5 important things happening in South Africa today

·26 Jun 2023

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

Government planning to take over private energy: With Eskom’s financial constraints in mind, electricity minister Kgosientsho Ramokgopa says that the embattled power utility is working on a plan where the private sector generates electricity while the utility still operates the grid. In addition, he said that the government was looking into a model where the private sector would finance, build and operate a generation project for a short period, with it then being transferred to the government. [EWN]

Almost the end of the gloom: Nick Riley, Investec’s head of investment banking, says South Africa is close to the bottom of its crisis, with opportunities on the horizon. Riley said that JSE valuations are incredibly depressed and that their value will eventually be unlocked – possibly through sector consolidation or break-ups of larger groups. He added that the consumers will have more breathing room once the global rate hike cycle ends, with the rand also typically strengthening during a drop in rates. [Business Day]

Auditor concerns: Despite agreeing on the need for harsher penalties, industry experts say the new increased fines for auditors found guilty of misconduct could decimate smaller and independent tiers of the industry. The experts added that the fines, which were introduced by Finance Minister Enoch Godognwana earlier this month, could see would-be auditors move away from the profession. If an auditor pleads guilty, they could be fined up to R5 million, while an audit firm could be liable for a R15 million fine. [News24]

Ramaphosa confident for elections: President Cyril Ramaphosa says it is “silly” to think that the ANC will not win the 2024 elections with an outright majority. Ramaphosa added that he was so confident in winning that he was not even thinking of going into a coalition government. His comments come despite several political experts saying that the party will drop below 50% at next year’s election, with the ruling party potentially needing to enter into a coalition government. [News24]

Markets: South Africa’s rand weakened 1% against the U.S. dollar on Friday as concerns about global economic growth weighed on risk sentiment. “The risk aversion deepened on Friday as recession fears grow in Europe following the publication of much weaker-than-expected PMI data from the Eurozone and UK,” said Fawad Razaqzada from StoneX. On Monday (26 June), the rand was trading at R18.73/$, R20.43/€, and R23.85/£. Brent crude is trading at $74.18 a barrel. [Nasdaq]

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