News in South Africa 20th December:

1. Reserve Bank was hacked:

Finance minister Enoch Godongwana recently revealed that the South African Reserve Bank suffered an attempted hack. The revelation was very late, with the attempt taking place in August (four months ago), but the media and South Africans only found out in the past week.

Reserve Bank was hacked
Photo by Sora Shimazaki

The central bank received information from state agencies and private security service providers in August about a “possible breach” and acted in accordance with its protocols, it said in an emailed response to questions on Wednesday.

The bank hasn’t previously issued a statement on the incident.

“There was no impact on our systems and our operations,” it said.

Finance Minister Enoch Godongwana told delegates at a gathering of Eastern Cape provincial leaders late last month that the central bank was hacked on 12 August 2022.

“The minister of finance, in accordance with the constitutional practice of receiving operational updates from the bank, was informed of the attempted breach of the South African Reserve Bank’s computer systems and that there was no impact on the SARB’s systems or operations,” Finance Ministry spokesman Mfuneko Toyana said Wednesday in an emailed response to questions.

The Bank of Zambia suffered a cyber attack in May. The breach caused minimal damage to its systems, and the bank refused to pay a ransom to the group behind the hack, it said at the time.

2. Cabinet reshuffle:

Following a resounding victory at the ANC’s elective conference, the door has now opened for president Cyril Ramaphosa to make sweeping changes to his cabinet.

There are currently vacant positions in the cabinet, and transport minister Fikile Mbalula is moving to a full-time position of secretary general at Luthuli House, meaning ministers will have to move around.

When Mbalula steps down from the position, Ramaphosa will be sitting with two big gaps in his cabinet, with the position of minister of public service and administration still sitting vacant after former minister Ayanda Dlodlo was appointed as an Executive Director on the board of the World Bank in Washington in the United States earlier this year.

Minister of employment and labour Thulas Nxesi has been serving as acting minister for the department since then.

Transport and Public Service and Administration are two key departments that cannot sit vacant for long. This was demonstrated for the latter in recent months when public servants embarked on – and continue to participate in – nationwide strikes, pushing back against the government’s unilateral 3% wage hike.

South Africa’s roadsrailways, and licencing departments are also in a sorry state that requires keen focus and attention within the transport department.

While Ramaphosa has given no indication of how he would go about a cabinet reshuffle, his resounding victory at the ANC conference may give him the confidence to axe ministers who vocally opposed his bid for a second term, and in cases, actively worked against him to topple him politically.

According to political analysts, while the cabinet serves at the pleasure of the president, a lot of politicking is still taking place in the background, and Ramaphosa may find it difficult to act without support from the ANC’s national executive committee (NEC).

3. Good news for fuel prices:

Weekly data from the Central Energy Fund (CEF) shows that motorists in South Africa will be entering the new year with a much lower petrol price – and an even bigger cut on the cards for diesel.

According to the CEF’s data for 16 December 2022, motorists can expect a petrol price cut of around R1.93 per litre in January 2023, while diesel could be cut by as much as R2.83 per litre.

The lower prices are being driven by much lower international product prices as well as strength in the rand relative to the US dollar.

These are the changes you can expect, at the end of week 2 in December.

  • Petrol 93/95: decrease of R1.93 per litre
  • Diesel 0.05%: decrease of R2.73 per litre
  • Diesel 0.005%: decrease of R2.83 per litre
  • Illuminating paraffin: decrease of R2.16 per litre

A drop in oil prices is the biggest contributor to the equation, reducing international product prices by between R1.80 and R2.70 per litre in the local formula. The rand, which has recovered from political instability in recent sessions, is contributing to a 12 to 15 cents per litre drop.

“The prospect of further rate rises will hit economic growth in the New Year and, in doing so, curb demand for oil,” said Stephen Brennock, an analyst at brokerage PVM. “China’s recovery will not be a swift affair, with the situation likely to get worse before it gets better.”

The rand’s story, meanwhile, is a positive one for local prices.

