21 Mar

South African Inflation Dips Deeper Below Midpoint of Target Range

South Africa’s inflation rate fell further below the midpoint of the target range in February, giving the central bank another reason to consider easing monetary policy next week.

Inflation slowed to 4 percent, the lowest level in almost three years, from 4.4 percent in January, Pretoria-based Statistics South Africa said Tuesday in a report on its website. The median estimate of 21 economists in a Bloomberg survey was 4.1 percent. Prices rose 0.8 percent in the month.

February’s data marks the eleventh consecutive month of price growth within the Reserve Bank’s target range of 3 percent to 6 percent, the longest run since 2015.

The Monetary Policy Committee, which was increased to seven members last month with the appointment of Fundi Tshazibana to the panel, will announce whether it’s changing its benchmark lending rate next week Wednesday.

An unchanged stance would mark the fourth straight meeting in which the rate is held at 6.75 percent.

“Some of the more hawkish members of the committee are likely to move onto the dovish side next week,” Jeffrey Schultz, a senior economist at BNP Paribas said by phone in Johannesburg. “As a result we think that there is scope for the SARB to cut by 25 basis points.”

The central bank expects inflation to remain within the government’s target band until at least the end of 2019.

South Africa’s rand was one of the most volatile currencies tracked by Bloomberg last year and has gained about 9 percent versus the dollar since Cyril Ramaphosa was elected to lead the ruling African National Congress after President Jacob Zuma’s tenure came to an end in December.

Core inflation, which excludes the prices of food, non-alcoholic beverages, energy and gasoline, was steady at a six-year low of 4.1 percent in February.

Traders are now pricing in a 25 basis point cut at the May MPC meeting. Forward-rate agreements starting in three months dropped two basis points to 6.87 percent, or 26 points below the benchmark Johannesburg Interbank Agreed rate.

To read the full article, click here.

16 Feb

Mandela’s Favored Heir Ramaphosa Takes Power in South Africa

He’s been dubbed over the years as the best leader South Africa never had.

After missing out two decades ago on becoming president, as Nelson Mandela had hoped he would be, Cyril Ramaphosa, 65, finally took power a day after Jacob Zuma resigned following 10 days of sustained pressure from the ruling African National Congress.

Ramaphosa’s election by the National Assembly crowns a career during which he founded the biggest mineworkers’ union, led talks that ended apartheid and produced the nation’s first democratic constitution, and amassed a fortune during a 14-year stint in business.

He was chosen as the ANC’s deputy leader on Zuma’s ticket in 2012, and assured his ascension to the presidency by winning the top party post in December.

“Ramaphosa has always been a deal-maker and a negotiator,” said Zwelethu Jolobe, a political science lecturer at the University of Cape Town. “He isn’t the kind of person who rushes into things. He tends to have a long-term view.”

Ramaphosa has his work cut out for him as president. He’ll need to turn around an economy that’s been hamstrung by years of mismanagement and policy uncertainty, address public outrage over a lack of jobs and tackle the corruption that’s become institutionalized during Zuma’s almost nine-year tenure.

His task will be made all the more difficult by the fact that the ruling party remains deeply divided and Zuma allies occupy several key leadership positions.

For now, investors are giving Ramaphosa the benefit of the doubt. The rand has gained the most of any currency against the dollar since he won control of the ANC on Dec. 18, and business confidence reached its highest level since October 2015 last month amid expectations that he would drive through more pragmatic and predictable policies.

Ramaphosa, who trained as a lawyer, built the National Union of Mineworkers into the country’s largest labor union and under his leadership it staged South Africa’s biggest-ever mining strike in 1987. The ANC elected him as its secretary-general in 1991, and he led the party’s team that negotiated an end to white minority rule.

To read the full article, click here. 

30 Jan

The Clock Is Ticking on the Zuma Era in South Africa

The clock is ticking on South African President Jacob Zuma’s scandal-ridden administration as his deputy, Cyril Ramaphosa, flexes his political muscles and shows he’s increasingly wielding state power to stamp out corruption and revive the economy.

While the ruling African National Congress’s top leadership has decided that Zuma, 75, must leave office — to win back voters and stoke investor confidence in the stagnant economy — without setting a deadline, newly elected party leader Ramaphosa and his supporters have moved decisively on two other fronts.

His office and the Ministry of Public Enterprises announced sweeping changes to the board and management of struggling state-power utility Eskom Holdings SOC Ltd. As well as deciding on Friday that Zuma must step down, the ANC National Executive Committee suspended the party’s pro-Zuma provincial executive committees in the provinces of KwaZulu-Natal and Free State that the courts said weren’t properly elected.

