After plumbing depths last recorded during the height of SA’s recession, business confidence looks to be moderately on the up, according to the South African Chamber of Commerce and Industry’s (Sacci’s) business confidence index.

The index on Monday moved up to 96 in July, from 95.1 in June.

Strong business confidence correlates with an increased appetite for investment by the private sector.

At the end of March, however, nonfinancial private companies had R725bn on deposit in South African banks, up from R670bn a year earlier, Reserve Bank data showed.

Companies are hoarding cash or expanding abroad – put off by a stagnating economy, power shortages, low commodity prices and slower growth in export markets. Delays in passing business regulations are compounding their unease.

Sacci CEO Alan Mukoki says that although global and local conditions are improving, there were many uncertainties – including what would happen at hung municipalities and the timing of the next US interest rate hike, which would have a bearing on the rand.

The other variables that will affect sentiment among business include local interest rates, the state’s ability to deliver on infrastructure spending amid rising borrowing costs and the oil price. The firmer rand, slightly higher commodity prices and exports, and better retail sales all helped buoy business confidence – some of the very factors companies have cited for snubbing investing in SA.

Improved energy supply also lifted confidence, Eskom having managed to keep the lights on. Sacci has, however, called for caution to be exercised on “vulnerable economic issues,” especially with SA facing the prospect of a rating downgrade in December.

“We don’t know how monetary authorities will respond to factors like union members who get above-inflation wage settlements. We also don’t know if government will be able to deliver on its outstanding infrastructure spending with borrowing becoming more expensive,” he says.

An interest rate hike in the US could weaken the rand, which in turn can have a negative effect on the inflation outlook and may support further rate increases by the Reserve Bank.

A concerted effort was needed to avoid even tighter economic conditions in 2017 because lower growth would put pressure on public finances, unemployment and the cost of borrowing, Sacci says.

Economic growth is expected to be closer to zero in 2016 and just around 1% in 2017.

Sacci’s index is based on developments around 13 economic indicators – including energy supply, manufacturing, exports, imports, vehicle sales, retail sales, the construction of buildings, inflation, share prices, real private sector borrowing, real financing cost, precious metal prices and the rand exchange rate.

There were marginally fewer impediments in the real business environment in July compared to June, Sacci says.

At 96 in July 2016, the index was still lower than the 101.8 recorded in July 2015, suggesting that business confidence is yet to fully recover.

By Ntsakisi Maswanganyi and Bloomberg for BDlive

The 2016 Municipal Elections are happening today, with the political circus in overdrive as parties chase your all-important vote.

But how have Municipal Elections impacted the rand in the past?

What’s the difference between Municipal and General Elections?
General elections consist of a national and provincial vote. Nationally and provincially you vote for a political party (Proportional Representative or PR electoral system) to get seats in the national and provincial legislatures.
In municipal elections, you vote for a political party and a ward councillor (a mixed system of PR and ward constituency) to get seats at the municipal level. So it’s about selecting leaders for the country and province vs. selecting leaders for your city/town and local ward.

Which are more important, general or municipal?
If you think Municipal elections are note important, think again. Chances are your daily lives are more impacted by who leads your city/town/ward than who is leading the county. Think local road, refuse collection, rates you pay, sewerage and water.

What are the possible implications for the rand?
If previous elections (Municipal and General) are anything to go by, not much! Yes, we’ve seen little to no reaction in the currency market compared to previous elections. Does that mean elections are not important? Not at all, it just means that their immediate impact may be limited.

Why have elections had little impact in the past?
The real impact will depend on the policies set by the respected governing party. Policy takes a considerable amount of time to filter through the various levels of bureaucracy. Previous elections have been a near formality, with little to no real challenge to the ruling party. We’ve also seen relatively free, fair and peaceful elections in the past (and long may this continue).

What scenario could see rand improvement?
Free and fair elections with no violence/intimidation is really important. Considering all goes well come August 3rd, and opposition parties improve their showing, we could see the rand given a nice little boost.

