By James Preston for SA Crypto

SA Crypto’s chat channels were abuzz last night as MyBroadBand released an article reporting on a big decision by FNB: The bank announced that they will be shutting down all bank accounts related to cryptocurrency businesses. This includes large exchanges such as Luno, VALR, AltCoinTrader, iCE3X among others. The closures will be effective from end of March 2020.

The news stirred numerous conversation on the groups as users were stunned at the shortsighted move by what is seen as a progressive bank. First it was on Telegram where a user shared the article, were immediately the response was a negative one.

30 minutes later, SA Crypto’s primary Whatsapp group began fluttering with chatter around the subject.

The conversation continued for some time, with very little positive outlook. The reasonable users among the group objectively hoped that such a move by FNB would be an isolated one, a perspective reaffirmed by VALR CEO, Farzam Ehsani.

Ehsani weighed in on the conversation on both Telegram and WhatsApp, eventually stating that he would do an AMA (Ask Me Anything) on his Twitter profile to discuss his viewpoint as the CEO of a major cryptocurrency in South Africa. Especially considering his previous role as “Head of Blockchain” at Rand Merchant Bank, a sister division to FNB.

After some interesting perspective from SA Crypto users, including a Bitcoin “Over The Counter” broker, Ehsani announced his AMA.

In addition to his AMA, Ehsani shared a public statement to all VALR users assuring them of their continued positive relationship with other banks in South Africa, and such a move by FNB wouldn’t adversely affect operations.

Meanwhile, Luno have released an official statement on their website, along with FAQs around how the move by FNB could impact existing Luno customers. The statement confirms that Luno is affected by FNB’s decision, as they anticipate their FNB business bank account being closed in the second quarter of 2020.

SA Crypto was alerted to this news on a recent visit to the AltCoinTrader offices, where one of the executives revealed they had just come back from a meeting with their relationship manager at FNB. The manager disclosed to AltCoinTrader that FNB was planning the closure, stating that FNB’s executive committee were considering its risk appetite, and deemed “virtual currencies” as too unclear from a regulatory perspective and thus were going to announce the discontinuation of banking support.

At the time, SA Crypto was unable to confirm the news, with it now being officially made clear in a letter from FNB.

Both iCE3X and Luno have responded to the FNB announcement, stating that, like VALR, they have good relationships with a number of other primary banks in the country, and deposits and withdrawals will be able to continue as normal, with FNB bank details requiring a change. Eugéne Etsebeth, COO at iCE3X, confirmed on Twitter this morning that clients would be unaffected by FNB’s announcement.

The move does raise some concerns for cryptocurrency users in South Africa, as it opens the door for other banks to question their relationships with cryptoasset companies. It would be extremely surprising however to see these banks follow suit, as the revenue generated from banking fees with these companies must be considerable, although the fact that FNB are willing to sacrifice such revenue is worrying to say the least.

FNB have stated they are open to reversing this decision should South African regulators provide further clarity on virtual currencies.

The news comes in conjunction with equally stunning news from RMB Holdings, who announced last night that they will be selling off R130 billion worth of First Rand shares in a major portfolio restructuring move. The figure is the total sum of the full 34% stake RMBH has in First Rand Limited, the company that operates FNB.

In reaction to the announcement, former FNB CEO Michael Jordan took to Twitter to share his surprise.

The RMB Holdings statement did not give a reason for the unbundling of the First Rand shares, but said there would be a detailed explanation before the end of the first quarter 2020.

It is strangely coincidental that the announcement comes on the same day First Rand-owned FNB announce their distancing from cryptoasset companies. And while it would be irresponsible to jump to conclusions, the gravity of both of these announcements makes it difficult not to.

Will SAA survive this strike?

South African Airways (SAA) says its future hangs in the balance after its workers went on strike to demand higher wages and protest planned job cuts which forced the state-owned carrier to cancel all its flights.

More than 100 international and local flights international flights were cancelled when the unions began their strike on Friday, which saw SAA shedding at least R200-million – plunging its balance sheet into a deeper crisis.

The National Union of Metalworkers of South Africa and the South African Cabin Crew Association embarked on a strike after SAA announced a restructuring process which may affect 944 jobs.

