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Ramaphosa: I see a good future for SAA, Eskom beyond Covid-19

The Covid-19 crisis has provided an opportunity for government to reform its state-owned enterprises, so much so that President Cyril Ramaphosa is optimistic about the future of troubled entities SAA and Eskom.

During an address to the South African National Editors' Forum on Sunday, Ramaphosa shared views on the restructuring of the SA economy for a new normal post Covid-19, and addressing issues at state-owned enterprises (SOEs).

"Covid-19 will give us greater capacity to reset, reposition and even repurpose SOEs," he said.

Speaking about SAA, which entered into business rescue in December as it faced a liquidity crisis, Ramaphosa said that the process is reaching a point where we could move forward with a new airline. SAA's business rescue plan was due to be finalised this past week, but business rescue practitioners have asked for an extension till 8 June, Fin24 previously reported.

"I am pretty gung-ho about a future of a new South African Industry, and I am also gung-ho about the future of the aviation industry," the president said. He added that the flag carrier is respected across the continent and that Johannesburg will be used as a hub to distribute Covid-19 medical supplies.

"I see a good future for SAA, and similarly I see a better future for Eskom," Ramaphosa said.

Eskom, which is facing a debt burden of R450 billion, has been able to stave off load shedding during lockdown. However, its sales had taken a knock with businesses across industries halting activity.  The Department of Public Enterprises told Parliament this past week that the power utility may report a loss of R16 billion for the 2020 financial year.

But Ramaphosa was fairly bullish about the interventions underway at Eskom. "All these are being done in the proper way, and with proper consultation," Ramaphosa said.

The president will soon announce the names of the SOE Council, who will advise government on the way forward with SOEs, he said.

Speaking more broadly on the economy, the president said we could not "return the economy to where it was before the virus". "Covid-19 changes everything, it will change many things and the way our economy functions," he said.

In adjusting for a new global economy, a social compact between government, business and labour is required to ensure inclusive growth. He stressed the importance of restructuring the economy, to be aligned to deal with the challenges facing society. "We have been operating under an economy which has been colonial and racist, over the many years," he said.  The economy must respond to poverty prevailing in the country and be one that creates jobs.

"Covid-19 gives a stronger rationale to transform and restructure the economy," Ramaphosa explained.

Buy local

The president appealed to South Africans to buy local, as a form of patriotism. "This is a mindset change, and in a way – economic patriotism. We would like to see all South Africans be more patriotic, even when it comes to the economy, " he said. Encouraging localisation of supply chains and industrialising the economy, would help to drive growth, he added. 

 The president also spoke of an employment drive, which could start during the pandemic, particularly getting workers to screen communities. He said that the pandemic had also brought an employment opportunity for social workers. "This is a time when social workers need to be binding the wounds of our nation. Many people will be negatively affected by Covid-19," he said. Apart from creating new sectors in the "care" economy, there is also a chance to create new sectors in the green economy, Ramaphosa said.

The lockdown, which was instituted on 26 March, in order to slow the spread of Covid-19, resulted in slowing economic activity. The Reserve Bank's latest projections indicate a contraction of 7%. This is the worst performance seen since the global depression in the 1930s. National Treasury's projections as at 30 April, 2020 are indicate job losses roughly between 600 000 to 1.8 million. 

*Update: This article was updated on 1 June, 2020 at 10:50 to reflected the updated figures of Treasury's job loss projections.

Lameez Omarjee

Fin24 

 

Treasury now estimates nearly 1.8 million job losses

National Treasury now estimates that job losses could be between 690 000 and 1.79 million due to the impact of Covid-19 on the SA economy.

Initially, in a presentation circulated among members of the Standing Committee on Finance on 30 April, Treasury indicated that between three million and seven million job losses were expected, which would have seen unemployment levels balloon to nearly 50%.

In its revision, the presentation now indicates that 690 000 job losses are likely in the event of a quick recovery. While 1.79 million jobs could be lost in a worst-case scenario. A full time equivalent measure was used this time, to take into account businesses that may be making use of furloughs, among other measures, to mitigate the impact on jobs, Treasury said.

During the last global recession in 2008-09, SA lost one million jobs.

Job loss estimates from Treasury indicate anything

The revised job losses could be nearly 1.8 million, according to projections from Treasury. (Source: National Treasury).

Sectors that will be mostly affected are manufacturing, construction, trade, catering and accommodation and financial and business services. 

