News in South Africa 25th September:
1. National Lottery corruption charges:
South Africa’s lottery regulator, the National Lotteries Commission (NLC), has been facing down a slew of allegations of mismanagement and corruption.
The commission finally released lists of its beneficiaries under sustained pressure, after first fighting the move.
In July, the Organisation Undoing Tax Abuse (Outa) laid criminal complaints of racketeering and fraud in connection with allegedly dodgy Lottery-funded projects. Outa alleges that funds have been siphoned off the Lotto, and has called for a full investigation into the complaints.
More recently, it said NLC Chief Operating Officer Phillemon Letwaba has breached the code of conduct of the South African Institute of Chartered Accounts (Saica).
2. Foschini Group’s Jet purchase approved:
The Competition Tribunal has approved the sale of Jet Stores, to The Foschini Group (TFG), subject to conditions.
The Competition Commission had recommended that the merger be approved after it investigated concerns from competitors that TFG would have obtained a dominant market position through the merger. But it found this was not the case.
The Tribunal conducted virtual proceedings on the matter on Wednesday and heard submissions from the Commission, the South African Commercial Catering and Allied Workers Union (Saccawu) and the merger parties.
TFG may now acquire Jet Stores, provided that it will not retrench employees as a result of the merger for a period of two years from the implementation date of the merger, the Tribunal said in a statement issued on Wednesday evening. TFG should also give preference to employees of Edcon, the retail group of which Jet stores is part, for any vacancies that arise in the Jet business for a period of three years from the merger implementation date.
In SA, the acquisition of 381 Jet stores will increase TFG’s market share in the whole apparel market to 22% after the merger. For clothing specifically, TFG’s market share would increase by 7.2% to 24.6% and in footwear, the group will command a 35.4% market share. But TFG will gain the most in the lower LSM market where its clothing market share is set to increase by almost 18%.
3. SA Express avoids liquidation:
SA Express’s employees are set to become its owners, after getting the go-ahead late Tuesday (September 22) from its business rescue practitioners Daniel Terblanche and Phahlani Mkhombo and the Department of Public Enterprises to buy the troubled state-owned airline.
Accepting the bid by its employees means SA Express, which went into business rescue in January after it could not pay a R11.3 million debt, will not be liquidated.
The move to have SA Express’s employees become its owners happened quickly, says Thabsile Sikakane, a spokesperson for Fly SAX, a special purpose vehicle the employees created.
Sikakane says the idea to have the employees take ownership was first floated by acting Public Enterprises DG Kgathatso Tlhakudi a few weeks ago.
Soon after, the employees were contacted by equity crowdfunding platform Uprise.Africa CEO Tabassum Qadir to see if it could assist. Aside from Uprise.Africa’s involvement, Sikakane says the employees’ bid got a further boost when they were also contacted by prospective investors about backing the venture.
One of SA Express’s unions also backed the move to have its employees become shareholders.
National Union of Metal Works of SA (Numsa) spokesperson Phakamile Hlubi-Majola says that while it preferred the airline to remain in state hands, as it is a strategic asset, it supports the move on the part of its employees.
4. Rand suffering from dollar claw back:
The strong dollar saw the rand come under additional pressure, trading to a low of R17.20/$ while South Africa celebrated Heritage Day, although the unit subsequently recovered lost ground to trade below R17. On Friday, the rand starts the day at R16.92 to the dollar, R19.74 to the euro and R21.57 to the pound
After gaining over 20% this year, gold is on track for its worst week in over a month, as the dollar continues to claw back some of its recently lost ground.
Risk sentiment improved overnight after strong numbers for new-home buying in the US, as well as renewed talks between US politicians about a new stimulus programme.
5. Eskom implements load reduction:
Eskom had issued a load reduction notice for various high-density areas in five provinces on Thursday evening as it battles to prevent network overloading which often leads to explosion of transformers.
Electricity will be cut off from 17:00 to 22:00 around Soweto, the Vaal, Newcastle, Ehlanzeni and Mopani District in Limpopo. The power generator said it is “battling to keep up with the increased equipment failure caused by overloading that is costing millions to repair.”
In Soweto, the affected areas will include: Diepkloof Zone 1-6, Orlando East, Orlando West, Orange Farm.