The striking unions are demanding an 8% across-the-board wage increase. Unions also want to have job security for at least three years and the in-sourcing of services like security, cleaning and ground handling.

According to Numsa and SACCA, SAA pilots recently received a 5.9% increase. The two unions said their members were simply demanding increases as well, which should be higher than pilots as they earn less.

SAA has pointed out that the 5.9% salary stems from a 5-year salary agreement after an arbitration process to which the airline is legally bound.

In a meeting with the striking unions, Minister of Public Enterprise Pravin Gordhan has said that no further financial resources can be advanced to cash-strapped flag carrier SAA. In September, the government issued a R5.5bn bailout to cover SAA’s operational costs, but will be unable to help any more.

Nampak CEO to run Eskom

By Samkelo Mtshali for IOL

The appointment on Monday of Nampak Chief Executive Officer Andre de Ruyter as the new Eskom CEO has been met with mixed reactions from the political sphere, with the Economic Freedom Fighters particularly displeased with his appointment at the power utility.

The embattled state entity has not had a permanent CEO since the resignation of Phakamani Hadebe in July, with board chairperson Jabu Mabuza acting in the role of CEO since Hadebe’s resignation mid year.

The EFF said that Ruyter’s appointment was anti-transformation and racist and that his appointment was part of a ‘racist project’ by Public Enterprises Minister Pravin Gordhan to undermine Africans.

“This racist project does not seek to undermine Africans as far as it concerns management of SOEs but as important role players in the economy. It seeks to reinforce the falsehood that Africans cannot manage strategic and complex institutions.

“The other false that must be dismissed with the contempt it deserves is the idea that Africans are inherently corrupt. Since his appointment as Minister of Public Enterprises, Pravin has been removing African managers in SOEs in favour of non-African male, some even less qualified or less experienced compared to the removed African managers,” said EFF spokesperson Mbuyiseni Ndlozi.

The National Union of Metalworkers of South Africa (NUMSA) general secretary Irvin Jim said that de Ruyter’s appointment did not do anything to aide transformation in the country and that the union regarded the appointment as “nothing less than a provocation”.

“This constitutes a setback when it comes to the transformation agenda in the country. This is an insult to blacks and Africans in this country that to date in this country since the democratic breakthrough we do not have competent black women and black Africans who can occupy such a position,” Jim said.

Democratic Alliance Chief Whip in Parliament Natasha Mazzone said that de Ruyter had a mammoth task ahead of him and said that he should use his experience to set Eskom on the right course to recover.

“De Ruyter has an unenviable task ahead of him and his priorities should include stabilising Eskom’s mammoth mountain of debt as well as ensuring a secure electricity grid for the nation.

“Of course, the only way we can truly achieve an efficient Eskom and an energy secure South Africa is when we break the utility’s monopoly over the energy sector as set out in the DA’s Cheaper Electricity Bill,” said Mazzone.

She added that de Ruyter should remain independent and beyond reproach in his capacity as Eskom CEO and that the DA would “keep a close eye on the developments at Eskom under his leadership” in the hope that he will always act in the best interest of Eskom and the public.

Inkosi Mzamo Buthelezi, the IFP’s spokesperson on Public Enterprises, said that although de Ruyter will only officially begin his term on January 15 2020 he should “make very good use of the following month in order to familiarise himself with Eskom”.

“There is very little time to turn things around at the ailing parastatal, de Ruyter must hit the ground running,” Inkosi Buthelezi said.

Amongst some of the key issues that Inkosi Buthelezi said de Ruyter should focus on was building bridges with all stakeholders, decrease debt and reign in unpaid bills, renew or advertise contracts and strengthen supply chain management and tender procurement and financial controls.

Retrenchments loom at SAA

Source: eNCA

South African Airways (SAA) has informed its more than 5,000 employees that it’s restructuring. It is estimated that about 944 staff will be affected – nearly 20% of the workforce.

The national carrier has had its fair share of financial turbulence.

But in the mid-term budget, Finance Minister Tito Mboweni announced that the state would pay off the airline’s R9.2-billion debt over the next three years.

The airline has incurred over R28-billion in cumulative losses over the past 13 years.

Bill to nationalise Reserve Bank re-introduced

Source: Eyewitness News

The reintroduction of the bill comes at an awkward time for President Cyril Ramaphosa, who is on an investment drive to boost an ailing economy.

