Flash Briefing: AG uncovers more Covid-19 corruption, 2021 a good year for SA equities, StatSA rethinks GDP metrics

By Melani Nathan

  • The Auditor-General’s office has published its second report on the government’s spending during the Covid-19 pandemic. Auditor General Tsakani Maluleke found “significant deficiencies in the procurement and contract management processes of the relief package government redirected in response to Covid-19”. At the request of President Ramaphosa, the Auditor-General’s office undertook an audit of government’s spending of a R500bn package made available to contain the spread of the virus and relieve social and economic distress. It was found that TERS relief payments were abused and were paid to people who were below the legal age of employment, deceased, receiving other benefits, or working in government. Over R3bn of funds that may have been disbursed incorrectly have been recovered. More than 1,500 company directors who were awarded government tenders applied for and received social grants from Sassa. The audit also identified various instances of contracts being awarded to businesses that do not have a history of providing PPE – often working in a different industry or being formed just before a contract was awarded.
  • South Africa’s third quarter gross domestic product numbers are adding fuel to investors’ optimism. An annualised growth rate of 66% shows that the economy is finally starting to recover from the ravages of the Covid-19as it moves out of recession. Equity strategists are making a growing case for 2021 to be a good year for South African stocks as global investors respond to the anticipated widespread availability of a coronavirus vaccine with an increased appetite for riskier assets. Local money manager Momentum Investments was the latest to add its voice, suggesting that “the stars are finally aligning” for the South African equity market. According to the firm, investors will migrate out of haven assets like bonds, cash and gold, and increase their holdings in equities, with non-US stocks being favourable.
  • Statistics South Africa says it will review its data compilation methods for monitoring the country’s Gross Domestic Product early next year. Annualised data showed shocking fluctuations as Covid-19 rattled the economy in 2020. Comparing this year’s data with corresponding periods last year certainly isn’t comparing apples to apples. StatsSA says its proposed new methodology will provide a more accurate overview of the economy’s performance even when shocks and anomalies occur.

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