Eskom forced to pay French company R1 billion, and the government Premier who owns 24 properties
The South African rand remained relatively stable in muted trading on Tuesday, despite the release of a positive purchasing managers’ index survey.
Investors are still awaiting updates on tariffs ahead of the United States’ August 8 deadline. The rand was valued at 17.92 against the dollar, only slightly changing from Monday’s close.
However, concerns persist in the market following the US decision to impose a 30% duty on goods imported from South Africa, which is the highest rate among Sub-Saharan African countries.
Analysts warn that additional threats may arise, particularly regarding a potential increase in US tariffs due to South Africa’s membership in BRICS (the grouping of Brazil, Russia, India, China, and South Africa).
In the long run, South Africa plans to diversify its trade relationships away from the US to reduce any future leverage that the US may have over it.
However, for now, the country must prepare for further disruptions that could negatively impact the economy and limit the rand’s potential appreciation.
On Wednesday, 6 August, the rand was trading at R17.87 to the dollar, R23.78 to the pound and R20.69 to the euro. Oil was trading slightly lower at $68.76 a barrel.
Here are five other important things happening in and affecting South Africa today:
Eskom ordered to pay R1 billion: The High Court has ordered Eskom to pay nearly R1 billion to French contractor Framatome due to delays in replacing steam generators at Koeberg Power Station. The court found that Eskom did not meet essential obligations for the project, necessitating compensation for Framatome’s losses. [MyBroadband]
The Premier who owns 24 properties in South Africa: Former North West Premier Supra Mahumapelo owns at least 24 properties across South Africa. These include 18 residential, two business, and six vacant or undeveloped pieces of land. [Newsday]
Own goal for South Africa: Minister of International Relations and Cooperation Ronald Lamola has confirmed that South Africa’s special envoy to the United States has not made an official visit. This strategy of having no official representation in the US has not worked out for the country, as evidenced by Trump’s July 31 executive order imposing a 30% tariff on South African exports and his criticism of local policies. [BusinessTech]
Risks for major banks: The rise of fintech firms in South Africa poses risks to traditional banks. While these fintechs offer opportunities for efficiency, they challenge the stability of the financial system. Big banks may struggle to adapt quickly and, facing competition, could take greater risks to keep up with more agile startups. [Daily Investor]
S&P warns of fiscal instability: The ANC has expressed its disagreement with Reserve Bank Governor Lesetja Kganyago’s decision to unilaterally lower the inflation target last week. Because of this, the market intelligence agency S&P Global warned that this misalignment could risk the Treasury’s efforts to stabilise public debt. [News24]
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