Tag: economy

By Sifiso Zulu for EWN

South Africans are looking to President Cyril Ramaphosa for answers after the latest round of load shedding; the most severe to hit the country.

Eskom says it had no choice but to implement stage 4 load shedding on Monday after an urgent need to shed 4,000 megawatts off the grid.

Stage 4 load shedding has never been implemented before, and this drastic measure by Eskom took the country by surprise.

But it appears that even President Ramaphosa was not expecting the latest development, saying it came as a shock and was most worrying.

Energy expert Chris Yelland agrees that this move was unprecedented and speaks to how dire the situation is at the debt-ridden power utility.

“This is uncharted territory. So, it’s much deeper than it’s ever been before, and it did come as a surprise because it was announced that six generation units shut down as a result of unplanned outages.”

Ramaphosa recently announced plans to unbundle Eskom into three entities to deal with generation, transmission and distribution.

Labour unions have vowed to fight the plan, arguing that it’s the onset of privatising Eskom.

Total’s oil and gas discovery worth R1trn

By Paul Burkhardt, Bloomberg/Fin24

Total SA said it has opened up a new “world-class” oil and gas province off the coast of South Africa after making a significant gas-condensate discovery there will provide a boost for the economy of R1-trillion over the next 20 years.

Success in the nation’s first deep-water well is a potential boon for a country that imports most of its oil, processing the remainder of its fuels from coal and natural gas.

“We are very pleased to announce the Brulpadda discovery, which was drilled in a challenging deep-water environment,” Kevin McLachlan, senior vice president of exploration at Total, said in a statement on Thursday.

“Total has opened a new world-class gas and oil play and is well-positioned to test several follow-on prospects on the same block.”

Total, the operator, now plans to acquire 3D seismic data before drilling as many as four more exploration wells at the license.

“It’s a catalytic find,” Niall Kramer, chief executive officer of the South African Oil & Gas Alliance, an industry lobby group, said by phone. The country has only drilled in shallow waters before, with little to show for it, he said. “There’s nothing that has been on this kind of scale.”

Exxon, Eni

The new oil and gas region, with estimated volumes of around 1 billion barrels according to consultant Wood Mackenzie, has drawn interest from explorers including Exxon Mobil and Eni SpA, which also hold stakes in the waters.

“It’s probably quite big,” Total CEO Patrick Pouyanne said Thursday on a conference call. “Having said that, the region is quite difficult to operate: huge waves, the weather isn’t very easy.”

Total was drilling about 175 kilometers (109 miles) offshore in the Outeniqua Basin to a final depth of 3 633 meters (11 900 feet). The discovery, which also includes some light oil, could prompt a rush of activity offshore by other companies, especially since South Africa is due to introduce new oil and gas legislation later this year aimed at spurring exploration.

Africa as a whole has seen an increase in drilling, with oil and gas rigs around the continent topping 100 in recent months, according to Baker Hughes data. The count was as low as 77 in 2017.

Total has a 45% working interest in Block 11b/12B, Qatar Petroleum holds 25%, CNR International 20% and Main Street, a South African consortium, 10%.

Meanwhile, Minister of Mineral Resources Gwede Mantashe told delegates on the last day of the 2019 Investing in African Mining Indaba on Thursday that his department’s plan to separate oil and gas from the Mining Charter and develop separate legislation for the extraction method would yield immediate impact.

He lauded Total’s discovery as one of the outcomes.

Source: IOL 

The Competition Commission in South Africa said it has noted an agreement between Standard Chartered Bank and the New York State Department of Financial Services where Standard Chartered pleaded guilty to currency manipulation.

The Competition Commission said in a statement: “The Competition Commission has noted a consent agreement, which subsequently became a court order, between Standard Chartered Bank and New York State Department of Financial Services. In the consent order, Standard Chartered pleaded guilty to currency manipulation which included the South Africa Rand (ZAR) between 2007 and 2013. This is captured on pages 9 and 10 of the court order.”

The Commission said it would consider the impact of the order on the ongoing forex litigation with the banks in South Africa.

