November 01, 2024
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Africa-news (598)

Lamborghini has already sold all its cars until 2024
Africa-news

Lamborghini has already sold all its cars until 2024

August 25, 2022
0

Italian sports car maker Lamborghini has already pre-sold the entire production run to early 2024, its boss said, with luxury goods seemingly unaffected by global economic uncertainty.

South Africa’s inflation rate hits 7.8%, highest in 13 years 
Africa-news

South Africa’s inflation rate hits 7.8%, highest in 13 years 

August 24, 2022
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South Africa’s annual consumer inflation reached its highest level in 13 years, increasing to 7.8% in July from 7.4% in June, which is the third consecutive month as underlying price pressure increased.

This is according to a statement posted on Statistics South Africa’s website today.

South Africa is currently experiencing the fastest inflation under Lesetja Kganyago’s time as governor of the central bank, and it is still at a level last seen during the global financial crisis.

The consumer price index (CPI) jumped by 1.5% between June and July this year. Based on Statistics SA, this was only the fourth time since 2008 that the monthly increase was 1.5% or higher.

  • Food inflation increased by 9.7% year on year in July, up from 8.6% in June. Prices for bread and cereals were 13.7% higher than a year ago.
  • Large monthly price increases were observed in a variety of products between June and July, including maize meal (4.2%), cake flour (6.3%), macaroni (5.0%), and white bread (2.8%).
  • However, rice prices fell by more than 3%, while Oils and fats saw the biggest price hikes – up 36% in July from a year ago.
  • Fuel prices increased by more than 10% in July. This had a particularly negative impact on transportation prices, with taxi charges rising by 9% in a single month. Taxis were 16% more expensive than a year ago. Petrol is now 56% more expensive than a year ago.
  • Electricity bills climbed by 7.5% on average, which is lower than the 13.8% increase seen last year but higher than the 6.3% increase expected in 2020.
  • However, service inflation (+4.2%) and durable goods prices (+4.8%) were substantially lower than non-durable goods inflation (14.4%), which is mostly driven by food.
  • Core inflation, which excludes food, nonalcoholic beverages, fuel, and electricity, increased to 4.6%, exceeding the central bank’s target range of 3% to 6% for the first time in more than four years.-wires
UK-backed Africa infrastructure fund plans to raise US$500m
Africa-news

UK-backed Africa infrastructure fund plans to raise US$500m

August 24, 2022
0

Emerging Africa Infrastructure Fund plans to raise as much as US$500 million over the next three years to invest in infrastructure projects on the continent.

Congo bans Orange, Airtel, Vodacom executive travel in tax row
Africa-news

Congo bans Orange, Airtel, Vodacom executive travel in tax row

August 23, 2022
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The Democratic Republic of Congo has banned some telecommunications executives from leaving the country after they resisted paying a new tax on the industry, according to people familiar with the matter.

China forgives debt for 17 African nations
Africa-news

China forgives debt for 17 African nations

August 23, 2022
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China will forgive 23 loans for 17 African nations, China’s foreign minister Wang Yi has announced.

Gas crisis sends euro back below parity against dollar
Africa-news

Gas crisis sends euro back below parity against dollar

August 22, 2022
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The euro briefly fell back below parity against a robust dollar on Monday and was languishing at five-week lows, weighed down by concern that a three-day halt to European gas supplies later this month will exacerbate an energy crisis.

Angola to start talks on trade deal with EU in bid to diversify from oil
Africa-news

Angola to start talks on trade deal with EU in bid to diversify from oil

August 22, 2022
0

Angola and the European Union are set to start talks for a trade deal this year after EU and African partners approved a request from the oil-producing nation to join a regional trade bloc, according to an EU document and an official.

The green light to start negotiations came in late July, an EU document shows, shortly before the southern African country holds general elections next week.

"We are now in a position to open formal negotiations, but there is not yet a date agreed with Angola. We expect this to happen in the last quarter of this year," an EU spokesperson told Reuters.

The Angolan government had no immediate comment.

The possible deal would likely increase the export of Angolan products to the EU, and possibly reduce the dominance of oil which currently accounts for nearly all exports by value.