An opposition politician’s bill to nationalise the South African central bank that spooked investors when first unveiled a year ago has been revived and referred back to lawmakers, parliamentary papers showed on Tuesday.

The reintroduction of the bill comes at an awkward time for President Cyril Ramaphosa, who is on an investment drive to boost an ailing economy. He has to juggle his pro-business approach with left-leaning elements of the ruling African National Congress (ANC) that want to legislate for land expropriation without compensation, among other policies.

Introduced by leftist politician, Julius Malema, in August last year, the bill lapsed when a new Parliament was elected in May. Malema’s Economic Freedom Fighters (EFF) were one big winner, gaining 19 new seats.

When initially introduced, the South African Reserve Bank Amendment Bill put pressure on the ANC to go through with a plan it shelved in 2018 and rattled markets wary of threats to the central bank’s independence.

The ANC has said any plans to nationalise the bank will be done responsibly and not affect the institution’s mandate or independence. Reserve Bank governor Lesetja Kganyago has previously warned that the ownership debate was increasing investor uncertainty and pushing up the risk premium attached to the country’s debt.

Unlike most central banks in the world, the South African Reserve Bank (SARB) is privately owned. The ANC resolved at a party conference in December 2017 to move it into full state ownership.

Malema’s private members bill will be referred to the Standing Committee on Finance for further deliberations and public input before the lower house of parliament votes on it. If passed, it would normally then go to parliament’s upper house for approval before Ramaphosa signs it into law.

Malema, however, believes it is not necessary to refer the bill to the upper house, which could hasten its passing.

By Janice Kew for IOL

Shoprite Holdings Ltd. started a review of supermarket operations outside South Africa and would consider exiting certain countries if that would help reverse regional sales declines.

Africa’s biggest grocer reported a 4.9% fall in third-quarter revenue when its main market is excluded, the Cape Town-based company said at the start of its annual general meeting on Monday. Weaker currencies weighed on performance and the Nigerian business was affected by xenophobic attacks — a response to violence in South Africa against immigrants from elsewhere on the continent.

“We are not scared to take the hard decisions,” Chief Executive Officer Pieter Engelbrecht told investors, adding that leaving certain markets would be considered. Other measures including cost reductions are underway, he said.

The performance contrasted sharply with improved trading in South Africa, where quarterly sales jumped by 10% even as Shoprite’s main lower-income customers battle with the impact of an economic showdown. Chains including Checkers and U-Save are benefiting from a new IT system and the revamp and opening of new stores, the retailer said.

The shares rose 0.6% to 139.04 rand as of 11:50 a.m. in Johannesburg, valuing the company at 82 billion rand ($5.6 billion). The stock has fallen 27% this year.

Shoprite reported the update at the start of its annual general meeting, where former billionaire Christo Wiese was re-elected as a non-executive director despite some investor pressure over his three decades as chairman. Shareholder All Weather Capital had last week nominated former Pepkor Ltd. head Jan le Roux as a director to try and reduce Wiese’s influence, though he received just 16% support.

The makeup of the board will change over the next year, Wiese said at the AGM, while more attention will be given to succession planning. A decision on whether he continues as chairman will be taken later on Monday.

Black Friday is not a charity, consumers warned

Source: Supermarket & Retailer

Black Friday, which falls on 29 November this year, may feel like an annual treat for thrifty shoppers, but it has little to do with altruism. For retailers it is all about maximising consumer spend.

Some Black Friday bargains will save you money, with some items selling at or below cost price, but profit-starved stores, especially those in South Africa under extreme pressure, do not plan to come in at a loss for the day.

Rather, online and brick and mortar stores use the annual shopping day to manipulate consumers, get feet through doors, win hearts and minds, and generate additional revenue.

In South Africa, shoppers spent close to R3 billion at stores on Black Friday 2018 – a leap in spending so high that it even helped ‘save’ the country’s economy after a torrid year. And with South African consumer spending habits often dictated by pay day deposits, it’s an expense that few local consumers can actually afford.

In order to get consumers parting with their cash, and then, ironically, thanking the stores while doing so, retailers employ several tricks and techniques – many of which are refined each year as the shopping day continues to gain traction in South Africa.

