New electricity disaster looming in South Africa, and good news for Cape Town homeowners

South Africa’s rand, government bonds, and stocks all strengthened on Thursday after the South African Reserve Bank (SARB) lowered its main lending rate, citing well-controlled inflation. 

The rand traded at 17.81 against the dollar, approximately 1% stronger than its closing level on Wednesday and hovering around a five-month high. 

The SARB also released detailed modelling of a lower inflation target of 3%, which it stated its Monetary Policy Committee (MPC) found more appealing than the current target of 4.5%.

An analyst from TreasuryONE said that this ‘softer’ stance boosted confidence, helping the rand strengthen and causing government bond yields to fall. 

However, despite the positive developments, policymakers have stressed risks from US President Donald Trump’s trade war and domestic politics remain. 

On Friday, 30 May, the rand was trading at R17.84 to the dollar, R24.04 to the pound and R20.19 to the euro. Oil was trading slightly lower at $65.77 a barrel.

Here are five other important things happening in and affecting South Africa today:

Electricity disaster: No new Independent Power Producers (IPPs) can connect to the grid in five provinces, the Free State, North West, Eastern Cape, Western Cape, and Northern Cape, until the National Transmission Company implements its expansion program. This grid limitation has already hindered renewable energy projects, resulting in no wind allocations in bid windows 6 and 7 of the government’s procurement programme. [Business Day]

Good new for Cape Town residents: The City of Cape Town is providing some relief to residents in response to strong public feedback on its draft budget. On Thursday, Cape Town Mayor Geordin Hill-Lewis addressed the council and introduced expanded rates relief measures along with reduced tariffs, particularly benefiting the middle class, who had expressed significant opposition to the initial proposed increases. [eNCA]

Interest rate relief: The South African Reserve Bank (SARB) Monetary Policy Committee (MPC) has voted to cut the country’s interest rates by 25 basis points. This brings the repo rate down to 7.25% and the prime lending rate to 10.75%. [BuinessTech]

A win for the Post Office: The acting CEO of the South African Post Office, Fathima Gany, has said that the failing state entity has achieved a positive net asset value of R1 billion. She highlighted that this is the first time the state-owned entity has achieved this since 2012, thanks to its business rescue practitioners writing off R7.4 billion of its debt. [MyBroadband]

Whole neighbourhood cut off: City Power has disconnected the electricity supply to the Riverpark community in Alexandra, north of Johannesburg. The utility said this decision followed confrontations with residents who stopped it from conducting meter audits and disconnection operations of non-paying residents in the area. [Primedia Plus]