News in South Africa 25th March:
1. Repo rate decision today:
The Reserve Bank is expected to make a rates announcement today, with expectations that rates will be held at current levels of 3.5%.
Yesterday, CPI inflation for February came in at 2.9% – below the bank’s target zone, and the lowest rate since June 2020 when the rate was 2.2%
Economists say that while this would usually signal room for a cut, because the drop in inflation is weighted towards infrequent purchases (clothing, footwear, appliances), while things like food, electricity and fuel are much higher (5%+), the SARB will be mindful that consumers remain under pressure.
“With the economy as weak as it is, it’s just so difficult to pass on any sort of cost increase that companies are experiencing… For example, clothing inflation at the moment is 0.2%, footwear at 0.6%. The inflation rate for appliances like a fridge is well below 1%.” said, Kevin Lings, Chief economist – Stanlib Asset Management.
2. Vaccinations part of a study:
The Medical Research Council has again reminded South Africans that the current distribution of the Johnson & Johnson Covid-19 vaccine is not a rollout, but a “3B open-label study”, which replaced the government’s vaccine rollout when it was paused in February.
Medical Research Council president Prof Glenda Gray told parliament on Wednesday that South Africans were well aware that the distribution of the Johnson & Johnson Covid-19 vaccine to health workers was being done as part of a study and was not the actual rollout.
“I do not think we are covering up for anything. We held press conferences, we went on television with the minister. If you go on to our website, to the Electronic Vaccine Date System, you will see the consent forms. It is very clear and public that this is a phase 3B open-label study,” said Gray, who is also the co-principal investigator of the J&J implementation study.
Gray and her team appeared before parliament’s portfolio committee on health, where they gave an update on the J&J clinical trials. Responding to a question from the EFF’s Naledi Chirwa, Gray said that the Sisonke study aimed to vaccinate 500,000 health-care workers.
“As the rollout begins, we will work closely with the Department of Health to transition the sites to roll out vaccines, which will either be J&J or Pfizer.
Gray said the national vaccine programme was “stalled or paused” on February 9 after data was released showing that the AstraZeneca vaccine was not effective for mild and moderate infection from the dominant Covid-19 variant in SA.
3. Sanral silent on e-toll status:
The South African National Roads Agency (Sanral) has baulked at commenting on allegations that Electronic Toll Collection (ETC), which manages the collection of e-tolls in South Africa, agreed to pay R40 million to an allegedly dodgy subcontractor two weeks before ETC won the Gauteng Freeway Improvement Project (GFIP) e-tolls contract.
Sanral general manager for communications Vusi Mona this week declined to respond to a list of questions emailed to Sanral on March 3 related to these allegations and to a request last week for additional comment after the Organisation Undoing Tax Abuse (Outa) publicly released further information about the alleged dodgy payments.
Sanral’s official line on the matter is that it cannot comment on anything until transport minister Fikile Mbalula has made an announcement on the future of the e-tolling system.
4. Cabinet reshuffle in the works:
A shake-up in the department of public enterprises has been mooted as President Cyril Ramaphosa mulls over slashing his bloated cabinet. Several sources close to the talks stated that Ramaphosa is gearing up to move some of the beleaguered state-owned enterprises from Minister of Public Enterprises Pravin Gordhan’s portfolio. Among them is South African Airways (SAA), which is expected to move to Minister Fikile Mbalula’s transport portfolio.
The sources also stated that the struggling power utility Eskom will be transferred to the department of energy under Minister Gwede Mantashe.
Ramaphosa is still deciding whether he should bite the bullet and axe some of his struggling cabinet ministers. However, according to another source, the president may make an announcement soon.
“There is that debate that we collapse public enterprises because the portfolios are two-fold. For instance, with Eskom, you find that Gwede is struggling to enforce action in minerals and energy.”
It has been said that these failed SOEs will likely be moved to better-suited portfolios – transport and energy, respectively. President Cyril Ramaphosa hasn’t made any sweeping changes to his cabinet for some time, and has made no major move to shrink it since the initial downsizing when he was elected.
5. Naspers and Prosus take a knock:
Naspers and Prosus both lost around 1% of their value after Tencent reported its quarterly results yesterday – but the SA companies could face more pressure today after a large slump in Tencent’s share price overnight.
Investors are worried about a Chinese government crackdown on Tencent platforms, while in the US, regulators have also threatened tech companies with delisting from American bourses if they continue to fail to comply with US auditing rules.