News in South Africa 20th March:
1. Repo rate cut by 1%:
The South African Reserve Bank may have to go further than its biggest interest-rate cut in more than a decade to support an economy that’s expected to shrink from the impact of the coronavirus.
The monetary policy committee voted to lower the repurchase rate by a full percentage point to 5.25%, Governor Lesetja Kganyago said Thursday. The announcement was streamed online from in the capital, Pretoria after the government announced measures to limit public gatherings and engagements to halt the spread of the pandemic.
The MPC now projects the economy will contract by 0.2% this year compared with a forecast of 1.2% growth given in January. That’s still more optimistic than estimates from economists such as Intellidex’s Peter Attard Montalto, who sees output shrinking by 2.3%.
“Monetary policy can ease financial conditions and improve the resilience of households and firms to the short-term economic implications of Covid-19,” Kganyago said. “Our decision and its magnitude seeks to do this in the near term.”
2. New regulations for price gouging:
Government has just announced strict new regulations to prevent price gouging during the coronavirus crisis.
According to new regulations as part of the Disaster Management Act, signed by minister of trade and industry Ebrahim Patel on Thursday, companies are not allowed to hike prices for a list of goods by more than the increases in the cost to produce these products.
They are also not allowed to hike their profit margins on these products to above the average mark-ups during the three months to 1 March 2020.
The list of products includes:
- toilet paper
- hand sanitiser
- facial masks
- disinfectants and cleaners
- surgical gloves
- surgical masks
- disinfectant wipes
- antiseptic liquids
- all-purpose cleaners
- baby formula
- disposable nappies
- cooking oils
- wheat flour
- maize meal
- long-life milk
- canned and frozen vegetables
- canned, frozen and fresh meat, chicken or fish
- bottled water
Prices for private medical services relating to the testing, prevention and treatment of the coronavirus will also be covered by the new regulations.
3. Massmart closes Dion Wired:
Walmart-owned Massmart announced on Thursday in a notice to shareholders that 23 Dion Wired stores will stop trading from today. It will still decide whether it will close 11 non-performing Masscash stores, the notice read.
The announcement comes following a previous statement issued on 13 January 2020, that the retailer would enter into a S189 consultation process, in terms of the Labour Relations Act.
“Since 13 January 2020, management have consulted extensively with the affected employees; organised labour and other relevant stakeholders under the guidance of the Commission for Conciliation, Mediation and Arbitration and all options/alternatives in respect of the potential closure of the affected stores have been exhausted,” Massmart said. The board has thus taken a decision to close the non-performing stores.
4. Capitec rejects Coronavirus speculation:
After its share price almost halved in a week, blamed the weak rand and computer trading for the crash.
In a statement released on Thursday, it also denied market talk that the disruption caused by the coronavirus will have a disproportionate impact on its business.
“There is speculation in the market that Capitec will be severely impacted by Covid-19 due to the market on which it focuses and its unsecured credit business model,” the company said. For its part, it “reminded” shareholders that only 9% of its clients have credit with Capitec, and that transaction fees and its income from funeral policies cover 91% of its operating expenses.
Also, it says that 81% of credit granted in August 2019 was to clients with a gross salary of over R10 000 per month, while almost half was to clients who earn more than R20 000 per month.
5. Eskom investigates allegations:
The board of Eskom says it will investigate allegations of corruption and victimisation against the power utility’s chief operating officer Jan Oberholzer.
“Both organisations cite the same source, an Eskom employee who has since deposed to an affidavit to the Commission of Inquiry into State Capture, as having raised the allegations.”
The Corruption Watch and Saftu want the Eskom board to intervene and protect the whistleblower.
The new allegations follow on a report in the Sunday Independent that accused Oberholzer of holding shares in a company that held a contract with Eskom.