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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

South African gross domestic product is projected
to grow less than one per cent 2019: IMF forecast

JOHANNESBURG South Africa (Xinhua) -- South Africa’s gross domestic product (GDP) is projected to grow 0.7 percent in 2019, said International Monetary Fund (IMF) in its economic outlook report released on Tuesday.

South Africa’s growth rate in 2018 was 0.8 percent.

IMF said it would continue registering a sluggish growth this year due to energy constraints and labor issues.

In 2020, the country’s growth rate is expected to be 1.1 percent.

"Growth in South Africa is expected to be more a subdued pace in 2019 than projected in April following a very weak first quarter, reflecting a larger than anticipated impact of strike activity and energy supply issues in mining and weak agricultural production," the report stated.

In the first quarter of 2019, South Africa’s GDP declined 3.2 percent.

Power outages which impacted the country early this year and recession in mining and construction sectors were blamed for the GDP contraction in the first quarter.

Last week, the Reserve Bank said it was expecting an improved growth in the second quarter of the year.

The bank initially projected the growth to be more than 1.5 percent, but later revised downward.

In Sub-Saharan Africa, growth is forecasted to be 3.4 percent this year and 3.6 percent next year.

Nigeria’s growth is set to grow 2.3 percent this year and 2.6 next year.

"Higher, albeit volatile prices have supported the outlook for Angola, Nigeria and other oil exporting countries in the region," the report said.
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EARLIER REPORTS:

South African finance minister presents bill to bail out debt-ridden electricity utility

CAPE TOWN South Africa (Xinhua) -- Finance Minister Tito Mboweni on Tuesday presented to Parliament a special appropriation bill which seeks additional financial support to bail out debt-ridden electricity utility Eskom.

The government is urgently working on stabilizing the utility, while developing a broad strategy for its future to prevent it from a systemic failure, Mbowenti told MPs.

The bill requests approval of additional 26 billion rand (about 1.87 billion U.S. dollars) in 2019/20 financial year and 33 billion rand (about 2.4 billion dollars) in the 2020/21 financial year for the state-run parastatal, according to Mboweni.

Earlier, the government committed 23 billion rand (about 1.7 billion dollars) to be allocated to Eskom over the next 3 years in the current fiscal framework.

Staggering under a heavy debt of 450 billion rand (about 32 billion dollars), Eskom, which provides more than 95 percent of the electricity consumed in South Africa, has been unable to provide sufficient electricity for the past decade, particularly for the past recent years when constant load shedding is implemented across the country.

The utility, crippled by poor management and alleged corruption, presents the biggest risk to the fiscal framework because of its financial problems and negative impact on the economy, Mboweni said.

Eskom is not financially sustainable based on its current high levels of debt and its inability to generate sufficient revenue to meet its operational and capital obligations, which exposes the entity to high levels of liquidity and balance sheet risks, said Mboweni.

Therefore, without major changes to Eskom’s business model and financial assistance being provided by the government, the company will be unable to meet its financial obligations through the 2019/2020 financial year, he said.

Mboweni said the fiscal support he was announcing on Tuesday "will come at a significant cost to the fiscus and to South African tax-payers."

This could substantially increase the government borrowing requirement for 2019/20, which will require the government to revise its funding strategy and current weekly bond issuance levels before the Medium Term Budget Policy Statement in October, said the minister.

The future sustainability of Eskom will have to address the debt and the restructuring of Eskom, he said.

The government remains committed to supporting and strengthening Eskom in order to ensure that the entity achieves business and financial sustainability and maintains adequate liquidity levels to continue operating as a going concern and ensure the security of electricity supply, the minister said.

The opposition Democratic Alliance (DA) lambasted the"bail out bill" which it said includes deep cuts to basic services for the poor.

"Nearly every basic service on which the poor rely will be cut to fund this bailout budget," the party said.
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South African President Cyril Ramaphosa commends
current socio-economic progress, despite challenges

JOHANNESBURG South Africa (Xinhua) -- South Africa’s President Cyril Ramaphosa on Tuesday said the country has made progress in addressing socio-economic challenges in the last 25 years while in other areas a lot still needed to be done.

