News in South Africa 9th November:

1. Load shedding at stage 4 all week:

More than half of Eskom’s installed capacity was offline on Monday, necessitating the move to stage 4 load shedding for the rest of the week.

Load shedding at stage 4 all week
Image taken by: Dazzle Jam

As the country is plunged into darkness at least three times a day, president Cyril Ramaphosa, his deputy David Mabuza, and cabinet ministers in charge of the state-owned power utility have failed to turn up with any plan of action or solution to the problem.

Public Enterprises minister Pravin Gordhan says that government needs to move with a sense of urgency, but no plan has been forthcoming.

Energy experts, meanwhile, say that the government’s dithering and corruption involved in the new station builds like Kusile are to blame for the ongoing crisis.

Commenting on this, Ramaphosa said that the biggest risk facing South Africa right now is that the country relies on Eskom as the sole generator of electricity.

Addressing a press conference on Monday evening (8 November), the president said that the country simply does not have a choice of moving from one provider to the other.

“The independent power producers are pumping in whatever they can, but the majority of them are still under construction,” he said. “The direction that we now need to move towards is to restructure Eskom to have a separate generation entity that can purchase power from other producers.”

With this split, Ramaphosa said that a separate government-owned transmission unit would provide power to citizens.

“We do want to have a measure of competition there so that we can all know that when the machines break down, there are others there.”

Ramaphosa noted that it was difficult to put a timeframe on the end of load shedding but acknowledged that South Africa was ‘in a very difficult and precarious situation’.

2. Water shutdown in JHB:

Rand Water has warned customers in Johannesburg and surrounding areas of a water shutdown from Monday (15 November) to Wednesday (17 November).

The water utility said in a statement published this week that it forms part of a scheduled shutdown of its B11 and B19 pipelines.

The shutdown forms part of Rand Water’s B19 Pipeline Augmentation Project and is the final leg of this programme that will increase the volumes of the B19 pipeline and therefore ensure sustainable supply of water to the consumers, it said.

“Rand Water has provided the affected municipal customers with a 21-days notification of the scheduled shutdown to allow them to execute their appropriate contingency plans. Therefore, municipalities should communicate to their affected customers.”

In a separate statement, Johannesburg Water said that it expects the outage to last at least 54 hours, impacting a number of suburbs in and around the city.

“This will, unfortunately, impact on water supply from the Rand Water Eikenhof pump station to the South of Johannesburg CBD, Northern and Western areas as supply will be reduced by 25%. Water supply from the Rand Water Swartkoppies system to the central CBD will also be reduced by 50%.

“Water supply reduction will result in poor to no water supply during peak water demand periods in most high lying and high demand areas. Stationary and roaming water tankers will be made available where feasible to reduce the impact to consumers.”

See a list of affected areas here: Areas affected by water shutdown.

3. Insurance for product recalls:

South Africa has witnessed two major product recalls this year which are likely to cost affected companies hundreds of millions of rand. There is a special insurance policy which can cover these losses.

Product recalls are costly exercises. Undertaken by companies, either voluntarily or by order of South Africa’s regulatory authority, when goods are determined to be defective and of possible harm to consumers, these recalls have far-reaching consequences.

One of South Africa’s biggest packaged food businesses, Tiger Brands, issued a recall of certain KOO and Hugo’s canned foods in July. It’s estimated that some 20 million individual items were part of the recall stemming from the detection of a packaging defect which raised concerns around consumer safety.

The cost to transport, store, and dispose of the affected cans is expected to cost Tiger Brands around R650 million. This includes the cost of the recalled stock being written off. Reputational damage is harder to quantify.

And it’s not just cans of baked beans, sweetcorn, and curried vegetables which have been removed from retailers’ shelves around the country in recent months. Certain apple juice products sold by Appletiser, LiquiFruit, Ceres, and Woolworths are also part of a recall first instituted in September.

“Some businesses can be forced into bankruptcy when incidents like these happen. If a company is compelled to speedily take the product out of the public reach before it causes harm, but fails to act quickly, it can have a long-lasting effect on all stakeholders in the value chain.”

There are two types of insurance that deal with distinct aspects of product recalls.

Product Recall insurance is a rare, but not completely unheard of, form of protection. It covers disposal costs, warehousing costs, and restocking of the recalled products. Some policies even cover PR and specialist recall consultants who can manage the brand’s reputation.

“If there is cover in the retailer’s name then they would be able to claim costs associated with recalling the product from their shelves,” said Abraham.

More common in South Africa is Public Liability cover. This protects the business against claims lodged by customers, suppliers, or members of the public if they suffer injury or damages because of negligent business activities.

This can apply to “slips and trips” when, for example, a shopper claims that they fell and suffered injury because of a supermarket’s negligence. Although it doesn’t cover the cost of recalls like Product Recall insurance, it does cover damage to third-party property or injury to third parties.

“If we are talking about a product recall, then both the manufacturer and retailer would be involved. It is advisable that both the manufacturer and the retailer should at least carry Products Liability cover,” said Abraham.

4. Better than expected tax collections:

Better-than-expected tax collections bode well for SA but unrelenting load shedding is a key constraint going forward.

The global growth story is quite positive, with developed markets and South Africa’s major trading partners expecting growth in excess of 6% this year.

The South African economy has also been showing positive growth for the last four quarters. This raises expectations that Finance Minister Enoch Godongwana will announce far higher tax collections in his mid-term budget policy statement (MTBPS) on Thursday (November 11).

PwC senior economist Christie Viljoen says tax collections could be R150 billion higher than forecast in the February budget. At that point gross tax revenue was expected to be R1.2 trillion, with an expected shortfall of R213 billion.

“This [higher-than-expected tax collection] is largely as a result of a mining tax windfall on the back of the surging global demand for commodities,” he says.

“This will enable the government to reduce the fiscal deficit, unless it decides to spend all of this extra cash.”

Viljoen adds that the rebasing of GDP in August will also reduce the size of the fiscal deficit and public debt ratios. “We would hope that the finance minister would not squander this opportunity to reduce these ratios and start on a path of real fiscal consolidation towards more sustainable debt levels.”

However, unrelenting load shedding remains a key constraint on the economic outlook. It may well cost the country, which already as an uncomfortably high rate of unemployment, another 350 000 jobs this year.

PwC forecasts real GDP growth of 4.1% for this year compared to the more optimistic forecast of 5.3% by the South African Reserve Bank.

5. Ivermectin ineffective against covid:

Studies and meta-analyses have found that ivermectin does little to nothing to prevent Covid-19 infection or to treat the virus.

A meta-study, covering over 24 ivermectin trials, was published in the journal Open Forum Infectious Diseases, initially showing that the parasite treatment boosted people’s chances of surviving Covid by 51%.

However, one of the biggest trials used in the analysis was retracted as a fraud, bringing this rate down to 38%. Other ivermectin trials have also since been retracted due to bad data, fake results or outright bias, with the meta-analysis not showing only a 4% benefit.

The drug only had an impact on Covid when researchers included the data of studies with a high risk of medical fraud in their analysis.

All information sourced from articles posted by: News24, BusinessTech, Business Insider, Moneyweb, and Bhekisisa.

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