What scenario could see rand weakness?
Any hint of violence/intimidation or elections that are not totally free and fair could impact negatively and cause a rand sell-off. Uncertainty/coalition governments in some of our larger metros could lead to a government in limbo and affect sentiment.

Source: Currencies Direct for

The Labour Court has found that the dismissal of four of the eight journalists fired by the SABC to be unlawful.

The court ordered that the journalists be allowed to return to work.

The SABC was also interdicted from continuing with the disciplinary action against them.

Trade union Solidarity, acting on behalf of four of the eight journalists — Foeta Krige, Suna Venter, Jacques Steenkamp and Krivani Pillay — lodged an application in the Labour Court in a bid to have dismissals overturned.

Eight journalists were suspended for questioning an editorial decision taken to ban the footage of violent protests where public property was being burnt. Following this seven of the eight were fired.

By Genevieve Quintal for BDLive

The rand fights back

The rand was trading at its highest level in over a year against the pound on Tuesday 19 July, as Turkey’s failed coup saw global markets bounce back from their risk-induced levels.

The rand was 1% stronger at R14.25 against the dollar on Tuesday at 08:30. It was 1.1% stronger at R18.85 to the pound and 0.85% stronger at R15.79 to the euro.

This level against the pound was last seen in early June 2015, said Umkhulu Consulting’s Adam Phillips on Tuesday.

Phillips said he was “surprised the markets were so bullish on emerging market currencies because there were quite a few fatalities and a vast number of military and judicial officials that were rounded up by the government”.

“The ‘risk on’ that we saw yesterday still looked tired and if one looks at local bonds they again lost some ground,” he said. “As yet there seems to be no effect on the rand.”

“I think a great deal of realignment has happened internationally and we have started to see yen positions being unwound as equities move up as a fear of rate hikes recedes,” he said.

Global markets have bounced back from the risk-off that was inspired by the failed coup in Turkey last Friday, said RMB analyst Isaah Mhlanga on Tuesday.

“It is as if nothing happened or markets are just getting numb to political risk that’s inspired by anti-establishment politics,” he said.

“The rand follows global sentiment,” he said. “It lacks direction as it waits for tomorrow’s CPI release and the Sarb (interest rate announcement) on Thursday. There is, however, potential for some gains but it’s just potential given the lack of major market-moving events.”

Source: Fin24
Infographic: Fin24


The South African Broadcasting Corporation (SABC) could‚ in an “extreme” case‚ have its licence revoked.

That is according to the Independent Communication Authority of SA’s (Icasa’s) Rubben Mohlaloga when questioned by 702’s John Robbie about SABC chief operating officer Hlaudi Motsoeneng’s reaction to its ruling against the broadcaster.

Motsoeneng had on Monday said “no one will tell us what to do” after Icasa made a decision that compels the SABC to reverse its ban on airing the destruction of property during protests.

Mohlaloga told 702 on Tuesday that various sanctions — from a caution to a fin‚ and‚ in extreme cases‚ a licence being “suspended or revoked” — were available to Icasa if the broadcaster did not comply with its rulings.

He says the SABC had seven days to comply or indicate that it would take the ruling on legal review.

The SABC’s Kaizer Kganyago later on Tuesday told the radio station that the SABC would take the decision to the courts‚ echoing Motsoeneng’s vow on Monday to approach the High Court or the Constitutional Court for relief.

“We are challenging that ruling … we are equal to the task‚” says Motsoeneng.

He had also said all newsrooms censored news in taking daily publishing decisions.

The fact that no good news was published showed that there was censorship in all news organisations‚ he says.

In May‚ Media Monitoring Africa‚ the SOS Support Public Broadcasting Coalition and the Freedom of Expression Institute lodged a complaint with Icasa’s complaints and compliance committee‚ challenging the validity of the SABC’s ban on protests.

