News in South Africa 25th January:
1. R1.2trn needed for food import costs:
Farmers in Africa will need as much as $65 billion (nearly R1.2 trillion) in loans annually to produce enough food to curb imports and cushion their economies from external shocks.
The continent imports over 100 million metric tons of cereals at an annual cost of $75 billion, the African Development Bank said in a statement. Recent spikes in inflation, including increases in food prices following Russia’s invasion of Ukraine, further demonstrate Africa’s over-reliance on imports of food staples and agricultural inputs, it said.
“A major obstacle to the development of private actors is the lack of credit financing,” the Abidjan-based lender said. Several studies put the figure on the order of between $27 billion to $65 billion a year, the AfDB said.
Russia’s invasion of Ukraine triggered a shortage of at least 30 million ton of food across Africa, especially wheat, maize, and soybeans, it said. The war sent wheat prices soaring by more than 40% in some countries while fertilizer costs in most African nations jumped three to four times from 2020 levels, resulting in a 2 million-ton supply gap.
Africa’s food and agriculture market could increase from $280 billion a year to $1 trillion by 2030, the lender said. Achieving this target will require significant new investments and the removal of barriers to agricultural development, it said.
The continent’s farmers struggle to access private financing largely because of the perceived risks of investing in farming. The AfDB has begun deploying so-called risk reduction tools, such as commercial credit guarantees to ease lending requirements to African farmers and agribusiness.
The goal is to “move from traditional subsistence agriculture to a modern and competitive African agro-industrial sector that can feed the entire African continent,” AfDB said.
2. Help needed from oil companies:
Oil companies are under pressure to come to the rescue of fuel retailers, who are suffering because of the additional expenditure they are incurring due to load shedding and losses on their fuel stockholding when petrol prices decrease.
The retailers claim they are also not fully compensated in the fuel price for the cost of debit and credit card sales.
Catch-22
The gripe from the service station network is that although load shedding is a government and country problem, Engen and other oil companies benefit from stable or higher fuel sales but the fuel dealers are bearing the cost of running generators during load shedding, he said.
“It’s an absolute loss to run a shift from midnight to 5am. There is nothing happening. That is what dealers are up in arms about. They [oil companies] aren’t giving us the option to close between those hours,” said Kharbai.
“However, it becomes a security risk if you are in total darkness and your site is closed.”
He added that discussions with the oil companies about sites remaining open 24/7 are ongoing.
3. Tutuka – crime ridden power station:
Eskom CEO Andre de Ruyter says the power utility is implementing a recovery plan to get as many megawatts back onto the grid as soon as possible – but the plan depends on everything going right, including resolving issues at its worst-performing power station, Tutuka.
Presenting the plan to the Standing Committee on Public Accounts (Scopa) on Tuesday, de Ruyter said that Eskom’s six worst-performing power stations would be the focus of its recovery efforts.
These stations are:
- Tutuka
- Duva
- Mejuba
- Kusile
- Matla
- Kendal
Tutuka is the worst-performing station in Eskom’s fleet, which de Ruyter said is simply unacceptable, given that it is one of the newer stations.
The station operates at an energy availability factor of 15% to 17%. The Eskom chief said this is disappointingly low. The reason for this, he said, is that criminality is rife in the area, and the station and its staff are under siege by criminal elements.
“The station’s manager has to wear a bulletproof vest when walking the stations and is accompanied by two bodyguards. His wife has bodyguards, and his children go to school with bodyguards – all as a result of threats being made on his life,” de Ruyter said.
He said criminality is an egregious problem that needs to be addressed.
If this problem isn’t resolved, Eskom’s entire recovery plan is at risk of not delivering the megawatts it needs to the national grid, as Tutuka is a key element of this plan.
4. Gupta supplied locomotives idle for 6 years:
Among the locomotives the Chinese state sold South Africa – with the help of the Gupta family – some have been standing idle for more than six years, documents released by Transnet this week show.
None of the locomotives are more than 10 years old yet.
Transnet has now formally started the process of finding an alternative supplier to help fix at least 160 of those locomotives at various sites around the country, though it expects more to break down.
Transnet Freight Rail (TFR) started taking delivery of the locomotives, designated 20E, 21E and 22E, in 2013. Some of those have not been in service for 2,337 days, Transnet says, or a little under 6.5 years.
The reasons they have been sitting idle include “derailments, accidents, incidents of vandalism”, with parts stolen in some case, and the inability to source spare parts.
The situation “led to a gradual deterioration of services that TFR offers to its freight customers as a result of a shortage of locomotives”, Transnet says dryly in its new request for proposals to sort them out.
In December, the Minerals Council South Africa called for the firing of TFR’s CEO and the group CEO of Transnet because of what it said was the dire decline Transnet has suffered under their watch.
Transnet anticipates that its new supplier may have to redesign components, or entire sub-systems, to get the locomotives running. That, it thinks, could take up to two years.
5. Crime levels rising during load shedding:
Experts in the security sector have raised concerns about crime levels during peak load shedding schedules and the little improvement made in policing over the last few years.
Head of Justice and Violence Prevention at the Institute for Security Studies, Gareth Newham, said: “Load shedding comes at a time when the state is very precarious. We have not seen improvements in the police in the last five years under the current administration. The decline in the ability to solve murders, to solve armed robberies, and organised crime has continued in the police.
“What you have seen is a decrease in reporting rates because the police don’t take street robberies very seriously, unless you are seriously injured or killed,” Newham said on Tuesday at a media briefing about load shedding-related security threats.
Newham added that there had been a significant increase in car and truck hijackings and that the state was “not able to get on top of that”.
He said load shedding affected home security systems and made people vulnerable to crime.
“We have seen [from] some insurance figures that there has been an increase in claims of house burglaries and robberies during load shedding schedules, and that has increased quite a lot over weekends.
“The increases seem to be spiking as a result of load shedding. Load shedding is a very worrying factor that powers on to a number of other factors that weaken our public security situation and the ability of the state to effectively respond to that situation,” he said.
He added that load shedding would make police stations vulnerable.
All information sourced from articles posted by: Fin24, Moneyweb, BusinessTech, Business Insider, and News24.
