Public Debt now the tightening Noose around the Country's Neck
In a strong rebuke of government’s dogged refusal to rein in public spending, especially on a civil service bill that has ballooned over the years, the Centre for Development Enterprise (CDE) has released a report that details exactly how bad it is. In a document called “Running out of Road, South Africa’s public finances and what is to be done”, the CDE states how public sector debt went from R210 billion in 1992, R900 billion in 2009 to the current R3 trillion – a noose around the country’s neck which sucks up 60% of GDP.
In its assessment of the assessment, the CDE could scarcely be clearer about how public debt weighs on the economy: “South Africa’s fiscal crisis is a result of rapidly rising public spending in an era of slow econ…
Load Shedding looms again
An acceleration in economic growth in South Africa could trigger power cuts, with state utility Eskom Holdings SOC Ltd.’s fragile generation system unable to respond to increased demand for electricity. The energy availability of Eskom’s generation fleet is supposed to be as high as 80%, but is currently as low as 69%, and even a 0.1% rise in gross domestic product could result in outages, Nelisiwe Magubane, an Eskom board member, said at an event organized by Afriforesight in Johannesburg on Wednesday.
The state-owned utility, which supplies about 95% of South Africa’s power, has a mountain of debt and is reliant on government bailouts to remain solvent. It is also contending with operational issues — most of its power stations are n…
Unemployment skyrockets to 29% - Youth Unemployment to 40.3%
South Africa’s unemployment rate has jumped by 1.4% to 29% – the highest it’s been since 2008. This is according to figures released by Statistician-General Risenga Maluleke yesterday. Maluleke said the number of unemployed people increased by 455 000 to 6.7 million in the second quarter of 2019, compared with the previous quarter’s figures and: “… of the 20.4 million young people aged 15-34 years, 40.3% were not in employment, education or training, which is a decrease of 0.3% compared to the first quarter of 2019,” Maluleke said.
Marriam Manzini (45), a hawker, said news like this didn’t bother her because she had been unemployed for 10 years. “I make a few cents on the street so I can support my children,” she said. “My fear is f…
Tech Blunder: Incompetent Communications Minister delays 5G for South Africa
Controversial Communication Minister Stella Ndabeni-Abrahams, whose personal life is more often in the news than her professional achievements, has released the policy on high demand spectrum and policy direction on the licensing of a wireless open-access network (WOAN)without paying any heed towards the highly competitive environment in which South Africa tries to keep its leading place.
The policy document punts the benefits and the need for the open-access wireless network for South Africa to increase competition and benefit consumers. While there is a strong focus on the planned WOAN, it is thin on details regarding the spectrum which will be assigned to mobile operators. It does, however, give the Independent Communications Autho…
Fitch confirms Credit Rating as Junk, corrects Outlook to negative ... will Moody's follow?
Today’s decision by Rating Agency Fitch to keep South Africa’s long-term foreign and local currency debt on BB+, the first notch of sub-investment grade (or junk status) did not come as a surprise given the recent fiscal circumstances. But on top of it, Fitch has downgraded the country’s outlook from stable to negative, citing concerns about the Tito Mboweni’s recently announced financial support of Eskom and a persistent low economic growth scratching the border to a technical recession.
All eyes are on whether Moody’s will take a more decisive view on the country’s deteriorating fiscal and economic performance and will follow suit in not to alienate itself through ill-advised ratings regarding South Africa.
South Africa’s Fi…
Mboweni takes from the People and sinks R 59bn into "Black Fiscal Hole" ESKOM
The boost South Africa’s central bank offered the economy by cutting interest rates last week may be fleeting after Finance Minister Tito Mboweni signaled tax rates may have to climb to help bail out Eskom. The debt-laden state power company, seen as the biggest threat to the nation’s economy, will get an extra R59bn over two years and together with lower-than-expected revenue collections, this “will come at a significant cost” to taxpayers, Mboweni told Parliament on Tuesday.
The Reserve Bank made it clear that its 25 basis-point reduction to the key rate can only have a significant impact on an economy that’s forecast to expand just 0.6% this year if it’s complemented by other structural reforms. While Eskom’s finances and its inabi…
Renewable Energy Champion Breytenbach axed in favour of governmental "Greed Elite"
The recent axing of the head of the Independent Power Producer’s office Karen Breytenbach, once celebrated as the champion for Renewable Energy in South Africa, will not only be a major setback to South Africa’s renewable energy programme, but will also send the wrong signals to potential investors and – once again – shows the care-free atmosphere in which the enemies of the state operate.
Breytenbach – who said she was given no reason by the Development Bank of SA or the Department of Energy as to why she had to leave before the end of her contract – had spearheaded the team that had built up the IPP office into a world renowned unit, drawing investment of over ZAR 200bn in renewable energy projects since 2011. She is now punished fo…
Saudi Arabia to invest US$ 10bn into SA Energy Sector
Saudi Arabia has pledged to chip in US$ 10 billion in funds to South Africa’s ailing power sector, according to futures tracker and energy portal Oil Price. The funding is said to be earmarked for refineries, petrochemicals processing and renewable energy projects. It represents a tenth of an earlier US$ 100 billion that was requested from the international investment community to enable upgrades to the country’s “underfunded energy sector”, Oil Price writes.
It added that Saudi’s “motivations for investing in South Africa’s power sector are largely in line with Saudi Arabia’s Vision 2030, which seeks to diversify away from oil dependence and towards foreign economies”. It’s furthermore emphasised that despite “power sector woes that …
Interest Rate Cut good News for Home Owners
The Reserve Bank has cut interest rates by 0.25 percentage points, amid indications that international oil prices could fall further and that slowing global growth could prompt a round of rate cuts by most major central banks. This decision takes the repo rate to 6.5%, the prime lending rate to 10%, and will translate, into a saving of R16 a month per R100,000 borrowed for existing homeowners. On a R1 million loan the saving would be R166 a month and potentially almost R40,000 over R20 years. This rises to savings of R498 a month on a bond amount of R3 million. The change also means that first-time borrowers will now find it easier to qualify for a loan – with the gross household income requirement for a R1 million loan falling from R33,…
Zuma lights verbal Fires at State Capture Commission
Former president Jacob Zuma testifying at the state capture commission of inquiry, July 15, 2019.
“I have been provoked and provoked to the last degree…I have been wanting to save the organisation (the ANC) and the country, but they made stories…they do everything…Some might know for a fact that I know things about them. I have behaved for decades, not played around with intelligence information, I have lived with people who don’t know what I know about them…but these comrades have provoked me…__”
Former president Jacob Zuma’s dramatic claims about plots and conspiracies against him could very well threaten to engulf the ANC in a firestorm of witch hunts and retribution if left unchecked and unchallenged.
Zuma, who for 16 yea…