Despite the local unit struggling under mounting political uncertainty in recent weeks, a solid victory by president Cyril Ramaphosa at the ANC’s 55th elective conference, where he secured a second term as party president, has calmed market jitters.

The rand recovered over 2% following the announcement on Monday (19 December), bringing the unit back to the R17.20 range.

While this is still a far cry from the sub-R17 levels seen before Ramaphosa’s position was brought into question with the Phala Phala report, the rand is still far off from the R18.30-plus levels seen in October and early November.

Provided the currency remains at current levels, or gets stronger against the dollar, the rand will continue to support lower prices at the pumps.

4. Port and rail bottlenecks tackled:

Transnet and the Minerals Council South Africa have announced a collaboration to improve rail and port throughputs that have cost producers billions in sales this year.

It is reckoned that SA lost upwards of R50 billion in 2022 and R35 billion in 2021 because the state-owned rail, port and pipeline company was unable to meet targeted export volumes.

The announcement on Monday says the two groups “have agreed to work together with a mutually agreed focus on helping to stabilise the whole system’s performance which entails responsibilities on both sides”.

Both parties have agreed to establish an oversight panel, a recovery steering committee and channel optimisation teams for each of the major commodities: coal, iron ore, manganese and chrome.

A recovery steering committee – comprising Transnet board members, the Minerals Council CEO and CEO representatives of bulk commodity producers – will come up with solutions cutting across rail and port.

Says president of the Minerals Council Nolitha Fakude: “We are determined to find practical solutions to our rail and port challenges and ensure that all producers, big and small, share in the inclusive growth that comes from improved operational performance.”

PwC’s Mine Report 2022, based on a survey of nearly 30 of the country’s largest miners, pointed to some of the logistics bottlenecks facing the sector, among them Transnet’s diminished rail capacity and ports rated by the World Bank as among the worst performing in the world.

Durban, Cape Town and Ngqura (East London) were rated in the bottom 10 of 370 ports worldwide, according to the World Bank Container Port Performance Index for 2021.

Earlier this year, the Minerals Council said R151 billion could be gained in additional exports, creating an additional 40 000 jobs, if all rail and ports systems were run at design capacity. This does not count the benefit to the fiscus from additional commodity sales.

Minerals Council members account for more than 80% of Transnet’s rail business and 50% of its income, though this has yet to return to pre-Covid levels.

The Minerals Council said in a statement at the time that major mineral export harbours were operating at between 12% and 30% of their daily averages.

5. Rental market:

Rising interest rates are eroding the prospects of potential homeowners, pushing a trend of longer-term rentals, according to the latest report by property consultancy and research firm Rode & Associates.

On top of increasing interest rates, homeowners must deal with the typical costs of owning a property, such as insurance, rates and taxes, and maintenance, as well as a rising cost of living.

“When it is cheaper to rent rather than to buy, it would make sense – purely from a financial point of view – to rent and religiously save the difference between rent and what the bond instalments would have been. After a few years of saving, a buyer could use the savings for a higher deposit to buy a home, which will by then probably be lower priced in real terms than now,” states the Rode report.

In November, the SA Reserve Bank’s Monetary Policy Committee (MPC) increased the repo rate by a further 75 basis points to 7%. This is the seventh consecutive hike, and interest rates are now at their highest level since 2016. The prime rate is now 10.5%.

Consumer price inflation cooled slightly in November to 7.4%, from 7.6% in October, while food prices continued to climb – reaching 12.5% in November from 12.0% in October. The SA Reserve Bank only expects inflation to “sustainably” move back to its targeted level of 4.5% by the second quarter of 2024.

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, says the last few months, the company’s digital marketing agency has noted a rise in rental-related search terms and a decline in buying search terms.

The FNB Residential Property Barometer also indicates that rising borrowing costs likely diverted some homeownership demand to rentals.

All information sourced from articles posted by: BusinessTech, BusinessLive, Moneyweb, and Fin24.

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