24 Apr

Wages Impasse Puts South African President Ramaphosa in a Bind

A standoff between South Africa’s government and unions representing its 1.3 million workers over pay puts President Cyril Ramaphosa in a jam.

While his administration has pledged to stick to its deficit targets and expenditure ceilings — a tall order if it buckles to demands for increases of as much as 12 percent — he can ill afford to alienate the unions ahead of next year’s elections or risk strikes that would curb growth.

He’s also indebted to the unions for backing his campaign to win control of the ruling party last year, a victory that set the stage for him to replace Jacob Zuma.

“He is in a Catch-22,” Sethulego Matebesi, a political analyst at the University of the Free State in the central city of Bloemfontein, said by phone. “The unions are not going to buy into the argument that the government can’t afford the increases they want.”

The wage talks have already dragged on for more than seven months. The eight unions that represent teachers, nurses and other state workers have warned they won’t tolerate the government’s “delaying tactics” much longer.

“There is an inadequate offer on the table,” the Congress of South African Trade Unions, the country’s largest labor group, said in a statement. “We caution government against creating an environment that will force workers to consider withdrawing their labor and embark on what will be a calamitous strike.”

Civil servants last staged a strike in 2010 that dragged on for three weeks before they were awarded 7.5 percent raises. Three-year settlements were reached in 2012 and 2015 that increased wages by 7 percent in the first year and inflation plus 1 percentage point for the next two years. South Africa’s inflation rate fell to a seven-year low of 3.8 percent in March.

While wage talks were due to resume on Tuesday, the government requested a delay until May 3, saying it needed more time to consult. The current pay deal expired at the end of March and any increases will be backdated.

To read the full article, click here.

17 Apr

Ramaphosa Vows to ‘Hunt’ $100 Billion in South Africa Investment

South African President Cyril Ramaphosa is spearheading a drive to attract $100 billion in new investment as he seeks to kick-start an economy that looks to be on the rebound following years of stagnation.

The investment push Ramaphosa announced Monday is the latest sign that he intends following through on pledges to create jobs and address years of economic mismanagement since he replaced Jacob Zuma as the leader of Africa’s most industrialized economy two months ago.

His administration has already replaced the boards of a number of state companies beset by governance and financial woes.

Ramaphosa named former Finance Minister Trevor Manuel, former Deputy Finance Minister Mcebisi Jonas, former Standard Bank Chief Executive Officer Jacko Maree and Asrapak Chairwoman Phumzile Langeni as “investment envoys.”

He also appointed Makhaya Advisory Chief Executive Officer Trudi Makhaya as his economic adviser. South Africa will hold an investment conference in the fourth quarter, he said.

“The reason for putting together a top team like this is to enable us to go out like a pack of hunting lions,” Ramaphosa told reporters in Johannesburg. “We are unleashing this pack of lions to go and hunt down those investments for us.”

The World Bank said last week that it sees South Africa’s economy growing 1.4 percent this year, up from 1.1 percent estimated in January.

The country could more than halve its number of poor people to 4 million by 2030 if it tackles corruption, gets free higher education right and reduces policy uncertainty in its mining industry, the Washington-based lender said in a report.

Source: https://www.bloomberg.com/news/articles/2018-04-16/ramaphosa-vows-to-hunt-100-billion-in-south-africa-investment

04 Apr

S.Africa mulling privatisation in Ramaphosa reform drive

South Africa will consider partially privatising struggling state-owned companies as part of wide-ranging reforms set in motion by President Cyril Ramaphosa since he came to power last month, the head of the National Treasury said on Saturday.

Dondo Mogajane said South Africa was at the end of a credit downgrade cycle after Moody’s held its investment-grade rating and raised its outlook on Friday, partly because of Ramaphosa’s plan to reform state companies.

“For me, I see it as the end,” Mogajane told Reuters in an interview.

“Moody’s are saying there are things we can do and these are the things we will be focused on,” he added, highlighting plans to stabilise debt, revamp state firms and boost growth in sectors such as agriculture and tourism.

A downgrade to a “junk” rating by Moody’s would have seen South Africa removed from Citi’s World Government Bond Index, and could have triggered up to 100 billion rand ($9 billion) in asset sales by foreign investors.

Investors have cheered Ramaphosa’s arrival and his choice of respected ministers in key roles, including former finance minister Pravin Gordhan as minister of public enterprises.

Gordhan is tasked with turning around state companies that have plunged public finances into crisis in recent years, including heavily indebted power utility Eskom and South African Airways (SAA), which is on the brink of bankruptcy.

