South Africa Archives - African Financial & Economic Data

24 Sep

Investment in renewable energy sector continues to power forward

Africa’s grid-connected electricity deficit coupled with its wealth of renewable resources, like sunshine, make it an attractive destination for energy investors. Africa Private Equity News, an industry information service, reports ongoing investment and strong deal activity in the continent’s power sector in August 2018.

“As both GDP growth and urbanisation in African continue to rise, the demand for power on the continent will increase exponentially. Renewable power will continue to make up the bulk of the new supply, in particular as: costs continue to drop; battery storage technology becomes more efficient allowing renewable sources to provide baseload supply; and renewable projects allow for the flexibility of multiple smaller projects in isolated regions or on mini-grids,” Andre Wepener, head of the power and infrastructure finance team at Investec, told Africa Oil & Power in an interview.

African Infrastructure Investment Managers (AIIM), an infrastructure-focused private equity fund and part of Old Mutual Alternative Investments, through its IDEAS Managed Fund, has acquired stakes in nine new solar and wind power plants in South Africa. When all these facilities are fully operational, expected at the end of 2020, they will provide an additional 800 MW of renewable energy capacity into the national power grid. “We are looking at almost R9 billion (US$611 million) in total capital expenditure across these power projects,” said Sean Friend, investment director at AIIM.

In another notable South African power deal, Vantage GreenX Fund Managers announced that through its second renewable energy fund, Vantage GreenX Note II, it has provided R2.05 billion ($139 million) of funding to a combination of six solar and wind energy projects with a combined capacity of 433 MW. Furthermore, Globeleq, an independent power producer, acquired Brookfield Asset Management’s South African renewable energy interests. The agreement will give Globeleq a majority shareholding in six projects totalling 178 MW.

In Senegal, a recent financing deal has cleared the way for progress on the Taiba Ndiaye wind power development. The project reached financial close on 30 July, with construction scheduled to begin in the near future. Operated by London-headquartered Lekela – a joint venture between Irish renewable energy company Mainstream and private equity investor Actis – and sponsored by French developer Sarréole, the site, when completed, will generate 158 MW.

Read more here: How We Made It in Africa

16 Jul

New private equity fund commitments to boost growth of African companies

African companies will benefit from several new private equity fund commitments and investment partnerships announced during June 2018, according to Africa Private Equity News, an industry information service. These funds focus on a variety of sectors – including agriculture, renewable energy and technology – and will help businesses on the continent accelerate their growth.

South African private equity firm Agile Capital has launched a third fund of R1 billion (about $75 million) and is aggressively targeting fresh investments. While Agile’s existing portfolio is concentrated on the services, manufacturing, automotive and infrastructure sectors, the firm’s criteria for investment doesn’t exclude other industries. “We favour acquiring a controlling stake in any sustainable company poised for growth,” says CEO Tshego Sefolo.

Specialist forestry investor Criterion Africa Partners has announced the first close of its Africa Sustainable Forestry Fund II, with several institutional investors – including the UK’s CDC Group, Dutch development bank FMO and the European Investment Bank – making commitments of $81 million. The fund has a total target of $150 million, and invests across the forestry value chain.

Renewable energy continues to be a popular theme for investors, and Climate Fund Managers was therefore able to attract additional capital of $75 million to its blended finance facility, Climate Investor One (CIO), bringing the total third-close fund size to $535 million. The CIO, launched in partnership between FMO and South Africa’s Sanlam Infraworks, provides funding for renewable energy projects in the wind, solar and run-of-river hydro sectors in developing countries across Africa, Asia and Latin America. The three new investors are IMAS Foundation (a sister foundation to the INGKA Foundation – the owner of INGKA Group, which in turn owns the majority of IKEA’s department stores globally); Swedfund, the development finance institution of Sweden; and the Nordic Development Fund.

Gulf Capital, the Abu Dhabi-based alternative asset manager, revealed that Egypt is one of its target geographies for over $350 million it plans to invest in private equity over the next two years. “We are encouraged by what’s happening in Egypt. Egypt is growing above 5%, they devalued the currency, restructured the economy, introduced new investment laws, and foreign reserves are [at an] all-time high. If you look at the IPO market, it is 10 to 15 times oversubscribed,” the firm’s CEO Karim El Solh, told Gulf News.

Read more here: How We Made It in Africa

19 Jun

The history behind Morocco’s “Africa” World Cup

Morocco’s fifth bid to host the World Cup, like its previous four, ended in disappointment.

