Business

5 important things happening in South Africa today

Staff Writer

 ·29 Aug 2023

Here’s what is happening in and affecting South Africa today:

Public finance blues: Finance Minister Enoch Godongwana says the intensity of Eskom blackouts and perennial inefficiencies at Transnet’s operations have undermined any efforts to grow the economy this year, putting public finances under immense pressure. This pressure is so severe that Godongwana is expected to announce wide-scale cuts to the budgets of provinces for 2023 and 2024 when he presents the Medium-Term Budget Policy Statement on 25 October. [Daily Maverick]

Consumers to pay Eskom ‘inadequacies’: Eskom is hoping to recover almost R24 billion through a regulatory clearing account application (RCA) submitted in April. If approved, the R24 billion RCA will be added on top of future electricity tariff increases. Business leaders are pushing back and say that consumers should not be made to pay for Eskom’s inadequacies. “We accept Eskom needs money to get out of the crisis it finds itself in, but [it] should be doing more to deal with inefficiencies,” said EIUG CEO Fanele Mondi. [Business Day]

Business environment struggles: In its results for the year ended 30 June 2023, Italtile noted that businesses and consumers are hamstrung by load-shedding, rampant crime, increased competition, and high inflation and interest rates. “The depreciation of the currency and inflation-driven input cost increases drove up product and building costs for all businesses,” it said, adding that this reduces affordability to all consumers experiencing high unemployment levels and real wage decreases. [Daily Investor]

State incapacity: Harvard professor Ricardo Hausmann says that the biggest hurdle to economic growth in South Africa is a weak and incapable state. He added that there are two main ANC policies that drive these hurdles: cadre deployment and preferential procurement. He said that cadre deployment is backed by too many vested interests, while preferential procurement or BEE is anti-competitive and anti-value-for-money, which makes it very hard for the public sector to be efficient. [News24]

Markets: The South African rand was up slightly against a weakening dollar on Monday after slipping earlier in the day amid uncertainty about the outlook for U.S. Treasury yields and interest rates. On Tuesday (29 August), the rand was trading at R18.54/USD, R20.7/EUR and R23.40/GBP. Oil is trading at $84.45 a barrel. (Reuters)