News in South Africa 20th September:
1. Rand stuck at R19/USD:
The rand has been stuck at around R19/USD as markets worry about the deterioration in South Africa’s state finances, the risk of a global recession, and the US Federal Reserve’s aggressive monetary policy stance.
This is according to Investec chief economist Annabel Bishop, whose comments come ahead of the Fed’s interest rate decision on Wednesday and the South African Reserve Bank’s (SARB) decision on Thursday.
Over the past five days, the strongest the rand has been was around R18.92/USD, and its weakest has been around R19.09/USD.
Bishop said the Fed is expected to keep interest rates unchanged this week, but the risk of further hikes this year is one of the key reasons keeping the rand weak.
Emerging market currencies, in general, have been weak compared to a year ago, as higher US interest rates weaken economic activity globally and locally and make emerging market assets less attractive to investors.
The rand is also being weighed down by domestic factors such as the widening fiscal deficit, the poor state of government-owned electricity and freight utilities, and load-shedding, she said.
“The rand will indeed be at risk of government-determined factors both this year and next, as the fiscal deficit is widening, while rapid repair to Transnet’s rail lines is not occurring, and load shedding stifles economic growth and exports,” she said.
These factors are undermining investor confidence in the South African economy and making it difficult for the rand to attract sustained buying interest.
However, despite the current challenges, there are some reasons to be optimistic about the rand’s medium-term outlook.
In particular, better-than-expected data from China has been a key factor in the rand’s performance over the past week.
“The world’s second-largest economy saw better-than-expected retail sales and industrial production data last week Thursday as stimulus measures started to take effect, boosting market optimism,” Bishop said.
However, there are still concerns around China’s real estate market, as new home sales saw a further month-on-month contraction in larger cities, and developer defaults remained a key concern.
Despite this, Bishop said the markets took the industrial production and retail sales data as showing a potentially brighter outlook than has been feared, as concerns had been building on the ineffectiveness of China’s stimulus measures to date.
2. ID crisis:
Almost a million South Africans have had their identity document (ID) numbers blocked over fraudulent identity concerns, and Lawyers for Human Rights have said no law allows this.
At the same time, they also believe the criteria behind the blocking of some of these IDs have become increasingly arbitrary.
The issue of fraudulent identity has long been an issue in South Africa. Over a decade ago, in 2012, the Department of Home Affairs (DHA) started a campaign to address the issue of misrepresentation on the National Population Register and initially identified 29,000 cases of suspected fraud.
These cases included duplicate ID cases (one person sharing an ID number with multiple people) and multiple ID cases (one person assigned multiple ID numbers).
In 2013, the department issued a notice of its intention to “invalidate” and “cancel” all unverified duplicate IDs – meaning the ID numbers were blocked on the National Population Register.
However, the number of these unverified IDs has grown significantly. Home Affairs estimated that the department had recorded nearly one million of these cases as of the end of 2020 and is suspected to be well over a million in 2023.
Without an ID, an individual is denied essential services and constitutional rights. They cannot vote, apply for a bank account or any form of loan, purchase a vehicle, renew vehicle and driver’s licences or even a cell phone, among other things.
Speaking with Newzroom Afrika, Lawyers for Human Rights’ Thandeka Chauke said that the department believes ID blocking was an “administrative tool” used to maintain the accuracy and integrity of the National Population Register.
She added that although the department has legitimate concerns around fraudulent identity – a major problem in the Home Affairs system – no law allows the department to block an ID number, bringing into question the legality of this action.
“What the Identification Act does allow is for the cancellation, replacement, or seizure of the physical ID book – not the marking or blocking of the ID number,” said Chauke.
She added that there is another issue of due process. “Even if there were a law that gave the DHA the authority to block IDs, they would still have to follow due process – as administrative justice is a constitutional right,” she said.
Chauke noted this issue as evidenced by how people find out their IDs have been blocked. “People are finding out their IDs have been blocked only when they try to access a service that requires an Identification,” she said.
“This signals that there is already something working in the system, as they should have received notice of the intention to block the ID number, reasons as to why it’s getting blocked, and an opportunity to dispute the decision,” she added.
Chauke further highlighted that when a person does follow the proper process to dispute the department’s decision, Home Affairs takes months – even years, in some cases – to process the dispute.
Lawyers for Human Rights have criticised the arbitrary criteria for blocking ID numbers, as the group noted that most of their clients are marginalised, black South Africans, reported IOL.
3. Eskom maintenance debacle:
Halfway into the current financial year Eskom has completed only eight of the 54 outages in its reliability maintenance programme for the period. That is not even 15%.
This, the utility says, is “due to break downs and changes in outages”. The plan is constantly being revised and outages that have flexibility are rescheduled accordingly, it adds.
It further disclosed that 19 outages have been deferred, four of them beyond the end of the period on 31 March 2024, and three have been cancelled.
