News in South Africa 9th January:

1. New goals for government:

ANC president Cyril Ramaphosa said load shedding, crime, and corruption were harming the party’s public standing and should be tackled head-on in its 2023 priorities. 

New goals for government
Photo by Arunodhai V

Ramaphosa was speaking at the party’s January 8 birthday celebrations in Bloemfontein, the Free State, on Sunday. The speech provides the setting for what the ANC and its government employees should focus on in the political year ahead. 

Thousands of ANC supporters, mostly dressed in the party’s branded yellow T-shirts, filled the stadium in anticipation of Ramaphosa’s address. 

The president said the party had seven priorities, with the most important being tackling the energy crisis to end load shedding, improving the delivery of services, and combating crime and corruption.

Ramaphosa told a packed stadium at the Dr Petrus Molemela Stadium the ANC had to find urgent solutions to ongoing load shedding that continued to impact economic growth. 

He added the government and Eskom should work on ensuring the return of additional units at the parastatal to clamp down on power cuts. Other cushions should be the further implementation of the government’s plan to source other forms of energy besides coal. 

“The board needs to recruit world-class professionals to fill vacancies in executive management.

Another concern was crime and corruption, which continue to be associated in some instances with ANC members. 

Ramaphosa said the ANC would continue to strengthen law enforcement agencies, saying a weak security cluster often bred continued lawlessness and violence. 

Another area of focus for him was local government, especially poor service delivery seen at this level.

The ANC event was held in the Mangaung Municipality, which has a record of poor service delivery.

Ramaphosa mentioned in his address the cries he heard during his visit. 

He said one of the solutions was for the ANC to continue with its aim of professionalising the public service. 

“Local government has a critical role in rebuilding local communities as a basis for an integrated developmental state.

“The collapse of many municipalities has had a devastating impact on citizens who must deal daily with sewage spills, water shortages, uncollected garbage, countless potholes, and inaccurate billing,” Ramaphosa added. 

The fact the ANC faces a tough national election in 2024 was not lost on the president, but he said there was no doubt the ANC was a party for the nation. 

2. Greylisting deadline looms:

South Africa is fast approaching the critical deadline set by the Financial Action Task Force (FATF) and will soon know whether it will be added to the global grey list or not.

South Africa underwent a mutual evaluation of its anti-money laundering and combating the financing of terrorism (AML/CFT) system by the FATF between April 2019 and June 2021, with the final report being finalised and published in an October 2021 Mutual Evaluation Report.

Failing to sufficiently address the shortcomings found in the report would lead to South Africa being greylisted by the FATF, which would hold significant consequences for businesses and the government’s efforts to draw investment and conduct operations internationally.

Treasury that it is currently engaged in various follow-up processes with the FATF, with a face-to-face meeting set with the authorities this week (13 January).

South Africa will be represented at the meetings by a delegation of officials drawn from the National Treasury, various departments and investigative units as well as the the National Prosecuting Authority and SARS.

“The meeting will give the South African delegation the opportunity to engage with the FATF Joint Group, and to respond to any further queries which the FATF Joint Group might have,” Treasury said.

South Africa will also present to the FATF on the progress made in addressing the deficiencies that were identified by the group.

The group will report to the FATF’s International Co-operation Review Group (ICRG) on the progress that South Africa has made in addressing the deficiencies, before the ICRG makes a final recommendation to the FATF Plenary ahead of its meeting of 22-24 February 2023.

3. Petrol price spikes incoming:

Efficient Group founder and chief economist Dawie Roodt said South Africans should expect an increase in the price of petrol and diesel because of higher taxes.

On Wednesday, the petrol price was cut by R2.06 per litre while diesel price decreased by R2.81 and R2.69 per litre from 50ppm and 500ppm, respectively.

The Department of Mineral Resources and Energy said the average Brent Crude oil price decrease was behind the fuel price cuts.

Oil prices also continue to drop in response to fears of a global economic recession, which is good news for consumers.

However, Roodt warned that South Africans should not expect petrol and diesel prices to continue to decline.

“I am sure we will see an increase in the petrol price in March because the finance minister always increases the fuel levy during his February meeting,” he said.

“The increase in fuel taxes is very painful, but a tax on petrol is less damaging to the economy than an increase in company or personal income taxes.”

Apart from tax increases, the fuel price is mainly driven by the rand exchange rate and the oil price.

The oil price is significantly influenced by the conflict in Ukraine. The war negatively affects the oil supply, which drives up the price.

On the other end of the scale, global recession fears are driving the oil price lower because of lower demand.

“I expect the oil price to gradually decline because of increased supply with countries like Venezuela pumping more oil.”

However, the situation looks less rosy in the longer term.

4. JSE companies lowering debts:

The deleveraging of the JSE continued in 2022, with total interest-bearing loans owed by all JSE companies – excluding banks – falling below R1 trillion for the first time in five years.

Debt peaked in 2020 at the height of the Covid-19 pandemic, when interest rates fell to 3.5% and companies scrambled to shore up balance sheets hit by plummeting sales.

The process of derisking balance sheets, already much in evidence in 2021, continued in 2022.

An analysis shows companies were more inclined to take on debt in 2020 to see them through the Covid crisis, but then began restructuring balance sheets as economic conditions improved.

A relatively brisk market recovery in 2021 allowed debt to be paid down as it became clear interest rates at 3.5% wouldn’t last. Once the fear of extended Covid lockdowns dissipated, companies raced to reduce debt in anticipation of a spike in interest rates.

JSE Top 40

The rump of this debt is owed by the JSE Top 40 companies, where the deleveraging trend is most in evidence.

Over five years, the companies showing sharp debt reductions are Anglo Platinum, brewer Anheuser-Busch, Aspen Pharmaceuticals, BHP, MTN, Pepkor, Sasol, Steinhoff and Sun International.

Meanwhile, property investment companies went against this trend, taking on more debt – in some cases to take advantage of property opportunities that presented themselves following the Covid lockdown crash in 2020.

5. World food prices at record high in 2022:

World food prices fell for a ninth month in a row in December, though they hit their highest level on record for the full year in 2022, UN data showed Friday.

Food prices soared to a monthly record high in March after Russia invaded agricultural powerhouse Ukraine, a major supplier of wheat and cooking oil to the world.

A Russian naval blockade that prevented Ukrainian grain exports was lifted following a deal in July that was brokered by Turkey and the United Nations.

The Food and Agriculture Organization said Friday its price index, which tracks the monthly change in international prices of a basket of food commodities, fell to 132.4 points in December, a 1.9 percent drop from November.

It was also one percent lower than in December 2021.

But the index was 14.3 percent higher overall in 2022 compared to the previous year as it reached an all-time high of 143.7 points.

“Calmer food commodity prices are welcome after two very volatile years,” FAO chief economist Maximo Torero said in a statement.

“It is important to remain vigilant and keep a strong focus on mitigating global food insecurity given that world food prices remain at elevated levels,” he said.

Torero said many staples are near record highs, with prices of rice rising and “still many risks associated with future supplies”.

All information sourced from articles posted by: News24, BusinessTech, MyBroadband, Moneyweb, and Fin24.

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