DA leader quits; Inflation down; SOEs fail audits; ABB flags Eskom payments; Putin eyes Africa; flights resume

By Linda van Tilburg

  • The leader of the Democratic Alliance, Mmusi Maimane has resigned. This follows months of speculation about Maimane’s future after the DA failed to increase its support in the May elections. Maimane said the “cowardly” campaign to smear his name had placed his family in danger and this added to the fact that the DA no longer remained the vehicle for his vision, prompted his resignation. He said he wanted to change the DA from being seen as a party for minorities to one that was trusted by black people and wanted to address the historical imbalances, but with recent events he no longer believed that it was possible. The party chairperson and former Nelson Mandela Bay mayor, Athol Trollip also resigned, while Johannesburg mayor Herman Mashaba left the party earlier this week. The DA federal council will meet today to decide the way forward.
  • South Africa’s core inflation rate fell to the lowest level since 2011 to 4.1% in September down from 4.3% in August. Food prices increased by 3.7% compared to 3.8% last month but the cost of cereals and bread increased sharply to 8.5% and wine cost 10.8% more. Power, water and gasoline has largely driven increases since last year. Electricity rose by 11.8%. Bloomberg reports that the drop in the core inflation rate is leading to a decline in the annual headline reading which could raise pressure on the central bank to cut its benchmark rate. But the deteriorating fiscal metrics may limit the scope for another rate cut this year.
  • The Auditor-General has revealed that irregular expenditure by national and provincial departments including state-owned entities, increased from just under R51bn in 2017/2018 to R61.3bn for the 2018/2019 financial year. Kimi Makwetu also said that less than 23% of government departments and public entities received clean audits. There were also 11% of audits that were outstanding of which most were from public entities. South African Airways had not submitted financial statements for two years. Makwetu also told Scopa that the SOEs were increasingly relying on government guarantees to secure loans but it is reflecting badly on government debt and could result in a credit downgrade for South Africa.
  • Swiss company ABB, the maker of robotics and power grids, is being probed for suspect payments to Eskom. The company self-reported the incidents to US and South African authorities and expects it may be sanctioned. The Zurich-based company revealed with its third-quarter earnings. The company also took a $160m write-down on the Kusile power plant. Former Eskom CEO Matshela Koko is alleged to have guaranteed future contracts to ABB in return for subcontracting work to his stepdaughter’s business. ABB joins a string of international companies, which includes SAP and McKinsey that were caught up in corruption allegations related to Eskom.
  • Two of the world’s biggest military aircraft landed at Waterkloof Airbase in Tshwane yesterday afternoon. The Russian Tupolev Tu-160 ‘Blackjack’ bombers which are capable of launching nuclear missiles were the first to land in Africa to display the new cooperation between the defence forces of Russia and South Africa. This comes as President Vladimir Putin was hosting leaders from more than 50 African states yesterday in Russia’s first conference with the continent, underlining a Kremlin push to rival the US, the European Union and China as strategic players on the continent. Putin described the summit as a return to Africa. Representing South Africa at the summit, President Cyril Ramaphosa said that Africa wants to engage with Russia in a meaningful way. This is after Ramaphosa’s government halted a controversial plan for eight nuclear plants between Russia and former President Jacob Zuma which would have cost an estimated at R1trn.
  • Reuters reports that South African Airways and Comair planes are back in the air after they have been grounded when the country’s safety regulator flagged maintenance problems. Flights departed from Johannesburg OR Tambo Airport as normal, said the Airports Company South Africa. At least eight of Comair domestic flights were hit on Tuesday, but the airline says it expected no further disruptions. 25 of SAA’s aircraft were affected by the safety audit and some have been returned but the airline did not give an indication how their flights will be affected. The South African Civil Aviation Authority said it did find faults during an inspection, but did not disclose what they were.