South African emergency energy plans may disappoint

2020 ◽  
Keyword(s):  
South African ◽  
Energy Production ◽  
Load Shedding ◽  
Public Image ◽  
Successful Implementation ◽  
Medium Term ◽  
Power Outages ◽  
Content Type ◽  
Investor Confidence ◽  
Maintenance Programme

Significance Eskom's new CEO, Andre de Ruyter, recently warned that ‘load shedding’ (power outages) will continue in the medium term as the utility embarks on an accelerated maintenance programme to put the grid on a more stable basis. In turn, Ramaphosa and energy minister Gwede Mantashe have promised various measures to supplement energy production, notably allowing municipalities to procure electricity from 'independent power producers' (IPPs) and easing conditions for companies to generate their own electricity. Impacts An Eskom voluntary retrenchment package will partly buoy investor confidence about the potential for wider reforms. Eskom’s new spokesperson, a respected financial journalist, could help improve the utility’s poor public image. The coal lobby and related ANC-aligned figures will pose a formidable hurdle for the successful implementation of Pretoria's energy plan.

South Africa’s Eskom frailties will be put to the test

2020 ◽  
Keyword(s):  
Economic Crisis ◽  
Energy Production ◽  
Capacity Constraints ◽  
Load Shedding ◽  
Medium Term ◽  
Power Outages ◽  
Power Utility ◽  
Content Type ◽  
Plant Maintenance ◽  
Term Energy

Subject Eskom's overhaul. Significance State-owned power utility Eskom does not expect to have to institute ‘load shedding’ (power outages) during the current nationwide lockdown to combat the COVID-19 outbreak, with demand for electricity dropping by as much as 9,500 megawatts since it began. Recurring load shedding has been required since January as Eskom struggles with capacity constraints and undertakes crucial plant maintenance, with Pretoria promising various measures to alleviate the energy production crisis. Impacts With uncertainty rampant given the lockdown and economic crisis, recent short-to-medium term energy projections may fall by the wayside. Eskom’s belated 'unbundling' is finally underway, with CEOs named for the transmission, distribution and generation subsidiaries. Ongoing policy and legislative uncertainty will further dampen confidence in Pretoria’s reform commitments among the country’s miners.

Iran will struggle to create a ‘resistance economy’

2017 ◽  
Keyword(s):  
Central Asia ◽  
Fiscal Year ◽  
Gdp Growth ◽  
Crowding Out ◽  
Medium Term ◽  
Content Type ◽  
Investor Confidence ◽  
Real Gdp ◽  
Defence Spending ◽  
Supreme Leader

Subject The Iranian budget. Significance Speeches marking the Iranian New Year (Nowruz) on March 21 highlighted disagreements between Supreme Leader Ali Khamenei and President Hassan Rouhani. While both promoted a ‘resistance economy’, each meant something different. The recently published budget for the 2017-18 fiscal year highlights divisions and linkages between the two philosophies. Impacts Real GDP growth in 2017 will not be much above 3.0% and will rise to 4.5% in the medium term. Rising tensions with Washington will further boost defence spending, crowding out development. Additional US congressional sanctions, or even threat of sanctions, are likely to depress investor confidence. New transport links to Central Asia may significantly increase trade.

South Africa’s Eskom will weigh on economic rebound

2018 ◽  
Keyword(s):  
Investor Sentiment ◽  
Capacity Constraints ◽  
Load Shedding ◽  
Economic Recovery ◽  
Power Outages ◽  
Content Type ◽  
Power Stations ◽  
National Economic ◽  
Growth Prospects ◽  
Rotational Load

Significance Capacity constraints across Eskom’s power stations have resulted in sustained rotational load shedding (power outages) in recent weeks, while its debt and liquidity issues risk undermining already subdued growth prospects. Impacts The national energy regulator is unlikely to accede to the full amount of Eskom’s application for a 15% price increase over three years. Eskom’s turnaround will prove crucial to sustaining any broader national economic recovery and improvement in investor sentiment. Major job cuts at Eskom will likely be avoided until after the forthcoming general election expected in May.

IMF deal will have mixed impact in Argentina

2018 ◽  
Keyword(s):  
Central Bank ◽  
Policy Coordination ◽  
Medium Term ◽  
Treasury Bonds ◽  
Monetary Policies ◽  
Foreign Investors ◽  
Content Type ◽  
Investor Confidence ◽  
Combined Operation ◽  
The Government

Significance Driven by the currency run that saw a depreciation of 24.1% in just three weeks, the government has begun talks with the IMF in a bid to restore investor confidence. The peso run ended on May 15 owing to a combined operation by the Central Bank and the Finance Ministry: the Central Bank put a floor under the exchange rate by offering 5 billion dollars at 25 pesos to the dollar while the Finance Ministry reopened its tender of Treasury bonds to attract foreign investors. Impacts The sharp peso depreciation will boost inflation; workers will demand a reopening of wage negotiations. Falling real incomes will undermine economic recovery. Investors will demand more policy coordination and coherent fiscal and monetary policies. IMF funds will ease medium-term default fears, but fiscal tightening will be required to lower dependence on foreign finance.

