News in South Africa 14th October:
1. Mid-term budget policy statement postponement:
The letter requesting a week’s delay of the Medium-Term Budget Policy Statement (MTBPS) from Finance Minister Tito Mboweni to National Assembly Speaker Thandi Modise arrived after hours on Tuesday evening. Analysts say this is a worrying sign of the grim financial reality the government faces in executing lofty goals of development and economic recovery.
And while officially Thursday morning’s parliamentary programming committee must make a final decision, it is highly likely that the MTBPS will be moved from Wednesday 21 October to a week later, 28 October.
It’s an interesting development in the economic announcements. Much focus will be on Thursday’s joint parliamentary sitting for President Cyril Ramaphosa to present what’s called the Economic Reconstruction and Recovery Plan. A briefing to the Cabinet lekgotla of 7-8 October shows the plan is focused on infrastructure-led economic growth, with eight priority areas, even if it lacks specific deadlines and funding details.
But that presidential economic recovery plan is styled as the moment of hope. The grim reality check will be the 2020 MTBPS, given that the Covid-19 hard lockdown pulled an already flailing economy into recession, with a R304-billion drop in tax collection as poverty, hunger and inequality increased while at least 2.2 million jobs were lost.
Tuesday’s letter by Mboweni requesting Parliament to delay the “mini budget”, is indicative of how at this late stage of the MTBPS cycle the rands and cents appear not to be firmly in place yet. Not for the economic recovery plan, not for the MTBPS.
2. SA economy to shrink:
The International Monetary Fund (IMF) on Tuesday maintained its forecast of an 8% contraction in South Africa’s economy in 2020, but trimmed its outlook for next year, citing the continued impact of the coronavirus pandemic.
The IMF’s 2020 forecast for gross domestic product (GDP) was unchanged from June but it forecast 3% growth in 2021, 0.5% lower than its previous estimate, it said in its World Economic Outlook report.
Africa’s most advanced economy has the highest number of confirmed COVID-19 cases at just under 700,000 with nearly 18,000 deaths.
The 8% contraction forecast for this year would be among the largest estimated for emerging market economies, topped only by India and Mexico. South Africa’s economic rival, Nigeria, is seen shrinking only 4.3%, according to the report.
3. R50b in Ters relief paid:
Regarding Covid19 Ters payments, the labour department states that as of 9th October, since the beginning of the lock-down: over R49 billion has been disbursed in benefits in the form of over 11 million payments. These benefits were disbursed across all provinces roughly in proportion to demographics and economic activity:
- in Gauteng: R23 billion was disbursed in 5 million payments;
- Northern Cape: R484 million was disbursed in just over 100,000 payments;
- and all other provinces falling in between.
- At the same time R7.5 billion was disbursed in 1.3 million payments in normal UIF benefits.
- Covid19 Ters benefits have been paid for a period of 6 months.
4. PwC sued for R650m:
Two senior executives at Botswana supermarket chain Choppies Enterprises are suing former auditors PwC for R653 million for not signing off on the company’s 2018 accounts, which led to a share price collapse.
Choppies Chief Executive Officer Ramachandran Ottapathu and Executive Director Ismail Farouk allege that PwC didn’t complete the audit in part to pressure the company to hire PwC director Rudi Binedell as head of finance, according to a statement issued on behalf of the directors. The duo filed the lawsuit at the High Court in Gaborone, Botswana’s capital.
Choppies said in September 2018 that it was working with PwC to assess a number of past accounting practices, including around previous acquisitions, that needed independent verification and legal analysis. That would delay the release of earnings, the retailer said.
5. Joburg highway flooded:
The tens of millions of rand spent fixing Joburg’s iconic double-decker M1 highway appears to have been a waste of money, the Gauteng legislature’s roads and transport committee said.
The highway’s lower deck flooded during a thunderstorm last week, leading to an outcry on social media as motorists posted video of cars crawling along with water halfway up their sides.
The committee said it was “concerned” about the complaints, adding that it had raised the questions around the highway’s two-year, R169m refurbishment.
“This appears to have been a partial waste of public resources as the recent flooding has proven that the drainage system that was meant to be addressed with the recent rehabilitation still does not work,” the committee said.
The refurbishment, which saw the highway closed to traffic from 2018, included an upgrade of the existing storm water drainage system.
The JRA apologised to the city’s road users. Investigations into the flooding are under way while maintenance of the storm water infrastructure has been ramped up.