After a vote by FIFA member nations on June 13, the “United” bid of the United States, Canada and Mexico was picked ahead of Morocco to host the 2026 World Cup.

Morocco notched 65 votes, compared to 134 by the United bid. Crucially, 11 African countries voted against Morocco’s bid despite its projection of a united front for another “Africa” World Cup.

That lack of African support proved costly as, to have any chance of winning the 104 votes required for a simple majority, Morocco needed the 54 votes held by Africa’s federations.

Some of the opposition to Morocco’s bid within the continent stemmed from a four-decade old territory dispute: Morocco’s annexation of Western Sahara also known as Sahrawi Arab Democratic Republic (SADR), a former Spanish colony in 1975.

South Africa, the first African country to host the World Cup in 2010, was one of the major opponents of Morocco’s bid over its Western Sahara claims.

Both countries have had a strained relationship since 2004 when South Africa recognized the Western Sahara’s independence.

Similarly, Namibia voted against Morocco’s bid saying “it will never support nor align itself with a colonizer” in reference to Morocco’s annexation of Western Sahara.

After World War 1, Namibia was itself occupied by neighbor South Africa for 75 years until 1990.

Politics over Western Sahara territory have lingered for years. In January 2017, Morocco rejoined the African Union after a 33-year absence since the union admitted Western Sahara as a member state in 1984.

But Morocco’s re-admission was voted against by 15 of the AU’s 54 member states. Morocco also asked the AU to re-consider its stance on recognising SADR when it requested to rejoin.

Morocco’s Africa foreign policy has markedly changed in recent years under King Mohammed VI.

To read the full article, click here.

12 Jun

The way history is taught in South Africa is deeply problematic

History may soon be a compulsory school subject until Grade 12 in South Africa. A task team established by the country’s minister of basic education made this bold recommendation in a report released in early June.

The task team credits history education with three grand tasks. The first is developing critical thinking skills, particularly those relating to “evidence” and the unique concepts necessary to becoming an academic historian.

The second is to develop identity, with a focus on pan-Africanism and nation building. The third is about social cohesion: the ability to transcend racial, class and ethnic barriers by recognising the problem of prejudice and the issues facing a multi-cultural society.

If history is taught correctly, the report argues, school-leavers should become capable of dealing with educational, social and political problems.

The task team isn’t unique in its position. It draws on decades of post-conflict literature which has argued that history education is important for memory and identity formation.

Since history education equals social cohesion, the logic follows that more history education will equal more social cohesion.

The problem is that history education as it’s currently delivered may not achieve the desired outcomes. My ongoing fieldwork involves observing four racially diverse Grade 9 history classes in Cape Town, with learners who represent a range of social and economic statuses.

The observations are taking place over the course of the academic year, interspersed by longitudinal interviews with the teachers and learners.

The findings suggest that even when students are knowledgeable about historical events, they struggle to explain how these events shape contemporary society.

History education needs a more explicit focus on historical consciousness if students are to become capable of dealing with South Africa’s social problems. This focus would help students to construct a relationship between past events and present-day reality so they can understand why we are the way we are.

To read the full article, click here.

04 Jun

South Africa’s school pit latrine scandal: Why children are drowning

During his first week at school, five-year-old Michael Komape drowned in a pit latrine in northern South Africa. That day in January 2014 will be one his father James Komape will never forget.

As he takes me back to the school in Chebeng village, where the tragedy struck, his pain is palpable. “When I arrived at the opening of the toilet hole all I could see was a small hand,” he says.

“Some people were standing looking into the hole, no-one had thought to take him out. It’s the saddest thing I’ve ever seen. “No-one should die like that.

He pauses for a moment before continuing. “He must have been trying to call for help to maybe even climb out. It’s hard to accept that my son died alone and probably afraid.”

Mr Komape struggles to make eye contact. Instead he fixes his eyes on the neat row of brick toilet stalls, which were built after his son died in the toilet of rusty corrugated iron just metres away.

The iron sheet that had served as the seat collapsed when Michael sat on it. He fell in, along with the seat and its white plastic lid, the authorities said. But this is not a one-off problem affecting one school.

While access to proper sanitation is a basic human right enshrined in South Africa’s constitution, many pupils have no choice but to use pit toilets.

How did things get so bad? Analysts say it is partly a legacy of apartheid, since under white-minority rule virtually no resources were allocated to develop schools for poor, predominately black children. Also to blame is the failure to maintain existing infrastructure, however basic.