“It is as if Cyril is confirming that he has taken over the reins,” said Susan Booysen, a political science professor at the University of Witwatersrand’s School of Governance. “I would say Zuma will be gone in anything between 10 and 30 days maximum.”

Zuma’s exit would catapult Ramaphosa, 65, into the presidency and allow him to begin to repair an economy that suffered its second recession in almost a decade in 2017 and has struggled to mount a strong recovery. He’s also vowed to fight the graft that has marred Zuma’s administration.

An open question remains whether Zuma will step aside before Feb. 8 so that Ramaphosa can deliver the annual state-of-the-nation address. Zuma’s diary, released by the Presidency on Monday, shows he is still scheduled to present the speech and respond to a debate a week later.

Zuma announced on Sunday that Water Minister Nomvula Mokonyane will represent him at the inauguration of Liberian President George Weah. Ramaphosa is leading South Africa’s delegation to the World Economic Forum gathering in Davos this week.

To read the full article, click here.

23 Jan

Infighting Plagues South African Opposition Ahead of Elections

South Africa’s main opposition party is proving to be its own worst enemy as it bids to topple the ruling African National Congress from power in next year’s elections.

Instead of capitalizing on voter antagonism toward the ANC and President Jacob Zuma over a succession of scandals, the Democratic Alliance has stumbled, with its mayors’ performance drawing criticism in several of the biggest cities it runs, including Cape Town and Johannesburg.

The party is also struggling to deal with a severe water crisis in Cape Town and improve services in municipalities where it wrested control from the ANC in 2016.

“The DA has been shooting itself in the foot,” said Xolani Dube, a political analyst at the Xubera Institute for Research and Development in the port city of Durban. “Its internal problems are doing serious damage to its image and will undermine its attempts to portray itself as a viable alternative to the ANC.”

Personality clashes and disagreements over policy have already cost the DA control of one major town, Mogale City, northwest of Johannesburg, and its mayor in Cape Town risks being ousted by her own party in the coming weeks.

The timing for the DA’s woes is awful. While it capitalized on anger over Zuma to win 27 percent of the vote in the 2016 municipal elections, up from 22 percent in a national ballot two years earlier, it’s now up against a ruling party that’s been revitalized under new leadership.

The election of Cyril Ramaphosa to replace Zuma as its leader in December will probably reduce the odds of the ANC’s support dropping below the 50 percent mark in 2019. The party has won every vote outright since apartheid ended in 1994 when Nelson Mandela led it to power.

Cape Town Crisis

In Cape Town, which the DA has controlled since 2006, Mayor Patricia de Lille faces an official probe after being accused by her fellow party members of poor administration and a high-handed management style — allegations she denies.

To read the full article, click here. 

22 Jan

Zuma’s Time Running Out as Ramaphosa Wields S. African Power

The clock is ticking on South African President Jacob Zuma’s scandal-ridden administration as his deputy, Cyril Ramaphosa, flexes his political muscles and shows he’s increasingly wielding state power to stamp out corruption and revive the economy.

While the ruling African National Congress’s top leadership has decided that Zuma, 75, must leave office — to win back voters and stoke investor confidence in the stagnant economy — without setting a deadline, newly elected party leader Ramaphosa and his supporters have moved decisively on two other fronts.

His office and the Ministry of Public Enterprises announced sweeping changes to the board and management of struggling state-power utility Eskom Holdings SOC Ltd. As well as deciding Zuma must step down on Friday, the ANC National Executive Committee suspended the party’s pro-Zuma provincial executive committees in the provinces of KwaZulu-Natal and Free State that the courts said weren’t properly elected.

“It is as if Cyril is confirming that he has taken over the reins,” said Susan Booysen, a political science professor at the University of Witwatersrand’s School of Governance. “I would say Zuma will be gone in anything between 10 and 30 days maximum.

Economic Revival

Zuma’s exit would catapult Ramaphosa, 65, into the presidency and allow him to begin to repair an economy that suffered its second recession in almost a decade in 2017 and has struggled to mount a strong recovery. He’s also vowed to fight the graft that have marred Zuma’s administration.

An open question remains whether Zuma will step aside before Feb. 8 so that Ramaphosa can deliver the annual state-of-the-nation address. Zuma announced on Sunday that Water Minister Nomvula Mokonyane will represent him at the inauguration of Liberian President George Weah.

One of the wealthiest black South Africans, Ramaphosa is expected to adopt more business-friendly policies, even though he enjoys the support of the communist party and the biggest labor union federation.

To read the full article, click here.

18 Jan

S. Africa Moves to Tackle Corruption as Zuma Loses Influence

South African prosecutors moved to freeze the assets of suspected allies of the politically connected Gupta family more than a year after the nation’s top graft ombudsman outlined the depth of state looting in the country.

