South Africa

South Africa needs to urgently fix energy, transport and security challenges if it is to reverse souring investor sentiment, executives said on Thursday as President Cyril Ramaphosa targets 2 trillion rand ($111 billion) in new investments over the next five years, Reuters reported. Executives were speaking at the South African Investment Conference in Johannesburg, launched by Ramaphosa in 2018 as a way to boost economic activity that had been in decline for over a decade in Africa's most advanced but struggling economy.

South Africa’s economy probably entered a technical recession with a second straight quarterly contraction, according to an index that tracks interbank payments, Bloomberg News reported. The BankservAfrica Economic Transactions Index, an early indicator of economic activity, dropped 1.7% in the first quarter compared with the prior three months. A median estimate in a Bloomberg survey of analysts is for a quarterly gross domestic product expansion of 0.2%.

South Africa and Nigeria have been placed on a global financial watchdog’s so-called gray list denoting nations with shortcomings in tackling illicit financial flows, a move that scars their international reputations and may raise costs for banks and asset managers, Bloomberg News reported. The decisions were announced by the Financial Action Task Force on Friday. While South Africa’s inclusion on the list was widely flagged as a risk, the possible addition of Nigeria attracted little attention. Morocco and Cambodia were taken off the list after improving their controls.

South Africa is offering a total of 13 billion rand ($710 million) in tax incentives to businesses and individuals to encourage investment in renewable energy projects and offset the impact of higher fuel and food prices, Bloomberg News reported. Africa’s most industrialized economy is experiencing its worst bout of power rationing yet, with outages occurring for more than 200 days in 2022 and every day this year, because the state power utility can’t meet demand from its old and poorly maintained plants.

A shuttered South African airline sued Boeing Co. for fraud over its agreement to buy eight 737 MAX planes and seeks damages of at least $83 million, Reuters reported. Boeing "placed profits over safety and led with a plan of deception," Comair's suit filed Monday in U.S. District Court in Seattle said. Boeing declined to comment. Comair said that Boeing committed fraud over its failure to disclose problems with a key flight control system tied to two fatal 737 MAX crashes in 2018 and 2019 in Indonesia and Ethiopia that killed 346 people and led to the MAX's 20-month grounding.

South African President Cyril Ramaphosa played down suggestions that an amendment to the central bank’s mandate is imminent, while confirming that a possible change remains under discussion, Bloomberg News reported. Any change to the mandate of the South African Reserve Bank, which focuses on curbing inflation, will take time, Ramaphosa, told reporters in Johannesburg on Monday. Last week Gwede Mantashe, the chairman of the ruling African National Congress, said the party had agreed at its national conference to change the mandate, prompting a decline in the value of the rand.

South Africa's unreliable power supply and its high level of government debt are two of the main risks to its financial stability, the country's central bank said on Tuesday, Reuters reported. Africa's most developed economy has seen 170 days of rolling blackouts this year due to a maintenance backlog of state utility Eskom's ageing coal-fired power plants. This has not only hit corporate productivity but also hurt investor sentiment, the South African Reserve Bank (SARB) said in its biannual health check of the financial system.

S&P Global Ratings expects South Africa’s government to fulfill its commitments to investors in Eskom Holdings SOC Ltd. as it finalizes a plan to tackle the state-owned utility’s massive debt burden, Bloomberg News reported. Finance Minister Enoch Godongwana said last month the government may shift between one-third and two-thirds of the power company’s debt of about 400 billion rand ($23.2 billion) onto its own balance sheet and attach strict conditions to the relief. Details, including the quantum and terms, of the transfer are expected to be announced in February’s budget.

Tongaat Hulett Ltd., the 130-year-old South African sugar maker, is being placed in administration after failing to recover from an accounting scandal that exposed a mountain of debt, Bloomberg News reported. The decision was taken after creditors rejected a restructuring plan that would have given the company leeway on some of its outstanding loans and access to 1.5 billion rand ($84 million) needed to keep operations going. Tongaat had repaid about half of the 12 billion rand of debt that emanated from the scandal that erupted in 2019.