South Africa's ANC will hinder Ramaphosa’s reform plan

2019 ◽  
Keyword(s):  
Voter Turnout ◽  
Load Shedding ◽  
Power Outages ◽  
Power Utility ◽  
Content Type ◽  
Finance Minister ◽  
Reform Plan ◽  
State Capture ◽  
General Elections ◽  
Significant Bearing

Significance As general elections approach on May 8, recurring ‘load shedding’ (power outages) by state-owned power utility Eskom and damaging ‘state capture’ (corruption) revelations against party and state officials are heightening pressure on the ruling ANC. Impacts Declining voter turnout, and overall participation of eligible voters, would prompt growing concern about rising apathy and populism. Whether Finance Minister Tito Mboweni remains in post after May's polls could have a significant bearing on several reform measures. Given the ANC and the main opposition DA's recent struggles, several smaller parties could perform above expectations.

Unrest and COVID-19 will reduce South African growth

2021 ◽  
Keyword(s):  
Economic Growth ◽  
South African ◽  
Unemployment Rate ◽  
Energy Sector ◽  
Economic Recovery ◽  
Medium Term ◽  
Content Type ◽  
High Unemployment ◽  
The Government

Significance This chokes off an unexpectedly strong economic recovery in the first half of 2021. Meanwhile, unemployment has hit a record high at 35%, or 47% according to the expanded definition which includes people who have given up looking for work. Impacts Without higher economic growth, the unemployment rate will not substantially improve. The combination of low growth and high unemployment heightens the chance of further violent unrest. The government will have difficulty sticking with debt reduction plans without further dampening growth. Planned reforms in the energy sector could ease some of the country’s electricity woes in the medium term.

South Africa's minerals bill could prompt legal battle

2016 ◽  
Keyword(s):  
Civil Society ◽  
Mineral Resources ◽  
Political Uncertainty ◽  
Medium Term ◽  
Content Type ◽  
Investor Confidence ◽  
Lower House ◽  
Mining Legislation ◽  
Petroleum Resources ◽  
Legal Battle

Subject The government's persistence in revising the Mining Charter, despite claims by industry that the process of developing the amendments was not inclusive. Significance In November, an amended version of South Africa’s primary mining legislation -- the Minerals & Petroleum Resources Development Act (MPRDA) Amendment Bill -- was passed by the lower house of the country’s parliament, nearly two years after it was referred back by the president based on constitutionality concerns. The MPRDA must now be debated in the upper house of parliament before being returned to the presidency. Impacts The current ‘investment strike’ by major mining houses is likely to continue in the medium term. Mining sector employment will not increase at the same rate as it has previously. Political uncertainty within the ruling ANC will continue to weigh down investor confidence. Pressure on the minister of mineral resources to resign will increase -- both from industry and civil society groups.

South African national minimum wage will prove elusive

2017 ◽  
Keyword(s):  
South African ◽  
Minimum Wage ◽  
Medium Term ◽  
Short Term ◽  
Substantial Impact ◽  
Content Type ◽  
Macroeconomic Conditions ◽  
Current Minimum ◽  
Wage Floor ◽  
Labour Regulation

Significance Due to take effect on May 1, it would introduce a single wage floor set at 20.0 rand (1.5 dollars) per hour. The NMW is a significant departure from current minimum wage frameworks, both in terms of its level and its coverage, and is going to have a substantial impact on companies and low-wage employees in the short-to-medium term. Current labour market and macroeconomic conditions, however, increase the risk that the employment effects of the policy will be largely negative. Impacts The proposed minimum wage level, and the large proportion of workers currently earning below this, suggest likely job losses. From a labour regulation perspective, introducing a single NMW will simplify the extremely complicated minimum wage system. Inspection and enforcement infrastructure will require significant investment, but this is unlikely in the short term.

South African Reserve Bank will reaffirm independence

2020 ◽  
Keyword(s):  
Interest Rates ◽  
South African ◽  
Banking Sector ◽  
Debt Relief ◽  
Quantitative Easing ◽  
Medium Term ◽  
Content Type ◽  
Reserve Bank

Significance Although the bank has acted on various fronts to support the economy, including a limited bond-buying programme, it continues to resist calls for full-blown quantitative easing (QE), and to fend off efforts which would threaten its independence. Impacts Lower interest rates will provide some relief for households and businesses but will not prevent a sharp economic contraction this year. The SARB’s efforts to make it easier for the banking sector to provide debt relief for customers will likely be extended. With most of SARB’s top leadership remaining in situ for 4-5 years, its independence and credibility should be secure over the medium term.

Poor infrastructure will weigh on South African growth

2020 ◽  
Keyword(s):  
Private Sector ◽  
South African ◽  
Government Expenditure ◽  
Load Shedding ◽  
Short Term ◽  
Content Type ◽  
Private Sector Investment ◽  
Plant Maintenance ◽  
Public Pressure ◽  
Poor Infrastructure

Subject South African infrastructure. Significance Building on previous government commitments to reverse the falling percentage of GDP spent on investment, last month’s 2020 budget sought to rebalance government expenditure away from consumption spending to capital budgets. In a time of severely strained government finances and an economy in recession, Pretoria is looking to shift resources from stalled infrastructure projects to more viable ones and to attract private-sector investment. Impacts Eskom's new CEO could face growing public pressure to ease ‘load shedding’ (power outages) necessary for key plant maintenance. Ongoing bureaucratic, legislative and procurement hurdles will hamper improved infrastructure spending over the short term. A flagship government aim for 30% of GDP to be spent on investment by 2030 is unlikely to be realised.

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