MENU

South Africa
Tag Archive

South Africa’s private sector activity still in negative territory

3 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG, Feb 3 (Reuters) – Activity in South Africa’s private sector remained in decline at the start of 2016, a survey showed on Wednesday, with employment, new orders and output all falling since December.

The Standard Bank Purchasing Managers’ Index (PMI), compiled by Markit, edged up to 49.6 in January from 49.1 a month before, but remained below the 50 mark that separates expansion from contraction.

“While the weak rand helped exports to stabilise, it also exerted some upward pressure on input costs, resulting in the steepest increase in overall input costs for five months,” Markit said. South Africa’s rand slid about 25 percent against the dollar last year, weighed down by a dim outlook for Africa’s most developed economy and slowing growth in China, a key consumer of local commodities. Investors are also worried about the prospect of undue political interference in economic policy after President Jacob Zuma suddenly fired the finance minister in December.

Read more

Kumba Iron Ore sees 2015 profit plunging as supply glut persists

3 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Kumba Iron Ore said on Tuesday it expected full-year earnings to December 2015 plunge as much as 67 percent as it battled slumping prices for the steel-making ingredient.

The unit of Anglo American said headline earnings per share (EPS) are expected to fall by between 65 percent and 67 percent to 11.45 rand and 12.05 rand.

Kumba is due to release its full-year results on Feb. 9.

Headline EPS is the main gauge of profit in South Africa and strips out certain one-off items.

Iron ore prices fell about 35 percent in 2015 due to a supply glut and growth concerns in top consumer China, forcing Kumba to cut jobs and restructure its main mine, Sishen.

Kumba took a 6 billion rand ($374 million) writedown charge in 2015 for the reconfiguring of the Sishen mine.

Its shares initially fell as much as 8 percent before recouping losses to close 3.1 percent higher at 37.51 rand.

“The market had expected that there will be some write off. It is good that Kumba is taking the medicine it needs and focusing on cutting costs,” said Sanlam Private Wealth portfolio manager Greg Katzenellenbogen.

The world’s largest producer of iron ore, Vale SA, said on Thursday it would recommend to its board that no dividend be paid to shareholders this year because of the slump in commodity prices.

($1 = 16.0535 rand)

 

(Reporting by Zandi Shabalala and Thekiso Anthony Lefifi; Editing by Tiisetso Motsoeneng and David Evans)

Read more

Eskom names short-term suppliers for Arnot coal-fired plant

2 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Eskom will use coal from Glencore, South32 and five other suppliers to power the Arnot power station, including Exxaro Resources with whom it did not renew a 40-year contract in December, the utility’s spokesman said in a Twitter post on Tuesday.

The short-term supply agreements are separate from the list of bidders for the new long-term contract, the outcome of which Eskom said it will announce before the end of the first quarter of this year.

Eskom listed lesser-known Tegeta, Keaton Energy, Hlagisa Mining and Umsimbithi Mining as the other short-term suppliers to the 2,100 MW Arnot plant.

 

(Reporting by TJ Strydom; editing by Jason Neely)

Read more

HeroTel wants to consolidate Wi-Fi service in South Africa

28 January 2016 Comments (0) Africa, Business, Featured

Alan-Knott-Craig-Jnr

The startup, with $4.75 million in capital, believes a single network will benefit consumers with more consistent service at lower costs.

Hundreds of small wireless providers are competing to connect Internet users in South Africa, but a new player has a different vision.

Instead of starting one more competing company, HeroTel founder Alan Knott-Craig Jr. wants to connect as many existing Internet providers as possible to form a national wireless network.

HeroTel hopes to consolidate the fragmented landscape of wireless Internet providers under a single brand. Knott-Craig said this would enable more consistent service for consumers at lower costs and aid expansion of service to areas that currently do not have broadband access.

HeroTel, launched in August 2015, has raised $4.75 million in investment capital and hopes to have a national footprint by April. Knott-Craig said he hoped the company would become the “Capitec of telecoms,” referring the South African banking network.

Knott-Craig, 38, is a South African entrepreneur and former CEO of the social network Mxit. He also founded Project Isizwe, a nonprofit that wants to put free Wi-Fi within walking distance of every South African.

Over the course of two years, the Isizwe Project has successfully turned the South African city of Tshwane (Pretoria), population 2.9 million, into the continent’s largest free public Wi-Fi network.

The network has 750 sites and more than 20 percent of the buildings in Tshwane are within walking distance of Wi-Fi, Knott-Craig said. One million people were to be connected by the end of 2015 with the entire population within walking distance of free Wi-Fi by 2017.

Knott-Craig believes that municipal governments should take responsibility for providing Wi-Fi to their citizens just as the governments provide electricity, sanitation and roads.