Ramaphosa said this on Tuesday in Johannesburg while speaking at the two-day 25 Years of Democracy Conference.

The conference was held by government, academia and civil society to conclude the gains the country has made after independence, identify challenges and the way forward.

He pointed out that when the country became independent in 1994, it had a substantial fiscal deficit, huge Apartheid debt bill and stagnant growth.

"The substantial investment we have made in economic and social infrastructure, in providing houses, water and electricity, in expanding access to education and health care has undoubtedly improved people’s lives," said Ramaphosa.

He noted that there have been improvement in education qualifications of citizens, increase in middle class, reduction in poverty and improved access to basic services.

Ramaphosa stated that the government’s immediate task is to grow the economy and reduce poverty and address some of the challenges like corruption.

"Growing an inclusive economy is by far our greatest focus.

"This progress has been undermined, particularly since the global financial crisis, by stagnant growth, declining investment, maladministration and corruption, among others," the president said, the structure of the economy has to change to have inclusive growth.

Ramaphosa said there has been a common national identity and called on all stakeholders to join hands for the country’s progress.

"We all have a stake in the stability of our country.

"Elected representatives should be held to account ... and the national interest demands we each do our part ... in forging our nation building efforts further," he said.

Mills Soko, Director of Cape Town University Graduate School of Business, said the government have to take painful decisions and trade off and also take a leaf from China—"with China what was important was unity in government and execution."
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South Africa identifies priority areas to spur economic growth

JOHANNESBURG South Africa (Xinhua) -- South Africa will in the next five years prioritize improving the industrial competitiveness and performance, expanding markets for the country’s products and increasing levels of investment, said a senior government official on Monday.

Trade and Industry Minister Ebrahim Patel said this in Johannesburg while addressing the business community at an interactive sessions.

He said the government is also focusing on promoting greater levels of economic inclusion, initiating equitable spatial and industrial development and increasing the capabilities of the state.

"The country’s growth levels are well below what is needed to achieve our development goals.

"These conditions call for coordination between government and business to lift the rate and inclusivity of growth," he said.

"We will use the talents of all South Africans, including the expertise in the private sector to strengthen the implementation capability of the state," said the minister.

He pointed out that the country is facing challenges in sectors like construction and manufacturing, particularly in steel.

"We need to work together in ensuring that this economy grows at the kind of level that does not only generate taxes that government needs, but also the jobs that are absolutely critical and ensure that more South Africans are included," he added.

Patel said the African Continental Free Trade Agreement (AfCFTA) is a "game changer" that will transform the South African industries.

"The AfCFTA, which comes into effect in July next year with tariff-free trade in 90 percent of goods, represents an enormous opportunity for industrial expansion but it also carries big risks too. It depends on what we do now as a country to ensure industrial readiness for the free trade area," he said.
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Zambia says South Africa court ruling on KCM not enforceable

LUSAKA Zambia (Xinhua) -- The Zambian government said on Tuesday that a ruling by a South Africa court granting India’s Vedanta Resources an urgent interdict halting of the liquidation of its Konkola Copper Mines (KCM) unit in Zambia cannot be enforced because the ruling has no bearing in the southern African nation.

On Tuesday, a South African court ruled that wind-up proceeding must be immediately withdrawn until a final decision is made following arbitration.

But Richard Musukwa, Zambia’s Minister of Mines and Minerals Development said the court ruling in South Aria has no jurisdiction or enforceable mechanism in Zambia until it was registered in the Zambian courts.

"To that effect, I want to state that foreign judgments are not enforceable in Zambia until a rigorous process is undertaken when it is registered.

"To that effect it has no effects to processes that are ongoing in Zambia.

"The liquidator is still in charge of the liquidation process," he told reporters during a press briefing.

He however said the government has asked its attorneys in South Africa to appeal the judgment as it respects the jurisdiction of the courts and urged people to remain calm.

The Indian mining firm has been locked in a dispute with the Zambian government since May 2019 when the government appointed a liquidator to run KCM after accusing the firm of breaching the terms of its license.
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FURTHER READING:

South Africa has a sovereign debt problem: Its name is Eskom

             

 

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