5 important things happening in South Africa today
Here’s what is happening in and affecting South Africa today:
Interest rate bites: Absa said the first half of the year, characterised by higher interest rates and a rising cost of living, has seen more customers roll into arrears, forcing the bank to take on heavier loan losses that pushed credit impairments up by 60%. Mortgage loan credit charges more than tripled – surging by a staggering 258% to R975 million as consumers bore the brunt of the South African Reserve Bank’s most aggressive and rapid interest rate tightening spell in 15 years. [Moneyweb]
SA sleeping on its own renewables boom: South Africa has imported $10 billion worth of solar panels, lithium-ion batteries and inverters, most of which in the last three years, with $2.5 billion in the first six months of 2023 alone. However, the local renewables manufacturing sector has not developed much, and it has not been able to keep pace with the strong rise in demand as it struggles to compete with international manufacturers, particularly those in China – meaning SA is missing out on billions of rands being generated from its own renewables boom. [Business Day]
AGOA membership still likely: South Africa will likely keep its preferential access to US markets because hundreds of American firms are also benefitting, according to the nation’s ambassador to BRICS, Anil Sooklal. He said there are over 600 US companies doing business in South Africa and questions if they would really think of turning their backs on that. “I don’t think there is any serious threat of us losing preferential access to AGOA. AGOA is not a one-way issue, trade is not a one-way issue,” said Sooklal. [BusinessTech]
SA debt trouble: Economist Dawie Roodt warned that South Africa is running out of money and facing a difficult time for the next five years. He noted that above-inflation salary increases, increasing debt from failing SOEs, and strained tax collections have resulted in a fiscal deficit set to be between 6% and 6.5% of gross domestic product (GDP), much higher than the minister’s expected 4%. “I expect South Africa’s debt to increase to 75% of GDP by the end of the year and reach 80% of GDP by the end of 2024,” said Roodt. [Daily Investor]
Markets: The South African rand weakened on Monday, as analysts said the risks were for the rand to fall further due to weak economic data out of China, higher-than-expected core producer inflation in the U.S. and increased bets on another Federal Reserve rate hike in September. On Tuesday (15 August), the rand was trading at R19.08/USD, R20.81/EUR and R24.20/GBP. Oil is trading at $86.22 a barrel. (Reuters)
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