News in South Africa 8th February:
1. Investors abandon SA:
Investors have lost faith in South Africa’s government and have halted investment despite a wealth of opportunities, the head of the country’s biggest employer in the crucial mining industry said.
More than 200 days of power cuts last year and blackouts every day so far in 2023 have dented confidence, as has the poor performance of the state transport utility and a plethora of other problems. Pledges to enact reforms to spur the economy have come to little, said Neal Froneman, CEO at Sibanye Stillwater.
“There is much more that we can invest in and the rest of South African businesses can invest in if the climate was different, if we had power, if we had clear policies and if it was more environmentally friendly,” Froneman said in an interview last week. “Business investment in South Africa is on strike until things improve.”
Corruption, crime and mixed messages from government ministers as to how quickly the country will transition to cleaner energy has also drawn criticism from a range of business leaders. Investment has been confined mainly to keeping existing businesses running rather than expanding their operations.
Mining accounted for 4% of gross domestic product in 2022, employed about 476 000 people and generated R878 billion of exports, according to the Minerals Council South Africa, a lobby group representing most mining groups operating in the country.
Largely as a result of the problems Froneman laid out, economic growth is anemic with economists surveyed by Bloomberg forecasting expansion of 1.2% this year. Unemployment at 32.9% is among the highest across more than 80 countries tracked by Bloomberg.
“Investors are very negatively disposed toward South Africa,” Froneman said. “They’ve lost faith and they’ve lost trust in the government.”
“Corruption – and the crime that stems from it — are a cancer eating away at the entire economy on a horrific scale,” he said. Progress made in energy provision was so late in the day that the system had already failed,” he said.
The poor performance of the economy could cost the ruling African National Congress power in next year’s general elections if it continues to “act in the party’s interest instead of the national interest,” Froneman said.
“They engage but they are unable to implement any of the things that are necessary to change this,” he said. “They will tell us what we want to hear but I don’t believe they are sincere in making a difference.”
2. 26 mega projects planned:
Nedbank has published its updated Capital Expenditure Project Listing for 2022, outlining the big capital projects that are currently underway in South Africa.
According to the bank, 2022 saw a moderation in fixed investment activity in the country as strong local and domestic headwinds unsettled and eroded business confidence.
The value of new projects announced during the year fell to R248.5 billion from R392.7 billion in 2021. The private sector remained the major driver of investment, with planned new projects rising to R193.6 billion, accounting for 78% of the total value of new projects announced in 2022.
Capital projects by government and public corporations were subdued compared with 2021. However, these institutions have announced many projects over the past two years, mainly the integrated strategic projects, which formed part of the economic recovery plan.
Nedbank said that it expects capital spending to slow in 2023. Downward pressure on investment will mainly be exerted by the impact of electricity shortages, which, coupled with slower global and local demand, easing commodity prices, slow progress with structural reforms and persistent policy uncertainties, will continue to hurt investor sentiment.
Most of the biggest projects were announced in the first half of the year before near-permanent load shedding became a daily feature of South African life.
Fittingly, the energy sector became one of the biggest sources of projects, accounting for the biggest chunk of announcements.
This includes the Green hydrogen plant at the Coega Special Economic Zone, worth R75 billion; the 5th and 6th rounds of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), valued at R34.3 billion and R12.1 billion, respectively; as well as the Seriti coal mine windfarm project, worth R12 billion.
Excluding those mega projects, total project announcements amounted to around R60 billion – which Nedbank said suggests hesitancy among businesses to commit to large capital expenditure given weak business confidence.
3. Ramaphosa cannot stop tariff increase:
Eskom chairperson Mpho Makwana says Cyril Ramaphosa never told the board not to hike electricity tariffs but did ask the embattled power utility to minimise the impact of the increase.
Makwana added that Ramapahosa’s refusing to allow for the increase would be a neglect of his duties.
If Eskom did not implement the increase, National Treasury would still not give them any financial assistance on budget day.
4. Blood shortage:
Blood rationing in hospitals could be a possibility, should the country’s stocks continue to decline, the South African National Blood Service (SANBS) has warned.
High demand for blood across the country has left stocks in steady decline.
SANBS urged South Africans to donate blood in order to maintain safe stock levels.
Anyone between the ages of 16 and 75, weighing a minimum of 50 kilograms, can donate blood.
The service’s spokesperson Khensani Mhlangu said blood rationing could have dire consequences for people who rely on transfusions.
“Before we got to day zero would be a situation where blood would have to be rationed and only severe maybe cases of illness would get transfusions, meaning that those who rely on blood transfusions every now and again would not be able to access this blood and they would fall severely ill.”
5. Literacy crisis worsening:
Fewer primary school children can read for meaning now than before the Covid pandemic, and most children entering grade two do not know the alphabet. But despite a literacy crisis, there is no national reading plan, no proper budget, no accurate reporting, and no progress on implementing vital interventions.
The results of the 2023 Reading Panel background report for the 2030 Reading Panel, written by leading education economist Nic Spaull (pictured), released Tuesday, show a country going backwards in the fundamental unit of education: literacy.
The 2030 Reading Panel is a group of leaders and researchers convened by former Deputy President Phumzile Mlambo-Ngcuka to ensure that all children in South Africa aged ten or older can read for meaning by 2030. The report finds that “nothing short of a sustained countrywide overhaul of the education system would be likely to yield this result”.
Extrapolating from Western Cape data, the report estimates that the share of grade 4 children that cannot read for meaning has increased to at least 82%, from 78% recorded in 2016.
The report finds that about 60% of children have not learned most of the letters of the alphabet by the end of grade one, citing data from the Department of Basic Education (DBE) Early Grade Reading Study (EGRS), which has followed children from over 200 schools for more than seven years in the North West province.
By the end of Grade 2, over 30% still don’t know all the letters of the alphabet. The report finds that these children are “perpetually behind and in ‘catch-up’ mode, although they never actually catch up”.
What is being done to ensure that literacy is put first? Frighteningly little, says the report.
The most visible national reading programme is the Presidential Youth Employment Initiative (PYEI) Educator Assistant Program. In 2023, nearly 30,000 Educator Assistants (EAs) are to be “Reading Champions” focused on improving reading for foundation phase learners. The report notes this with some scepticism, since the only requirements to enter are very low – 30% in matric and fluency in the home language of the school – and the Reading Champions will have no face-to-face training or be submitted to a selection process.
Nationally, the DBE is not giving the reading for meaning crisis-specific attention. Despite claims to the contrary from the DBE, the report finds that there is no National Reading Plan, and that the most recent “National Reading Strategy” was published in 2008.
In the 2022 Education Budget Vote, the budget specifically allocated for reading is R11-million to the Early Grade Reading Assessment. This targets 18 schools. The DBE only managed to reach nine schools.
All information sourced from articles posted by: Moneyweb, BusinessTech, Fin24, EWN, and MyBroadband.
