Fitch and Moody affirmed the country’s investment grade credit rating. That is, South Africa has avoided downgrades from the two agencies.
For long, two ratings agencies — S&P and Fitch — ranked South Africa only one level above “junk”, or non-investment grade status.

The downgrades were driven mainly by slowing GDP growth, which makes South Africa more vulnerable to capital outflows, rand depreciation, and rising budget and current account deficits ( among other things).

The economy has been hit by slower-than-expected growth due to the detrimental impact of the five-month platinum sector strike — Amcu shut down the industry for five months, the longest sector-wide strike in the nation’s history, in 2014 — on the economy, other labour unrest and generally weak demand both locally and globally.

Plenty of times the assessments get to the heart of the dilemma facing South Africa Reserve Bank governor Lesetja Kganyago, who is struggling to keep the weakening rand from fuelling inflation at a time when interest rates, at their highest level in five years, have left gross domestic product growing at its slowest pace since 2009.

Amid the growing concern that US Federal Reserve could raise interest rates next month, which is likely to weaken the rand and further fuel inflation, it must have been increasingly hard for the SA Reserve Bank to hold the repo rate at 7 percent at their last meeting this year.
If South African economic data pointed out to improving labour market, I am certain that the Reserve Bank would move in lock-step with the Fed to avoid accelerating the capital exodus from South Africa.

But let’s us not divert attention from the real problem; the Reserve Bank is not where the problem is. The problem is that the government doesn’t see growth as the biggest crisis in SA.
The government’s ability to carry out reforms has always been hamstrung by the standoff between senior leaders in the ruling ANC party.
Oftentimes, South Africans have found themselves standing at a cross roads; betwixt and between, watching an intense power struggle play itself out at the expense of governance and the economy.
It’s for the same reason that the nation stands in awe for what Pravin Gordhan, SA minister of finance, has done.

The once embattled minister thought beyond himself even amidst the fierce storm. What Gordhan, has done is laudable: he has done a sterling job in averting a downgrade.
He has been driving fiscal consolidation — cutting expenditure and reducing debt — and economic reform in anticipation of the S&P review this month.
The report will be issued next month. He has steadfastly refused to grant SAA a R5- billion bailout and has said SA cannot afford the nuclear deal or a zero percent fee hike for universities.
Gordhan knows that stalling the momentum in economic reforms maybe detrimental to economic growth and investor confidence.

There’s a lot of things that have happened in SA, many of which are naturally credit-rating-negative and may have been seen by foreign investors as a precursor to a full ratings downgrade to junk status in December and somehow compelled them to start to position their investment for that eventuality rather than wait for the actual downgrade.
But, I believe it did many investors well, and helped them think otherwise, to see a superlative job Gordhan was doing to put a downgrade at bay.
Gordhan, his deputy, Mcebisi Jonas, and the Treasury stood as a bulwark between SA and a devastating downgrade. Did I mention that they are the incorruptible bones that increase investors’ confidence?

We are yet to know S&P’s decision regarding a downgrade in December.
But that is not much of a big deal anymore: in assessing a sovereign rating, credit analysts, assets managers and others typically would not rely on the analysis of one agency.
Wage deal, also, may help in making S&P decide against a downgrade: agreeing to a three-year wage pact in the platinum sector has boosted the outlook for SA’s big three mines and SA’s chances of avoiding a junk status come December.

South Africa’s big three platinum producers are celebrating wage deals reached with unions without a single day lost in strike — the very strikes that negatively affected economic growth of SA and landed it in this hot mess — and that might benefit South Africa credit rating in December.

Gordhan did not blink in the war of attrition over SA’s future and in so doing saved South Africans, and non-South Africans, from a disaster that was to happen. A disaster that would last for many years given SA’s huge debt.
Africa is then happy that Gordhan is not pliable as in standing for what he believes in, what is right, he became a lifeline for Africa.

Business

LEC to switch off households over debts

Published

5 days ago

March 21, 2023

The Post

MASERU – The Lesotho Electricity Company (LEC) will from Tuesday next week begin switching off clients who owe it money.

The LEC issued a seven-day ultimatum to all customers who owe it on Tuesday last week. The deadline ends on Monday.

It is expected that the LEC will begin switching off households that have defaulted.

The state-owned power company, however, is not going to touch any government department or business entities that owe it on grounds that they are in payment negotiations.

The LEC move comes barely two weeks after it cut electricity supplies to the Water and Sewerage Company (WASCO) thus causing it to fail to pump water to communities countrywide for more than two days.

The LEC says it is owed close to M200 million by government departments, businesses and individuals.

The LEC spokesman, Tšepang Ledia, told thepost that the government and the businesses will not have their electricity cut because they are in negotiations.

“We are in negotiations with the government and businesses and hopefully they will pay,” Ledia said.

“We advise the ordinary people to pay their debts before the 20th of March 2023 or else we cut the services,” he said.

The LEC says it is running short of funds for its daily operations.

In December last year the company increased power tariffs by 7.9 percent on both energy and maximum demand charges across all customer categories for the Financial Year 2022/23.

Last week the LEC boss, Mohato Seleke, said postpaid consumers and sundry debtors owe the company M169.4 million.

He said unless the debtors pay he will be unable to buy electricity from ’Muela Hydropower Project, Eskom in South Africa and Mozambique’s EDM.

This, he said, could cause serious load shedding in the country and could be devastating for businesses.

