News in South Africa 22nd April:
1. Renewed surge of infections globally:
The renewed surge in Covid-19 infections is threatening to further divide the world economy between the rich and poor, potentially damaging overall global growth if the fresh outbreaks spread or if key sources of demand falter.
More people were diagnosed with Covid-19 last week than any other since the pandemic began. The World Health Organization this week warned that new infections are increasing everywhere except Europe, led by rocketing numbers in India with cases also rising in Argentina, Turkey and Brazil.
That’s casting a shadow over a previously vigorous global economic rebound given that failure to control the virus or get vaccines distributed evenly risks driving new mutations, first in emerging markets and then on to developed nations that had been beating the pandemic back.
Even if that doesn’t happen, a two-speed recovery will restrain even inoculated countries by limiting foreign demand for their goods and destabilizing supply chains. The International Monetary Fund said last month that the recovery will miss out on a $9 trillion bump by 2025 unless faster progress is made in ending the health crisis.
Emerging and developing economies accounted for two thirds of global growth before the pandemic and around 86% of the world’s population. The World Bank told them just this week that they must prepare for the possibility of their recoveries losing steam.
2. Headline inflation rises:
Inflation has ticked up. Stats SA data showed that consumer price inflation rose by 3.2% in March on a year-on-year basis. That’s up on the 2.9% print recorded for February. The inflation level remains well within the Reserve Bank’s inflation target band of 3 to 6%.
Experts expect quite a big increase in inflation in April – with it going up to about 4.3% for April, and that’s going to be largely as a result of an increase in fuel price inflation again.
Now we’re entering that period where we have positive fuel prices actually over $60 a barrel, compared to last year where oil was below $10 a barrel, and in the case of WTI (West Texas Intermediate) going even negative.
When we are comparing the same months one year apart, that increase is going to be much higher. So we see the probability of fuel prices going above 20% and higher over the next couple of months.
3. EOH to pay back R40mil:
Listed tech firm EOH has agreed to pay back over R40 million from contracts awarded by the Department of Defence that were found to be irregular.
The Special Investigating Unit, which has been probing procurement contracts awarded by the DoD to EOH worth some R250 million, said in a statement on Wednesday that it had uncovered irregularities relating to the procurement process, as well as overpricing of Microsoft Licences, amounting to more than R40 million.
“EOH was confronted and acknowledged the said overpricing. EOH agreed to sign an Acknowledgement of Debt (AoD) and has since signed the AoD with the SIU to the value of R41 676 493.92, which is to be paid back to the DoD,” spokesperson Kaizer Kganyago said.
The SIU added that the company had agreed to pay back the money over a period of three years with interest.
However, the SIU emphasised that the signing or acceptance of the AoD by EOH would not exonerate the company from paying any further amounts due to the DoD that might be uncovered by its investigations in future.
4. Bird flu makes a return:
A second outbreak of avian influenza has been detected in the North West province, a week after it was found at a commercial layer farm in the east of Johannesburg.
The South African Poultry Association reported that an outbreak of the highly pathogenic H5 virus was detected on a broiler breeder farm in North West. The farm has had to cull 7,000 broiler breeder birds, the poultry industry body said in a statement.
The association said that the birds’ remains had been sent to the Onderstepoort Veterinary Research Institute for analysis and sequencing.
The strain of the avian flu detected last week on the Johannesburg farm has been identified as (Highly Pathogenic Avian Infulenza) HPAI H5N1 and is different from the 2017 outbreak. The farm has culled 240,000 birds as part of its attempts to contain the virus’ spread and protect surrounding farms. It will cost R20 million to replace the birds.
In 2017, South Africa had a flare-up of the H5N8 bird flu, which caused an egg shortage and saw the industry kill about 4.7 million hens, or 20% of the national flock.
“Any outbreak of HPAI is treated as extremely serious and virulent, and the poultry industry remains in a state of high alert,” the poultry association said.
5. Pick n Pay and Netcare data:
Pick n Pay’s headline profit fell by more than 21% over the past year, while its turnover grew by more than 4% to R93 billion. The retailer plans to invest R2.5 billion into new stores aimed at lower-to middle-income households.
Netcare released a trading update for the past six months: while its revenue was up compared to the previous six months – it was at least 5.5% lower than in the same time in the previous year. EBITDA was at least 36% lower, “due to the negative impact of Covid-19 on patient activity”.