South-Africa Wi-Fi

South-Africa Wi-Fi

 

200 wireless providers operate in South Africa

In the private sector, he said there are about 200 wireless service providers operating in South Africa and the business is profitable. Revenues total about $53 million a year with profit margins of approximately 30 percent.

The problem, Knott-Craig said, is that consumers will demand greater wireless speeds at lower prices so a network makes more economic sense than a fragmented marketplace of providers.

Currently, Knott-Craig said, Wi-Fi speeds are doubling. But the cost to the consumer stays the same when it should be decreasing, he contends.

“People want fast reliable, affordable broadband, that’s all they want, and they don’t want you to feel like you’re doing them a favor by arriving to fix it,” he said.

Knott-Craig said South consumers now pay about 600 rand ($35) a month for 10 megabytes per second. He projected they will pay the same amount for 100 megabytes by 2017.

Five million households lack broadband access

He said HeroTel would use unlicensed spectrum, which is the same as the spectrum home and office consumers use for Wi-Fi.

In addition to improving service for existing customers, Knott-Craig believes pooling the resources of existing providers will enable the network to bring Internet access into about five million households that do not have broadband. Only about 400,000 of these are reachable by fiber-optic broadband, he said.

For the rest, he said, unlicensed spectrum Wi-Fi is the obvious answer because it is inexpensive, he said. “That’s why the HeroTel strategy makes sense.”

According to the Internet Architecture Board, South Africa has approximately 33.5 million Internet users, representing 61 percent of the population as of December 31, 2014.

Getting more people connected to the Internet will be good for all of South Africa, Knott-Craig said. “The more people in South Africa that are on the grid, whether it is the poor or the rich, the faster our economy can grow,” he said.

Read more

South African mines post lowest annual death toll of 77

28 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

PRETORIA (Reuters) – South Africa’s mines minister Mosebenzi Zwane said on Thursday that 77 workers were killed in mining accidents in 2015, the lowest number on record and down from 84 in 2014.

South Africa’s mines are the deepest and among the most dangerous in the world but industry fatalities have been falling, a trend rooted in improved safety practices and a shrinking labour force as production declines.

 

(Reporting by Tiisetso Motsoeneng; Writing by Ed Stoddard; Editing by James Macharia)

Read more

Platinum producer Lonmin cuts jobs and costs

28 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Lonmin said on Thursday it would continue to review its services and reduce costs, mainly through job cuts, as the sliding price of platinum bites further.

The company said labour costs fell 194 million rand ($11.8 million) in the last three months of 2015 after it shed 5,077 jobs, or 84.6 percent of its planned reduction in headcount.

“Progress continues with the restructuring programme due to the new benchmarked operating model and removal of high-cost production to ensure the business remains viable,” Lonmin said in a statement.

It is targeting savings of 700 million rand in 2016.

Hurt by a 2014 strike, rising costs and a plunging platinum price, Lonmin raised $400 million through a cash call in December which failed to find favour with shareholders and priced shares at about a penny each.

Some of the proceeds of the rights issue were used to pay down debt, leaving the company with $69 million in cash at end of December.

The miner said production of refined platinum reached 171,441 ounces in the three months to the end of December, up 22.6 percent from a year earlier.

The price of platinum has been on the decline for about five years. It fell 26 percent last year and is trading at less than half its 2011 peak.

Shares in Lonmin have lost nearly all of their value over the last year. It was the worst-hit of three top platinum miners by the 2014 five-month labour stoppage.

Lonmin maintained its full-year production guidance of 700,000 platinum ounces and its capital expenditure plan of $132 million despite projecting sustained weaker metal prices.

($1 = 16.3897 rand)

 

(Reporting by Zandi Shabalala; editing by David Clarke and Jason Neely)

Read more

South African president Zuma under pressure as economy worsens

27 January 2016 Comments (2) Africa, Featured, Politics

Jacob Zuma

Analysts point to potential losses for the African National Congress in upcoming local elections, which could pave the way for Zuma to exit the presidency later this year.

South Africa’s venerable African National Congress party may lose political ground in upcoming municipal elections as economic conditions worsen and controversy swirls around President Jacob Zuma.

As business confidence in the government and popular opinion of Zuma plummet, some are predicting the ANC could pave the way for Zuma to exit the presidency later this year if the local elections go badly.

Zuma’s six-year tenure has been mired by accusations of corruption, policy missteps and controversial appointments that his critics contend have created economic stagnation and stifled investment in South Africa.

Ouster of finance minister sparks protests, while rand plunges

Zuma caused a national uproar in December when he abruptly fired a respected finance minister and then was forced to sack an inexperienced replacement only four days later amid protests and plunging currency rates and capital markets.

