News in South Africa 19th November:
1. Reserve Bank – interest rate decision today:
The Reserve Bank’s monetary policy committee will announce its interest rate decision later today. Most economists don’t expect a cut.
South African interest rates have already been cut by 300 basis points since the start of the year – much more than the median cut of 100 basis points in other emerging markets.
The cuts this year have already meant a steep decline in bond repayments. On a new mortgage of R2 million at the prime rate, you will now pay around R3,800 a month less than at the start of the year.
In September, governor Lesetja Kganyago said the Reserve Bank’s models do not make provision for further cuts in the near term.
Instead there are two rate increases on the horizon, in the third and fourth quarters of 2021.
2. Ramaphosa investment drive success:
President Cyril Ramaphosa’s drive to raise R1.2-trillion over five years got a boost on Wednesday 18 November, when his third SA Investment Conference attracted R109.6-billion in investment pledges from local and foreign companies.
This brings the investment pledges that Ramaphosa has secured since the start of the conference in 2018 to R773.6-billion – comprising new investments and those announced before by companies and pencilled in their capital expenditure plans since 2017.
Ramaphosa’s team of investment envoys, which is responsible for marketing SA Inc to cash-flush investors, doesn’t yet have the exact data on the split between new and existing investment pledges.
But Trade, Industry and Competition Minister Ebrahim Patel, who is part of Ramaphosa’s investment team, said most of the investment pledges involve the expansion of existing projects/investments by companies. In other words, it is not a new investment.
Regardless, Ramaphosa said the investment pledges will go far in rebuilding the economy in the wake of the devastating Covid-19 pandemic that has wiped out prospects of economic growth and job creation.
“These investments will go a long way towards the recovery of the economy,” Ramaphosa declared, adding that he didn’t expect to attract investments this year from companies due to the pandemic.
3. SABC retrenchments to continue:
The SABC will move ahead with its retrenchments as planned, despite a fight back from journalists and other employees at the broadcaster.
However, the board has recognised the dispute and said it will look at other ways to limit job losses.
The group initially planned to retrench 600 workers, but this was decreased to 400 through other cost-cutting measures, such as reducing leave from 35 days to 28 days.
4. Easier to invest offshore:
All eyes are on the Financial Sector Conduct Authority (FSCA) after it come to light that Treasury and the South African Reserve Bank (Sarb) had moved to ease exchange controls.
Treasury, in an explanatory note put out during the Medium-Term Budget Policy Statement, said it had lifted some restrictions on how South Africans could list abroad.
It said: “All debt, derivatives and exchange-traded instruments referencing foreign assets, that are inward-listed, traded and settled in rand on South African exchanges, will be classified as domestic. The classification of all inward-listed shares denominated in rand remains domestic.”
The change means locally-listed firms holding offshore assets, will have these assets defined as domestic holdings, as long as they trade these assets locally and in rand.
The explanatory note says Treasury is looking at reforms that will phase out current exchange control regulations. This is part of a broader plan that will possibly see the creation of non-rand-denominated listing instruments, collateral for derivative exposures, and possible mechanisms to enable financial services providers and asset managers to manage collective investment schemes of foreign assets from SA.
5. Zuma accuses Zondo of friendship:
Former President Jacob Zuma maintains that Deputy Chief Justice Raymond Zondo can’t make a ruling on their relationship and the request for his recusal from the state capture inquiry because he has made a statement about it.
Zuma has filed another affidavit in which he said that Zondo was downplaying their relationship and insisting it was because they’re friends.
The former president said that after Zondo was appointed chairperson of the commission, they met at his official residence for a briefing.
After Zondo denied any friendship between him and Zuma, the former president responded in a statement, saying in part: “It is a trite principle that a judge cannot sit in his own case or adjudication of factual disputes arising from his own statement of facts, judged against allegations raising disputes about such a statement.”
Zuma argues that his version of events was not consistent with that of the deputy Chief Justice, so Zondo could not be the person deciding if their relationship could affect the impartiality of his work.