Back at their home just outside Polokwane, the main city in Limpopo province, the Komapes tell me they want justice for Michael’s death.

With the help of Section27, a human rights law firm, the family are set to appeal against a recent court ruling which rejected their claim for damages over the incident.

To read the full article, click here.

25 May

Cape Town’s water crisis proves we need to think about water in a new way

Cape Town caught the world’s attention earlier this year with dramatic headlines that it could become the world’s first major city to run out of water, joining an ever-growing line-up of major cities, regions and nations facing comparable threats, including São Paulo, Mexico City, Barcelona, Bangalore, Nairobi, California; and Australia and large parts of the Middle East and North Africa.

A tough water-saving regime helped push back Day Zero for dry taps in Cape Town to 2019. But the crises around the world have surfaced deep patterns of disconnect in our relationships with water. At the same time, at a local scale, water has emerged as a lens through which to view the complex dynamics of politics, governance, privilege and agency in one the world’s most unequal societies.

The Khoikhoi pastoralists, thought to be the original inhabitants of what is now Cape Town, were drawn to the slopes of Table Mountain around 2,000 years ago for the freshwater springs and rivers that flow year round. They named the place Camissa, the “place of sweet waters.” The natural abundance of water also drew early Dutch settlers here in the 17th century to establish a supply station for ships crossing the seas for the Dutch East India Company.

Aqueducts, channels, an old sand filtration system, and other relics of an extensive colonial-era water infrastructure can still be found on the mountain. The growing modern city long ago outstripped these natural resources, however, and these local waters disappeared from everyday life. Rivers and streams were encased in concrete, recharge areas for underground groundwater stores were paved over, and distant catchment areas were tapped to feed the city. At the same time millions of liters of fresh water were channeled from the city out to sea every day in storm-water drains.

But the Cape Town water supply remains as dependent as ever on surface water collected in dams from rivers, and the ecological health of these rivers has long been neglected.

South African Gold Producers Agree to Settle Lung-Disease Suit

Mining companies including Anglo American Plc agreed to settle a class-action lawsuit from workers who said they contracted deadly lung diseases in South African gold mines.

The agreement provides for compensation for all eligible workers suffering from silicosis or tuberculosis who worked in the companies’ mines at any point since March 1965, the parties said in a statement Thursday.

The six producers last year set aside about 5 billion rand ($396 million) to settle the lawsuit. The settlement will be submitted to South Africa’s South Gauteng High Court for ratification.

The workers say they were negligently exposed to large amounts of silica dust over decades, causing silicosis and pulmonary tuberculosis. South Africa’s mines, which have produced a third of all the world’s gold, have drawn in millions of poor, black workers from across the region in the 130 years since gold was discovered.

The mines remain among the world’s deepest and most dangerous even after the end of apartheid rule in 1994, before which safety standards and environmental restrictions were minimal.

There is no limit on the number of potential claimants, the parties. The agreement was reached following three years of negotiations and is the first class action settlement of its kind in South Africa.

“The parties to the agreement believe that a compromise settlement is far preferable for all concerned than an inevitably lengthy and expensive litigation process would be, allowing for claimants more quickly to receive compensation and relief for their conditions,” they said.

Anglo American, African Rainbow Minerals Ltd., AngloGold Ashanti Ltd., Gold Fields Ltd., Harmony Gold Mining Co. and Sibanye Gold Ltd. were represented by the Occupational Lung Disease Working Group. Spoor, Abrahams Kiewitz Inc. and the Legal Resources Centre represented the class members.

Source: https://www.bloomberg.com/news/articles/2018-05-03/south-african-gold-producers-agree-to-settle-lung-disease-suit

03 May

Absa Dumps KPMG South Africa in Blow to Auditor’s Survival

Barclays Africa Group Ltd. ditched KPMG LLP South Africa as one of its two auditors, the first major local bank to do so, in another blow to the embattled accounting firm’s hopes of survival in the country.

The decision may pressure other lenders into following suit less than a month after KPMG South Africa lost one of its biggest contracts when the government’s Auditor-General terminated its services.

KPMG has been tainted for work done for the Gupta family, who are being probed for using their friendship with former President Jacob Zuma to win state contracts and influence cabinets appointments, which they deny.

“It’s not the first time a company has dropped them and I suspect it won’t the last time,” said Wayne McCurrie, a money manager at Ashburton Investments Management Co.

“There’s going to be some job losses because KPMG has lost so many clients and they are probably going to lose more. They aren’t getting new clients.”

