SA recession risk rises; SAA close to collapse; Zim starvation crisis; PIC demands Steinhoff reports

By Jackie Cameron

  • SA is staring down a recession, says Bloomberg. South Africa’s economy contracted for a second quarter this year and the economy hasn’t expanded at more than 2% annually since 2013. Treasury forecasts show growth will remain below that threshold until at least 2022. With pledges to boost economic growth to as much as 5% by 2023, President Cyril Ramaphosa couldn’t have had a more difficult start to his presidency. It points out that the economy has contracted for four of the seven quarters since he took over from Jacob Zuma in early 2018. Only Kgalema Motlanthe, who led the country for eight months after Thabo Mbeki was ousted, had a worse stint – and that was during the global financial crisis. Growth in household consumption is down, business confidence is down and the agriculture, mining and manufacturing sectors are under severe pressure.
  • SAA is on the brink of collapse. Its bosses are trying to buy more time by asking all the big lenders to help it with a cash crunch, while unions representing staff members are threatening to take action to push the airline into business rescue, a form of bankruptcy protection. Bloomberg reports that SAA bosses have gone with a begging bowl to Standard Bank, Investec, Absa, Nedbank and Rand Merchant Bank. The state-owned company needs money to pay for salaries, fuel for its planes and cover other costs until March 2020. The banks all declined to comment. SAA, says Bloomberg, last made a profit in 2011 and has failed to implement numerous turnaround plans. The carrier delayed publication of its financial statements for the year through March until its status as a going concern is assured – a contingency that will hinge on it securing more working capital. The airline has received R57bn ($3.9bn) in bailouts since 1994 and Finance Minister Tito Mboweni has been reluctant to give it more money or provide guarantees to enable it to raise more debt, saying it isn’t viable and should be shut down. Public Enterprises Minister Pravin Gordhan has said SAA will keep flying and a “radical restructuring” will be undertaken to ensure its financial and operational sustainability, says the news agency.
  • Zimbabwe is deep into a vicious cycle of sky-rocketing malnutrition, the World Food Programme has warned. It plans to double the number of people it’s providing with emergency food aid in Zimbabwe, where half of the 14-million population is facing severe hunger, says Bloomberg. The United Nations agency said it plans to assist 4.1 million people by January and called for funding from donors to meet the growing needs of the country’s citizens. “We’re deep into a vicious cycle of sky-rocketing malnutrition that’s hitting women and children hardest and will be tough to break,” WFP Executive Director David Beasley told Bloomberg in an emailed statement. “With poor rains forecast yet again in the run-up to the main harvest in April, the scale of hunger in the country is going to get worse before it gets better.”
  • South Africa’s Public Investment Corp., the continent’s biggest fund manager, said it’s preparing court papers to try and force Steinhoff International to release PwC’s full report on what led to the retailer’s accounting scandal, reports Bloomberg. Steinhoff didn’t respond to a letter demanding the report, PIC’s head of legal services Lindiwe Dlamini said in parliament on Tuesday. “And now we have to prepare the papers in order to have all the information we need to pursue the past directors.” The global retailer is also being challenged in a South African court by two media outlets to release the 7,000-page report.