News in South Africa 26th September:
1. Schools – load shedding crisis:
The National Association of School Governing Bodies warns that the ongoing power cuts will have a devastating impact on the quality of schooling.
The country battled Stage 6 power cuts last week.
Eskom announced stage 3 load shedding for most of the week, escalating to stage 4 in the evenings.
The association’s Matakanye Matakanya has urged authorities to step in and help.
“It is a big, big problem and you must understand that the security in schools is using technology and so if the power has been cut the everything stands still,” he said.
2. SA gets investment grade rating:
South Africa generally has a good credit quality and its default risk currently remains low, according to Sovereign Africa Ratings (SAR).
The agency announced its findings on the country’s creditworthiness on Friday, giving South Africa a BBB long-term and B+ short-term rating, with a stable outlook.
Its views of the country’s sovereign status contradict those of the ‘big three’ – Moody’s Investors Service, S&P Global Ratings and Fitch Ratings – which together account for about 95% of international rating activity, having all been around for over a hundred years.
Moody’s latest assessment of South Africa stood at Ba2 with a positive outlook, while Fitch and S&P gave the country a BB- rating with a stable outlook.
SAR says to reach its findings, it considered “the direction and assessment of the South African economy in terms of key indicators and variables”, including natural resource endowments, climate change risks, economic growth, and government debt, as well as monetary and fiscal policy stance.
Supportive factors
“The ratings are also supported by the country’s reconstruction and recovery plan which aims to address some of the country’s challenges such as high unemployment, poverty and income inequality, energy, and water crises, as well as deteriorating infrastructure and logistics networks,” the agency says in its report.
Chief ratings officer David Mosaka explains: “Our ratings score [connotes] the fact that in terms of South Africa’s ability, capacity to honour its debt obligations, the South African government – or the Republic of South Africa – is very adequate in fulfilling that.
“That is a very key message of leading indicators that underpin the whole modelling exercise.”
Tackling ‘prejudices’ entrenched by the big three
Friedman said SAR’s work will disrupt the system and hopefully tackle the systematic prejudices the industry giants have created in their lifetimes.
“We desperately need a new perspective, and not a new perspective which is the ratings agency equivalent of sunshine journalism.
“It’s not a perspective that says everything is wonderful … it’s simply based on a far deeper-rooted understanding of the realities of the societies in which we operate than we are going to get from three people who fly in for three days and talk to … business people, so in that sense it [SAR] is very important,” he said.
Friedman did however add that in order to ensure that SAR achieves its goals, holding the agency to account for its work will be very important.
3. Tech selloff still on:
The great tech selloff of 2022 is far from over as investors brace for earnings misses that may spur a more than 10% plunge in the Nasdaq 100.
More than two-thirds of 914 respondents in the MLIV Pulse survey think profits of the technology companies will disappoint the market throughout 2022.
Firms including Alphabet Inc’s Google are at risk of advertisers cutting spending as the global economy struggles, while streaming services including Netflix Inc face an exodus of price-sensitive subscribers with consumers tightening their belts.
The Nasdaq 100 is down about 31% so far this year, wiping trillions of dollars in market value, as investors reassess the post-pandemic value of many business models. Interest-rate hikes are hitting stocks and diminishing the value of their future earnings. Inflation is driving up costs, while a stronger dollar is weighing on profits and the threat of recession is growing.
Retailers such as Amazon.com Inc. are finding some their direct responses to the Covid-19 pandemic — such as massive investments in warehouses and workers to pack products in them — are coming back to bite them.
Apple Inc. said it will raise the price of its App Store purchases across Asia and countries that use the euro, as the value of foreign currencies collapses relative to the dollar. Microsoft Corp lowered its forecast because of the currency’s strength in June.
And in July, Sony Group Corp warned investors about the impact of the global economic slowdown, especially in Europe, and the adverse effects of the strong dollar on its financial results. The Bloomberg dollar index, which tracks greenback’s performance against 10 leading global currencies, has set new record since those announcements were made.
Tech’s earnings are projected to lag the S&P 500 in the third and fourth quarters. Info tech’s earnings per share are estimated to fall 6.6% year-over-year in the third quarter, compared to a 3.2% gain for the overall S&P 500, according to Bloomberg Intelligence data.
The Nasdaq 100’s 12-month forward EPS has dropped about 2.9% since June 1, compared to a 0.8% drop for the S&P 500.
4. Cyberwarfare risks:
South Africa remains vulnerable to cyberwarfare, despite a plan to protect the country against threats to its national security and commercial capability being put into motion almost eight years ago.
Cyberattacks have increased at a rapid rate, especially since the onset of the Covid-19 pandemic, which left many businesses vulnerable to incidents as work moved from secure offices and servers to homes.
The private sector isn’t the only target of global cybercriminals. South Africa’s state-owned rail, port, and pipeline company, Transnet, became a victim of a ransomware attack in 2021. The country’s justice department was also targeted later that same year. These attacks, focused on South Africa’s critical infrastructure, are expected to increase in frequency and veracity, according to technology experts.
Government approved the National Cybersecurity Policy Framework (NCPF) in 2012, making it official through a gazette three years later. This was developed “to ensure a focussed and an all-embracing safety and security response in respect of the cybersecurity environment.” The NCPF deals, among other cyber threats, explicitly with the issue of cyberwarfare.
“In order to protect its interests in the event of a cyber-war, a cyber defence capacity has to be built,” notes the NCPF.
So far, the SANDF has created a Cyber Command and, in developing its operational capabilities, has conducted a skills audit among members and provided in-post training.
The team is currently able to detect and identify cyber threats, according to the presentation delivered to parliament by the Command’s head, Brigadier General Mafi Mgobozi, and is developing its own database to better predict future threats. The Cyber Command also claims to “hunt for threats and stop the threats” as part of a proactive response.
But the Cyber Command’s effectiveness and progress have been marred by funding issues – impacting the SANDF as a whole – together with a lack of human resources and technological expertise.
The “Cyber Command is able to function, however not optimally,” noted the presentation.
5. Concerns over corruption in CPT:
Lawmakers want the same real-time audit process that has been applied to the use of disaster relief funds in KZN to be used with the restoration of parliament in Cape Town.
The building was gutted by a fire in January and will take an estimated R1.5 billion to R2 billion to restore.
However, MPs have expressed concern about corruption and ‘cost overruns’ on the project and want appropriate measures in place to prevent this.
All information sourced from articles posted by: ENCA, Moneyweb, BusinessTech, Business Insider, and BusinessLive.