The statement continued: “In February 2017 the Commission referred to the Tribunal for prosecution a collusion case against Bank of America Merrill Lynch International Limited, BNP Paribas, JP Morgan Chase & Co, JP Morgan Chase Bank N.A, Investec Ltd, Standard New York Securities Inc., HSBC Bank Plc, Standard Chartered Bank, Credit Suisse Group, Standard Bank of South Africa Ltd, Commerzbank AG, Australia and New Zealand Banking Group Limited, Nomura International Plc., Macquarie Bank Limited, ABSA Bank Limited (ABSA), Barclays Capital Inc, Barclays Bank plc (Respondents).

“The Commission investigated a case of price-fixing and market allocation in the trading of foreign currency pairs involving the South African Rand since April 2015. The Commission found that from at least 2007, the respondents had a general agreement to collude on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US Dollar / Rand currency pair.

“Further, the Commission found that the respondents manipulated the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times. Citibank N.A. pleaded guilty and reached a settlement agreement with the Commission and agreed to pay an administrative penalty of R69 500 860. Citibank N.A. undertook to cooperate with the Commission and avail witnesses to assist the prosecution of the other banks.”

The commission said that since February 2017, it has been engaged in protracted litigation with the rest of the banks, including Standard Chartered Bank, on pre-trial issues such as jurisdiction of the South African authorities and disclosure of the Commission’s evidence.

Source: IOL

Following a fuel price roller coaster in 2018, in which prices finally subsided meaningfully towards the end of the year, South African motorists can look forward to some price stability, at least for the next month.

According to the Automobile Association, the price of petrol is likely to increase by around eight cents a litre, while diesel is set to go down by three cents and illuminating petrol by nine cents. This prediction is based on late-month, unaudited data released by the Central Energy Fund.

This would push the price of a litre of 95 Unleaded petrol to R13.50 at the coast and R14.09 in Gauteng, with 93 Unleaded rising to R13.87 in the latter region.

While the rand has gradually appreciated against the US dollar in the past month, firming from around R14.50 to the dollar to current levels in the region of around R13.70, international crude oil prices edged higher, to hover around the $60 mark, although this is still well below the highs of around $84 recorded in October.

“What is worth noting is that the average rand strength against the US dollar has been increasing for nearly a month, and we are hopeful this may point to a period of greater stability for the currency,” the AA added.

“If international oil prices continue their current stable trend, South African fuel users may see fewer of the wild swings in fuel prices which characterised 2018.”

But don’t spend all those savings just yet. Last year showed us how volatile the fuel market can get.

By Alexander Winning and Macdonald Dzirutwe for IOL

South Africa turned down a request from its southern African neighbour Zimbabwe for a $1.2 billion (about R16.6 billion) loan in December, a spokesman for the finance ministry said on Monday.

“South Africa doesn’t have that kind of money,” National Treasury spokesman Jabulani Sikhakhane said.

Zimbabwean officials were not immediately available for comment.

Zimbabwe was hit by deadly anti-government protests last week after a hike in fuel prices stoked anger over an economic crisis.

Police say three people died during demonstrations that turned violent in the capital Harare and second city Bulawayo. But human rights groups say evidence suggests at least a dozen were killed.

Zimbabwean President Emmerson Mnangagwa said on Sunday that he would return home from a European tour and skip the World Economic Forum in Davos to address the crisis.

By Sam Mkokeli, Mike Cohen, Paul Vecchiatto and Amogelang Mbatha for Fin24/Bloomberg 

South African President Cyril Ramaphosa appointed former central bank Governor Tito Mboweni as his finance minister on Tuesday, replacing Nhlanhla Nene, who lied about his meetings with the Guptas.

Mboweni, the nation’s fifth finance chief in less than three years, will have to oversee an economy that’s fallen into recession and help Ramaphosa rebuild confidence battered by almost nine years of mismanagement under former President Jacob Zuma. He must also reassure investors and credit-rating companies of credible plans to stabilise debt and revive growth in the mid-term budget on October 24.

“In the wake of Mr. Nene’s resignation, I have decided to appoint Mr. Tito Mboweni as minister of finance with immediate effect,” Ramaphosa said. “Mr. Mboweni takes on this responsibility at a very critical time for our economy.”

Mboweni, who trained as an economist, served as head of the South African Reserve Bank for a decade until 2009 and for four years as labor minister in former President Nelson Mandela’s cabinet. His major achievement at the central bank was building the nation’s foreign-exchange reserves to almost $40 billion from less than $10 billion.

