SA economy shrinks 30%; R4bn business interruption claims unpaid; BizNews unpacks tobacco scandal; Steinhoff

By Jackie Cameron

• South Africa’s economy probably contracted more than 30% in the second quarter when restrictions to curb the spread of the coronavirus shuttered almost all activity for five weeks, according to central bank forecasts. The annualised drop in gross domestic product is forecast at 32.6% for the three months through June from the previous quarter, the Reserve Bank is reported as saying. The economy contracted an annualised 2% in the three months through March, the first time since 2009 that a South African recession has lasted longer than two quarters, says Bloomberg. The slump was less than projected and economists including Kevin Lings of Stanlib Asset Management warned that the fall-off in the second quarter will be severe.
• Virus-related claims are mounting for insurers, with just over 500 small South African firms battling rejected business interruption claims worth up to R4 billion. Loss adjustment firm Insurance Claims Africa is pushing a host of big South African insurers including Santam, Old Mutual, Hollard and HIC Underwriting Managers to make payouts under business interruption policies sold to its clients. For more on the battle between the hospitality sector and insurers, listen to Alec Hogg’s podcast with Insurance Claims Africa CEO Ryan Woolley on BizNews.com (full transcript is available at BizNews Premium).
• Steinhoff, a former Johannesburg stock market darling, continues to experience fall-out from the accounting scandal unearthed in 2017. Annual advisory fees climbed 35% last year, pushed by costs related to a deal the retailer reached with creditors to skip debt repayments. Creditor-advice payments accounted for about 40% of total advisory fees of 158 million euros, the company said Tuesday in its annual report for the year ended September, according to Bloomberg. And, reports Reuters, Steinhoff International faces legal claims amounting to more than 9 billion euros.
• Tobacco companies – including the so-called legitimate brands – have been ‘ghost smuggling’ cigarettes and making bumper profits under a government prohibition on tobacco sales. BizNews founder Alec Hogg has been investigating. Listen to his explosive interview with a tobacco insider, who had close links with John Bredenkamp, the wealthy Zimbabwean arms and tobacco trafficker who died last month. The full interview and transcript is available in BizNews Premium.