The rand dropped to under 16 to the dollar for the first time and the benchmark stock index lost the equivalent of $11 billion after Zuma fired finance minister Nhlanhla Nene and replaced him with parliamentarian David van Rooyen on Dec. 9.

Business leaders protested while thousands of South Africans took to the streets using the slogan “Zuma Must Fall” and demanding that Zuma leave office.

ANC leaders persuaded Zuma to quickly replace van Rooyen and a measure of stability was restored with the appointment of a third finance minister, Pravin Gordhan who had served in that post from 2009 to 2014.

Economy worsens with record drought

South Africa, the most industrialized country on the continent, was under economic pressure well before the latest events. The rand has steadily declined, losing half its worth since Zuma took office in 2009. The economy is stagnant, unemployment is high, and the country is undergoing its worst drought since record keeping began in 1904.

Maize production has dropped by 30 percent and prices on the South Africa Futures Exchange have more than doubled in the past year. While agriculture makes up only a small fraction of South Africa’s gross domestic product, the country will be forced to import food, including as much as $710 million worth of maize, which will result in even higher prices.

Christo Joubert, a price analyst with the National Agricultural Marketing Council, said the council expected prices to increase by as much as 20 percent in 2016. “The drought is hitting everything,” Joubert said.

The higher prices will present further struggles in a nation with an unemployment rate of 30 percent. Also, analysts predict the nation’s economy could stagnate in 2016 for the third straight year, with a growth rate of less than 1 percent.

Support for government declines

ANCBusiness confidence and popular support for the incumbent government have also dropped.

The business community’s confidence dropped to its lowest rate in 20 years, according to the South African Chamber of Commerce and Industry. As the finance upheaval unfolded in December, the chamber’s confidence index declined to 79.3 percent, the lowest level since June 1993.

Meanwhile, even before December’s events, public distrust of the president had reached a record 66 percent, up from 37 percent in 2011. A majority of South Africans believe Zuma ignores the courts and the parliament, according to an Afrobarometer poll released in November.

Municipal elections could be pivotal

The troubled economy and public distrust put in doubt whether the ANC can maintain its grip on power and whether Zuma will serve out his term.

The ANC has won 60 percent of the vote since coming to power with Nelson Mandela two decades ago.

Gary Van Staden, an analyst with NKC African Economics, said the party could lose as much as 10 percentage points of support in local elections between May and August. He said the ANC can expect to lose control in some municipalities, which run parks, libraries, utilities and sanitation.

If the elections go badly for the ANC, some analysts predict the party will try to replace Zuma.

“We look for a cornered ANC machine having the possibility of managing the exit of President Zuma around July,” said Peter Attard Montalto, an analyst at Nomura.

For now, however, the ANC has voiced support for the embattled president. In the annual speech on the January 8 anniversary of the party, Zuma touted the progress the ANC has brought to the country and said the ANC was needed as a unifier.

Meanwhile, several possible candidates to become Zuma’s successor have emerged. Among those mentioned are Zuma’s former wife, Nkosazana Dlamini-Zuma, who heads the African Union Commission; Cyril Ramaphosa, the deputy president; and Baleka Mbete, the ANC national chairwoman and speaker of parliament.

Read more

Nigerian minister tells MTN to drop lawsuit over fine

26 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

By Julia Payne

ABUJA (Reuters) – South African cellphone operator MTN should drop its legal action over a $3.9 billion fine imposed in Nigeria to help facilitate talks on a possible settlement, the Nigerian telecommunications minister said on Tuesday.

The Nigerian Communications Commission (NCC) slapped a $5.2 billion fine on MTN in October for failing to disconnect users with unregistered SIM cards but after weeks of negotiations reduced it by 25 percent.

MTN, which makes about 37 percent of its revenue from Nigeria, then filed a suit in the West African country questioning NCC’s legal grounds for imposing the penalty.

“I’m not aware of any out-of-the-court settlement,” telecoms minister Adebayo Shittu told reporters.

Shittu said President Muhammadu Buhari will have the final decision on the matter, adding that MTN might be advised to withdraw the court case filed against the fine.

“If they withdraw it creates a better environment, an environment where there is no stress or pressure on either side,” he said.

A judge in Lagos, Nigeria’s commercial capital, last week gave the company until March 18 to try to reach a settlement with the Nigerian authorities over the fine. The prospect of a lower fine boosted MTN shares.

The fine equates to more than twice MTN’s annual average capital spending over the past five years.

Nigeria has been trying to halt the widespread use of unregistered SIM cards amid worries these are being used for criminal activity, including by the militant Islamist group Boko Haram.

