by ‘other’ metallic minerals (-17.1%; -0.5% pts) and manganese ore (-5.6%; -0.4% pts).
The negative impact was countered somewhat by decent growth in iron ore production (+8.5% y-o-y, +1.0% pts).
On a monthly (sa) basis, however, mining production fell by 0.3% m-o-m in September following the 1.2% rise in August.
“Alongside the poor performance in both July and August, this contributed to a 1.6% q-o-q contraction in mining output in Q3. As with manufacturing, the mining sector is also likely to weigh on quarterly real GDP growth,” the BER said.
According to economists at Nedbank, the poor performance comes as no surprise, given little to no improvement on the logistical front and only mild improvements in energy availability over the month.
“Lower commodity prices in a more subdued global economy also hurt mineral sales, which fell, in nominal terms,” it said.
3. Rising food prices put consumers under pressure:
A burden felt most by poorer households — who spend a larger share of their income on feeding their families — making the anxiety over the high cost of living a potent part of the political conversation ahead of next year’s general election.
In Bloomberg’s Shisa Nyama Index, which tracks the prices of key ingredients in a traditional barbecue consumed in South African townships, the cost of potatoes surged 40% month-on-month in October.
Crunching data from the Pietermaritzburg Economic Justice and Dignity group, the gauge includes potatoes, cooking oil, corn meal, carrots, tomatoes, frozen chicken, beef and wors — a tasty sausage made from ground meat offcuts.
The overall index rose 17% last month, up from 12.5% in September. South African consumer price data for October will be released on Nov. 22.
To compile its survey, the group tracks the prices of 44 food items on the shelves of 47 supermarkets and 32 butcheries that target the low-income market in the greater areas of Johannesburg, Durban, Cape Town, Pietermaritzburg, Springbok in the far northwest and the far north-eastern town of Mtubatuba.
Usiphile Ndimande, a student who usually eats with friends, has considered lunching on his own but worries he’ll come up short either way.
“If you go it alone, it’s going to hurt financially,” Ndimande said. “It’s better if there’s more of us. But if you do, you don’t get full. You lose both ways.”
4. Treasury needs to borrow more:
Treasury said it’s left with no choice but to borrow more money in this fiscal year to fund government spending.
But director-general Duncan Pieterse said it’s not a sustainable means to stimulate the economy, and it will only worsen the country’s spiralling debt crisis.
He was on Friday responding to critique from civil society organisations to the Medium-Term Budget Policy Statement (MTBPS), tabled in Parliament last week.
Pieterse said at the core of the country’s poor finances was low economic growth.
Over the past 15 years, South Africa’s debt has grown to among the highest compared to other emerging economies.
Pieterse said the country can’t continue to borrow its way out of its budget deficit, currently standing at more than R56 billion.
Pieterse said while problems persist in the energy and logistics sectors, the economy will remain constrained and increasing spending does not make sense.
“Increasing spending significantly in that kind of environment will not permanently raise economic growth. Eventually what will happen is that debt service costs will rise even further, more quickly, crowd out more social expenditure and it will put us in a very unsustainable fiscal position.”
Pieterse said new measures needed to be introduced to boost infrastructure investment.
5. More claims that Mediclinic bills were manipulated:
Another former Mediclinic employee has accused the hospital group of manipulating patient bills for financial benefit.
This comes after Mediclinic launched an independent probe following explosive claims of billing manipulation.
However, a second whistleblower has made similar claims, sharing correspondence that reflects that billing changes were made to patients’ records.
All information sourced from articles posted by: Moneyweb, BusinessTech, DailyInvestor, EWN and Fin24.
