News in South Africa 18th January:
1. Food shocker due to load shedding:
The price of some staple food groups is expected to rise as load shedding takes its toll on the agricultural sector, says Christo van der Rheede, an executive director at Agri SA.
Speaking to 702, Van der Rheede said that load shedding is having profound knock-on effects for all types of agriculture businesses, including those dealing with livestock and crops. He added that South Africa’s food security might be on the rocks soon if the issue persists.
“If you’re a dairy farmer. You cannot milk your cows. You cannot keep your milk in a cold storage facility when there’s no electricity… The same applies to irrigation farmers that are irrigating grains, maize, sugar cane, also other crops”
“What is important is that farmers are still producing food at a large cap. And that’s the nice thing… The bigger issue is the affordability of food, and we’ve seen a spike in the price of all kinds of basic stuff. That’s why the poultry industry has called on the minister to zero-rate chicken, for example, to make it cheaper.”
Load shedding is also adding to already damaging global impacts, including the war in Ukraine that drove up diesel prices – pushing up operation and transportation costs for the farming industry – and increased the price of fertiliser.
This puts farmers under severe pressure, making agriculture a very unprofitable business, he said.
Van Der Rheede called on the government to support domestic farmers more through tax incentives which could include reducing the price of solar/renewable energy installations on farms.
The warnings have unfortunately become a reality. This Wednesday (18 January), the South African Poultry Association said that there is a lack of chicken products in the country due to the inability to slaughter the animals.
Over 10 million chicks had to be culled over the course of the last six weeks, said the association. It added that if this situation was to continue, consumers could expect the price of chicken to rise.
2. Inflation slowdown jeopardised:
South African inflation slowed to a seven-month low in December, though mounting price pressures including a sharp increase in electricity costs may force the central bank to keep interest rates higher for longer.
The headline consumer-price index rose 7.2% from a year earlier, compared with 7.4% November, Pretoria-based Statistics South Africa said Wednesday in a statement on its website. The median of 15 estimates in a Bloomberg survey of economists was 7.3%.
Inflation averaged 6.9% in 2022, up from 4.5% in the previous year, statistics office data show. That’s the highest level since 2009, when rising electricity costs also added to price pressures, and is the highest annual average of Lesetja Kganyago’s tenure as central bank governor.
While the rate of price growth is expected to slow in 2023 as the worst global inflation shock in a generation eases, it could take longer to approach 4.5% — the midpoint of the central bank’s target range at which the monetary policy committee prefers to anchor expectations.
Despite December’s slowdown, the change in the headline inflation rate breached the target ceiling for an eighth-straight month. Core inflation, which excludes the costs of food, non-alcoholic drinks, fuel and electricity, remains elevated, suggesting price pressures are broad-based.
South Africa’s average inflation expectations for the next two years have increased, according to a survey of analysts, business people, labor unions and households conducted by the Stellenbosch-based Bureau for Economic Research. The poll was conducted before the national energy regulator allowed cash-strapped power utility Eskom Holdings to increase tariffs by 18.65% and 12.74% for the next two years.
After front-loading its fight against inflation, concerns about South Africa’s economic prospects could see it slow the pace of rate hikes. Forward rate agreements used to speculate on borrowing costs show traders are pricing in an 80% chance of 25 basis-point increase for the MPC decision scheduled for January 26.
3. DA against Eskom:
The Democratic Alliance (DA) is the latest political party to join the legal fight to stop Eskom from implementing load shedding and declaring it unconstitutional.
The party also wants to interdict electricity regulator Nersa’s decision to grant Eskom an 18.6% tariff increase for the 2023/24 financial year, and a further 12.74% for 2024/25.
DA leader John Steenhuisen accused Eskom and government of failing to respect and fulfil the Bill of Rights.
Steenhuisen said he had instructed the party’s lawyers to apply to the high court for an interdict to stop the implementation of the tariff hike.
He said the increase had to be halted, pending a decision on the way forward on ongoing load shedding, declared inconsistent with the Constitution, and therefore invalid.
In addition to this, Steenhuisen said the party would be mobilising South Africans in the fight against load shedding during its ‘Power to the People’ march to Luthuli House next week.
4. Petrol price cuts:
After a steep fall in January, petrol and diesel prices are currently on track for more cuts in February, the latest information from the Central Energy Fund shows.
However, recent strong gains in the oil price and a weaker rand may put price cuts at risk.
The fuel prices are usually adjusted on the first Wednesday of a month and determined by the price of oil and the rand-dollar exchange rate.
Based on the latest oil and rand prices, the fund’s data shows that the price of 95 unleaded petrol could be cut by around 14c in February, with 93 petrol due for a 7c decrease.
Diesel prices could decline by between 37c and 49c a litre, based on current estimates. This could bring the Gauteng diesel price to below R21 for the first time since March. Russia’s invasion of Ukraine triggered a spike in oil prices since February.
Petrol is already back at pre-invasion levels.
However, gains in the oil price and the dollar before the end of the month could still thwart fuel price declines. On Tuesday, Brent rose by more than 2% to above $86 per barrel following stronger-than-expected Chinese economic growth data.
5. ENSAfrica negligent data protection:
Africa’s largest law firm has been ordered to pay R5.5 million to a woman who fell victim to a syndicate that hacked her email during a property purchase.
The hackers changed the bank account number in a PDF emailed to Judith Hawarden by ENSAfrica, which was handling the conveyancing of a Johannesburg house she was buying from its client.
Instead of landing in the law firm’s trust account, Hawarden’s money ended up in the account of one of the hackers, and swiftly disappeared.
After the discovery of the fraud, ENSafrica wrote to Hawarden demanding the money a second time, and she sued the bank for failing in its duty of care by negligently failing to warn her about the dangers of hacking or taking precautions to prevent it.
Three-and-a-half years later, the Johannesburg high court ruled in favour of Hawarden on Monday, ordering the firm to pay her R5.5 million plus interest and the costs and fees of two expert witnesses.
Judge Phanuel Mudau said even one of ENSAfrica’s own experts admitted in court that the firm could have done much more to avoid the fraud, and it could have cost as little as R2,000 a month to implement a technical solution.
“But for the negligent transmission of its account details and failure to warn Hawarden upfront of the inherent danger of business email compromise, she would not have suffered the loss,” he said.
“[ENS] was an expert conveyancer and was facilitating and managing the transaction. The risk of loss to Hawarden was highly foreseeable by ENS.”
Even though evidence in court showed that in 2019 it was a “near-universal” practice for conveyancers to send their banking details by email, “it does not absolve [ENS] of its unsafe behaviour”.
All information sourced from articles posted by: BusinessTech, Moneyweb, EWN, Fin24, and Business Insider.