The rand gained 0.6% to R14.76/$ by 16:51 in Johannesburg, reversing an earlier decline of as much as 1.4%. Yields on benchmark 2026 government bonds fell six basis points to 9.22%.

Source: IOL/Bloomberg

The business cycle in South Africa, where the economy entered its first recession in almost a decade in the second quarter, is in its longest downward phase since records started in 1945.

It entered a 58th straight month of declines in September, central bank data showed Tuesday.

The regulator monitors about 200 indicators representing economic processes such as production, sales, employment and prices to determine the direction of the trend.

By Carin Smith for News24

About 41% of economically active South Africans are estimated not to have any retirement plan in place, according to a survey by 10X Investments.

It defines “economically active” people as those with a monthly income of more than R7 600.

The survey went out to over a million South Africans and, according to 10X, this serves as a representation of the 11.9 million economically active South Africans in the country.

The survey estimates that more than 40% of economically active women across all demographics have no investments or savings in any form.

Crisis coming

About 46% of the 1.4 million respondents to the survey indicated a “profound” lack of trust in the retirement industry.

The report points out that SA is sitting on a retirement timebomb, with only 6% of the country’s population on track to retire comfortably, according to National Treasury.

“There is no evidence to suggest that the crisis in retirement planning in the country has improved at all in the last 20 years,” states the report.

The report found a lack of understanding among many existing clients of the retirement industry of what they have saved and what they need to have saved.

Fewer than 50% of the respondents were aware of how much money they could expect at retirement.

The survey found that 46% of respondents began planning for retirement only after becoming established with partners or having children, while just 22% began planning at the beginning of their careers, which is what is recommended.

Founder and CEO of 10X Investments Steven Nathan says many people only discover that their retirement products have performed poorly when it is too late.

Gender gap

He said the survey results point to the gender pay gap in SA, where women are understood to earn around a quarter less than their male counterparts. This has a knock-on effect on retirement savings.

The report also noted that the gender pay disparity is often exacerbated by the increased likelihood that women’s careers will be interrupted during pregnancy and child-rearing.

A mere 16% of the women respondents reported investing their savings to grow their wealth.

The report concludes that just putting money aside is not enough in a high-inflation environment like South Africa. Saving money in a traditional bank account in this type of environment means your money is actually shrinking, and that in the future it will be able to buy less than it would today.

The report, therefore, highlights the fact that a big contributor to South Africa’s retirement crisis is lack of understanding of key concepts, such as the need for retirement savings to keep up with inflation.

SA faces ‘biggest ever’ fuel hike in October

By Tom Head for The South African

You might have heard a few horror stories about the petrol price in South Africa soaring by R1 for next month. Well, we’re here to tell you it all seems completely true.

The AA forecast a rise of R1.12 per litre of petrol, and a whopping increase of R1.38 for diesel in October – a devastating blow that has been described as “the biggest single hike” in our country’s history. But what’s fuelling this crisis, and why are costs spiralling so dramatically? We’ve got answers.

Oil prices are nearing $100 a barrel
There’s a very bleak outlook for oil prices on a global scale. This is by no means a consolation, but it goes some way to explaining why it’s getting ridiculous in South Africa. It’s not just internal factors that have ramped up the petrol price. Some commentators believe oil prices will hit a 10-year high of $100 a barrel soon.

Tension between the US and Iran
It’s hard to accept, but the world tends to revolve around America at this point. While President Trump is taking a more hostile approach to foreign policy, Iran has become one of his targets. Now, the country is one of the biggest exporters of oil in the world, but there’s trouble on the horizon.

The US government are set to impose further sanctions on Iran while pulling out of an agreement regarding a nuclear deal achieved by the Obama Administration. Production is already dropping in the Middle-Eastern country, and further financial turmoil will have a negative effect on oil costs.

Countries not producing the goods
Energy Minister Jeff Radebe has highlighted that Libya produced 1.5 million barrels of oil a day before the regime collapsed in 2011. That number is now almost at a third of what it used to be.

Venezuela’s current crisis also got a mention. They are a member of the Organization for Petroleum Exporting Countries (OPEC), but the oil industry has all but collapsed in the South American state. To put it in laymen’s terms, production is down and the cost has gone up.

A weak rand value to the dollar
It’s been a nightmare month for the rand, which has had to battle against the fierce knockout blow delivered by the recession. With the financial crisis coming as something of a surprise, the rand plummeted against the greenback and has struggled to find its feet ever since.