“Why not?” Mogajane said when asked if it was possible parts of government-owned companies could be sold.

“There have to be new ways of looking at these things. Are we talking privatisation? Are we talking equity partnership? Let’s give an opportunity for new ministers to unpack what it means.”

Mogajane gave as theoretical examples the sale of 49 percent of SAA and of attracting private investors by splitting up the generation, transmission and distribution sections of Eskom, one the world’s biggest power utilities.

His comments are likely to go down badly with powerful trade unions, sections of the ruling African National Congress (ANC) and the Economic Freedom Fighters, a disruptive red-beret-wearing opposition party.

Read more at Reuters.com

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.

20 Mar

South African Tax Agency Head to Face Hearing After Suspension

South African tax collection agency boss Tom Moyane was suspended and will face disciplinary proceedings as newly elected President Cyril Ramaphosa’s administration moved to restore trust in the institution.

The ouster was Ramaphosa’s latest step to replace Jacob Zuma appointees in the government since taking over the presidency last month after his predecessor was forced to step down by the ruling party.

He’s also removed the board of the state power utility, which is laden with debt and has been implicated in a graft scandal.

Mcebisi Jonas, a former deputy finance minister, is being considered for the post, but it’s unclear whether he would accept it, according to two people familiar with the situation, who spoke on condition of anonymity.

Jonas couldn’t immediately be reached for comment and the National Treasury, which oversees the tax agency, didn’t respond to an emailed request for comment.

The decision to suspend Moyane as commissioner of the South African Revenue Service came on Monday after he refused to resign during a meeting with Ramaphosa, the Presidency said in a statement.

Ramaphosa said in a letter to Moyane that under his leadership there had been a deterioration in public confidence in the agency and that public finances had been “compromised.”

“For the sake of the country and the economy, this situation cannot be allowed to continue, or to worsen,” the president said in the letter.

As the events of the past few days unfolded, Moyane threatened to seek a court interdict to stop plans to remove him from his position, according to two people familiar with the matter.

Mark Kingon has been appointed acting commissioner, the National Treasury said in an emailed statement on Tuesday. Kingon, who has been with SARS since its establishment, was the interim head of the revenue body’s business and individual taxes unit, it said.

To read the full article, click here.

02 Mar

Politics Can Be Murderous in South Africa’s Port City of Durban

Politics around South Africa’s third-biggest city, Durban, can be a murderous affair. A bloody battle for positions gripping the African National Congress has left dozens dead in KwaZulu-Natal province in the past year.

The region, which accounts for more than a fifth of the party’s total membership, has been a battleground between two factions vying for control of positions with access to government budgets worth billions of rand.

A local councillor who’s represented constituents in the Umlazi community outside Durban for the past decade learned in December that party colleagues were plotting her assassination.

“The political contest is no longer healthy,” said the councillor, who asked not to be identified because she fears for her life. “If I challenge you, it means I will be your enemy till you die.”

KwaZulu-Natal was one of the hotly contested regions in the race to elect a successor to Jacob Zuma as leader of the ANC in December.

Cyril Ramaphosa defeated Nkosazana Dlamini-Zuma, Zuma’s former wife and ex-chairwoman of the African Union Commission, and was elected South Africa’s president last month.

Violence has claimed the lives of 22 politicians since January 2016 and about 100 others in the past four years in the province, according to Mary De Haas, a researcher who’s monitored the region for several decades. Drive-by shootings are a favoured method of killing in Durban, a port city of 3.7 million people.

It’s so bad that a commission headed by Marumo Moerane, a lawyer, is holding public hearings on the violence that are regularly attended by sobbing relatives recounting how their family members were slain.

Recent political turmoil in the government has filtered down to cripple some of South Africa’s crime-fighting units, said Senzo Mchunu, the former premier of KwaZulu-Natal.

The province is no stranger to political violence, reaching its height in the run-up to South Africa’s first democratic election in 1994 that brought Nelson Mandela to power after white-minority rule.

To read the full article, click here.

26 Feb

‘It’s Like 1994 Again’: South African CEOs Hail Ramaphosa Win

South African company heads cheered the start of Cyril Ramaphosa’s presidency, saying that business and consumer confidence were sure to improve following the departure of scandal-hit Jacob Zuma.

The result should be economic growth and even job creation, while various stagnating business-friendly policy initiatives could be revived. Further downgrades to the country’s debt may also be avoided.

Below is a selection of quotes taken from interviews with chief executive officers as their companies reported full- or half-year financial results.

South Africa’s largest clothing and food retailer caters for customers in the higher income bracket in its home market and in Australia.