This is how stores will try to trick you into spending more money than you probably should on Black Friday 2019.

Stores will build up your bargain-seeking arrogance – to your detriment.

The psychological manipulation starts long before anyone bangs on the store doors early on Black Friday morning itself, and all the retailers taking part are conspiring against you.

Stores use several psychological tricks to manipulate shoppers, but one of the most important is boosting your certainty of finding a great deal on days like Black Friday, according to brand and consumer specialist Martin Lindstrom.

He argued on Bloomberg that most of what we do while shopping is irrational and subconscious, and calls the mall “the soul of seduction”. The more rational shoppers think they are, he says, the more likely they are to be manipulated.

In other words, you might think it’s entirely rational, and even pretty genius, to be tracking down that amazing deal on Black Friday – but if anything, this confidence just means you’re more likely to fall prey to their tricks.

Building up the hype prior to Black Friday reinforces the idea that great bargains are to be had. Also watch out for messages that tease limited availability and the need to pounce on deals while they are available, rather than sitting on the idea of buying that brand new washing machine until it is “too late”.

“Limited stock” is just that – especially if the numbers aren’t specified.

Mainstream stores will not risk being caught for fraud; if they advertise a once-in-a-lifetime discount of tens of thousands of rands, they really will sell at that price. But there is no requirement for them to have enough stock to make sure you too can get that item at that price.

Be especially worried when the level of stock is not specified, because “limited” can mean “one”.

Stores count on the fact that the adrenaline rush of Black Friday will make you grab a “deal” you haven’t properly researched when limited stock means you can’t get exactly what you want – especially after you’ve camped out on a cold floor all night or obsessively clicked “refresh” on a web page.

Retailers lure you in with great deals, and then subtly tempt you to buy stuff that is not on sale

The concept of loss leaders – items that aren’t necessarily profitable, but sold to attract customers to other items – is nothing new, and not exclusive to Black Friday, either.

Between online research and social media, retailers have to offer genuinely good deals to get feet through their doors rather than those of competitors. If they draw enough traffic they may be able to offset the losses with higher volumes on regularly-priced goods, and they tend to do everything in their power to convince you to buy those.

In some cases it seems as if stores also subtly mark up items they think shoppers may not know the value of, and let the halo-effect of Black Friday give the impression that these too are really good deals.

Loss-leading is not a failsafe way for stores to generate profits, but they do work – to the extent that they’re banned in many US states and European countries.

The products on sale may be old….

Check the model numbers of the hot ticket items that are deeply discounted, and you may find that the products are anything but new.

Events like Black Friday are a great way to move old items that haven’t sold through the year, and probably won’t move during Christmas shopping either – and which will only drop in value as they are outpaced by newer models with new features or technologies.

These can still be great deals if you know what you are in for, and if you are happy with last year’s model, or one with limited features. Just don’t be caught with a “new” TV that isn’t quite what you expected.

… or inferior

Because American consumers can now be counted on to flood into stores for Black Friday, some manufacturers create products especially to capitalise on that spending.

In at least some cases, these special product lines are cheaper to make, and inferior, to mainstream product lines that carry the same name. Because of this, Forbes suggests that the very bastion of a Black Friday deal – the not-so-humble flat screen television – is better bought at other times of the year to avoid buying “toned down, derivative models”.

If you can’t find the model number for a common item from a big name with a simple Google search, beware.

You are not being paranoid: some stores will quietly increase prices before Black Friday to claim bigger discount levels.

As with some online stores in South Africa, those dramatic double-digit percentage discounts on offer come 29 November will not necessarily be as attractive as simple math would suggest.

That’s because in order to hit the advertised discounts, some retailers quietly increase the retail price of sale items a few weeks before the event.

That way they can genuinely claim a discount compared to what they were charging before, even though that is not necessarily the price that was generally charged.

Chances are you’ll get the same thing at the same discount later – and you may do even better.

It’s easy to fall into the temptation trap of Black Friday and think it’s the only sale of the year. But, in the US market at least, CNN claims that there are the same – if not better – deals to be had at other times of the year.

And the South African seasonal retail cycle is looking more and more like that of America, as Black Friday and Cyber Monday take hold here.