In the aftermath of the ban‚ a number of senior journalists at the broadcaster face disciplinary action for questioning the decision.

The media briefing was disturbed by a protester who shouted “away with Hlaudi” and “history will judge you”. He was subsequently removed by security.


SA has not experienced loadshedding for some time. Eskom has certainly made a major effort to improve its maintenance and to keep the lights burning.

Several renewable energy plants have also come on line. Significant electricity price increases must also have contributed to a reduction in use.

However, the main reason for the cessation in loadshedding is that economic growth has dropped to a very low level, after it had already been on a decline since 2007. Real GDP growth for 2016 is expected to be about half a percent or less – much lower than in 2015.

The low growth is due to internal and external factors including the decline in global economic growth, and a concomitant decline in demand for commodities.

Major factories in SA – including electricity-intensive operations, such as steel plants and ferro-metals smelters – have reduced production or closed their plants in response to low demand and prices. Output in both the mining and manufacturing sector declined in the fourth quarter of 2015 and the first quarter of 2016, compared with the equivalent six-month period a year earlier. This, obviously, also had a negative effect on related economic sectors.

As a result of this decline in economic growth, the amount of electricity distributed in SA (excluding electricity sold to foreign countries), as published by Statistics SA (Stats SA), also shows a decline from 2008, with the result that electricity consumed in SA in 2015 was less than that consumed in 2007.

Electricity consumed in SA in the first four months of 2016, according to Stats SA, was 2.5% down on the consumption for the same period in 2015, as a result of a further drop in economic activity in 2016.

This reduction in demand for electricity has eliminated the need for loadshedding for quite a while, and has actually led to a small surplus in electricity supply capacity.

But SA is not yet out of the woods with regard to sufficient supply of electricity. New generating plants should have been on line in 2007 already, according to the government’s white paper on energy policy, published in December 1998. Medupi’s first unit came on line about eight years late.

There is a close relationship between real GDP and electricity consumption.

Before the late 1990s, the growth rate of electricity consumption was higher than the growth rate of real GDP. However, since the late 1990s, the situation has changed and the growth rate of real GDP is now higher than the growth rate of electricity consumption. The reason for this change is the fact that the economy became less electricity-intensive after 1997, in terms of electricity consumption per unit of real GDP.

There are various reasons for this decline in electricity intensity. As any economy matures, the secondary and tertiary sectors become more dominant, and their contribution to GDP increases relative to that of the primary sectors.

The secondary and tertiary sectors use less electricity per unit of output produced compared with that of the primary sectors. Mining, for example, is much more electricity-intensive than a factory producing finished goods.

As economies develop, they become more services based, which also contributes to a reduction in electricity intensity.

High electricity prices have also had an effect on electricity intensity through, for example, encouraging the more efficient use of electricity.

The average so-called growth margin (the real GDP growth rate less the growth rate of electricity consumption) is currently equal to about two percentage points.

While the demand for electricity is depressed, mainly due to poor economic growth in the country, this relationship between electricity consumption and real GDP also implies that insufficient electricity-supply capacity will act as a constraint on economic growth.

Electricity is often referred to as an enabler of economic growth.

When the economy starts to recover again, this constraint will soon start limiting the economic growth rate, and will lead to the country missing the opportunity to capitalise on the next commodity upturn. Loadshedding will return. It could even be necessary before then, if output from some of the large generating units is lost due to technical problems.

The relationship between electricity consumption and real GDP, as demonstrated, shows that for an average real GDP growth rate of 5% per annum, an average sustainable growth in electricity-supply capacity of 2,5% to 3% per annum will be required.

This will have to be taken into account in the development of long-term electricity plans, to enable high and sustainable economic growth. What makes this challenge even bigger is the fact that, at the same time, provision will also have to be made for the replacement of a number of old power stations, which are gradually nearing the end of their life.

