News in South Africa 22nd December:
1. Lights on over festive season:
“We will have a festive season with the lights on,” Electricity Minister Kgosientsho Ramokgopa said on Thursday.
The country has about 27 700 megawatts available and demand is averaging just more than 24 000 megawatts, Ramokgopa said during a briefing. That’s why we’re not seeing load shedding right now, he said.
Load shedding is currently suspended until at least Friday afternoon. While Ramakgopa would not be drawn on how long this would last, he did intimate that the real test for electricity supply would be in the new year, when industry returns.
“The lights will remain on, going into the near future. The trend line is positive. What we will celebrate is if we can sustain it.”
Losses fell below 11 000 megawatts from 18 December, but the point is to maintain this, the minister said. Eskom is carrying out “aggressive maintenance” and adding extra maintenance in addition to what was already planned, so that when business picks up again in January, the positive trend line can be sustained, Ramokgopa said.
While he was cautiously upbeat, 2023 has been SA’s worst-ever year of power outages. Eskom’s recently released interim results showed plant performance had continued to decline, that municipal arrears had climbed almost R12 billion to R70 billion in just six months, profit was half of what it was a year earlier and Eskom’s debt burden – R442.7 billion at the end of September – was still rising.
Looking back on 2023, Ramokgopa said one of the lowlights was the energy availability factor – the percentage of Eskom’s plants available to deliver energy – which was 55.4%.
“We want to ramp that up to 60%. We haven’t reached that target. I’m sure we’ll be closer to that by March next year,” he said.
Eskom’s power stations continue to be unreliable, but lessons have been learnt, according to the minister.
The delays in returning Koeberg unit 1 to service have also taught the team how to avoid some of the same issues as Unit 2 of the nuclear power plant goes offline for refurbishment.
The burning of diesel to run its emergency generation fleet is expensive and unsustainable, says Ramokgopa. Of late, this has dropped significantly because of the current electricity surplus. Eskom was also running out of money for diesel, and if it had carried on using the fuel to produce electricity at the same rate it had been using it in prior months, the budget would have been blown by January.
2. Rental market thriving:
South Africa’s rental market has recovered from the lows of the Covid-19 pandemic as the country’s high interest rates have made buying property far more expensive for many consumers.
This is according to TPN Credit Bureau’s industry principal, Waldo Marcus, who told Kaya Biz that South Africa’s residential rental vacancies declined significantly in the third quarter of this year.
Residential rental vacancies dropped to 6.76% in Q3, down from 7.27% in the previous quarter.
In other words, just under 7 out of 100 residential units in South Africa were vacant during this quarter – the lowest quarter since 2017.
Year-on-year, overall vacancies have decreased by 11.52% on average.
Marcus said this positive trend in the rental market aligns with the overall performance throughout the year, signalling a departure from the challenges the sector faced during the Covid-19 pandemic.
He said one of the key factors contributing to this strength is South Africa’s persistently high interest rates.
Since November 2021, the South African Reserve Bank has hiked the country’s interest rate ten times and by a cumulative 475 basis points.
This has brought the repo rate to a 14-year high of 8.25% and the prime lending rate to 11.75%.
Marcus said these rates put a lot of pressure on property purchases, making ownership significantly more costly.
This is especially true when coupled with the country’s high inflation, rates and taxes, and utility expenses.
Therefore, renting has become a more attractive and viable alternative to property ownership.
In addition, Marcus said consumers are making more informed decisions and balancing their household budgets better to ensure they have some predictability for their household expenses.
He added that property investors are reaping the benefits of this robust rental demand.
Lower vacancies give property investors the space to navigate the pressures of the current economic climate.
While the leeway may be limited, Marcus said investors have the opportunity for investors to gradually increase rental prices, given the sustained demand for rental properties.
3. Massive visa backlog:
An immigration law expert says that the number of visa applications blocked due to inefficiencies at Home Affairs is likely worse than the department lets on and added it has little intention of addressing the issue because of bureaucratic attitudes towards foreigners.
Home Affairs Minister Aaron Motsoaledi noted in a recent parliamentary Q&A that the backlog in temporary residency visas remained at over 74,309 – unchanged from the department’s last report at the end of October 2023 – adding that an additional backlog of 43,944 in permanent residency permits also remains.
South Africa has long been facing a significant skills shortage, and businesses have been struggling to attract much-needed skills to the country, with their efforts having been hindered by the failures at Home Affairs.
Companies have reported that visa applications can take up to 48 weeks to be accepted, which poses a threat to expansion plans, investment, and job creation in a country with a 33% unemployment rate.
