Dangerous SAA take off under investigation

By Emily Derrick for Simple Flying

A South African Airways flight is under investigation after a miscalculation almost caused a serious incident during take-off. The flight, which took place on February 24th, was heading to Brussels to pick up some COVID-19 vaccinations but almost crashed as it departed. According to reports, automatic safety features were responsible for preventing a catastrophe.

The South African Civil Aviation Authority (SACAA) officially launched an investigation into the events on February 24th. The pilot and co-pilot of the flight reported the incident as per standard procedures. However, the SACAA said it should have been reported within 72 hours, but in fact, the aviation authority only heard about the incident on March 17th.

What happened?
The incident in question was very nearly a serious disaster. A South African Airways (SAA) Airbus A340-600 was set to head from South Africa to Brussels to collect COVID-19 vaccines. However, it appears the crew seriously miscalculated the plane’s take-off weight by almost 90 tons. The resulting error meant the plane was not traveling fast enough to take off safely.

Early reports suggest the Airbus’s safety features kicked in to override this; however, the aircraft is not designed to correct speed for flap retraction. As such, when the crew retracted the flaps, the plane went into what’s known as an alpha floor event. The plane was at risk of stalling during take-off. Luckily for the crew, the Airbus’s safety systems again took over, adding more power and lowering the nose of the plane, thereby preventing it from stalling.

Why is it such a serious incident?
The incident is being called “extraordinarily dangerous” by the SACAA. Although no passengers were onboard and the safety procedures meant no one was harmed or close to being harmed, the SACAA seems more concerned with the serious miscalculation.

According to reports, the pilot did not have the correct number of recent flight hours to be operating the flight, which caused a delay before the incident occurred. SAA planes have mostly been grounded due to the pandemic and ongoing financial issues, which have meant few pilots have been flying regularly.

SAA bailout package
South African Airways has suspended most operations for so long that pilots now no longer have enough flight training. Photo: Airbus
Many have criticised the SACAA for allowing the flight to take off at all and have accused the governing body of giving SAA special treatment. The flight was allowed to take off after exemptions were granted. It was a one-off to get vaccines, and so was allowed to go ahead. The SACAA denies favouritism and says it takes each case individually and is investigating the incident now it has been made aware of what happened.

The new allegations of special treatment for SAA come within weeks of fresh allegations from members of the South African parliament. Some MPs claim the government is providing too much funding to save the airline when it should be allowed to collapse. How much finance should be awarded to the airline is contentious, but providing exemptions from safety regulations raises more serious questions about SAA’s legitimacy.


By Babalo Ndenze for EWN

Parliament has continued public hearings into land expropriation without compensation.

There have been submissions from organisations opposed to the move and those in support of amending the Constitution to explicitly allow it.

Members of the public and affected parties have been offered another opportunity to make their voices heard following three previous rounds of public hearings over the past three years.

Some of the submissions argued that there was no justification for a constitutional amendment, with some saying that the courts should play a role in determining compensation.

Those representing the agricultural sector have come out in opposition to a constitutional amendment.

AgriSA’s Christo van der Rheede said that his organisation opposed expropriation without compensation, saying that the process should be less politicised.

“And that we specifically talk about fundamental human rights in terms of ownership of property and that should not be motivated and compromised by politics but by reality and practicality.”

The Helen Suzman Foundation has also opposed the move, saying that there was no need for an amendment.

But Cosatu said that it supported the change.

The labour federation’s parliamentary coordinator Matthew Parks: “We feel it is a rational intervention, we feel there is just utilisation in the bill for a new conversation for the expropriation of land to advance land reform and as Cosatu we support this bill as is.”

The hearings continue on Wednesday with submissions from AfriForum and the banking sector.


Retailers pessimistic about the future

By Lameez Omarjee for News24

A potential third wave of Covid-19 infections, and possible renewed restrictions will likely harm the retail sector and traders are generally pessimistic about the future.

The trade sector reported declining confidence across the board according to the retail trade survey for the first quarter of 2021, which was released by the Bureau for Economic Research (BER) on Tuesday. During the quarter, the country moved from lockdown level 3 restrictions – in which an alcohol sales ban and a lengthened curfew was implemented in January and February – to lockdown level 1 in March. Most of the responses were received during the last two weeks of February, when the peak of the second wave of Covid-19 infections had passed.