Treasury also projects an economic contraction of between 5.4% and 16.1%. Updated projections are expected to be presented at the tabling of the adjusted budget later this month.

 The Reserve Bank projects a contraction of 7%, which would be the worst performance since the Great Depression in the 1930s.

At a briefing to members of the South African National Editor's Forum on Sunday, President Cyril Ramaphosa said that Covid-19 has presented an opportunity to restructure the economy to one which is more inclusive and addresses issues in society such as poverty and inequality, Fin24 reported.

"We have been operating under an economy which has been colonial and racist, over the many years," he said. "Covid-19 gives a stronger rationale to transform and restructure the economy," he added.

 

 

Lameez Omarjee

Fin24 

 

ANALYSIS | SA's economy is in a blizzard, and Mboweni's tweets are just one snowflake

At least three ANC top six officials, including President Cyril Ramaphosa, have cautioned Tito Mboweni against his apparently controversial public statements and Twitter rant – but that’s as far as it goes. 

The finance minister enjoys the backing of the president and it seems that any lobby to push out Mboweni will not be given oxygen. 

His plan to approach the International Monetary Fund for funding has been endorsed by the ANC national executive committee and the party’s focus now has been geared on an economic recovery plan post-Covid-19. 

In conversations with ANC officials, Mboweni was said to have been told that contradicting Cabinet colleagues is unbecoming of a finance minister and taking his frustrations to Twitter was ill-advised. 

Mboweni was further cautioned that his long-standing critics in the NEC would use his Twitter rants to "eat him alive". 

By the time the ANC’s NEC met on Thursday, Mboweni’s critics – who are known to be opposed to his push to access funding from the International Monetary Fund – appeared to have found a gap in the form of his Twitter rants to attack him. He was described as "ill-disciplined" for telling Parliament he opposed the on-going cigarette ban in Cabinet and for Tweeting that obeying majority or collective decisions felt like "swallowing a rock". 

But concessions from Mboweni’s supporters, including Ramaphosa, that Mboweni’s utterances were inconsistent with the decorum of the office of the minister of finance rendered the discussion closed. 

ANC economic policy guru Enoch Godongwana summed it as follows: "All people were saying is that the office of the finance minister requires a certain kind of decorum."

Once that was widely agreed to, any effort by his opponents to segue from Mboweni’s "ill-discipline" into opposition to Mboweni’s economic plan fell through. 

Instead, the ANC NEC accepted and endorsed the plan to approach the IMF for finance – an issue that has been a bone of contention for weeks. 

ANC deputy secretary-general Jessie Duarte referred to an attempt to stir controversy around Mboweni’s statement’s as "infantile politics", saying party officials were too busy dealing with the crises to be concerned about petty squabbles. 

Quibbling while Rome burns

Duarte seemed to be of the view that the economic crisis as a result of the coronavirus is too big to be fighting over tweets. 

It is probably not the last time Mboweni speaks out of turn or makes known his feelings on social media and it would not be the last time he is slated for it. 

The finance minister is known to insist that public debate should be encouraged at a time when there is no clarity on how the economy will rebound following the Covid-19 pandemic. 

However, the way Ramaphosa handled Mboweni’s controversy allowed for the party not be drawn into a ruse of fighting over the finance minister instead of dealing with what’s currently at hand. 

That approach led to the party taking a clear decision on the IMF after an explanation that the ANC has never been opposed to accessing funding from these international financing organisations as long as South Africa’s sovereignty was not in question.

The NEC was told that the government was had the option to access up to $50 million (R915m) from the World Bank and $4.2 billion (R77bn) from the IMF with favourable loan conditions – better than the market. 

Ramaphosa poured water on a factional fight by not giving oxygen to Mboweni’s controversial comments. This has allowed him to focus the discussion on recalibrating SA’s ailing economy.

It has empowered them to push through a fractious issue of IMF and World Bank funding and get on with the task. 

It has set the tone for what is to come: the party can’t be distracted by personality politics amid an economic bloodbath. 

 The focus now is revising the budget and reallocating R130 billion to give life to Ramaphosa’s R500 billion economic stimulus package. 

Any effort to push out the finance minister is dead in the water and now the work can go on and be appraised accordingly. 

Qaanitah Hunter is News24's political editor and the author of Balance of Power: Ramaphosa and the future of South Africa (NB Publishers).

 

 Qaanitah Hunter

Fin24 

   

'Nothing sinister' behind renewed cigarette ban, says Dlamini-Zuma ahead of court case

There is "nothing sinister" behind the state's decision to renew the ban on the sale of tobacco products under Level 4 of the lockdown, according to Minister of Cooperative Governance and Traditional Affairs Dr Nkosazana Dlamini-Zuma.