It soared above the R15 mark, and only recently came back down to R14.40. Most recently, Turkey’s currency tanked as a result of Trump’s intense import tariffs, aimed at stimulating industrial growth within the US.

In a global market, for every action, there is a reaction, and all emerging economies felt the knock-on effect of Turkey’s wobble.

Government subsidy backfires
Have you ever tried to help a situation but only gone and made things worse? Well, that’s effectively what happened to Jeff Radebe last month. The minister announced that the government would subsidise fuel costs for the month of September, meaning that an increase in the petrol price was smaller than forecast.

However, what were we just saying about actions and reactions? The slight relief felt this month will be compounded by the misery said to be coming our way next week.

For petrol prices to rise by a rand within a 30-day period is sharp, shocking rise. Had there been no government intervention, there’d be less of a knock-on effect. October’s rise could have been as “little” as 50 cents per litre, had South Africans been allowed to pay the full whack in September.

Source: Supermarket & Retailer

South African consumers have saved billions of rands in loyalty programme rewards offered and are increasingly taking advantage of their reward points given the country’s tough economic climate, which is having an impact on consumer goods including fuel, electricity and food.

According to Clicks customer marketing executive, Heloise Janse Van Rensburg, the Clicks ClubCard loyalty programme, one of the oldest, which was introduced in 1995, was doing exceptionally well, especially given the tough economic climate the retailer was trading in.

Janse Van Rensburg says this speaks to how the retailer’s ClubCard customers valued their cashback rewards.

“Our Clicks ClubCard has 7.5 million active members.We provide simple, easy rewards that are accessible and convenient to our customers. In 2017 alone, over R320 million was paid to ClubCard members in cashback rewards,” says Janse Van Rensburg.

She says ClubCard cashback could be used to pay for purchases in Clicks, Claire’s and The Body Shop stores.

Consumers have saved billions of rands in loyalty programme rewards offered and are increasingly taking advantage of their reward points.

Janse Van Rensburg added that ClubCard had an array of ClubCard partners like Shell, Discovery HealthCare, Sorbet, The Body Shop, Musica, SpecSavers and Execuspecs, City Lodge Hotel Group, Europecar and Netflorist where customers can earn further ClubCard points and benefits.

John Bradshaw, Pick n Pay’s head of marketing, says the Smart Shopper rewards programme was launched in 2011 to reward loyal customers, the retailer’s way of saying thank you to its customers.

Bradshaw says customer reaction to the launch of the programme exceeded Pick n Pay’s expectations and the retailer currently had more 7 million active customers.

He added that Pick n Pay modernised Smart Shopper early last year to introduce more personalised discounts and during this financial year, offered R3 billion in personal discounts to its Smart Shoppers.

“Accessibility is critical and we always look at ways to make this easier for customers across multiple platforms. We have already gone digital with the launch of our mobile app which as proved very popular. Innovation has played an important role in Smart Shopper’s success,” says Bradshaw.

He added that every Thursday, Smart Shoppers receive personal Just for You discounts on the products they buy most often.

“These are worth over R500 per customer per year. These personalised discounts are automatically loaded weekly for each Smart Shopper. Customers can claim these by loading the discounts onto their card at the Smart Shopper kiosk in-store, via email or on the Pick n Pay mobile app. The card is then swiped at the till with the qualifying products to get the savings. These personalised discounts have been well received with customers and over a million customers are using their personalised discounts,” says Bradshaw.

Woolworths says the Woolworth WRewards programme was not a traditional points based programme and customers enjoy instant savings at point of sale (POS) on their till slip and on the Woolworths App, product voucher offers and up to 3 percent Cash back when buying with their Woolworths Credit card.

Woolworths says the WRewards in its current format had been in operation since September 2010 customers have saved a total of R538m during the period June 26, 2017 to June 24 2018.

Consumers have saved billions of rands in loyalty programme rewards offered and are increasingly taking advantage of their reward points. Picture: Nabeelah Shaikh
“No other programme gives you the opportunity to give back via a Community Loyalty programme such as MySchool MyVillage MyPlanet. To date the MySchool MyVillage MyPlanet programme has given back over R570 since its inception in October 1997,” says Woolworths.

         

           

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