“As expected, the trade sector experienced another tough start to the new year. Much of the performance of the sector still largely reflects a Covid-19 narrative.

“Be it in terms of its restrictions on trade or its impact on the labour market, the pandemic’s sustained influence on business and consumer sentiment remains concerning amid the uncertainty about its trajectory,” the report read.

After making a recovery from its 29-year low of 11 points in the second quarter of 2020, to 50 points by the fourth quarter, retailers’ confidence levels declined by 13 points to 37 during the first quarter of 2021.

“This was to be expected considering that much of the momentum gained in the final quarter of last year was from pent-up demand for alcohol, anticipated festive season sales and the vital social grant top-ups, which all petered out by the first quarter,” the report read.

During the fourth quarter, retailers also benefitted from demand in durable goods – related to home improvements and home office equipment and furniture, but this was reversed during the first quarter. Sales volumes of durable goods and semi-durable goods, such as clothing, footwear, sporting equipment, declined. Sales volumes of non-durable goods like foods, beverages, tobacco, pharmaceuticals and cosmetics sales volumes held steady.

Price increases

“… Retailers in general kept selling prices elevated, and durable goods retailers in particular hiked their prices,” the report read. Price hikes are linked to increases in import prices and high food inflation. “Costs associated with Covid-19 related hygiene protocols also remain an extra expense to retailers. Looking ahead, rising fuel and electricity prices will also have an impact on prices,” the report read.

Wholesaler confidence levels remained relatively flat, declining from 59 points in the previous quarter to 58 points, this despite a deterioration in business conditions, lower sales volumes and a lack of pricing power. According to the BER, the sustained confidence may reflect optimism about business conditions in the second quarter.

“Consumer goods wholesalers expect to profit from a pick-up in alcohol sales amid eased trading restrictions, winter clothing sales and, more importantly, the resilient agricultural sector which has benefitted from favourable weather conditions and bumper crops,” the report read.

Non-consumer goods wholesalers – such as those selling building materials, chemicals and metal ores are expected to benefit from better global growth in 2021.

Weak economic growth, low business and consumer confidence and a fragile labour market knocked the domestic motor trade industry.

New vehicle trader confidence declined from 41 points to 35 points in the first quarter. “… Sales remain depressed and well below the 12-year average reading for this indicator,” the report read.

However, new vehicle dealers expect business conditions and sales volumes to improve in the second quarter. “Much of the optimism is fuelled by the prospect of a further recovery in the domestic economy and more people returning to work, which could boost sales volumes given that interest rates remain low,” the report read.

The BER highlighted that the overall retail sector is pessimistic about business conditions and sales volumes, going into the second quarter.

Other consumer pressures such as fuel and electricity price hikes, higher food inflation coupled with below inflation adjustments to social grants and the special relief grant and the Temporary Employer/Employee Relief Scheme drawing to a close in April, will negatively impact non-durable goods sales volumes.

“The weak labour market as well as the power supply crisis at Eskom also do not bode well for the trade sector in general,” the report read.

The BER noted that pent-up demand for durable goods, have mostly been met. Second quarter performance will likely depend on semi-durable goods retailers, especially linked to sales of winter clothes and school uniforms.


Eskom’s power grid is in deep trouble

By Jamie McKane for MyBroadband

Eskom has provided a detailed explanation of how its low energy availability will result in an increased risk of load-shedding this year.

A recent report published by the Council for Scientific and Industrial Research (CSIR) found that Eskom’s low Energy Availability Factor (EAF) was a driving force for the record-breaking load-shedding last year.

“Eskom fleet EAF is on a declining trend and drove load-shedding events in 2020,” the CSIR noted.

EAF measures plant availability including planned maintenance, unplanned breakdowns, and energy losses not under plant management control.

The statistics reveal that load-shedding occurred for 859 hours of 2020 (9.8%) despite a reduction in demand during the national COVID-19 lockdown.

This is bad news for 2021, as Eskom’s EAF has continued to drop into 2021, which will likely result in increased load-shedding until this improves.

According to Eskom’s latest weekly generation availability report, the average EAF for the year to date is only 58.55%.

In response to questions from MyBroadband regarding the effect of its declining EAF on load-shedding, the power utility said that lower EAF figures increase the risk of load-shedding.

“It is correct that as EAF drops, all other factors remaining the same, the risk of load shedding would increase,” Eskom told MyBroadband.