A total of 15 additional outages have been completed.
In the previous financial year 79 outages were scheduled, 45 of which were completed, while 17 in progress at year-end.
This information provided by Eskom comes shortly after its system operator in its latest weekly system status bulletin increased the base assumption of unplanned breakdowns to 16 000MW, rather than the previous 15 000MW.
‘More variable than wind’
In addition, Isabel Fick, head of the system operator’s office at Eskom, said at an Energy Systems Research Group event at the University of Cape Town that the performance of Eskom’s coal fleet is now more variable than that of wind and solar power.
According to Fick the variability of the 40 000MW coal fleet is about 4 000MW, compared to 150MW for the more than 6 000MW of renewables connected to the grid.
Eskom has been battling to reduce the extent of generation capacity offline due to unplanned breakdowns to less than 15 000MW, although it reported on Tuesday 19 September a reduction to 13 577MW.
Total energy availability has also been stubbornly below 60%, despite Ramokgopa saying at times it has improved to 60%.
Cabinet, in its latest statement published on 14 September, blamed the implementation of Stage 6 load shedding on the “concerted implementation of the planned fleet maintenance programme” and said it was “a regress from the trends that prevailed in the previous weeks of lower stages of load shedding”.
It continued: “Cabinet was assured that the current implementation of increased stages of load shedding is a short-term phase as Eskom prepares for more sustained and lessened stages of load shedding in the not-so-distant future.”
ANC secretary general Fikile Mbalula, in a post on X, once again set the goal of ending load shedding by the end of this year.
Load shedding suspended for another 16 hours:
Power utility Eskom says that further improvements in generating capacity has allowed it to suspend load shedding for most of the day on Wednesday.
The group said that load shedding would be suspended from midnight until 16h00 – then jumping back to stage 3 outages until Thursday morning.
The current plan is for load shedding to continue at stage 1 – however, changes are likely to occur.
Eskom has moved from setting a schedule for a few days in advance to providing daily updates with changes as they happen.
4. 10,000 fatal car accidents during 2022:
The more than 10,000 fatal car accidents on South Africa’s roads during 2022 cost the country’s economy in excess of R186 billion, translating to a cost of R7.8 million per crash, or 3.3% of the annual GDP.
Speaking on Cape Talk, Nivashni Nair, Sunday Times journalist, said she calculated this astounding figure by looking at numerous parameters affected by an accident past just the physical damage of the vehicle and/or its passengers.
This includes the loss of productivity of the passengers, cost of medical treatment, crash clean up, emergency medical services including the presence of the South African police, funeral costs, infrastructure damage, and long-term economic consequences of the loss of income, reduced productivity, and the impact on the victim’s family and dependents, she said.
These statistics, which reveal the far-reaching impacts of deteriorating road infrastructure, poor driver behaviour, and lackluster law enforcement, have never been released to the public by an official government agency and are in fact being ignored, said Nair, with little effort being made to decrease the number of fatal crashes in the country.
5. Nigeria seeks to deepen economic ties:
Nigeria’s President Bola Tinubu held talks with South African President Cyril Ramaphosa in New York, seeking to advance economic cooperation between the two largest economies in Africa, his spokesperson said on Monday.
The two African leaders met ahead of the United Nations General Assembly that is scheduled to start this week, they said in a joint statement.
“We can collaborate in a mutually beneficial way that enriches our populations,” Tinubu said, adding that both countries can cooperate in the mining and telecommunications industries to help “deliver jobs”.
Tinubu has embarked on Nigeria’s boldest reforms in decades, scrapping a popular but expensive petrol subsidy and lifting foreign exchange trading curbs. He has pledged to revive an economy struggling with record debt, anaemic growth and double-digit inflation.
President Ramaphosa hailed Tinubu’s “brave” economic reforms and pledged that South Africa will explore greater partnership with Nigeria.
“We are two major economies on our continent, and it is important that we deepen economic ties, particularly in light of the African Continental Free Trade Agreement,” Ramaphosa said.
“We would love to see Nigeria and South Africa working closely together on a number of issues because whenever we join hands, we have made an impact globally through those joint positions,” he said.
Tinubu also urged South Africa to join Nigeria in a call for reforms of global finance institutions to help Africa combat rising poverty and economic woes.
“We must join hands and agree that International Finance Institutions require reform as Africa is not to be a ground for economic scavenging any longer, but it is a place with gifted people that is ready for investment and cooperation,” Tinubu said.
Tinubu, attending his first UN General Assembly as Nigeria’s president, is also scheduled to meet U.S. President Joe Biden and executives from Microsoft, Meta and Exxon Mobil in New York in a drive to mobilize global capital to develop infrastructure.
All information sourced from articles posted by: DailyInvestor, BusinessTech, Moneyweb, TopAuto, and Fin24.
