By Linda van Tilburg
- The ANC is back in power in Johannesburg, the country’s economic hub after Geoff Makhubo was elected as the city’s mayor. Makhubo garnered 137 votes against 101 for the Democratic Alliance’s Funzela Ngobeni and 30 for the EFF’s Musa Novela. The ANC does not have an outright majority in the council and got opposition support to win the post. The DA has ruled Johannesburg in a loose alliance with the EFF since the 2016 municipal vote. Their agreement unravelled after the city’s DA mayor, Herman Mashaba quit and the EFF decided to field its own candidate. Bloomberg reports that the amaBhungane Centre for Investigative Journalism found that Makhubo’s company received R30m from Regiments Capital which has been implicating in the looting of money from state companies.
- Activity in the private sector in South Africa shrank for the seventh consecutive month due to reduced output, less new orders and a contraction in employment. That is according to IHS Markit’s Purchasing Managers’ Index which fell from 49.4 in October to 48.6. It is the sharpest contraction in the private sector since July. IHS Markit says both employment and input stocks decreased with companies signalling little expectation of an immediate boost to the domestic economy. With a number of issues facing the country, firms generally placed their optimism upon company-led investment rather than stronger national growth, IHS said. This comes a day after data that indicated that the gross domestic product of South Africa shrank for the second time in three quarters by 0.6% from July to September.
- The Rio Tinto Group has shuttered its Richards Bay Minerals unit yesterday and paused a $463m expansion project amid escalating violence in surrounding communities that led to an employee being shot and injured. The decision to halt operations was preceded by weeks of community protests in the area around the mine, causing “on-and-off disruptions,” said RBM Managing Director Werner Duvenhage. The demonstrations aren’t related to the company, but endanger employees’ lives and require government intervention. Losses will be “significant,” according to Duvenhage, who said he doesn’t know when RBM will resume operations.
- Mining companies will be challenging the key provisions of the Mining Charter in court in April. They are testing three aspects of the government’s revised charter, which set out rules on ownership, investment and exploration. Spokesperson Tebello Chabana said mines have agreed on the remaining provisions and the companies have started implement them. The legal challenge centres on whether previous black empowerment transactions should be recognised even after black shareholders exited, local procurement rules and the licensing for some minerals. Chabana said they thought that the government and mining companies were getting closer to resolving the issues, but the matter was still going to court.
- Cell C’s creditors aren’t giving up on a takeover offer from rival Telkom which South Africa’s third-largest mobile-network operator rejected last week. Senior debt holders have hired investment-banking firm Moelis & Co. and corporate lawyers Linklaters LLP and DLA Piper LLP to lobby for the Telkom proposal, Bloomberg reported. They could block Cell C from pursuing an alternative recapitalisation plan by forcing the carrier into liquidation or business rescue. Meanwhile MTN said it would vigorously oppose recommendations from the Competition Commission after the regulator instructed MTN and Vodacom to lower data prices. MTN said in a statement that it respectfully disagrees with the analysis and recommendations in the report and labelled it as “over-broad and intrusive.” The Telecom companies said it was wrong to lay the blame for the country’s data costs on local operators saying the greatest hurdle to data pricing reduction remained spectrum allocation for which the government is responsible.
- Saxo Bank have issued what Bloomberg regards as outrageous predictions for 2020. There is a prediction that the value of the Rand would plunge to R20 for a dollar. Other predictions are that that the UK’s nominal growth will double to 8%, the ECB will hike rates, Democrats will win the US elections backed by women and millennials, Hungary will leave the EU. Asia will be launching a new reserve currency to break its dollar dependence and the oil and gas industry will emerge as surprise winners amid the mania over ESG.
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