News in South Africa 24th March:
1. Third wave closer than expected:
Experts from the Nelson Mandela University in the Eastern Cape have warned that their statistical modelling shows that the third wave of Covid-19 could hit even sooner than expected – now projecting an increase in infections at the end of March and early April.
From the modelling used in 2020, (based on the number of deaths) we predicted the first wave would peak around mid-to-end July, while national models predicted much later in the year, from September. We now know it peaked around July 19 2020.
The data for the Eastern Cape shows the province led the second wave, but by the time additional restrictions were introduced in October 2020, it was too late to effect optimal systems as we were already heading towards the festive season, with a lot of movement and interprovincial and cross-border travel.
This led to the second wave rapidly spreading throughout SA.
The runaway data at the moment signals more trouble is coming in the form of the third wave, but it won’t necessarily be the Eastern Cape driving it.
It might be driven by the Western Cape and spread countrywide.
2. JSE reducing red tape:
The JSE’s latest discussion document proposes a reduction in some of its regulations, as it aims to reduce the burden of red tape on listed companies. Areas of focus in the discussion document released earlier this month include approval for transactions “in the normal course of business”; share repurchases; raising capital by bookbuilds and allowing directors to follow a rights’ offer during a closed period.
In its introduction to the ‘cutting red tape’ discussion document, the JSE’s director of issuer regulations, Andre Visser, notes that “The JSE has been very active since 2014 in reviewing the listings requirements on a regular basis to allow for a more effective applications” thereof. However the JSE recognises that because capital markets regulation and legislation have evolved significantly over the last few years there may still be provisions of those requirements that “appear to be redundant and/or not fit for purpose”.
The JSE is now considering removing the obligation to get shareholder approval for a transaction that falls within the definition of the “ordinary course of business” that is valued at more than 10% of the company’s market capitalisation.
Alternatively it is considering increasing the 10% cap to 30%. The change, says the JSE, will provide companies with more flexibility when conducting their business. It also brings the JSE into line with London Stock Exchange Requirements.
However companies will have to discuss “ordinary course of business” transactions with the JSE and it will be down to the JSE to assess whether or not the transaction does fall into the definition of the “ordinary course of business”.
3. Hospitals and healthcare workers in crisis:
Harrowing investigative reports have uncovered hospitals and healthcare workers in crisis in the Eastern Cape, which faces legal claims of over R40 billion, and shortages of staff, equipment, facilities and specialists.
This has been an ongoing crisis for at least the last three years, that has been ignored by national government.
The long list of issues has been exacerbated by infrastructure problems around electricity, red tape and bureaucracy, and inaction from provincial government.
Desperate doctors at public hospitals in Gqeberha (formerly Port Elizabeth), fighting clinical and nursing vacancy rates as high as 60% in some departments, have, in an unprecedented move, declined to allow medical students to do their clinical rotation at the three hospitals in the city, saying they simply do not have the time to teach them.
“It was a painful decision to take,” one of the senior doctors said. “Training is one of the backbones of what we do. But we had no choice.”
Covid-19 has cut a path of destruction through the province’s hospitals, with 307 health workers dead and 11,978 infected, according to the Department of Health’s latest epidemiological report.
Eight thousand nurses and other temporary workers who have been helping in the hospitals with cleaning and nursing and who were being paid with “disaster funds” are facing the termination of their contracts at the end of March, but, even with their help, in some units doctors and nurses are doing dishes, cleaning, and wheeling patients to theatre.
“We have some of the most highly qualified and expensive porters in the world in this hospital,” one doctor said. “They all have MBChB degrees.”
4. Oil prices crashed:
Oil prices nosedived Tuesday on lower demand prospects as Europe’s biggest economy Germany said it would reimpose strict coronavirus containment measures and struggles along with other EU nations to roll out vaccines.
Germany will meanwhile enter a strict shutdown for five days over Easter amid surging virus rates, Chancellor Angela Merkel and regional leaders agreed Tuesday.
“Oil has tumbled today over growing concerns about European demand as tighter restrictions in countries is likely to be a setback in regards to reopening their economies,” said market analyst David Madden at CMC Markets UK.
Oil prices were on a march to $70 a barrel before the lockdown news hit, with prices currently at $58-$60 a barrel. For South Africans, if lower prices persist, this could lead to a slight reprieve in terms of fuel prices – however with higher taxes and a weaker rand, it is unlikely to reverse increases expected in April.
5. ADvTECH annual results:
Education group ADvTECH’s annual results show an 8% increase in revenue to R5.5 billion, with headline profit up 6%. While its pre-primary phase lost students, other schools and its tertiary education institutions saw growth.
Its SA schools saw a 4% increase in students to more than 27,000 by February 2021, while schools in the rest of Africa saw a 10% increase.
Its tertiary education unit grew revenue by 9% to R2.3 billion. ADvTECH’s brands include Trinityhouse, Vega and Varsity College.
“We’re seeing a return to normal levels of schooling,” says CEO Roy Douglas. “Even before Covid we had made substantial investments in online education, so when Covid arrived, we were relatively prepared. More importantly, I think we are well positioned for any future disruptions.”
When the lockdowns were announced, AdvTech transitioned 75 000 students to online tuition without losing a single academic day, adds Douglas.
Where the pain was most deeply felt was in disposable incomes of parents. “We were able to extend R47 million in assistance to more than 5 000 families through a very difficult period.”
Though operating profit grew by 5% to R910 million (2019: R869 million), there was a near doubling in loss allowance and bad debts written off amounting to R264 million (2019: R136 million).