News in South Africa 31st May:
1. Fuel price crisis:
Government is still looking at its options as the country faces a petrol price crisis with an increase of around R3.80 a litre taking the price to about R25 a litre.
The fuel levy was decreased by R1.50 two months ago, but this was only for a limited period.
There have been mounting calls for the fuel levy to be scrapped as South Africans battle to make ends meet.
But chief economist at Stanlib, Kevin Lings, said that it was not as simple as that as government can’t just lose that revenue.
“The fuel levy collects about R90 billion a year for government. So, where does government get that R90 billion from?” Lings explained.
But he said that government needed to do something to help South Africans: “Under current circumstances, it would be wise to try and ease the pressure consumers are under right now,” he said.
With high fuel prices, comes higher inflation and then higher interest rates. South Africans are waiting to see how government will handle what many are calling the fuel price crisis.
Lings said that this could have serious knock-on effects as unions and workers will see them demand double-digit wage increases.
2. More fees for cars:
The Department of Transport is considering several policy changes to encourage more environmentally-friendly car usage in South Africa.
The proposals are included in a revised white paper, published by the department this past week, and include:
- Stricter parking policies;
- Access restrictions for private cars;
- Higher licence fees;
- Road pricing or area licensing.
Many of these proposals are already in place in parts of Europe, with countries like the UK charging more for travel into the city centre and for using petrol vehicles.
However, the department of transport noted restraints on private car usage will not be implemented independently of improvements in the quality of public transport.
“Little consideration is currently given to environmentally sustainable transport practices within transport policy. South Africa, in line with the developed world, will have to adapt its economic growth policies to the requirements of environmentally sustainable development,” it said.
“Apart from any other considerations, this will be necessary to assure continued survival in the global economy. The planning and implementation of an environmentally sustainable system is required in the transport sector.”
It added that low-carbon modes of transportation should be prioritised in the design of transportation systems in urban areas, while public transport should promote minimum international standards on environmental issues.
“The design should be premised on avoiding and reducing travel demand, shifting to more economic and environmentally friendly high-occupancy modes of transport, and improving energy efficiency through technological measures. The environmental friendliness of rail must be leveraged and advanced consistent with the Road Freight Strategy.”
3. Supply chain pressures:
Supply chain pressures on the local economy are now worse than at the height of the Covid-19 pandemic and the 2008 global financial crisis, says auditing and professional services giant PwC.
“Russia’s invasion of Ukraine, the Covid-19 lockdown in China, the floods in KwaZulu-Natal and load shedding are making things more dire,” PwC warns in its latest South Africa Economic Outlook Report for 2022, published on Monday.
“…This requires companies to evaluate the resilience of their supply chains to continue providing goods and services,” says PwC South Africa senior economist Christie Viljoen.
PwC chief economist Lullu Krugel stated that the challenges companies are facing now are a result of a failure to diversify their supply chains.
“When [the] Covid-19 pandemic happened, everyone was saying we need to diversify our supply chains, and if you speak to a lot of South African businesses, they tell you that they have not done that,” she says.
“In some instances it’s because it was very difficult – the costs [were prohibitive] or they could not get alternative supply, or for some it was a matter of [focusing on] survival … I don’t think anybody anticipated that we would be sitting with the type of problems that we are dealing with today.”
Its gross domestic product (GDP) forecast for the South African economy this year is much lower, at around 2%.
“South Africa’s key trading partners include some of the world’s largest economies, including China and the euro area. These economies are currently facing a multitude of headwinds, including rising interest rates, supply chain disruption, resurging Covid-19 waves, as well as producer and consumer inflation at the highest levels in decades,” says Krugel, adding that this is an indication that growth patterns are returning to sluggish pre-Covid-19 levels.
“The challenge with the kind of growth we are forecasting now – and also what National Treasury and the [South African] Reserve Bank is forecasting – is that it is going back to where we were pre-Covid-19″
4. Equity markets recover:
Stock markets in Asia and Europe were higher Monday as investors were cautiously optimistic, despite concerns over inflation, as China eases some of its strict Covid curbs in Shanghai and Beijing.
After Tokyo and Hong Kong closed more than two percent higher, London equities added 0.2 percent while Frankfurt and Paris closed up by more than 0.7 percent.
Fears over the soaring cost of living cast a shadow, however, as oil rose back above $120 a barrel for the first time in two months, deepening fears that central banks could raise interest rates aggressively and drag down economic recovery.
Oil prices are rising on the back of European efforts to ban Russian supplies over the Ukraine war, but also from signs that China’s economic activity could pick up as Covid-related restrictions are eased.
New data on Monday showed inflation in both Germany and Spain soaring on higher energy and food prices, turning up the pressure on the European Central Bank to speed up monetary tightening, with a first rate hike expected in July.
“Worries about global growth have eased — and hopes (are) that China’s worst Covid woes may be over,” boosting the world’s number-two economy, said Hargreaves Lansdown analyst, Susannah Streeter.
“There was a ripple of relief across European markets after authorities in Shanghai announced a lifting of restrictions from Wednesday, with more production now expected to begin across the manufacturing and tech hub.”
The gains on Monday added to growing hope that a months-long sell-off may have run its course.
5. Ivermectin halted:
A programme permitting controlled access to ivermectin for the prevention or treatment of Covid-19 in humans has been terminated by the SA Health Products Regulatory Authority (Sahpra).
There was a buzz about the product in 2020, with reports of illicit ivermectin-containing products entering SA, as well as the use of veterinary ivermectin products.
Wanting to prevent an uncontrolled situation in which people were using veterinary ivermectin in a dangerous way, in January 2021 Sahpra said clinicians could apply to use permitted human formulations for specific named patients and would be obliged to report on the outcomes.
The “controlled compassionate use programme” granted permission to five importers of unregistered ivermectin oral solid dosage forms, and health facilities were enabled to hold bulk stock in anticipation of patient need. Individual named patient applications were required after prescribers had initiated use of ivermectin. Sahpra undertook to monitor the emerging evidence of safety and efficacy, for both treatment and prevention.
Since then, Sahpra said studies that suggested potential efficacy of ivermectin in the prevention and treatment of Covid-19 have been retracted. The findings of two large clinical trials conducted in 2021 also did not support the use of ivermectin for patients with Covid-19.
The US Food and Drug Administration (FDA) in October stated: “ivermectin has not been shown to be safe or effective for these indications” and cautioned “taking large doses of ivermectin is dangerous”.
The FDA said: “Even the levels of ivermectin for approved human uses can interact with other medications, like blood-thinners. You can also overdose on ivermectin, which can cause nausea, vomiting, diarrhoea, hypotension (low blood pressure), allergic reactions (itching and hives), dizziness, ataxia (problems with balance), seizures, coma and even death.”
All information sourced from articles posted by: EWN, BusinessTech, Moneyweb, Fin24, and TimesLive.
