The world is changing fast and to keep up you need local knowledge with global context.
By Linda van Tilburg
- President Cyril Ramaphosa is cutting short a trip abroad to deal with the escalating crisis at Eskom, which imposed a sixth day of blackouts that threaten to tip the economy into recession. Eskom said there’s a high likelihood of power cuts all week and mining companies including Sibanye Gold, Impala Platinum, Harmony Gold and Petra Diamonds said that production had been interrupted and they are assessing when to resume output. Vodacom and MTN also said the outages were disrupting its services as their battery back-ups have limited power and will eventually fail. Ramaphosa is en route back home from Egypt and Eskom will brief him this morning on plans to mitigate and resolve the current electricity crisis. The Department of Mineral Resources and Energy Affairs is considering short-and medium term interventions to address the electricity shortage. It includes taking steps to develop more electricity generation capacity from independent power producers. Minister Gwede Mantashe said that he will urgently publish a request for information on filling the short-term gap.
- The Rand declined the most this month falling 1.2% to the dollar making it the worst performer among emerging-market currencies. It ended the day at R14.84 to the dollar. Meanwhile palladium has surged to a record, topping $1900 an ounce, after South African mining companies halted operations in response to the power cuts. The head of commodity strategy at Saxo Bank told Bloomberg that tight supply could potentially get even tighter due to production problems and although the price of palladium may pause, it could even go higher. Citigroup sees palladium prices jumping to $2500 by mid-2020 because of a persistent supply deficit. Platinum has also surged 2.7% an ounce.
- Manufacturing production has contracted for a fifth consecutive month adding to South Africa’s economic woes. Statistics South Africa said output fell by 0.8% in October compared to the same period last year. This was better than the 2.7% drop forecast by analysts in a Bloomberg survey. It has marked the longest stretch of declines since the global financial crisis. The largest negative contributions were glass and non-metallic mineral products that dropped by more than 10%, textiles, clothing, leather and footwear that fell by just under 10% and wood and wood products by 6%. Amid the falling output, food and beverages rose by 4%.
- Despite a tight wallet squeeze and slipping consumer confidence, South Africans are still in the mood to spend. That’s according to the Nielsen Consumer Confidence Index. Their latest index showed a five point decrease to 88 for the fourth quarter indicating that South Africans continue to face enormous financial pressures due to subdued economic growth, spiralling utility costs and increased job losses. Nielsen’s South Africa Connect MD Kerith Botha said South Africans have adapted to their current financial constraints with 84% saying they have changed their spending to save on household expenses. 66% said they were cutting down on take-away meals followed by 65% spending less on new clothes and 52% were switching to cheaper grocery brands. On a slightly more positive note, once South Africans have met their financial commitments, 82% say they have spare cash while immediate spending intentions have increased by a percentage point to 32% of South Africans believing now is a good or excellent time to spend. Just in time for Christmas.
- Comair has announced the appointment of Wrenelle Stander as Group CEO, effective immediately. Glenn Orsmond, previously joint-CEO, has been appointed as the CEO of Comair’s Airline Division. This forms part of the ongoing restructuring at Comair. Group Chairman Lindsay Ralphs said, “the joint-CEO structure introduced a few months back has been discontinued and these appointments should ensure better performance and efficiency in a very competitive airline industry.”
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.