South African state companies have asked for billions of rand in government funding to help them through the coronavirus crisis, a finance ministry presentation to parliament on Tuesday showed, Reuters reported. Loss-making state firms have been a long-term drain on Africa’s most industrialised economy, requiring bailouts that have strained public finances at a time of weak economic growth, helping to tip its sovereign credit to a “junk” rating.
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Low-income countries face long-term scarring that could undo gains in cutting poverty achieved over the past seven to 10 years because of damage from the Covid-19 pandemic, the International Monetary Fund said, Bloomberg News reported. “Absent a sustained international effort to support them, permanent scars are likely to harm development prospects, exacerbate inequality, and threaten to wipe out a decade of progress reducing poverty,” Daniel Gurara, Stefania Fabrizio, and Johannes Wiegand, economists at the Washington-based institution, wrote in a blog Thursday.
South African state defence firm Denel is not planning to seek new government equity injections despite a liquidity crunch aggravated by the coronavirus crisis, its interim chief executive told Reuters on Thursday, Reuters reported. Denel, which makes military equipment for South Africa’s armed forces and clients around the world, is one of several troubled state-owned companies in the country that have been kept afloat by government bailouts in recent years. It has struggled to pay salaries this year amid export restrictions and declining revenue.
Africa looks particularly vulnerable as the coronavirus crisis continues to batter the global economy, the Financial Times reported in a commentary. The IMF forecasts sub-Saharan economies will shrink by 3.2 per cent this year — the continent’s first contraction in three decades — and that government budget deficits will reach 7.6 per cent of gross domestic product, also a record. At the same time, the debt service burden of many African sovereigns has been surging. Scarce resources are diverted to interest and principal payments.
Standard Chartered is suing South Africa’s Land Bank to recover debts, Land Bank said on Tuesday, after the state-owned agricultural lender defaulted on repayments for debt worth 50 billion rand (2.26 billion pounds) in April, Reuters reported. South Africa’s Treasury said in June it would inject 3 billion rand into The Land and Agricultural Bank of South Africa, the country’s largest agricultural focused-lender, which had been in talks with creditors on a restructuring plan following the default.
The Zambian president has come under fire for the abrupt sacking of the central bank governor in the midst of a debt crisis in the southern African nation whose resolution hinges on bailout talks with the IMF, the Financial Times reported. Denny Kalyalya was fired with immediate effect by Edgar Lungu on Saturday without an official reason being given, at a critical juncture for Africa’s second-biggest copper producer which is struggling to repay more than $11bn of government debts. He was replaced with Christopher Mvunga, a former deputy finance minister and banker.
South African mobile operator Cell C said on Friday it expects to close around 128 stores across the country, more than half of its retail footprint, with 546 jobs on the line as it seeks to cut costs and restructure its operations, Reuters reported. The job cuts will be in addition to Cell C’s plans to lay off 960 workers, announced in June. “The retail environment has changed and this has been fast-tracked by the impact of COVID-19 and the evolving purchasing habits of consumers,” Cell C, which is not listed and is 45% owned by Blue Label Telecoms, said in a statement.
South Africa’s government has started talks with private entities interested in buying into the country’s insolvent national carrier, which needs at least 10 billion rand ($583 million) to resume operations, Bloomberg News reported. A team from the Department of Public Enterprises and advisers from FirstRand Ltd.’s Rand Merchant Bank began negotiations after receiving as many as four promising proposals regarding South African Airways, according to Kgathatso Tlhakudi, the DPE’s director general.
South Africa’s state defence firm Denel made a 1.7 billion rand ($99 million) loss in the 2019/20 financial year, the ministry that oversees the company said on Wednesday, Reuters reported. Denel, which makes equipment from armoured vehicles to missiles for the South African armed forces and clients around the world, is suffering a liquidity crisis aggravated by the COVID-19 pandemic. It has struggled to pay salaries and has yet to publish its results for the financial year ended in March.
Kenya’s second-biggest bank said loans issued via mobile phones almost halved in the first six months of the year, indicating that the fallout from the coronavirus pandemic is hitting lower-income earners hardest, Bloomberg News reported. Monthly disbursements by KCB Group Plc averaged 4 billion shillings ($36.9 million) to 5 billion shillings, down from 7 billion shillings to 8 billion shillings before the outbreak, and defaults have more than tripled, according to Chief Executive Officer Joshua Oigara. Many of the bank’s mobile loan customers are from the informal sector.