Here’s what is happening in and affecting South Africa today:
- As soon as president Jacob Zuma paid back R7.8 million for non-security upgrades to his Nkandla home, questions were raised about where the money came from, and how Zuma got his hands on it. So far, it has been established that the Public Investment Corp. owns 25% of the bank that loaned him the money, and that the president would have to pay R80,000 a month to service the loan. Political parties are calling for full transparency.
- Former finance minister Trevor Manuel has called the Hawks investigation into Pravin Gordhan an abuse of power, adding that the harassment will continue even though the unit has no case against the minister. He said the Hawks’ conduct is heading to ‘unlawful’ territory – but there are no brakes. Manuel compared the Hawks’ conduct to similar activity by state security under apartheid.
- A third lender has followed Futuregrowth and Danish group, Jyske Bankm in slamming the brakes on handing out money to South African state-owned companies. Cape Town-based Abax Investments says it has “significantly reduced” investment in SOCs due to concerns over credit worthiness. The group said the reduction has been happening over the past 3 years.
- Despite all the negatives on the scoreboard – Zuma, political turmoil, corruption, tough economic conditions, global economic slowdown, and drought – South Africa has shown resilience, and is chugging along, albeit to nowhere, economists have said. It is a positive sign that the country can weather the storms, but it also places us in a precarious position, where things can deteriorate quickly if the right decisions aren’t taken, they said.
- South Africa’s rand edged firmer on Monday in volatile trade with investors uncertain of the timing of a rate hike in the U.S., while worries over the possible arrest of finance minister Pravin Gordhan kept buying in check. On Tuesday, the rand was slightly stronger, trading at R14.30 to the dollar, R19.06 to the pound and R16.07 to the euro.
In global news: Asian stocks rose on Tuesday, boosted as Wall Street rallied overnight after Federal Reserve governor Lael Brainard calmed markets with remarks that appeared to reduce the prospects of a near-term interest rate hike. Oil prices fell in early trade on Tuesday on concerns over increased drilling in the United States.