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Friday, February 28th, 2020
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Category Archives: Financial News

Outraged unions fight govt cuts; fresh SAA bail-out; coronavirus leaps outside China; Massmart, Implats

BizNews — In today’s business news headlines:
* The credibility of South Africa’s proposals to curb debt and save its sole investment-grade credit rating will be put to the test by powerful labour unions outraged by plans to pare back the wage bill;
* Finance Minister Tito Mboweni has told journalists the government would be “stupid” to make noises that will precipitate the collapse of troubled national carrier SAA, which has received more taxpayers’ funds to keep it in the air;
* The speed at which coronavirus is spreading outside China has overtaken the pace of the spread of the disease in the country where the first case was reported in early December, the World Health Organisation says;
* South Africa will lose out on Chinese tourism spend this year, with no Chinese tourists scheduled to visit the country this year – which is a far cry from the usual 100,000 travellers who visit the Western Cape and beyond.
* Retail giant Massmart, owner of Game, Makro and DionWired, reported a staggering R1.1bn headline loss in the 2019 financial year; and
* Impala Platinum posted a rise in half-year earnings, reinstated dividends and halted closure of two shafts, after higher metals prices and improved operations boosted profits, says Reuters.

Ticking time bomb: unsecured debt is a major risk – Alec Hogg, Dave Woollam

BizNews — In an article warning that the United Nations has unsecured lending on its list of concerns, Malcolm Rees points out that there is much as R208bn in outstanding unsecured and short-term credit in South Africa, accounting for 11% of all outstanding credit. “To put that in context, the nominal value of outstanding unsecured credit has grown near six-fold since the start of the lending boom in 2008. In that year, it represented just 3% of all outstanding credit,” Rees writes. BizNews editor-in-chief Alec Hogg picks up the threads of this story with micro-lending expert Dave Woollam. In this podcast, Hogg and Woollam discuss how unsecured debt is a major risk to the economy. – Jackie Cameron

Finance Minister Tito Mboweni announces some tax cuts

BizNews — Against the expectation of many analysts, Finance Minister Tito Mboweni did not raise Value Added Tax or increase tax for individuals and instead opted for tax relief in some brackets. He also raised the ceiling for transfer duties on property.

Listen: Finance Minister Tito Mboweni’s full 2020 Budget speech

BizNews — Finance Minister Tito Mboweni delivered his budget speech in Parliament this afternoon and seems to be resigned to the fact that South Africa will be downgraded to junk status by ratings agency Moody’s. He refrained from any tax and VAT increases and said that persistent electricity problems will hold back growth. Over the next three years, government expects growth to average just over 1 percent.

40-50 years of underperformance at Eskom due to problems at Kusile and Medupi – Chris Yelland

BizNews — Energy expert Ted Blom warned this weekend that loadshedding could haunt South Africa for at least another five years. Blom said he believed it could take Eskom that long to sort out its coal problems and its maintenance backlog. He also mentioned that coal stations in Mpumalanga were operating at 72% capacity, which is expect to drop below 50% within the next year. This was followed by an estimate of another Eskom insider, Mike Rossouw who said that the cost overruns of Medupi and Kusile power stations could run into more than R1trn. Biznews founder Alec Hogg asked energy expert Chris Yelland whether this was an exaggeration and asked him who was to blame for the problems at the all-important Medupi and Kusile power stations. – Linda van Tilburg