By Johan Prinsloo for

The wheels, rims and axles are flying off the SABC wagon as staff threaten a news blackout.

Senior SABC managers, including journalists, are seeking an urgent meeting with the public broadcaster’s board to discuss recent editorial decisions by chief operating officer Hlaudi Motsoeneng.

Failure by the board to meet staff would result in a news blackout, staff warned.

The proposed blackout follows yesterday’s resignation of the SABC’s acting CEO Jimi Matthews over what he called a “corrosive atmosphere”.

This morning more pressure will be exerted on Motsoeneng as the DA says it will picket outside SABC headquarters in Auckland Park demanding Motsoeneng vacate his office. The DA says Motsoeneng has proved he is not a fit and proper person to manage the SABC.

SABC journalists have told The Times that Hlaudi rules like a dictator and that anyone who opposes him is axed. The proposed blackout would see staff come to work but doing nothing to get the news out.

Another senior news producer said they would fight to regain control and prove to the public that they were not all “captured”.

“There are forces at play here and they are using Hlaudi to capture the SABC. We are going back to the old days and we will fight to the end to regain our editorial independence,” said a radio news producer, who asked to remain anonymous for fear of victimisation. SA National Editors’ Forum executive director Mathatha Tsedu said on possible blackouts: “Sanef has no view on the steps SABC staff would take. It’s a democratic country and they can do whatever they like.the staff are the ones in pain and in the middle of it and they know how to deal with it.”

Yesterday Matthews shocked the public when he said: “For months I have compromised values that I hold dear under the mistaken belief that I could be more effective inside the SABC than outside.What is happening at the SABC is wrong and I can no longer be a part of it.”

The “corrosive atmosphere” is created by, among other things, Motsoeneng’s order that no images of violent protests be shown on TV news broadcasts.

The blackouts are being contemplated after a letter was written by SABC executive producers Busisiwe Ntuli and Krivani Pillay and senior investigative journalist Jacques Steenkamp requesting a meeting with the board.

The letter is believed to be behind Matthews’ resignation. It follows the suspension of economics editor Thandeka Gqubule, Radio Sonder Grense executive editor Foeta Krige and journalist Suna Venter.

They were suspended for disagreeing with Motsoeneng’s orders to not report on anti-censorship protests at the SABC’s offices.

Matthews, head of the SABC’s group radio and TV editors and general managers, wrote to Motsoeneng on Sunday stating its newsrooms had become sources of “derision, despair and criticism”.

“The developments have heightened this sense of fear, lack of clarity about our journalists’ responsibility and low staff morale.”

The executive producers’ letter criticised the removal of the SABC’s newspaper slots and The Editors on SAfm’s AM Live, which they say amounts to censorship.

In their letter they say: “As journalists having to operationalise the policies of this public institution, we feel aggrieved that journalistic integrity continues to be compromised. We wish to register our deep concern for our colleagues who have been suspended for expressing their right to freedom of expression by simply debating and assessing the newsworthiness of events as expected.”

They say the latest pronouncements “fundamentally erode the right of the public to know the whole story about developments in their communities.

“These pronouncements effectively render our newsrooms incapable of providing compelling audiovisual content that educates and informs the public and disseminates balanced and accurate information.”

Humphrey Maxegwana, parliamentary communications portfolio committee chairman, said the latest developments were alarming.

“When parliament’s recess ends we will meet to discuss summoning the SABC to explain exactly what is going on.”

William Bird, Media Monitoring Africa director, said a blackout was an extreme but effective tactic.

“These are desperate times at the SABC. Journalists are being suspended for legitimate dissent.”

Sekoetlane Phamodi, national co-ordinator of the SOS Support Public Broadcasting Coalition, welcomed the proposed blackouts.

“It’s time the SABC’s rank and file stand up and show the broadcaster’s board and parliament, which is derelict in its duties to ensure stability within the SABC, that the situation of decay cannot be tolerated.