 

(Writing by Ulf Laessing and Chijioke Ohuocha; Editing by Kevin Liffey and Keith Weir)

Read more

South Africa’s Amplats sees FY profit plunging on impairments

25 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Anglo American Platinum Ltd (Amplats) on Monday flagged a sharp fall in full-year earnings due to impairments, write-downs and restructuring costs in bid to survive plunging in commodity prices.

Headline earnings per share, the main gauge of profit that strips off certain one-off items, is expected to be down to between 25 cents and 55 cents compared with earnings of 301 cents a year earlier.

Amplats, a division of Anglo American Plc, is undergoing tough cost cutting to deal with plunging prices and low demand for its precious metals and the effects of a crippling five-month strike in 2014 at its biggest operation.

The top platinum producer said the fall in profits was due to efforts to make the business more efficient, cash generative and lean by reorganising operations and structure.

Anglo American, the world’s fifth-biggest miner by market value, is on a drive to sell more assets and whittle its business down to three divisions to cope with sharp fall in commodity prices.

Amplats said headline earnings per share would have risen to 412 cents if it had excluded the impact of the restructuring costs, a loan to its joint-venture partner Atlatsa and the increase in inventory.

 

(Reporting by Zandi Shabalala; Editing by Gopakumar Warrier)

Read more

South African entrepreneur is first black woman to launch an airline

23 January 2016 Comments (0) Africa, Business, Featured

Siza Mzimela

Siza Mzimela, a longtime aviation executive, is CEO of Fly Blue Crane, which operates flights to several locations in South Africa.

South African entrepreneur Siza Mzimela is making an important mark on aviation as the first black woman in the world to start an airline.

Mzimela is founder and CEO of Fly Blue Crane, a fledgling airline that flies to several destinations within the country and hopes to expand to regional cities.

Mzimela said she is tapping her years of experience leading other airlines, including South African Airways, the country’s largest airline, to shape Fly Blue Crane to meet customer expectations for consistent, on-time travel. The CEO promised convenient, problem-free booking and travel with competitive fares.

New airline is based in Johannesburg

Blue Crane, based at O.R. Tambo International Airport in Johannesburg, launched in August offering several flights daily to Bloemfontein, Kimberley and Nelspruit.

Blue Crane later added flights between Kimberley and Cape Town and between Bloemfontein and Cape Town, but announced that flights to Nelspruit would be discontinued in January because of lack of capacity.

The airline hopes to find success serving provincial and regional capitals in southern Africa.

Mzimela said that airports in Johannesburg, Durban and Cape Town had more than enough air service. But Fly Blue Crane wants to fill gaps in the market in smaller cities such as Kimberley within South Africa and then expand to regional centers.

She wants to use the airline to open new routes that will help improve the economies of smaller markets, she said.

fly blue crane

Regional expansion is a goal

While service within South Africa is the immediate priority, the new airline wants to expand beyond those borders. Mzimela hopes to add destinations in Botswana, Namibia, Zimbabwe and the Democratic Republic of Congo.

Fly Blue Crane operates a fleet of four fuel-efficient 50-seater Embraer Regional Jet 145 aircraft, which enables quick turnaround and efficient crews.

The new company is taking off at a time when the airline industry in Africa is poised to expand. According to the African Airlines Association, there is opportunity for African carriers to expand intra-African and domestic travel for a growing middle class while global carriers dominate intercontinental travel. More than 20 carriers are based in South Africa, the largest being South African Airways with a fleet of 65 planes.

Founder has headed two other airlines

Launching an airline isn’t the first “first” for Mzimela.

She was the first female CEO at both South African Express Airways and South African Airways. At South African Airways, she introduced non-stop flights to New York and Beijing  – a first in the history of the airline.

Mzimela also was the first woman in 67 years named to the board of directors of the International Air Transport Association. She serves on the South African Tourism Board and is a member of the board of the Oprah Winfrey Leadership Academy for Girls.

In 2012, she was named one of the 10 Greatest Female Leaders in Africa Today by Ventures Africa.

Mzimela also founded Blue Crane Aviation, an aviation services company providing African airlines with consulting, and legal and aircraft management services. She serves as the company’s executive chairperson.

She graduated with a degree in economics and statistics and began her career in banking before moving into the airline industry as a researcher.

Few women rise to the top in the airline industry

Mzimela said being a woman executive in the aviation industry has posed challenges. Globally, only 12 of 248 airline CEOs are women, fewer than 5 percent. Sexism and lack of female mentors are cited as factors that hold women back from executive posts.

“I don’t know how many times I walked into meetings and people just assumed I probably was the one who was going to be taking notes,” she said.

Mzimela said her success managing established companies motivated her to want to “build something better from the ground up.”

Read more