Falling energy availability means more load-shedding
Eskom said that its power system was currently constrained, a state partly due to the low EAF of the generating fleet. Load-shedding is subsequently required to correct this supply/demand imbalance.

The power utility also said, however, that EAF was only one half of the equation – the other being the demand it needs to meet.

“The dispatchable generation is required to meet the residual demand,” Eskom said.

“This residual demand is the total customer demand of the country less the power supplied by the renewable generation (wind generation, solar generation, concentrating solar power generation, biomass generation etc.) ”

“The residual demand is, therefore, made up of customer demand and the contribution from the renewable generation,” it said.

Each of these factors is variable, and the variance determines the strain on the system and the risk of load-shedding.

“In the case of the renewable generation, the contribution is dependent on wind and solar radiation and there is a strong seasonal effect on the wind generation,” Eskom said.

“The customer demand is also variable changing in the range of 22GW to 34GW over the year with higher demand during the winter months.”

“In general, lower EAF combined with high residual demand will result in load-shedding. Load-shedding is also unfortunately required when the fleet availability drops even further from the average availability for more than a few days.”

Eskom added that it is the generally low EAF coupled with the unreliability and unpredictability of the plant that results in load-shedding.

“All factors must improve to significantly reduce the risk of load-shedding,” it said.

Why EAF is falling
Eskom’s EAF is continuing to decline due to a number of factors, the most prominent of which is power plant failures and breakdowns.

“The major contributors to unplanned energy losses (UCLF) are partial load losses (where units are unable to operate at full load), boiler tube leaks, trips, outage slip and other full load losses,” Eskom said.

It should, however, be noted that Eskom is also conducting reliability maintenance on its power plants, which means that a portion of its fleet is taken offline for extended periods to resolve major issues and defects.

Once this program is complete, Eskom said it expects the risk of load-shedding to decline somewhat. However, while EAF may improve, the power utility still faces a significant capacity shortfall for the next five years.

“Eskom’s generating fleet is unreliable and unpredictable,” Eskom said.

“Together with focussed attention on the areas that contribute most significantly to load losses, Eskom has been embarking on a programme of increased much-needed reliability maintenance.”

“Only once that programme has been completed can we expect the plant performance to become more reliable and less unpredictable,” it said.

BEE is quietly changing in South Africa

Source: Sakeliga

The draft BEE code for the legal sector poses a threat to the independence and functioning of the legal profession. The code harms not only the private interests of practitioners, firms, and clients, but also the public interest, given the legal professions’ foundational role in a constitutional order.

These submissions form part of business group Sakeliga’s comments this week on the draft Legal Sector Code. Now in its second iteration for public comment, the draft Legal Sector Code seeks to bring the legal profession under sector specific B-BBEE codes.

“Regulation of the legal industry should serve the function of ensuring and overseeing the quality of service and the independence of the legal sector. Instead, the draft Legal Sector Code introduces partisan political considerations (specifically, racial transformation) as matters of law into the industry. Properly understood and legitimately pursued, these considerations should rather be matters of public advocacy and lobbying within the industry. The code therefore detracts from the proper functioning of the legal profession and its institutions and is not acceptable,” says Piet le Roux, Sakeliga CEO.

Constitutional importance

Sakeliga’s comments also extend to the special role of the legal profession in the maintenance of a constitutional order.

“We point out that a valid constitutional order requires effective separation of powers, for which a judiciary independent of partisan political programmes is crucial. The legal profession serves what could be called a meta-constitutional role, namely intermediation between the centres of power of the state, between legal subjects, and between the state and legal subjects. For this constitutional mechanism to function, the ability to freely choose legal representation and to freely represent clients are indispensable,” says Le Roux.

New trend

Le Roux says the Legal Sector Code are also instructive regarding new trends in BEE regulations. In earlier phases BEE was generally focused on the procurement relationship between the state and providers of products of services to it. Lately, in codes such as the Legal Sector Code, BEE regulation jettisons the requirement of the state as a transacting party. The new approach is to regulate for BEE requirements regardless of state involvement, which poses serious implications for freedom to trade and freedom to procure professional services,” Le Roux says.

Le Roux points to the proposed Property Practitioners Act and Conduct of Financial Institutions Act as legislative developments with a similar application of BEE.

Further matters and complete submission

The Code is also notable for its proposal of onerous pro bono requirements. If implemented, it would not serve to make legal services more accessible, but rather more expensive and inaccessible, and disproportionately harm smaller firms.