Angolan products such as frozen shrimps, ethyl alcohol, wheat bran and bananas are likely to benefit the most thanks to the expected lift of tariffs, according to EU estimates.

With the boost in trade expected from the deal and EU's increased need of fuel amid the energy crisis caused by the war in Ukraine, Angola might also export more oil to the 27-nation bloc. Currently China is by far its largest customer, despite oil now faces no import duty in the EU.

Most of Angolan exports to the EU already benefit of preferential treatment because the country had been classed as a least developed nation.

But thanks to its recent oil-fuelled economic growth, it is set to lose that status in 2027. That means it would face tariffs on several products unless it joins the regional trade agreement the EU signed with six southern African nations in 2016.

Under the deal, EU products will also access the Angolan market with lower duties - an advantage for local consumers but a risk to domestic industries if they do not invest to remain competitive.

Under the regional trade deal, the EU entirely removed tariffs and quotas on any imports from Botswana, Lesotho, Mozambique, Namibia, and Eswatini, and almost entirely lifted duties on South African exports, which remain however subject to quotas.

In exchange, the southern African countries removed duties on up to 86% of EU exports.-fin24

Proposed changes to finance laws could cause massive headaches for businesses in South Africa
Africa-news

Proposed changes to finance laws could cause massive headaches for businesses in South Africa

August 17, 2022
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Proposed changes to South Africa’s finance regulations to stop money laundering and terrorist financing could cause major headaches for businesses in the country – and lead to higher prices for consumers.

Presenting to the standing committee on finance on Tuesday (16 August), the Financial Intelligence Centre (FIC) proposed that the Financial Intelligence Centre Act (FICA) be amended, broadening the scope of ‘accountable institutions’ under its purview.

This change would force both small and large companies to comply with FICA regulations, adding an administrative burden and costs to business operations.

By doing this, the FIC aims to identify the proceeds of crime, combat money laundering and terror financing as well as supervise and enforce compliance with FICA.

The proposed amendments argue for the following types of entities to be included as ‘accountable institutions’:

  • Certain legal practitioners;
  • Credit providers;
  • Boards of executors or a trust company;
  • Estate agents;
  • Long-term life insurance businesses
  • Dealers in motor vehicles;
  • Dealer in goods over R100,000;
  • Dealers in crypto assets;
  • Dealers in Krugerrands, and;
  • Gambling institutions.

Bad for business

Critics of the proposed changes argued that the amendments to FICA are too broad in their definitions and would include activities that pose no risk of money laundering or terrorist funding.

The inclusion of an entity into the scope of the Act entails that extra compliance measures be taken to ensure that financial crime does not occur – this, however, comes at the cost of a company.

During the committee meeting, industry figureheads representing the insurance industry, the retail sector, the mining sector as well as financial service companies raised concerns over the scope of the amendments.

Keigan Hart, a spokesperson for Outsurance, said that the draft amendments could affect how business in the insurance sector is conducted with the extra costs of compliance ultimately falling on the consumer.

Hart said that the services Outsurance offers are low-risk products that should not be subjected to the same compliance provisions as seen with banking products. He added that the increased compliance costs, especially where the services of third-party vendors are concerned, are not proportionate to the risk.

“Increased compliance costs result in the increase in product costs which is ultimately passed onto the consumer,” said Hart.

The South African Institute of Chartered Accountants (SAICA) said that the accounting industry could face some challenges if the draft amendments are implemented. SAICA said that the amendments lack clarity and do not factor into account the cost of compliance.

SAICA recommended that smaller businesses (SMMEs) be subject to a lesser requirement and that other mechanisms such as transaction value could be used to manage risk when assessing accountants.

The Minerals Council of South Africa also added that the proposed amendments be redefined as they are too wide and must include only cash transactions over R100,000 not ‘payments in any form’.

The proposed amendments were said to be a blunt instrument in a broad kneejerk reaction to the possible ‘greylisting’ and sufficient thought has not been given to the impact such regulations could have on business in the country.

A recent report from the Financial Action Task Force (FATF), an international watchdog, identified significant weaknesses in parts of South Africa’s financial regulation. Such weaknesses have resulted in high cases of money laundering and terrorism funding in the country.

