Five important things happening in South Africa now
Here’s what is happening in and affecting South Africa today:
Coronavirus: Global confirmed coronavirus cases are at 4.6 million infections, with over 311,000 deaths. In South Africa, confirmed cases have climbed significantly over the last few days, now sitting at 15,515, with 264 dead. Recoveries have increased to 7,006, leaving the country with 8,245 active cases.
Lockdown split: Members of the advisory council to government on the coronavirus response have openly criticised leaders for continuing the countrywide lockdown, saying it has no basis in science.
Government has admitted that the advisors had no input and were not informed about the ‘risk-based approach’ to lockdown that is now being implemented, saying it was not their mandate to advise on this. Government has been criticised for the extended lockdown and many seemingly arbitrary regulations that go with it. [ EWN]
Electricity hike: South Africans can expect electricity prices to increase, after energy regulator Nersa has granted Eskom permission to recoup R13.3 billion through its regulatory clearing account. Eskom requested R27.3 billion.
Previously Nersa pushed back against Eskom price hikes, including the billions of rands paid to the power utility by government into its calculation of what is allowed. However, this was overturned in court. Nersa said this would lead to a catch-22 of rising electricity prices, pushing demand down, leading to more pricing gaps. [ 702]
Rate cut: The reserve Bank Monetary Policy Committee is expected to meet again this week, with analysts expecting another rate cut. The bank has already cut rates by 225 basis points so far in 2020, but economists believe that there is room for at least another cut of 50 points in May and a further 35 points in June. The rate cuts would help to boost economic activity, which is currently under pressure, with inflation expected to be subdued in the near term. [ Daily Maverick]
SAA stalemate: SAA’s business rescue practitioners says the failed airline has spent under R10 billion since entering into business rescue. A fifth of the money was spent on aviation fuel and 16% went on salaries and allowances, they said.
While they have agreed to not sell assets, and have been ordered to freeze retrenchments, the administrators have told parliament that the business should be wound down – and that liquidation should be avoided, as it would destroy value. [ Reuters]
Markets: South Africa’s rand fell on Friday and ended lower on the week as fears about a resurgence of coronavirus infections hurt sentiment toward the emerging markets.
Looking at the week ahead, while SA is desperately trying to resume economic activity, several mines had to shut down again over the weekend following cluster outbreaks of Covid-19.
With a light data calendar, markets will focus on Sino-US trade and Covid-19 developments for direction. On Monday, the rand is at R18.51 to the dollar, R22.40 to the pound and R20.03 to the euro. [ XE]