News in South Africa 15th June:
1. Power crisis deepens:
he City of Joburg is facing a deepening power crisis, with electricity problems leading to more blackouts that take days to repair.
The problems extend beyond just outages, with delayed maintenance, tampering and illegal connections now putting lives at risk. Numerous reports of live electricity running through the water system have been made, and such an event reportedly led to the deaths of Joburg couple this week.
Meanwhile other reports point to substations being short-staffed, power issues that would usually take hours to resolve now take days. The City said it is investigating the problems and working on maintenance issues.
2. New global tax measure:
The Group of 7 summit provided crucial momentum for a new tax measure that could revolutionise international taxation.
The global minimum corporate tax rate is a measure that’s gained increased prominence amidst tax talks. It would impose a non-binding minimum rate on multinational companies, a disincentive to those companies fleeing one country for another with lower taxes.
That tax could also bring in $150 billion, according to a Bloomberg report which cited Pascal Saint-Amans, who directs the Organisation for Economic Cooperation and Development (OECD)’s centre for tax policy. Presumably speaking about an annual figure, Saint-Amans told the French channel BFM Business that it is “not an anecdotal amount.”
“In some ways,” Saint-Amans said, “this is the end of the work on regulating globalisation for greater tax justice.” The figure he put forward also includes “a revised version of existing US measures on taxing foreign profits known as GILTI,” according to Bloomberg.
The G7 summit represented a major diplomatic and political step forward for the tax measures, as leaders agreed to a minimum rate of at least 15%. That’s what the US had reportedly proposed, a rate lower than the anticipated proposal of 21%.
Saint-Amans also addressed concerns that companies like Amazon could dodge the tax due to low profit margins, saying that the OECD would specifically look at its higher-margin cloud services.
3. Discovery ramps up vaccinations:
Discovery Health medical scheme is ramping up its vaccine distribution plans as it aims to vaccinate 40,000 people a day in South Africa.
In a letter sent to clients this week, the group said that its main objective is to get as many people in South Africa vaccinated as quickly as supply allows.
The group said that its vaccination site at its head office in Johannesburg, 1 Discovery Place, is currently the largest national private sector site – contributing to over 15% of all Gauteng vaccinations administered to date, and approximately 12% of the private sector vaccinations administered nationally.
“Based on the success of this site, we are intending to scale it up by a further 50%. We are also applying our learnings from 1 Discovery Place to bolster vaccination capacity countrywide, with the aspiration of vaccinating 40,000 individuals per day when all of our associated sites are at full capacity.
“In addition to the four additional sites in Johannesburg, Pretoria and Cape Town we have opened since 1 Discovery Place, Discovery has focussed its efforts on establishing further mass vaccination sites,” it said.
Discovery said that this will include Gallagher Estate in Midrand which has the ability to vaccinate 5,000 individuals per day; with a target go-live end of June subject to securing a sufficient supply of vaccines.
4. House price boom fades:
The mini-boom in house prices from the lows reached during last April’s hard lockdown seems to be over.
The latest FNB Property Barometer shows year-on-year house price appreciation slowed in May, for the first time in 11 months.
Two other indicators tracked by the bank, being volumes of mortgage applications as well as its demand strength indicator, “declined in the past two months, perhaps suggesting that the interest rate-induced demand may have peaked”.
FNB’s house price index increased 4.1% year on year in May from 4.6% in April (Lightstone’s separate house price index printed the same result in April).
FNB says that while indicators show demand is “now moderating”, these “remain above pre-pandemic levels, in part reflecting the positive effect of lower interest rates on market activity”. These are around 50 to 100 basis points higher than the figures in 2018 and 2019, before the Covid-19 pandemic.
However, inflation at that point was noticeably higher than now, meaning that in real terms house prices were in decline. With inflation at current levels, house prices are effectively flat (when factoring in inflation).
FNB says “mortgage credit has been rising steadily since the second half of 2020” as lenders appear willing to lend for asset-backed purchases (“unsecured credit components are trending lower”).
South African Reserve Bank data for April shows domestic private credit contracted by 1.76% year on-year, with a 1.52% contraction in March. This followed low single-digit expansion in January and February.
5. Ace still after Cyril:
Suspended African National Congress (ANC) secretary-general Ace Magashule insists that only he has the right to suspend party leaders.
Magashule, who was placed on suspension in May and was now challenging the sanction, has now filed his responding affidavit following those filed by his deputy, Jessie Duarte and party president, Cyril Ramaphosa.
He also insisted that the suspension letter he issued against Ramaphosa, which was backdated and was said to have been issued without any discussions in the ANC national executive committee (NEC), was legitimate and could only be set aside by a court of law.
The embattled leader wants his suspension declared unlawful and invalid and he’s also asking the High Court to uphold his suspension of Ramaphosa over allegations of vote-buying through the CR17 campaign.
His party has reacted to these issues making it to court, saying that Magashule should know how the organisation functioned by now.
Magashule is certain about the authority given to him through his office and the ANC’s constitution.
This was an argument often made in his 132-page responding affidavit, where he said that the two respondents in the matter did not understand the basis of his application to the court.
All information sourced from articles posted by: BusinessTech, TimesLive, Business Insider, Moneyweb, and EWN.