“The SABC belongs to South Africans. We have a right to know what is going on.”

Hannes du Buisson, Broadcasting Electronic Media And Allied Workers Union president, said: “We support any action as long as it is properly managed and complies with labour legislation.”

By Graeme Hosken and Dominic Mahlangu for

Labour unions have asked President Jacob Zuma to make good on a promise to cap the salaries of high-income earners, accusing business of not co-operating with them to improve economic conditions.

In their written submission to a meeting of the presidential working group on labour at the Union Buildings on Tuesday, trade union representatives said: “We need to revisit the notion of a package to raise the incomes of those at the bottom, combined with a freeze on the salaries of high income earners.”

They said a new wage policy should address the wage inequality in the economy.

The workers’ leaders had strong words for Zuma, saying the government hasn’t followed through on economic policies and lacks clarity on what has happened to some of the ANC’s promises.

Despite Zuma saying in his opening remarks that cooperation between business and labour successfully softened the blow of the 2008 global economic downturn, labour labelled the action “inadequate”.

The unions also said business is not doing its bit in helping to keep the economy afloat.

“While society is in crisis, many in business appear oblivious, raking in large profits, salaries and bonuses, and taking the social surplus offshore.

“Social stability, which business espouses, is not possible unless current conditions are radically transformed,” they said in their input.

Labour has suggested a 6- to 12-month programme to curb the economic crisis and change the structure of the economy.

The interventions include pushing government to “implement its own policies and meet its publicly made commitments” on issues like more local procurement and industrial policy.

New policy approaches needed

They also include considering new policy approaches where old ones have “clearly failed”, and where different policies are needed to ensure structural economic transformation.

Labour also said government should tell them how it has progressed on new policies like the black industrialists’ programme, and also on policies where changes are being considered.

“Government needs to make a frank and honest assessment of developments, and what obstacles (there) are to realisation of government policies in key areas,” the submission said.

Labour also called for a discussion on the ratings downgrade, and measures taken to avoid it. They said some of the policies government has adopted to avert the downgrade had “the effect of worsening the economic situation, and deepen(ing) the very economic problems which ratings agencies claim to be concerned with”.

Labour is, for instance, critical of government’s austerity measures, arguing it should be spending more to expand the tax base.

Zuma in his opening remarks thanked labour for cooperating with business and government to avoid recent rating downgrades, among others by going on an international pro-South Africa roadshow.

“If we work together in the manner we have done in the past few months, I am convinced that we will overcome the challenges that we face,” Zuma told the meeting.

Zuma said the sectors should all work together as they had done in 2008, when a global economic downturn loomed.

“We have had success before of working together to find practical solutions to our immediate challenges. As you would recall, after the onset of the global economic crisis in 2008, we crafted a strategy to cushion the impact of the crisis on workers.

“We need that spirit to address our challenges today.”

By Carien du Plessis for Fin24

SA on terror alert

The British government has joined the United States in voicing concerns over threats of terrorist attacks against foreigners in shopping areas around South Africa.

The United States embassy in Pretoria issued a similar advisory at the weekend.

“There is a high threat from terrorism. Attacks could be indiscriminate, including in places visited by foreigners such as shopping areas in Johannesburg and Cape Town,” the British government said in a statement posted on its Web site.

The government on Monday sought to allay fears after Washington warned Americans of a possibly imminent terror attack by Islamic extremists in the country’s major cities.

“We remain a strong and stable democratic country and there is no immediate danger,” State Security Minister David Mahlobo said in a statement.

The US on Saturday said it had received information that terrorist groups were planning to carry out attacks in SA during the Muslim holy month of Ramadan.

The warning said attacks may target sites frequented by US citizens, including high-end shopping areas and malls in the economic hub of Johannesburg and Cape Town.

It came against the background of the Islamic State’s “public call for its adherents to carry out terrorist attacks globally during the upcoming month of Ramadan”, the US embassy in SA said.


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