SARB will remain independent; Pvt electricity generation step-up; Eskom chair resigns; Zondo, Zuma, Prosus

By Linda van Tilburg

  • The ANC has re-affirmed the independence, role and mandate of the South African Reserve Bank in an annual policy statement. The assurance may allay fears of renewed attacks by some ANC leaders on the SARB in the run-up to the party’s national general council later this year. The Reserve bank came under criticism from labour unions and some senior ANC members including ANC-Secretary-General Ace Magashule who want interest rates to be reduced and argue that the bank’s drive for low inflation is misplaced and that it should do more to boost growth. While the current shareholders have no say over policy, some proponents of the ownership change argue it’s an important part of adjusting how the institution works. But the ANC said on Sunday that the move toward public ownership of the central bank must be done “in a manner and according to a timeframe that is prudent and affordable and that does not benefit private shareholder speculators.”
  • In another policy decision, the ANC said solving South Africa’s energy crisis, creating jobs and speeding up land redistribution will top the party’s priority list this year. President Cyril Ramaphosa said at an event held to mark the 108th anniversary of the founding of the ANC that the country should step up the introduction of new electricity generation by private companies and find new sources of energy. Ramaphosa however poured cold water on the suggestion that splitting up Eskom into three separate businesses will lead to privatisation. He re-iterated that Eskom was too big to fail and said there was no doubt in his mind that they would be able restore Eskom.
  • Eskom Chairman Jabu Mabuza resigned from the board of Eskom at the end of last week and apologised for the utility’s inability to meet commitments it made to the President to avoid power cuts until 13th of January. The London-based director of the Eurasia Group, Darius Jonker said the challenges at Eskom had yet again sunk a relatively capable reformer. He said Mabuza’s tenure was increasingly threatened by the inability to effectively communicate a path out of the current loadshedding predicament. Cosatu has called for the dismissal of Eskom’s entire board and the head of Public Enterprises Minister Pravin Gordhan whose department oversees the utility. The Rand extended its losses after the announcement of Mabuza’s resignation weakening more than 1% to R14.37 against the dollar on Friday.
  • Naspers‘s Prosus ambition to become the world’s leading online food delivery business took a major blow at the end of last week as its offer to buy JustEat lapsed. That is after Prosus increased its hostile bid for JustEat twice. JustEat will now merge with Takeaway.com in an all-stock deal. Prosus CEO Bob van Dijk said in a statement that JustEat was not an acquisition the company wanted to make at any cost and he believed that the the final offer was appropriate as JustEat would require significant investment. The CEO of Takaway.com, Jitse Groen described JustEat and Take-away as a “dream combination”. It plans to take on other London food delivery rivals including Deliveroo and Uber Eats.
  • The Reserve Bank has a crucial meeting on Thursday and is expected to keep interest rates unchanged as it awaits the February budget and a ratings review by Moody’s in the next few months. A Reuters poll expect the repo rate to be kept at 6.5% on 16th of January with 3 out of 15 economists polled by Bloomberg expecting a cut of 25 basis points.
  • The Zondo commission hearing is set to resume where it will hear an application by the commission’s legal team to authorise acting secretary, Bridgitte Shabalala to issue a summons for Zuma to appear before the inquiry from 27th to 31st of January. Zuma, who appeared before the commission in mid-July 2019 has promised he will re-appear, but he failed to turn up in November for scheduled hearings.