Sales on things like clothes and outdoor equipment are often dictated by the changing weather, so if you’re after summer fashion items, you may be better off waiting a few months after Black Friday.

Likewise, South African electronics stores increasingly release items like smart phones and televisions soon after they launch elsewhere. Those launch dates are often linked to big international events, such as the Consumer Electronics Show in the US.

So if you lust after a big-ticket item such as a new iPhone or a large TV, you might be better syncing your sales clock with, say, Apple’s international releases, and waiting for the fire-sale price drops that come when that now top-of-the-line phone suddenly becomes a previous model.

Source: Fin24

Following the breakdown of some of its power generation units over the weekend, the electricity system will remain “severely constrained” until at least Thursday, Eskom said.

In an update after at midday on Tuesday, Eskom said that these unplanned breakdowns, along with planned maintenance, meant that more than 12 500MW in power generation was offline by Monday evening.

Anything above 9 500MW means that Eskom has to resort to emergency power generation: open cycle gas turbines and pumped storage hydro electrical plants. These are very expensive ways of generating power, particularly gas turbines as they require large quantities of diesel. They can only be used for short periods before diesel and water reserves run out.

By Tuesday morning, the situation had improved to 11 500MW of capacity being offline.

“With the expected return to service of several units today and tomorrow, and with current diesel reserves, the probability of load shedding remain low for the week, but the system remains constraint until at least Thursday,” Eskom said in a statement.

It said that any additional unplanned breakdowns, or shortage of diesel and pumped storage, could result in load shedding at short notice.

Last month, South Africans suffered five days of load shedding after outages at five units. Eskom also resorted to emergency power generation, but then its diesel stocks started running low, which forced it to shed power.

When the going gets tough … the marketing budget gets slashed. It’s an age-old truism that marketing activities are among the first to be cut back during austere times. It’s also often the wrong thing to do, said Nona Koza, Business Partner at Oliver South Africa.

“It’s a mistake that brands make worldwide. Research shows the contrary is true: if you keep up your brand activity during austere times, when the economy swings up again you make a lot more money. The reason why is something we often forget: consumers buy a value. It’s a promise of what that brand is going to deliver. In tough times, when the brand becomes less prominent, it comes across as a lack of empathy. Your customers are struggling – where are you?”

Customers, just like companies, are more frugal and value-conscious when the economy is down. So, it is ironic that by underplaying your brand during such periods, you are taking important signs of confidence away from your customers. Hence why cutting back on brand positioning as a cost-saving measure is often self-defeating.

But slashing budgets need not be the only strategy. Hard times are an opportunity to revisit marketing strategies and ask if there is a better way to do things – and yes, there is. Through an on-site approach, organisations can radically improve their marketing activity. This is crucial for the above considerations: to keep customers close in a tough economy, you want a marketing approach that operates on close proximities and immersion with them.

“What you want to pursue is customer retention,” explained Koza. “How are your customers using your products? Who are your best customers? How do you reach them more directly? For example, the cost of one billboard can cover several breakfast events with key customers. The key thing here is targeted customer engagement and much more face to face interaction.”

Targeted engagement is just one side of this strategy. The other is to develop an agile marketing pipeline that is engaged with the business. Brand activities should align with business strategy and expectations. If your marketing people are not there in the trenches, meeting customers alongside other staff, grasping the roadmap and moving with its requirements, your branding efforts will struggle.

External marketing agencies are often too removed from the business coalface to achieve this. Internal marketing can, however represent an incredible cost centre. This challenge has given rise to a third model – the on-site agency.

“Unlike an external agency, an on-site agency works at the customer’s premises,” Gabrielle Gray, Executive Creative Director at Oliver South Africa explained. “Its people are there to engage with the business at every level – from chatting at the water cooler to sitting in on important meetings. And unlike internal agencies, an on-site agency manages marketing operations such as talent acquisition externally. You get the best of both agency models, but without the drawbacks.”

Oliver is pioneering the on-site agency model. It works with customers to create internal teams from Oliver’s own ranks, based at the customer’s premises to ensure the types of engagements described above. Complementary to any other internal or external marketing functions, on-site agencies improve delivery times, move with the customer business, help align marketing with business objectives, and brings the nuance needed to woo the business’ clients.