If no significant changes are made to legislation, then the country could be greylisted.

According to Rebecca Thomson, a senior associate at Allen & Overy, this would mean the country would be deemed as high-risk jurisdiction to transact with, and anyone wanting to do business with South Africa will need to take extra steps.

Government has until October to demonstrate that it has a credible plan to address its deficiencies – failing to do so would result in the country being greylisted in February of next year.

Pieter Smit, an executive manager at the FIC, said that the group could not exclude businesses from the scope of the act even if there is a low risk of financial crime. He added that if there is any risk, then the implementation of the act and its provisions will be risk-sensitive.

Here’s how much money top CEOs and executives earn in South Africa right now
Africa-news

Here’s how much money top CEOs and executives earn in South Africa right now

August 16, 2022
0

Professional services company PwC has published its Executive directors: Practices and remuneration trends report for 2022, highlighting how much top management earns at some of the largest companies in the country.

The report analysed executive pay during the period from 1 March 2021 to 28 February 2022, focusing on executive remuneration among companies listed on the Johannesburg Stock Exchange (JSE).

Across the JSE, there were, from Jan 2020 to June 2022, 208 new appointments into executive positions. And in the JSE Top 100, over the same period, there were 77 new appointments into executive positions, PwC pointed out.

Total guaranteed package

The financial services firm provided a snapshot of the average TGP across three quartiles: lower – median – upper – on the JSE.

TGP represents the portion of total remuneration that is paid regardless of company or employee performance. It is a fixed cost made up of basic pay, plus a cash value attributable to benefits.

An examination of TGP fees paid across the JSE shows that the median salary for chief executives was R5.71 million over the period.

By comparison, the median pay for chief financial officers was R3.63 million, and the median pay for executive directors was R3.76 million.

Super caps

Super caps represent the top 10 companies on the JSE. As at the end of February 2022, these companies accounted for 66% of the exchange’s total market capitalisation. The companies that make up the JSE top ten are shown in the table below, while the figures that follow illustrate remuneration averages calculated for them, PwC said.

An examination of fees paid across the JSE’s super caps shows that the average salary for chief executives was R27.74 million.

The average pay for chief financial officers was R17.99 million, and the average pay for executive directors was R15.45 million.

Short-term incentives

STIs are cash payments that are intended to remunerate executive directors – and other employees – for the achievement of annual business and personal goals, aligned with the organisational strategy.

PwC pointed out that Covid-19 had an impact on the quantum of STIs being paid to executive directors (resulting in lower or no STIs being paid). “We have noted a recovery in STIs to pre-pandemic levels. Generally, the recovery in variable incentives payable should be aligned to the recovery in the performance of companies,” it said.

To assess this, PwC said it analysed the performance of the JSE All Share index (and other indexes) over a three-year rolling period. Based on these analyses, it said that the TSR performance of the indexes has improved.

The data shows that the median STIs across the JSE was R3.37 million, with chief executives typically earning around R4.6 million.

As with the pay data, this number rises significantly at large-cap companies, where the median STI increased as much as 151% million for chief executives, to R13.72 million.-bustech

Why the IMF visits and what to watch out for
Africa-news

Why the IMF visits and what to watch out for

August 15, 2022
0

The fund regularly – usually annually – sends a staff team to assess the state of each country’s macro economy.

In most rich countries the news that a mission from the International Monetary Fund (IMF) is coming to visit is met with indifference. But, in most African countries the news can cause great consternation.

Why the difference?

History has a lot to do with it. The citizens of many African countries have suffered through their governments, under IMF pressure, cutting subsidies and social spending, firing public sector workers and increasing taxes. For example, a 2021 Oxfam study, found that the IMF encouraged 33 African countries to adopt austerity policies in the wake of the COVID pandemic.

On the other hand, with a few exceptions, such as Greece, citizens of rich countries have not experienced the IMF having any direct impact on their lives.

Another important reason is lack of knowledge. Usually, when the IMF comes to town, the public gets little information about the purpose of the IMF’s visit – or its likely outcomes. In other cases, people are concerned that they have limited ability to influence the outcome of the visit or its impact on their lives.