Johannesburg-based KPMG — which audits four of South Africa’s six biggest lenders, including Barclays Africa — last year lost publicly traded clients including clothing retailer The Foschini Group Ltd., financial services firm Sasfin Holdings Ltd. and consumer-goods distributor AVI Ltd. KPMG South Africa employs 3,400, according to the Johannesburg-based Business Times newspaper.

Barclays Africa’s board “is no longer able to support the reappointment of KPMG,” the lender, which is changing its name to Absa Group Ltd., said in a statement on Thursday.

The contract will cease once all regulatory steps associated with the 2017 audit have been completed by the end of this month, it said, adding KPMG Inc. and KPMG International had supported the local firm’s work.

During the past nine months, KPMG South Africa has issued a public apology for work done for the Gupta family, withdrawn the findings of a report about the country’s tax authority, and interrogated staff who signed off on VBS Mutual Bank’s accounts before it failed.

To read the full article, click here.

26 Apr

Investec Money Manager Upbeat on Growth in South Africa

South Africa’s economy is under new management, and Investec’s Chris Freund is among equities investors who are expecting growth to surprise to the upside.

President Cyril Ramaphosa, in office since February, is spurring optimism among stock traders who are already noting changes in Africa’s most industrialized market.

The new leader has set a goal of attracting $100 billion in investment, overhauled his cabinet and installed new boards at troubled state-owned companies.

“People are going to be surprised how South African growth rates are revised upwards,” Freund, the Cape Town-based South African multi-asset head for Investec Asset Management Ltd., which oversees about $140 billion for clients globally, said in an interview. “We are bulls on South Africa’s economy.”

Freund is not alone. Morgan Stanley upgraded South African equities to overweight on Wednesday and said its forecasts for economic growth are above consensus for this year and next.

Business confidence is recovering and political risk has fallen since Ramaphosa replaced Jacob Zuma as president, with private investment and household consumption heading higher.

On top of that, valuations are attractive: stocks traded on the Johannesburg exchange are at their cheapest since February 2010 on a price-to-earnings basis, Morgan Stanley said.

The improving confidence and economic outlook are conditions Freund is looking to make the most of for the 23 billion-rand ($1.8 billion) Discovery Invest Balanced Fund, the flagship mutual fund he helps manage for Discovery Invest, a division of Discovery Ltd., owner of South Africa’s largest medical-insurance administrator.

“We think that equity markets around the world are mildly expensive, but the more important thing is that the growth cycle is still with us, and so it’s time to try and make clients money,” Freund said.

South African stocks make up 45 percent of the Balanced Fund, with Naspers Ltd. its biggest holding at 3.5 percent. The fund has returned 7.7 percent in the past year, better than the 5.1 percent achieved by its peers, data compiled by Bloomberg show.

To read the full article, click here.

26 Apr

State Firms’ Debt May Threaten Financial Stability, Central Bank Says

The inability of South African state-owned companies to roll over debt could threaten the nation’s financial stability and ultimately result in more credit-rating downgrades, according to the central bank.

Governance issues at state companies, rising contingent liabilities and inadequate liquidity could add pressure to government finances through the increased use of guarantees, the Reserve Bank said in its six-monthly Financial Stability Review released in Pretoria on Wednesday.

“Financial stability centers around the ability of state-owned enterprises to roll over debt and achieve financial consolidation,” the central bank said. “Should state-owned enterprises fail to roll over debt, the government would be liable and might not be able to honor such debt.”

Ratings companies have flagged state firms’ finances as a concern in recent years. While Moody’s Investors Service kept the nation’s credit rating at investment grade and changed the outlook to stable from negative last month, it warned if risks at these companies materialize and increase the government’s debt burden, it could lead to downgrades.

Government guarantees to state companies are at more than 450 billion rand ($36 billion), according to data from the National Treasury. The state’s exposure to this increased to 64.5 percent in the past fiscal year from 54.4 percent as companies drew on the guarantees.

Power utility Eskom Holdings SOC Ltd. is the single biggest recipient of guarantees at 221 billion rand, followed by the Road Accident Fund at 189 billion rand, the central bank said. South African Airways said Tuesday it needs 5 billion rand from the government to cover immediate costs and warned it may struggle to make debt repayments due next year.

The rand, which has declined 0.5 percent versus the U.S. dollar this year, was little changed on Thursday morning at 12.4435 per dollar.

Source: https://www.bloomberg.com/news/articles/2018-04-25/state-firms-debt-may-threaten-financial-stability-sarb-says