The minister last week deposited an affidavit ahead of the start of a court case between the state and the Fair Trade Independent Tobacco Association. The association, whose members include cigarette makers Carnilinx and Gold Leaf Tobacco, is challenging the state's decision to retain the ban on the sale of cigarettes and tobacco products. 

The FITA court case is unrelated to proposed legal action by SA's largest cigarette manufacturer, British American Tobacco South Africa, which was dropped last week.

FITA wants to compel the government to reintroduce the sale of tobacco under Level 4 by having cigarettes and tobacco declared permitted goods. The association is also demanding access to minutes of meetings and documents that informed the decision to retain the ban. The case is expected to start on Tuesday. 

In her affidavit, filed in Pretoria on Friday, Dlamini-Zuma said that there was nothing "sinister" about the decision to renew the ban.

This comes after President Cyril Ramaphosa, in a televised address on April 23, initially approved the sale of tobacco products under Level 4. Six days after Ramaphosa made his announcement, Dlamini-Zuma announced that the sale of tobacco products would not be allowed.

In her affidavit, the minister said she would explain the process through which Regulation 27 – which prohibited the sale of tobacco products  - was promulgated in more detail in a future court filing. 

"For present purposes, however, I emphasise that the decision to promulgate the regulation was taken after careful consideration, not only of the submissions received, but also the relevant medical literature," she said. 

"It also is a decision that was endorsed by the NCCC [National Coronavirus Command Council] and Cabinet, before the regulations were promulgated."

The minister said it was not the case that she and the president were "somehow at odds over this issue".

"After the President's initial announcement was made, further consideration was given to the issue in the light of submissions received and medical evidence - and a different position ultimately adopted."

 She did not say what medical evidence the state relied on.

 "There is nothing sinister in a change of position following a consultative process: in fact, the very nature of consultation is that change may result."

Dlamini-Zuma added that the minutes of NCCC meetings are "classified as secret in terms of the Protection of Information Act."

"Further, I am advised and submit that such minutes are privileged from disclosure in legal proceedings, as they are protected by what is known as 'public interest privilege'".

 

 Jan Cronje

Fin24 

 

Window shrinking for SA's domestic 'Super Rugby' product

Stormers coach John Dobson struggles to see how South African rugby can host a domestic version of Super Rugby as well as the Currie Cup in 2020. 

As the nation-wide lockdown in the fight against the global coronavirus continues, the window for SA Rugby to get their professional franchises back on the field this year is shrinking. 

Super Rugby was suspended in March after seven rounds of fixtures. 

Earlier this week, New Zealand announced that they would be getting back on the field from June 13 with a tournament called the Super Rugby Aotearoa, which will include all five of their Super Rugby franchises. 

SA Rugby has been planning something similar as a replacement for Super Rugby and had initially wanted to stage the tournament between July and August, but with the country still in level four of its lockdown, it is difficult to see that happening anytime soon. 

Speculating on what the immediate future might look like, Dobson reckons there might not be enough time to stage a unique local competition with the Super Rugby franchises as well as a Currie Cup in 2020. 

"There was a strong argument that we'd have to play Super Rugby because of the commercial rights around that, but the way we're going, it's hard to see us starting before, I think, even July," he said in a video press conference on Tuesday. 

"Then we'd still have to squeeze a Currie Cup in? I think it's looking more like it's going to be a big Currie Cup going late in the year. I just don't see how we would play a Super Rugby tournament in August/September and then go play a Currie Cup after that and then hopefully still get some internationals. I think our options are becoming more and more limited."

One of the main issues, of course, will be getting the players into a state of match readiness following what would have been months in isolation. 

"We  are planning, but the problem is more a practical one for us in terms of conditioning," Dobson added.

"When we started this lockdown, we were looking at three weeks and then getting back to work. There was a formula of two to one, so if you were off for two weeks it would take one to get you ready to play again, and now I think that has been dramatically extended.

"We've now had a full off-season, so we'll need a full pre-season.

"We were keeping the players on a short readiness, now we're pulling them right back to look at more muscular-skeletal and long-term strength.

"We can speculate as much as we like, but with the length of the whole thing and the prognosis in South Africa, we're going to have to have a full pre-season before we're physically ready to play again."

 
 
 Lloyd Burnard - Sport24
   

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