Cape Times 2024-05-13

HIGH interest rates in South Africa could prevail for longer than initially anticipated, with the SA Reserve Bank (SARB) starting its cutting cycle only towards the end of 2025 as it becomes more aggressive on its inflation targeting. This comes as consumers continue to grapple with an elevated cost of living and a heightened interest rate environment, while average take-home pay in real terms tracks lower. The SARB is expected to keep interest rates unchanged at the meeting this month of its Monetary Policy Committee (MPC), as the recently published Monetary Policy Review gave a clear view of the central bank’s inflation and interest rate views. The SARB has raised and left the repurchase rate (repo rate) unchanged at a 14-year high of 8.25% since May 2023, broadly consistent with…

South African banks increased the proportion of short-term lending in their loan portfolios since 2008 with the introduction of the Basel III-mandated net stable funding ratio (NSFR), resulting in decreased long-term lending, particularly in residential mortgages. This is according to a study by the South African Reserve Bank (SARB), released on Friday, which investigated the effect of the NSFR on South African banks’ lending. The NSFR was introduced globally as part of bank liquidity reforms post the 2008 global financial crisis, and it addresses mismatches in the maturity of assets and liabilities, which was identified as a major cause of the crisis. However, there is little understanding of how these reforms have affected emerging market banks, which the study attempted to provide some insight into. The SARB said there were…

TESLA boss Elon Musk said on Friday that the electric vehicle manufacturer would invest over $500 million (R9.2 billion) this year to install new superchargers, just days after a report of massive layoffs in this branch of the company. “Just to reiterate: Tesla will spend well over $500m expanding our Supercharger network to create thousands of NEW chargers this year,” Elon said on X. “That’s just on new sites and expansions, not counting operations costs, which are much higher.” According to tech news outlet The Information, Tesla was moving to disband its supercharger department, laying off most of its 500 workers and its senior director. The revelation raised questions about the future development of Tesla’s network of over 50 000 fast chargers, which can add 320 kilometres of range…

The National Union of Mineworkers (NUM) has called for the resignation of Sibanye-Stillwater CEO Neal Froneman, amid the company’s process of retrenching nearly 4 000 workers from its South African gold mining operations, saying he and his executive have been “arrogant and brutal” in the lay-offs. NUM members on Saturday marched to Sibanye-Stillwater offices in Libanon on the West Rand calling on the company to halt its Section 189 process to retrench 3 900 gold-sector employees. The union gave the group a two-week ultimatum to address the employee demands for a halt in retrenchments. “We demand Sibanye-Stillwater to respect the country’s labour laws. We demand proper health and safety measures for workers underground,” the NUM said in its demands. It is also demanding that the Department of Mineral…

The outlook for house prices is slightly dimmer, FNB said in its Residential Property Barometer, released on Friday. Growth in the FNB House Price Index averaged 0.8% in the first quarter of 2024, unchanged from the fourth quarter of 2023. High borrowing costs and uncertainty were discouraging potential buyers, while unfavourable selling conditions were causing some homeowners to hold back on listing their properties. FNB said it echoed its view of a hesitant house price growth trajectory in the near term. “The elevated living and borrowing costs, as well as heightened political uncertainty – both domestically and internationally – are weighing on transaction activity and, ultimately, property prices. Nevertheless, wide disparities are evident across regions. Generally, larger non-metro regions are seeing stronger house price growth relative to traditional metropolitan cities.…

A number of parties in the Western Cape have trotted out the worn election trope of a “one-stop shop” for investments, aimed at making government application and approval processes easier for small- and medium-sized businesses. This Business Report reporter has covered most of the national elections in one form or another since 1994, and can attest to the fact that all manner of parties, including the ANC, have trotted out promises of the “one-stop shop”. However, while it is an idea viewed favourably by many business commentators, these “one-stop shops” never happen, and political parties soon get back to berating business for not following procedures, or doing things without proper consultation, both with the authorities and communities. Last Friday, senior representatives from most of the political parties contesting the elections…