The National Prosecuting Authority is targeting U.S.-based consultancy McKinsey & Co. and South African financial services firm Trillian Capital Partners Pty Ltd. for what it says was unlawful work for the state power utility.

It’s expected to be the first of many moves to tackle corruption more broadly. Trillian used to be majority-owned by an ally of the Guptas, who were accused by former Public Prosecutor Thuli Madonsela of wielding undue influence over the government to make money.

The three Gupta brothers, who are friends with President Jacob Zuma and in business with one of his sons, are alleged to have used those relationships to win contracts from state companies and influence government appointments. They and the Zumas have denied wrongdoing.

The NPA’s move “is good news, because people were becoming despondent as nothing was being done about corruption in the country,” Madonsela said by phone on Wednesday. “I hope that the bad guys will be taken to task and that people will start thinking twice before engaging in corrupt activities.”

The court filing by the NPA was made just two days before South Africa’s ruling African National Congress elected Cyril Ramaphosa as its new leader, picking him over Zuma’s preferred candidate and ex-wife Nkosazana Dlamini-Zuma.

Ramaphosa, 65, is now on track to become the country’s next leader and has promised to fight corruption as one of his main priorities, helping the rand rally by almost 6 percent against the dollar since his victory. The currency was little changed at 12.3099 per dollar by 7:23 a.m. in Johannesburg on Thursday.

“Ramaphosa has enjoyed a warm welcome by capital markets,” Adrian Saville, chief executive officer of Johannesburg-based Cannon Asset Managers, said on Wednesday. His “point of departure is rooting out corruption and purging the malicious agents of state capture. The steps taken by the NPA are pivotal to restoring the institutional credibility that has been decimated under Zuma’s presidency.”

To read the full article, click here.

06 Dec

Why South Africa’s Leadership Race Is Wide Open

The race to lead South Africa’s ruling African National Congress is in overdrive. While current nomination tallies from the ANC’s branches indicate that Deputy President Cyril Ramaphosa has the edge ahead of the party’s national elective conference that starts Dec. 16, its voting structure and procedures mean his main rival Nkosazana Dlamini-Zuma could still win. The victor is likely to become the country’s next president.

1. What’s at stake?

The ANC holds a national conference every five years to pick its top leadership. Because the ANC has held power in South Africa since apartheid ended in 1994, the winning candidates typically go on to top positions in the government. Jacob Zuma, the nation’s current president, won control of the ANC from Thabo Mbeki in December 2007 and took office in May 2009.

2. Why isn’t Zuma running again?

While the ANC’s rules don’t explicitly ban Zuma from running for a third term, they specify that the party’s leader must be its presidential candidate in national elections. The constitution limits the nation’s president to serving a maximum of two five-year terms, and Zuma’s time will be up in 2019. The party will probably be loath to bend the rules to keep Zuma on — his immersion in a succession of scandals has eroded its support and cost the ANC control of Johannesburg, the economic hub, and Pretoria, the capital, in last year’s municipal elections.

3. Who decides the ANC’s leadership race?

The 5,240 voting delegates who will attend the conference.The ANC’s branches will be represented 4,731 delegates. The incumbent leadership structures in the nine provinces will send 27 delegates each, the party’s national executive committee has 86 delegates and three leagues representing the youth, women and veterans have 60 delegates each. While the party has previously elected a president, deputy president, secretary-general, deputy secretary-general, chairperson, treasurer-general, it is considering proposals to enlarge its leadership structure, which would enable it to accommodate more members of competing factions.

To read the full article, click here. 

30 Jun

South Africa’s rand weaker as demand for emerging currencies wanes

JOHANNESBURG, June 30 (Reuters) – South Africa’s rand weakened further in early trade on Friday as a breach of key technical levels triggered short selling by offshore investors weary of local politics and betting the U.S. economy is on the mend and set for higher interest rates.

* By 0650 GMT the rand had weakened 0.23 percent to 13.0450 per dollar, compared to a close of 13.0150 overnight in New York.

* Better than expected estimates of economic growth in the United States in the previous session chipped away at the rand’s carry trade attraction, with higher yields in U.S. 10 bonds signalling an imminent move away from emerging currencies.

* Possible re-emergence of political noise as the ruling African National Congress begins its week-long policy conference also put the brakes on the rand.

* “Above the 13.00 we initially saw local exporter interest which kept it capped but once the local market called it a day New York pushed the rand as high as 13.0850 in what looked like a typical New York short squeeze,” said Nedbank Capital analyst Reezwana Sumad.

* South Africa publishes May trade data at 12000 GMT.

* Local bonds also suffered, with the yield on the benchmark government issue due in 2026 up 8 basis points to 8.785 percent, a 1-1/2 month high.

* Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.42 percent. (Reporting by Mfuneko Toyana, editing by Ed Osmond)

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