“We’ve gone from looking down to looking up. It’s incredibly positive. It will make a big difference in terms of consumer sentiment. We’re talking about greater GDP growth, we’re talking about fiscal responsibility, we’re talking about corruption being under control. It’s all the right things. It’s everything we wanted and I think our customer is going to respond well.”

Referring to last week’s Budget, which included the first rise in VAT since the end of apartheid:

“Yes, VAT has increased and it was a tough budget. But the good thing was that it was a fiscally responsible budget. Our customers are going to feel better about a fiscally responsible budget and the lower threat of credit downgrades coming back than they are about an increase of 1 percent on VAT.” Mark Lamberti, Imperial Holdings Ltd.

South Africa’s sixth-largest company by sales has a global transportation operation and is planning to spin off its African car rental and retail business later this year.

“If the President delivers on the kinds of things he spoke about in the state of nation address — and I have no reason to believe he won’t over time — I think you will see a level of regulatory certainty that we never had before, which makes it easier to make an investment decision.

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. 

15 Feb

Ramaphosa Faces Challenge to Rejuvenate South Africa After Zuma

Cyril Ramaphosa faces a tough road ahead as South Africa’s new president after Jacob Zuma’s resignation late Wednesday ended nine years of his scandal-marred administration.

Ramaphosa remains acting president until his expected election in parliament later Thursday in Cape Town and swearing in by the chief justice.

Groups of people gathered in the streets of the country’s cities celebrating the possibility that South Africa may regain its reputation as “the rainbow nation” that was so tarnished in the Zuma era, while markets cheered the transition of power.

A lawyer and one of the wealthiest black South Africans, Ramaphosa, 65, is widely expected to adopt business-friendly policies, prompting the rand to rise more than any other currency against the dollar since his election as ANC leader on Dec. 18.

While he showed remarkable political deftness in outmanoeuvring Zuma since his tight election as president of the ruling African National Congress in December, the road ahead is perilous — the ANC remains deeply divided, the cabinet needs a clean-out and a moribund economy requires a jump-start.

“The new president is going to have to make tough decisions on who is in his cabinet and that’s where the tough fight is going to be from now on,” said Ivor Sarakinsky, academic director at the University of the Witwatersrand’s School of Governance in Johannesburg.

Markets cheered the decision, with the rand extending Wednesday’s 2 percent rally against against the dollar, reaching the strongest level since February 2015 on Thursday.

It was 0.5 percent higher at 11.6570 at 9:48 a.m. in Johannesburg. Stocks climbed the most since June 2016 and the yield on the local-currency bond due in 2026 dropped five basis points to 8.34 percent.

During his resignation speech, Zuma backed away from the tone of comments he’d made in an interview with the state broadcaster earlier in the day, when he said the ANC’s decision to push him from office threatened to become “a crisis that I think my comrades will not be able to handle.”

To read the full article, click here.

12 Feb

Zuma’s D-Day Nears as Ramaphosa Promises Power Transition

South African President Jacob Zuma’s fate is set to be sealed when the top leadership of the ruling African National Congress meets to conclude the transition to a new administration.

The National Executive Committee will assemble on Monday in the capital, Pretoria, as Zuma, 75, has defied growing pressure to resign since his deputy, Cyril Ramaphosa, replaced him as party leader in December. His nine-year tenure has been marred by scandal and eroded support for the ANC.

“Our people want this matter finalized,” Ramaphosa told a crowd of about 3,000 people on the Grand Parade next to the Cape Town city hall on Sunday to commemorate the 28th anniversary of Nelson Mandela’s release from prison.

“The National Executive Committee will be doing precisely that. We know you want closure on this matter.”

While the 65-year-old lawyer’s rise to the ANC’s top post assured him of being its presidential candidate in elections next year, the new leadership wants an early exit for Zuma so it can begin rebuilding support.

Should Zuma refuse to obey the national executive’s order to step down, it could tell its lawmakers to use their majority in parliament to vote him out of office, clearing the way for Ramaphosa to take over.

Mandela Address

Ramaphosa delivered his speech at exactly the same venue and time when he held the microphone for Mandela’s address 28 years ago on the day he was freed from a 27-year incarceration. The rally Sunday marked the start of a series of events to celebrate the centenary of Mandela’s birth.

“As we emerge from a period of difficulty, a period of disunity and discord, this Nelson Mandela centenary year offers us what I would call a new beginning,” said Ramaphosa, who was Mandela’s favored successor two decades ago. “It offers us an opportunity to restore to our national life the values and principles for which he so firmly stood.”

To read the full article, click here.