South Africa’s state power monopoly says it will need to charge consumers more for electricity if it is to cut its debts and stave off bankruptcy, even as rolling blackouts continue to plague Africa’s most industrial nation, the Financial Times reported. Years of corruption and mismanagement under disgraced former president Jacob Zuma left Eskom with surging costs, falling revenues, a fleet of breakdown-prone coal power stations and ballooning debts.
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South Africa’s biggest pot of available cash — R1.91trn ($128bn) of civil-servant pensions and unemployment funds managed by the Public Investment Corp. — is emerging as the key to rescuing the debt-stricken national power monopoly, BizNews reported. The money manager has approached its parent agency, the National Treasury, with a proposal to ease the R464bn load of obligations crushing Eskom, signaling officials are gearing up for the complex financial and political operation to convert about R95bn of Eskom debt held by the PIC into equity.
Zambia must build majority stakes in selected mines to benefit from its mineral wealth beyond taxes, President Edgar Lungu said on Thursday, as he set out an economic recovery plan after the country defaulted on a debt payment last month, Reuters reported. Africa’s second-biggest copper producer, Zambia is seeking to increase its control over the mining sector - the country’s main generator of hard currency - as it navigates a debt crisis.
Administrators at struggling South African Airways (SAA) said on Wednesday they have issued a 48-hour notice to prevent nearly 400 pilots from accessing the company’s premises until they agree to new employment terms and conditions, Reuters reported. SAA entered a local form of bankruptcy protection in December of 2019 after roughly a decade of financial losses, and its fortunes worsened after it grounded flights because of the COVID-19 pandemic. Efforts to rescue the state airline face resistance from trade unions, who are at loggerheads with the government over wages.
The world’s policy makers must act urgently if they are to head off a looming solvency crisis that could cripple economies after the pandemic, according to a report led by two top former central bankers, Bloomberg News reported. Mario Draghi, previously president of the European Central Bank, and Raghuram Rajan, the ex-governor of the Reserve Bank of India, headed a Group of 30 study that looked at the response to the crisis.
South Africa’s government and trade unions are at loggerheads over unpaid salaries at South African Airways (SAA), which could lead to a messy court battle that may further complicate efforts to rescue the struggling airline, Reuters reported. State-owned SAA has not made a profit in almost a decade and was already under bankruptcy protection when the COVID-19 pandemic struck, exacerbating its woes. It halted all but repatriation and cargo flights in March before suspending all operations in September. Some employees have not been paid since March.
Jesuits in Africa are calling on the Catholic Church to press for better repayment terms on debt across the region after Zambia defaulted on a $42.5 million Eurobond coupon in November, America Media reported. The default sparked fears of a regional economic crisis and ripple effects on already struggling Zambians because of increased taxation and curtailed spending on social services, even as health needs increase because of the coronavirus.
Fitch Ratings has affirmed Mozambique's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'CCC'. The 'CCC' rating reflects limited financing options combined with high fiscal and external financing needs that have been exacerbated by the coronavirus shock, high general government (GG) debt and ongoing unresolved public-sector debt liabilities, Fitch Ratings reported. Fitch expects real GDP to contract by 1% in 2020, after muted GDP growth in 2019 of 2.2% due to the damage caused by two cyclones.