A point of how bad the backlog is, a report prepared for the presidency noted that between 2014 and 2021, only 25,298 skilled work permit visas were approved.
Speaking to Newzroom Afrika, immigration lawyer Gary Eisenberg said that the backlog crisis is probably much worse and that the numbers provided by the department are somewhat misleading.
“It’s unclear whether the numbers given by the department include application appeals and those under review, and that number is likely far higher than the 74,000,” said Eisenberg.
“Even if some foreigners with the means are able to get a court order to force the minister to make a decision on their applications, many of those orders are being ignored,” he noted.
Eisenberg added that skilled foreign professionals – who are needed to fill the gaps on the critical skills list – are simply walking away. “They cannot wait a year for a visa or spousal visa, so they are going elsewhere.”
He also noted that the department has little intention to fix the issues, and this is being of bureaucratic attitudes towards foreigners. “If a foreigner doesn’t want to sit and wait, then it’s fine; they must go. That’s the attitude we’re sitting with at Home Affairs,” he said.
Eisenberg also notes that he has little faith that the department will fix it anytime soon or even have the will to address the issues.
Potential evidence of this is the fact that in a parliamentary Q&A near the end of November, Motsoaledi noted that the time frame to fix the backlog has been pushed back to November 2024 from June 2024.
4. SA’s worst year of darkness:
This has been SA’s worst year of darkness under new electricity minister.
The country has experienced about 332 days of load shedding – and at higher stages than ever before.
Over the 153 days of winter (April 1-August 31), the country endured outages every day, with 55 days spent at a maximum of stage 3; 42 days at stage 4; and 39 days at stage 6.
The economy experienced stage 6 levels of load-shedding in one day out of every five.
5. Markets falter as pre-Christmas rally falls:
Stock markets faltered Thursday following an early pre-Christmas rally that was fuelled by expectations the US Federal Reserve will slash interest rates next year as inflation cools in the world’s biggest economy.
Asian indices struck a mixed note although Tokyo tumbled on troubling news from Japanese carmaker Toyota, whose share price tanked.
European equities slid, as London hit reverse one day after jumping on news of a sharper-than-expected slowdown in UK inflation, and with many traders away for the yuletide break.
Eyes are now on Friday’s upcoming release of the personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of inflation, which could be key for its next meeting in January.
Santa Rally?:
“Investors abruptly slammed the brakes on the year-end Santa rally,” said SPI Asset Management analyst Stephen Innes
New York’s three main indices lost more than one percent apiece on Wednesday, with the Dow coming off five straight records.
US equities had driven higher since late October, following a nearly unbroken path as inflation moderated and the Federal Reserve flagged plans for 2024 interest rate cuts.
A stream of US data in recent weeks has shown inflation continues to slow and the jobs market is softening, while other economic indicators suggest the US central bank is on course to bring prices under control while averting a recession.
The latest figures on Wednesday showed US consumer confidence bouncing back more than forecast, while home sales came off a 13-year low.
The most recent Fed gathering ended with officials indicating they would cut about three times in 2024, sparking a buying frenzy in markets and forcing some policymakers to try to temper expectations.
Traders are now eagerly awaiting fresh US data on Friday, which is the last trading day before Christmas.
Key figures around 1100 GMT:
- London – FTSE 100: DOWN 0.4 percent at 7,687.33 points
- Paris – CAC 40: DOWN 0.5 percent at 7,549.60
- Frankfurt – DAX: DOWN 0.5 percent at 16,646.24
- EURO STOXX 50: DOWN 0.5 percent at 4,512.86
- Tokyo – Nikkei 225: DOWN 1.6 percent at 33,140.47 (close)
- Hong Kong – Hang Seng Index: FLAT at 16,621.13 (close)
- Shanghai – Composite: UP 0.6 percent at 2,918.71 (close)
- New York – Dow: DOWN 1.3 percent at 37,082.00 (close)
- Euro/dollar: UP at $1.0943 from $1.0942 on Wednesday
- Dollar/yen: DOWN at 143.05 yen from 143.57 yen
- Pound/dollar: DOWN at $1.2628 from $1.2639
- Euro/pound: UP at 86.65 pence from 86.57 pence
- West Texas Intermediate: DOWN 0.3 percent at $73.97 per barrel
- Brent North Sea crude: DOWN 0.4 percent at $79.41 per barrel
All information sourced from articles posted by: Fin24, DailyInvestor, BusinessTech, Financial Mail, and eNCA.
