Africa

South African retailer Truworths International Ltd said on Thursday it will advance funding of 6.5 million pounds ($8.62 million) to its British footwear unit Office as part of a rescue plan, Reuters reported. The group as a whole, which sells clothes, jewellery and homeware, as well as shoes, has been hit by the impact of the COVID-19 pandemic and store closures because of lockdowns. On Thursday, it said its headline earnings per share, South Africa’s most closely-watched profit figure, fell by 28.2% in the year to June 28.

South Africa’s Comair Ltd will require up to 1.2 billion rand ($72 million) of funding and will have to cut a fifth of its workforce to restart operations, administrators in charge of restructuring the private airline said, Reuters reported. The airline, which has been under a form of bankruptcy protection since May, will be able to start operations in December if a business rescue plan presented late Wednesday is approved, they said.

The economic fallout from the Covid-19 crisis is likely to tip several of the world’s poorest countries into debt distress, forcing official creditors and private-sector lenders to accept a reduction or restructuring of loan repayments, the Paris Club group of creditor countries said on Tuesday, the Financial Times reported.

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.

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.