News in South Africa 6th December:
1. Politics draining rand:
The South African rand clawed back some of its losses since the release of the explosive section 89 report on president Cyril Ramaphosa’s Phala Phala farm last week, but it remains in shaky space as political uncertainty persists.
The rand recovered to around R17.19 a dollar on Monday (5 December) as Ramaphosa’s allies rallied around him at the ANC’s national executive committee meeting – this after tanking to around R17.60 amid speculation that the president would resign on Friday (2 December).
However, the currency remains under pressure – trading at around R17.40 on Tuesday – with a delay in the National Assembly vote on the report and Ramaphosa launching a Constitutional Court bid to have the report’s findings set aside, leading to political uncertainty around the president’s future.
According to Investec chief economist Annabel Bishop, the currency has not retreated to levels before the release of the report because concerns still centre on the president’s statement itself, along with some issues raised by the judges on the panel and the increased domestic political risk that has weakened the rand.
Things would have been worse for the local unit if international factors weren’t supporting its stronger position, she said.
“The rand was constrained in its reaction to the Phala Phala report by less hawkish comments coming from the Fed Governor, Jerome Powell indicating the likelihood of a smaller rate hike in December in the US,” she said.
“In addition, the rand’s continued partial recovery today was aided by China increasingly loosening its zero-tolerance stance against Covid-19 over the past weekend, reducing some of the fears about a harsher global economic slowdown than originally feared.”
Despite these supportive factors, risks still abound – and the rand consequently remains above R17.00/USD.
The Fed Chair continued to signal further rate hikes in 2023 – so while the rate may be slowing, the hikes will continue, Bishop said.
2. More SA firms are hiring again:
Hiring activity in South Africa has improved in recent months as companies emerge from the pandemic-induced lull. That’s especially true for the construction and engineering sectors, according to Career Junction’s latest jobs insights report.
South Africa’s employment landscape is slowly improving. After unemployment rates reached a record high of 35.3% in the fourth quarter of 2021, Statistics SA’s newest Quarterly Labour Force Survey (QLFS) shows a silver lining.
The country’s official unemployment rate declined to 32.9% in the third quarter of 2022, with around 204,000 jobs gained.
This employment trend coincides with recruitment activity tracked by Career Junction, which uses data gathered by around 5,000 of South Africa’s top recruiters that advertise positions to job seekers. This data is then used to compile Career Junction’s employment insights report.
The latest report, dealing with employment trends up to November, shows that hiring activity remains 9% higher than in 2021.
Building, construction, architecture, and engineering sectors have seen the biggest increase in hiring activity over the past three months, according to Career Junction.
The building and construction sector, including electricians, quantity surveying, and consulting engineering, showed the biggest increase in hiring activity of 19%. Architecture and engineering increased by 17%.
Increased hiring activity in the construction sector, as cited by Career Junction, aligns with Statistics SA’s latest QLFS. The third-largest job gains in the third quarter were made in the construction sector, with more than 46,000 employment opportunities realised. Only the manufacturing and trade sectors performed better.
The biggest increase in new construction jobs was recorded in the Northern Cape, which more than doubled employment in the sector over the course of a year. In Mpumalanga, jobs in the construction sector also increased by more than 30%, according to Statistics SA’s QLFS.
3. Municipalities overspending:
Finance minister Enoch Godongwana says that local governments are living beyond their means and are due to spend much more than their budgeted allocations.
According to Treasury, the total aggregated budgeted revenue for 2022/2023 will be R529.7 billion, while total municipal expenditure for the year will be R557.4 billion.
The main cost drivers are employee-related expenses, materials and bulk purchases.
4. Agriculture struck by water crisis:
One of Africa’s largest producers of agriculture chemicals says erratic rains and water shortages pose the biggest risk to food security on the continent, more than Russia’s war on Ukraine or other supply-chain disruptions.
Those water issues — driven by climate change — will see African countries grappling with food crises for decades to come, Seelan Gobalsamy, chief executive officer of South Africa’s Omnia Holdings Ltd., said in an interview Monday. Inadequate infrastructure to move key farming products will cause further problems, he said.
“When the sun shines, it’s harsher and when there’s rain, it comes down in buckets,” the CEO said in Bloomberg’s office in Johannesburg, hours before one of the heaviest summer hailstorms the city has experienced in years. “If you ask me what our biggest risk is going forward, is it Russia’s war on Ukraine, or supply chain? It’s actually climate change.”
“The impact of climate change on consumers, on the environment and on businesses will be massive in the coming decades.”
Sub-saharan Africa has been hit by a series of devastating climate-related weather events this year. Chad and Nigeria are among nations battling floods, and more than 400 people died when torrential rains hit the South African city of Durban. A series of cyclones has pummeled Madagascar and Mozambique while large swathes in the Horn of Africa are in the midst of a worst drought in four decades.
“Water is the biggest thing right now,” said Gobalsamy. In South Africa, “we have aging infrastructure and water supply is being disrupted. We have had some good rains last year for instance, and we need to focus on how to capture that.”
5. Deputy President land scammer:
The Organisation Undoing Tax Abuse (OUTA) has filed a criminal complaint against Deputy President David Mabuza with the NPA’s Investigating Directorate, accusing him of being involved in a R35 billion land claims scam.
OUTA says he’s involved in crimes such as theft, fraud, perjury and intimidation dating back as far as 2002 until today.
All information sourced from articles posted by: BusinessTech, Business Insider, BusinessLive, Moneyweb, and Daily Maverick.