This article seeks to remove some of the mystery surrounding IMF visits to a country. It explains the two basic reasons for the IMF sending its staff on “missions” to a country. And what can be expected in each case.

The IMF’s remit

According to its Articles of Agreement, the IMF’s purposes include promoting monetary cooperation among its 190 member states so that they can more sustainably manage their macroeconomic situations and their international financial relations. This should help them promote and maintain high levels of employment and real income and develop their productive resources.

The IMF also provides financing to countries that do not have sufficient foreign exchange to meet all their needs and obligations so they do not have to resort to measures that are destructive of “national or international prosperity”.

To fulfil these responsibilities, the IMF sends its staff on two basic types of missions to member countries.

Surveillance missions

The first are surveillance missions. Article IV says that the IMF should exercise “firm surveillance” over the efforts of its member states to try and direct their economic and financial policies towards the objective of fostering orderly economic growth with reasonable price stability.

Thus, the IMF regularly – usually annually – sends a staff team to assess the state of each country’s macro economy, the risks it faces and its capacity to continue evolving in a sustainable way. This team usually meets with officials in each country’s ministry of finance and central bank. In addition, they can ask to meet other government officials. For example, during COVID, the IMF might have been interested in meeting with health department officials.

The IMF staff will also normally meet with members of parliament and with representatives of business and labour. They may also meet with representatives of civil society.

There are four important points to note about these missions

First, while the IMF provides some guidance to its staff, it does not require them to follow any particular procedures for informing interested parties that it is visiting the country. The result is that it’s difficult for anybody interested in the visit to learn how they might engage with the mission or provide it with information.

Second, in principle, there is no limit on what issues the IMF can focus on during its mission. Consequently, IMF staff can raise any issue and request whatever information they think is relevant to assessing the state of the country’s macroeconomic situation.

Third, the outcome of the mission is a report prepared by the staff that is discussed by the IMF’s Board of Executive Directors. The report is usually made public after the discussion, together with a press release.

The IMF also uses the information in preparing its reports on the global economy.

Fourth, the IMF can make recommendations to the government on actions that it should take to deal with any challenges that have been identified.

These recommendations are purely advisory. In principle, the country is free to ignore them. This may be the case if the country is confident that it will not need IMF financing in the future. This is the reason that the citizens of rich countries do not usually care that an IMF mission is visiting their countries. However, this is a luxury that a country cannot afford if it thinks it may need IMF financial support. Or that its access to international financial markets may be influenced by the IMF’s view. This, of course, is the case for most African countries.

Financing missions

The second type of mission is initiated by requests for IMF financing.

Their purpose is to assess the country’s need for financial support. And to negotiate the terms on which it will be provided.

The IMF provides the financing on an unsecured basis. It tries to ensure that it will be repaid by making the financing subject to policy conditions, known as conditionalities. The premise of these conditionalities is that the country is essentially living beyond its means and must reduce its expenditures to the level of its income, including the funds contributed by the IMF. In short, the IMF is demanding that the country makes sacrifices.

This means, inevitably, that the terms of IMF financing are controversial. First, the scale of the sacrifices necessary to restore a country to macroeconomic health are not easily determined. They depend on perceptions of the causes of the country’s crisis, assumptions about future economic developments and the capacity of the government to implement policy changes and the public to accept and absorb these changes. Reasonable people can, of course, have different views on these issues.

Second, the scope, terms and number of conditionalities the IMF chooses to attach to its financing can be very broad, or quite specific. For example, it can merely state the size of budget cuts that the country must make or the amount of additional revenues it must raise and then leave it up to the country to decide how to meet these conditions. Alternatively, it can specify which budget items should be cut, which taxes should be increased, and which structural reforms must be implemented in order to get IMF financing.

This effectively means that the conditionalities are matters for negotiation between the government and the IMF and that they depend on the balance of bargaining power between them. This means that the IMF is effectively a player in the domestic economic policy making process of countries that need its financing.

However, the IMF is not subject to the same legal requirements regarding participation or transparency as other players in this process.-moneyweb

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