The world is changing fast and to keep up you need local knowledge with global context.
By Linda van Tilburg
- Eskom has posted a surprising R1.3bn profit in the six months through September, which is almost double that of the previous year thanks to higher tariffs. This is after many analysts had expected Eskom to record a loss for the first half. However, it still anticipates a R20bn loss for the full year that ends in March 2020 due to lower demand and prices in the summer months. The power utility is still shackled to its massive R454bn debt burden. Eskom’s acting CEO Jabu Mabuza said the Eskom turnaround remained a long and difficult journey. The utility’s CFO Calib Cassim said the current financial year would probably represent a high-water mark for annual losses with smaller deficits seen in 2021 and 2022. Bloomberg reports that the Government’s R138bn bailout over the next three years is unlikely to be enough to ensure Eskom’s viability.
- The Reserve Bank says there’s a high likelihood that the South African government’s finances would deteriorate further posing a risk to the stability of the country’s financial system. The Bank said in its Financial Stability Review report released yesterday that the worsening fiscal position caused by higher government debt, weak economic growth and lower tax collection has been exacerbated by the struggling state-owned enterprises. The government also has to set aside more money to help its debt-laden firms, pushing up contingent liabilities. The result will be tax increases, lower corporate and household income and investment as well as a protracted period of low economic growth. The financial sector’s profitability would also come under pressure, while causing credit-rating downgrades will trigger capital outflow. Debt will be more expensive and difficult to issue because of negative investor sentiment.
- President Cyril Ramaphosa withdrew from the Chairman’s Conversation, a signature annual event hosted by Power FM radio station, because of allegations the station’s owner, Given Mkhari, assaulted his wife. Ramaphosa’s withdrawal, announced less than an hour before the show was due to start, comes just as South Africa starts its annual 16 Days of No Violence Against Women and Children campaign. Mkhari and his wife, Ipeleng, were arrested in 2018 after raising charges of assault against each other. Those were later withdrawn. The Presidency said the non-participation of Ramaphosa should not be read as an endorsement of the untested allegations raised by the civil society organisations but a carefully weighed up decision taken in the public interest.
- KPMG says it is winning back customers and no longer bleeding staff as the auditing firm tries to rebuild an image tarnished by a series of scandals. The firm secured a number of new mandates in industries such as telecommunications, mining and information technology. CEO Ignatius Sehoole said KPMG has spent the past two years increasing the independence of its board, adding layers of security to its auditing processes and reviewing the risk profiles of clients. He said he was heartened by the fact that their remedial actions were starting to be recognised. A third of KPMG’s R3bn in revenue has evaporated since late 2017 when the company came under increasing fire for its association with companies involved in the plundering of the state coffers. The company’s workforce in South Africa has dropped by about 1,000 over the past two years as Absa, the Auditor-General and Foschini’s terminated KPMG as their auditors.
- Steinhoff shares surged by 25% yesterday. The company announced earlier this week that it had closed the sale of Unitrans, its automative operation to CFAO, a subsidiary of Toyota. Steinhoff CEO, Louis du Preez said that the closing of the transaction was another successful step to simplify Steinhoff’s portfolio and de-leverage its balance sheet. Earlier the company announced that the European retail investor. Alteri I will acquire Steinhoff’s Blue Group that owns British furniture companies Harveys Furniture and Benson for Beds. The company also announced that the general merchandise division of its Australian furniture subsidiary Greenlit Brands will be sold.
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Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.