In difficult times, such a personal touch is important. Customers want to see it from their brands, and those brands need it from their agencies. Cutting back on brand positioning is not the right strategy during tough times. But branding can be done differently: customer-focused touch points and engagements, pop-up events, tailored digital messages – these are crucial tools. The on-site approach offers significantly better engagement and brand performance at the budgets of traditional marketing, since it works intimately with the organisation to become on-premise brand partners and it can leverage creative resources like no other.

“Traditional approaches do work for some companies,” said Gray. “However, what we find is the immediacy of being on-site, a client being able to walk over to us and say, ‘I’ve had this idea, how can we execute it? What do you think?’ – this is a very good way to deliver on business objectives. As a result, we understand the customer’s business better and, in turn, the customer is more involved with brand activities. ”

Government unveils Eskom rescue plan

By Lameez Omarjee and Jan Cronje for Fin24

Eskom is aiming to have completed the unbundling of its generation, transmission and distribution operations by December 2022, according to a new policy roadmap published by Minister of Public Enterprises Pravin Gordhan.

Here is what you need to know:

‘Cost-effective power’

Gordhan repeatedly returned to the point that South Africans deserve cost-effective electricity, which Eskom is not providing at the moment. The fact that tariffs have increased by 500% over the past decade – without an associated boost in generating capacity – has put the economy under strain, and is not sustainable.

Eskom must be restructured to survive

The plan to split Eskom into three parts – generation, transmission and distribution – is going ahead. Of the three, the transmission entity will be spun out first, around March 2020.

All three entities will remain functional subsidiaries of a larger Eskom holding company.

The minister said on Tuesday that monopolies were by their nature wasteful. A large part of the restructuring plan deals with increasing competition and competitiveness within the utility to eliminate waste and inefficiencies.

In the generation space, the plan proposes that Eskom retain its existing generation fleet and each power station concludes a power purchase agreement with the transmission entity. Eskom will also be permitted to build its own renewable energy generation.

There will not be much focus on unbundling the distribution arm in the near future, due to its complexity. Municipalities currently play a key part in selling on electricity to consumers at a markup. “There is a bit more study that we need to do,” he said.

UCT professor Anton Eberhard, a member of President Cyril Ramaphosa’s task team on Eskom, tweeted that the establishment of a separate electricity transmission company would be transformational by creating a transparent platform to buying competitively priced electricity.

Cost savings

Eskom has only been functioning in recent times due to lifelines from the state, as it does not make enough revenue from selling electricity to cover the cost of the interest on its debt. Treasury in February allocated Eskom R23bn each year for the next three years for a total of R69bn. The National Assembly, meanwhile, recently agreed to a special appropriation to grant Eskom R59bn over the next two years – over and above the allocated R69bn – to pay interest on debt.

To save costs, Eskom would be reviewing coal contracts, and government intends to meet with suppliers to review the cost structure, returns and fair price of coal.

Other measures include a review of employee benefits and alternatives to retrenchment, consequences for non-payment of electricity to recoup some of the R25bn it is owed by municipalities, talks with the energy regulator about pricing, and new procurement approach. The financial turnaround also includes a review of independent power producer contracts, and the disposal of non-core assets to raise cash.

State capture

The minister said that the damage caused by state capture was “huge” and “systemic”. Skilled people were “chased out” the company. All these factors had a negative impact on Eskom’s finances, he told journalists. He added that “‘trolls’ would claim that Eskom was to be privatised, but said this was ‘fake news'”.

Just transition

The plan acknowledges the need for a sustainable approach to be adopted for workers and communities impacted by the decommissioning of coal power stations. Alternative economic developments must be considered for affected communities and the state will be obligated to make sure affected communities can adapt to new opportunities. Gordhan said that labour unions and affected stakeholders are being engaged to understand the importance of changes to Eskom’s future structure.

New CEO

Eskom has been without a permanent CEO since May 2019, when Phakamani Hadebe announced his sudden resignation due to the ‘unimaginable demands’ impacting his health.

Despite speculation that he might, Gordhan did not announce a new chief executive, saying the utility’s new head would be announced next week. This would also be accompanied by board and management changes to account for Eskom’s changed structures.

“We have a bright future for Eskom. It still has a few clouds around it now,” Gordhan said.

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