News in South Africa 3rd November:
1. Load shedding causing mass job loss:
The ongoing power cuts in South Africa are expected to result in the shedding of at least 350 000 jobs, despite projections of 3.9% economic growth for 2021.
This is according to a research report by accounting firm PwC, which notes that the return of load shedding in the fourth quarter, after 11 weeks of no power cuts, undermines economic growth.
The report adds that although the global economic environment is favourable for trade-dependent South Africa, domestic challenges such as the ongoing power cuts continue to cloud scenarios for the remainder of the year.
“Overall, we expect load shedding to reduce 2021 GDP [gross domestic product] growth by three percentage points and cost the country 350 000 in potential jobs.”
Chief economist at economists.co.za Mike Schüssler says South Africa has lost well over a million jobs already due to load shedding.
“Think of all the businesses that didn’t start up and businesses that have closed down, the mines that haven’t expanded because there’s no power, and the extra refinery that we were going to have in Coega that didn’t come,” he says.
“There [are also] thousands of small farms that didn’t make it and had to consolidate. That meant job losses.”
Schüssler adds that the service industry that probably uses the most electricity is the telecommunications sector – and if users can’t use their cellphone, then those service providers can’t make money.
“The mining and manufacturing guys are [also] in real dire straits when there’s no power. I will say that we might lose another few tens of thousands of other jobs in the next few months if we don’t get rid of load shedding. We already have close to 12 million people unemployed.”
2. Petrol increases again:
South Africa’s petrol price increases of R1.21 per litre on Wednesday puts petrol inflation at 33.9% year on year, says Kevin Lings, chief economist at Stanlib.
With electricity inflation also at 14%, South Africa’s energy cost is now far outpacing incomes, he warned, adding that access to reliable and affordable energy sources is critical for South Africa’s economic success.
Speaking to radio station 702, Lings said that the considerable petrol price increases seen earlier this year didn’t have as significant an effect on households, as people weren’t travelling as much due to lockdown restrictions.
“There’s obviously a huge price effect that we’re now going to have to deal with more fully because we’re obviously trying to open up the economy and we’ve got the prospect of a bit more domestic tourism, people moving down to the coast for holidays,” he said.
Based on current metrics, Lings said that another increase was likely in December.
“Unfortunately, given where the currency is right now, there would be next month another increase of around 50c a litre if the oil price stays where it is, and the currency stays where it is. That would take us to R20 a litre.”
“If you’ve got electricity at 14% inflation and fuel at 34%, those increases are well in excess of any household income or business activity growth.”
3. ANC coming to an end?:
Political analysts are calling the ANC’s poor performance in the local elections – where it is expected to fall under 50% of the overall vote – ‘the beginning of the end’ for the party.
Voter apathy has dealt the ANC a deadly blow in the recent local government elections — and many experts believe it could be a precursor to the party’s future fortunes.
The ANC was already reeling from a poor performance in the 2016 local government vote, but it appears to be even worse this time around, according to experts and based on results counted by the end of Tuesday evening.
What has worsened the ANC’s misfortunes are new kid on the block ActionSA, along with the DA proving to be resilient, despite a controversial election campaign. The EFF has also grown in key areas, as has the Freedom Front Plus.
While the ANC in 2016 mainly lost in Gauteng and in the Nelson Mandela Bay metros, it now appears set to get a bloodied nose in its traditional strong bases, including in KwaZulu-Natal and the Free State.
In KZN, there was a 36% voter turnout in Monday’s local government elections, a low that will surely hurt the ANC.
Experts believe this is a new dawn in South African politics.
Associate professor at the Wits University’s school of governance, William Gumede, agreed, saying: “We are at a point where the ANC’s dominance is over, and they will need coalitions, even in a national election. This trend cannot be reversed, no matter what they say.”
In the future, Gumede said, municipalities will be governed by coalitions.
“The big thing for the ANC now is who are they going to go into coalition with,” he said.
Gumede said these elections were worse than 2016 for the ruling party.
“It’s too late for the ANC because when you have been dominant as a political party and then you drop under 50%, there is a psychological thing that happens in society and among your own allies, when they start deserting you,” he said.
4. Missing records of dodgy businesses:
A study by Corruption Watch has found that a national register of companies barred from doing business with the state has no names on it.
This is incredibly surprising, experts say, because South Africa has well-documented procurement corruption in South Africa.
The register was established under the Prevention and Combating of Corrupt Activities Act to assist state companies and departments in avoiding corrupt companies.
A second list containing names of companies suspected of doing dodgy business – including fronting in BEE and failing to fulfil previous contracts – was also empty in all metros except the City of Cape Town.
5. Ending deforestation and emissions:
A host of world leaders agreed to stop deforestation and reduce methane emissions by 2030 in two major agreements announced at the COP26 climate summit.
The deforestation pledged was signed by leaders of more than 100 countries – including the US, UK, China, Russia, and Brazil.
They committed to stopping and reversing deforestation by 2030. These countries have more than 86% of the world’s forests, according to the UK government, which is hosting the summit.
Brazil is an especially notable participant given the historical deforestation of the Amazon rainforest.
Twelve of the 100 or so nations also agreed to provide $12 billion between 2021 to 2025 to help developing countries reach the deforestation goal. The money is to restore degraded land and to support indigenous groups, the UK said.
The second big agreement covers emissions of methane, a greenhouse gas dozens of times more potent than carbon dioxide.
The White House announced on Tuesday that more than 90 governments joined President Joe Biden in pledging to reduce methane emissions by 2030.
Their goals is to “reduce the world’s methane emissions 30% from 2020 levels by 2030,” the White House said.
All information sourced from articles posted by: Moneyweb, BusinessTech, TimesLive, Fin24, and Business Insider.