Seleke said the LEC spends M630 million monthly to buy electricity.

“If postpaid consumers do not settle their debts this could prevent the LEC from being able to buy electricity which can lead the country to encounter load-shedding,” Seleke said.

Seleke said collecting debt from government department ministries was a challenge as there is an understanding that since LEC is a state-owned company, it will continue supplying government agencies with electricity and they will settle their bills when they have funds to do so.

Seleke said the LEC has lost M21 million to vandalism during this financial year.

Relebohile Tšepe

Business

Bumper payout for former mineworkers

Published

5 days ago

March 21, 2023

The Post

MASERU – AT least 11 316 current as well as former mine workers are set for a bumper payout after Tshiamiso Trust began disbursing the first billion Maloti to workers who are suffering from silicosis and tuberculosis.

The payment comes two years after Tshiamiso Trust began processing claims for the historical M5 billion settlement agreement between mineworkers and six gold mines in South Africa.

Speaking at the payment announcement in Maseru last week, the Trust’s CEO, Lusanda Jiya, said it has been two years since they officially began accepting claims.

“Our people come to work every day with the mission of impacting lives for the better, and the first billion rand paid out to over 11 000 families is just the beginning,” Jiya said.

“We know that there is no compensation that will ever be enough to undo the suffering endured by mine workers and their families,” he said.

“However, we are committed to deliver our mandate and ensure that every family that is eligible for compensation receives it.”

Jiya said the Trust is limited both in terms of the time in which they can operate, and the extent to which they can assist those seeking compensation.

Broadly speaking, the eligibility criteria include among others that the mineworker must have worked at one of the qualifying gold mines between March 12, 1965 and December 10, 2019.

Secondly, living mineworkers must have permanent lung damage from silicosis or TB and deceased mine workers representatives must have evidence that proves that they (the deceased) died from TB or Silicosis.

Tshiamiso Trust has a lifespan of 12 years, ending in February 2031.

Over 111 000 claims have been received to date, through offices in South Africa, Lesotho, Botswana, eSwatini, and Mozambique.

The Trust is working with stakeholders in these countries and others to mobilise its efforts and expand operations.

The history of silicosis in South Africa goes back to the late 1880’s when the first gold mines began operations.

The gold was stored and locked in quartz, a special rock that contains large amounts of silica.

Crystallised silica particles can cause serious respiratory damage if inhaled.

In the earlier days of gold mining, dust control, health and safety standards and the use of PPE (personal protective equipment) were not as advanced as they are today.

Tshiamiso Trust was established in 2020 to give effect to the settlement agreement reached between six mining companies.

The companies are African Rainbow Minerals, Anglo American South Africa, AngloGold Ashanti, Harmony Gold, Sibanye Stillwater and Gold Fields.

The settlement agreement was reached and made after a ruling by the Johannesburg High Court as a result of a historic class action by former and current mineworkers against the six gold mines.

Justice for Miners is a coalition of interested parties in the mining sector launched at the Nelson Mandela Foundation in Johannesburg in 2020.

The Johannesburg High Court approved the setting up of the Tshiamiso Trust to facilitate payment by the companies to affected miners.

Keith Chapatarongo

Business

Farmers cry over cost of livestock feed

Published

3 weeks ago

March 7, 2023

The Post

MASERU – Lehlohonolo Mokhethi is a farmer who has been running a successful poultry business, thanks to a small loan he got from a local bank.

He now has 300 chickens.

He says his vision is to rear 5 000 chickens by 2025 and employ 30 youths. But he is now grappling with a new challenge: the ever increasing cost of chicken feed.

That is threatening the viability of his business.

“The biggest challenge is that food prices increase every day, feeding is expensive,” Mokhethi said.

“It is quite difficult to make profit in business if each and every day food prices increase. Today I am buying a bag of food with a certain amount then the next day the price has increased,” he says.

“Our customers fail dismally to understand that food has increased and the Chinese are taking our market because they sell at a low price thus I run at a loss.”

Last week, a top attorney in Maseru who is also a prominent farmer, Tiisetso Sello-Mafatle, called a meeting for farmers to discuss these challenges.

She says the government must regulate the prices of livestock feed.

That is critical if the farming business is to succeed, she says.

Attorney Sello-Mafatle says farmers must come up with a structure for livestock feed prices which they would present to the government for gazetting.

“We should state our regulations and give them to the government to make everything easy for both parties because we cannot wait for the government to make regulations for us,” Sello-Mafatle says.

She adds that “farmers should be bullish about what they want and never have fear endorsing new things”.

“I will not be challenged or cry (because of) what life throws at me but I will cry when things are not happening the right way,” she says.

Mafatle says farmers need to know who they are and know the capabilities they have.

“This will help a farmer in becoming the best in any field they are in once they are confident about themselves,” she says.

Karabo Lijo, another participant, said they have to influence the cost of inputs in agriculture, especially livestock feed.

“We have to go back to cost-price analysis where as farmers we are able to derive the selling price and the break-even point in our production,” Lijo said.

“We can also derive the stable or constant mark-ups on our products,” he said.

“We need to do research to increase the ability to produce byproducts which are likely to have the longest shelve life,” he said.

The meeting urged farmers to diversify their products by introducing such things as mushroom farming. They said mushrooms can grow very well in Lesotho due to its favourable climate.

The farmers also demanded that there should be regulations on how land can be sold or borrowed in Lesotho.

Tholoana Lesenya and Alice Samuel