News in South Africa 26th March:
1. SAA grounded despite bailouts:
SAA’s business rescue process is almost at an end, but despite billions in money forked over by government in bailouts, there is still no real plan to get the restructured airline off the ground.
Business rescue practitioners Siviwe Dongwana and Les Matuson notified the airline’s creditors and employees earlier this month that SAA has already received R2 billion in working capital to resume operations.
This is however unlikely to be sufficient to cover the cost of recapitalising the cash-strapped state owned carrier.
The business rescue plan, which was approved by creditors in July last year, envisaged that the airline would resume operations when the country eased restrictions, with domestic travel commencing under levels two and three of the lockdown and international travel resuming under level one.
However the airline was only able to conduct some repatriation and cargo flights throughout 2020 due to financial constraints and continued travel bans.
SAA has received R7.8 billion of the R10.5 billion that was allocated for the implementation of the business plan in the 2020 medium-term budget policy statement (MTBPS). This amount covers payments to employees, payments to post-commencement creditors and unflown ticket liabilities.
Government says it will cover the full cost of the restructure, but needs an equity partner for future capitalisation.
2. Repo rate left unchanged:
Yesterday, the Reserve Bank kept the repo rate on hold at 3.5%, with all five members of the Monetary Policy Committee voting to keep rates unchanged.
The prime rate remains at 7%.
The rand held steady following the announcement – trading around R14.93 to the US dollar.
Members see inflation remaining relatively contained into 2021. Inflation is expected to rise to around the midpoint (4.5%) of the target range in 2022 and 2023.
The bank revised its headline consumer inflation forecast to 4.3%, from 4%. The forecast for 2022 was revised lower from 4.5% to 4.4%. “The overall risks to the inflation outlook appear to be balanced,” said Kganyago.
The Reserve Bank forecasts first growth to be -0.2%, down from 1%, since the January MPC meeting. However, stronger quarterly outcomes are expected for the remainder of the year. The bank revised its growth forecast for 2021 from 3.6% to 3.8%, having considered possible new waves of Covid-19 infections and constraints to energy supply.
3. Zuma ready for jail:
Jacob Zuma says he is ready to go to jail, and that he has lost faith in South Africa’s judges and courts, including the Constitutional Court.
The former president, who has a long history with the country’s courts, is refusing to abide by a Constitutional Court ruling that he appear before the state capture commission, where over 40 witnesses named him as being core to the saga.
Zuma has written a 25 point statement explaining why he didn’t appear before the state capture commission.
On Thursday, the commission’s lawyer, Advocate Tembeka Ngcukaitobi, pleaded with the Constitutional Court to give Zuma a two-year sentence, for contempt of court.
The court reserved judgment.
Zuma accused the commission of bias and being incompetent, and said Constitutional Court itself is made up of people who have it out for him.
4. Sygnia’s founder resigns:
Investment company Sygnia’s founder Magda Wierzycka has resigned as joint CEO – as she shifts her focus to finding overseas opportunities, and concentrates on her own investment vehicle.
David Hufton, who was named deputy CEO in 2018, then joined Wierzycka at the helm of Sygnia last year, will take the role of sole CEO from June.
Speaking after the announcement, Wierzycka said stepping down was a decision long in the making. The move was not particularly huge from Sygnia’s perspective, she said, given she will remain a majority shareholder of the business and will continue to serve on its board.
“I will contribute as much as possible to the strategy of the business, to the innovation, to looking for opportunities for Sygnia; not only here in South Africa but also overseas. But the fact that I’m no longer tied to day-to-day operations gives me the freedom and the flexibility to do all of that,” she said.
Part of her plan involves looking for investment opportunities for Sygnia – particularly in the US, where she is looking to spend three months this year, to study its economy.
She is also focusing more attention on her investment vehicle Braavos Investment Advisors, which has already attracted £5 billion (more than R100 billion) in assets under management, she said.
5. Churches worried about restrictions:
South African churches are worried about talk of tighter lockdown restrictions, after recommendations were made this week that the country move to a higher level of lockdown to avoid super spreader events at Easter gatherings at the end of the month.
The South African Council of Churches says that it is talking to its members to ensure that gatherings are monitored and restricted, but believes that religious celebrations can still take place as they did in 2020.
“The SACC is to reach out to other faiths to say what is the most sustainable way to sustain lives, livelihoods and religions.” said, Bishop Malusi Mpumlwana, Secretary – South African Council of Churches
“It is possible to have Easter the same way we last year. Bigger churches can impose caps depending on space. Churches will look at how to manage compliance.”