Source: IOL

South African budget retailer Mr Price Group has said that it would buy privately-owned kitchenware company Yuppiechef in a cash deal, to bolster its online presence and premium offerings.

Without revealing the deal size, Mr Price said the purchase consideration for the South African omni-channel retailer represents about 1% of its market capitalisation.

Mr Price Group’s current market cap is 47.29 billion rand ($3.17 billion), according to Refinitiv Eikon.

The budget clothing and homeware retailer has been looking to expand its market share and has rolled out new product lines to shore up sales and build its online strength, even as many brick-and-mortar retailers succumb to the COVID-19 crisis.

“Yuppiechef gives us another platform to escalate our ambitions in online retail and enables us to be strategically position for further growth,” Mr Price chief executive officer Mark Blair said.

Founded in 2006, Yuppiechef has two primary operations – a retail division comprising seven stores and an online platform, and a wholesale division, which develops and imports branded goods for wholesale distribution.


Pfizer vaccine approved for emergency use

Source: Eyewitness News

The South African Health Products Regulatory Authority (SAHPRA) on Tuesday approved the Pfizer/BioNTech coronavirus vaccine for human use.

SAHPRA released a statement on its website on Tuesday afternoon, saying that the Section 21 application for the vaccine was approved. A Section 21 application is usually valid for six months and is used for emergency use access of a health product that is unregistered. AstraZeneca’s COVID-19 vaccine was granted Section 21 approval by SAHPRA in January.

This means that the vaccine can be distributed but will be conditional on its efficacy and safety, which will be continuously monitored.

SAHPRA is tasked with regulating all health products in the country and also oversees clinical trials.

South Africa has already ordered 20 million doses of the vaccine, which is yet to arrive. Its arrival date is still to be made clear.

The vaccine rollout to South Africans has not begun yet. The Johnson & Johnson vaccine currently being given to healthcare workers is part of the implementation study for that vaccine.


Pick n Pay to cap garlic and ginger prices

By Philippa Larkin for IOL

Pick n Pay will cap its gross profit margin for ginger and garlic, which is good news for cash-strapped consumers, following recent public complaints that fingered seven retailers for price gouging.

South Africans are struggling to afford basic foodstuffs amid rising prices.

The move follows public complaints against seven retailers about the rising cost of these items. Picture: Brendan Magaar, ANA.
In recent months, the Competition Commission has received a number of complaints from members of the public alleging that certain Food Lover’s, Spar, Shoprite Checkers and Pick n Pay stores had increased prices of ginger and garlic.

The Competition Commission said yesterday it was pleased to announce the signing of a memorandum of agreement with Pick n Pay last week – the first retailer to do so – and it hoped to formalise similar agreements with other national retailers.

“This confirms that the company has capped its gross profit margin for ginger and garlic essential food items for the period covering January 28, 2021 to April 1, 2021, which may be extended. Pick n Pay has also instructed its franchises to price no higher than the corporate store price on ginger and garlic,” it said.

The commission said it had engaged with all the affected retailers, and expressed its concerns that the alleged significant price increases of ginger and garlic in certain retail outlets could result in a contravention of Consumer Protection Regulations and other relevant provisions of the Competition Act. In terms of the Consumer Protection Regulations, ginger and garlic fall under the category of “basic food and consumer items”.

It said although the wholesale prices for these products had increased due to heightened consumer demand during the second wave of infections, the commission was of the view that this did not warrant the large increase in absolute margins seen in some instances.

The Pietermaritzburg Economic Justice and Dignity research group published its Household Affordability Index for January 2021, which showed that the cost of a basic food basket had increased drastically.

The index showed that the price of maize meal and other maize products continued to increase, with basic and core food items such as sugar beans, rice, flour and bread seeing hikes of between 31 percent and 68 percent.

It said the cost of a basic food basket in January was R4 051.20, which was way above the monthly minimum wage.


By Siphelele Dludla for IOL

South Africa’s economy shrank by 7% last year compared to 0.2 percent growth in 2019 amid the devastating impact of Covid-19 and lockdown restrictions, Statistics SA said.

This is the most significant economic downturn in 75 years, but was not unexpected following months of economic slowdown due to lockdown restrictions.

’’If we explore the historical data, this is the biggest annual fall in economic activity the country has seen since at least 1946,” Stats SA said.

