By Jackie CameronÂ
- As the number of Covid-19 deaths in South Africa hovers around 60, President Cyril Ramaphosa and his team have found R500bn to boost the economy as it takes strain under Covid-19 containment measures. The additional economic and social relief measures, which include funds to create jobs and bolster social grants and other benefits, come as the lockdown continues, decimating jobs and exacerbating grinding poverty. South Africa has one of the strictest lockdown rulebooks in the world, banning the sale of cigarettes and alcohol and prohibiting exercise outside homes. The President’s address flows from recent deliberations at Cabinet, the National Coronavirus Command Council, the President’s Coordinating Council, and the National Economic Development and Labour Council, among others.
- Another state-owned enterprise, this time the Land Bank, is in deep financial trouble, warning it is likely to default on R50bn. This distress signal comes three months after Moody’s issued a ratings downgrade. At the time, the Land Bank issued a statement saying the decision reflected “an assessment that increased fiscal challenges suggest that the South African government will be more selective in dispersing financial support to state-owned enterprises, including Land Bank”. Bloomberg reports that the news of potential default “adds to a long list of financial headaches for President Cyril Ramaphosa’s government, which provided the loan guarantee to Land Bank less than two months ago”. South Africa’s state entities have been a significant burden on taxpayers, with mismanagement and corruption rampant across these organisations – from Eskom to South African Airways.
- Almost two thirds of South African business operators believe the Covid-19 containment measures will have a worse impact than the 2008/09 recession caused by the global financial crisis, with 65% believing it would be substantially worse. That’s according to a StatsSA survey aimed at assessing the early fall-out from the lockdown, which has seen the economy grind to a halt as the government tries to prevent the spread of the deadly Covid-19 virus. Nearly half of the 700 businesses surveyed had closed their doors for the duration of the lockdown, says a government statement. More than 85% reported a drop in turnover, and more than one-third said they were expecting to axe staff, while not far off a third said they had already cut working hours or temporarily cut staff, says StatsSA. About half of survey respondents indicated they can survive without turnover for between one and three months.
- The Public Enterprises Ministry has promised to work with unions to develop a new airline out of the ashes of SAA. That’s according to Reuters, which says the airline has been in bankruptcy protection since December, and has suspended all commercial passenger flights – partly as a response to the global coronavirus pandemic. In a virtual meeting with labour unions, the Inter-ministerial Committee on SAA reiterated that the government was not in a position to provide more capital to the state-owned airline, the ministry said in a statement. Last week, the government told the airline’s administrators that it would not provide more funds, lending guarantees or allow foreign financing of a business rescue plan. A proposal by the airline’s administrators, seen by Reuters last week, said SAA’s entire workforce of around 5,000 workers would have their employment terminated by mutual agreement on April 30.
- Sasol’s share price, which has been decimated this year, has been unfairly treated by investors, says Old Mutual. On the back of the oil price collapse, Sasol’s shares, down more than 80% in 2020, are trading as if the market expects years of bad news around oil and that the South African fuel and chemicals giant will struggle to escape its balance sheet constraints, says Reuters. It quotes Old Mutual Investment Group’s Meryl Pick, a money manager who helps oversee the firm’s R10bn ($533m) Investors Fund.