“The second biggest fall was recorded in 1992 when the economy contracted by 2.1 percent.

“At that time, the country was struggling through a two-year-long recession, mainly the result of a global economic downturn.”

Stats SA said the annual real gross domestic product (GDP) growth rate of -7 percent last year was primarily led by decreases in manufacturing, trade, catering and accommodation; and transport, storage and communication.

The agriculture, forestry and fishing industry, however, escaped the effects of the pandemic relatively unscathed, expanding production by 13.1 percent last year.

The government also grew marginally in the year, up by 0.7 percent.

Stats SA said expenditure on GDP also decreased by 7.1 percent last year as household final consumption expenditure decreased by 5.4 percent.

Meanwhile, the fourth quarter GDP recorded positive growth as economic activity resumed after lockdown restrictions were lifted.

Stats SA said GDP lifted by 1.5 percent in the fourth quarter of last year, giving an annualised growth rate of 6.3 percent, and easily beating market expectations of a 5 percent rise.

The largest positive contributors to growth were the manufacturing, trade and transport sectors.

The manufacturing industry increased at a rate of 21.1 percent in the fourth quarter, as nine of the 10 manufacturing divisions reported positive growth rates in the period.

Stats SA said expenditure on real GDP increased at an annualised rate of 6.5 percent in the fourth quarter of last year as household final consumption expenditure increased at a rate of 7.5 percent.


Struggling Massmart disposes of more assets

By Dineo Faku for IOL

Massmart shares surged 20.76 percent at the JSE yesterday to close at R54.10 as the market welcomed the proposed sale of its non-core Masscash, Cambridge Food and Rhino stores as well as the review of its footprint outside the Southern Africa Development Community (SADC) as it focuses on investment in core and high returning assets.

Chief executive Mitch Slape said the group would review its operations outside SADC in the second quarter.

Slape said the group had appointed Barclays to facilitate the disposal of the Cambridge Food, Rhino and Massfresh comprising The Fruitspot and a meat processing facility assets.

“We are going to be divesting our Masscash, Cambridge and Rhino business largely because these are not core assets to Massmart, and we see no clear pathway to market leadership with these businesses,” said Slape, adding that the SADC stores had a mixed performance and had added significantly to the complexity of the Massmart business.

“These decisions are indicative of a strategic shift to concentrate on areas of market leadership, areas we believe we have the strength against our competitors.”

Massmart unveiled plans to accelerate its e-commerce strategy leveraging the experience of parent company Walmart.

It announced a focus on the growth of its DIY category, primarily Builders Warehouse, its wholesale business, and the revitalisation of its general merchandise business.

However, due to Covid-19 pandemic restrictions mainly on liquor, sales during the 52 weeks ended

December 27, 2020, fell to R86.5 billion representing a decline of 7.7 percent, with a 7.5 percent fall in comparable store sales in line with expectations.

Investment Analyst at Sanlam Private Wealth, Renier de Bruyn, said grocery retailers had been hard hit by the liquor restrictions, which negatively impacted the results, while the increased spend on home improvement projects by retail customers was evident in the healthy rise of operating profit at Builders.

“Some underlying progress can be seen in the new management team’s turnaround plan announced at the start of 2020 in terms of improved inventory and margin management and restructured operations,” De Bruyn said.

“There also seems to be better support from their parent Walmart in a number of areas.”

Trading profit was up 5.5 percent at R1.172bn from R1.11bn in 2019. The group reported a net loss of R1.8bn from R1.3bn during the same period in 2019, while its headline loss narrowed to R900 million compared to a headline loss of R1.2bn during the same period in 2019.

Euromonitor consultant Christele Chokossa said despite the 5.5 percent increase in trading profit due to lower operating costs through lease renegotiation, recruitment freeze, and closure of DionWired stores, Massmart’s profit before interest and taxes declined by 119.5 percent, while net loss for the period increased by 35 percent.

“Massmart likely lost shares in food retailing due to lower demand from the hospitality industry, as well as the closure of some stores due to Covid-19. Besides, Game’s performance was poor when considering its overall industry performance,” Chokossa said.

The review of the stores outside SADC builds on the turn-around plan announced last year that has seen the revamping of Game stores, and resulted in the closure of 23 DionWired stores and underperforming Masscash stores. Last month Massmart also announced the decision to divest an additional 14 Cash & Carry stores following a more comprehensive strategic review.


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