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Facing mounting debt and blackouts, SA to deliver budget

Net debt currently stands at around 2.28 trillion rand, or 48.6% of GDP, according to the treasury.

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South African Minister of Finance Tito Mboweni delivering his Medium-Term Budget Speech on October 24, 2018 - AFP

South Africa’s Finance Minister Tito Mboweni faces a balancing act ahead of his maiden budget Wednesday to reassure investors over the country’s troubled public electricity company without alienating union allies ahead of national elections.

He is under pressure to bail out the state power utility Eskom — along with its $30 billion mountain of debt — which is at the centre of the country’s mounting economic troubles.

Mboweni will deliver his maiden budget to parliament in Cape Town at 1200 GMT.

Analysts warn of tensions that may emerge should the restructuring lead to job losses.

President Cyril Ramaphosa announced this month that the utility would be divided into three, but unions have rejected that, saying it would lead to job cuts.

Over the past few weeks the utility has implemented a nationwide programme of rolling blackouts as it failed to meet demand. 

The scale of the power outages, unseen in more than a decade, has rocked the continent’s most industrialised nation, plunging businesses, homes and traffic lights into darkness.

But the ruling African National Congress (ANC) has been warned by its coalition partner, the COSATU trade union federation, that sackings could damage their alliance ahead of national elections due on May 8.

“We remain totally opposed to any restructuring plan that will benefit the capitalist class and increase prices for the working class,” said spokesman Sizwe Pamla.

Ramaphosa indicated last week that details of the government’s rescue plan, which will be designed to stave off another damaging credit rating downgrade, would be revealed in Wednesday’s budget.

Fears are mounting that if Eskom defaults on its massive debts, lenders would be entitled to call back other loans to different parts of the state including the troubled national carrier South African Airways.

Fraud, corruption and incompetence have gripped public sector businesses and compromised their credibility while mounting debts have spooked investors.

High unemployment and debt

“It has become clear that Eskom’s coal-heavy system is now a dangerous impediment to sustainable growth in South Africa,” said Jesse Burton, a researcher at the University of Cape Town’s Energy Research Centre.

Mzukisi Qobo, an associate professor at Wits Business School, said Mboweni would likely announce steps “towards eliminating wastage in government and offer a clue on whether government intends to increase taxes”.

Several taxes including VAT as well as levies on fuel and alcohol were hiked last year in an effort to raise 36 billion rand ($2.5 billion) to plug gaps in receipts at the tax collector.

Mboweni, who replaced former finance minister Nhlanhla Nene when he was forced to resign over meetings with the scandal-tainted Gupta brothers, took office in October.

His speech is also expected to address the country’s stubborn 27 percent unemployment rate as well as the overall sluggish economy which only returned to growth in December following a recession.

Net debt currently stands at around 2.28 trillion rand ($160 billion), or 48.6 percent of GDP, according to the treasury.

Michael Sachs, an economist at Wits University, said the government was being forced to borrow more to service its debts, creating a dangerous cycle.

He called for “an executive with clear and effective policies, that makes trade-offs, confronts those trade-offs and mobilises society behind those solutions”.

“Whether we will get there after the election, I am not sure,” he added.

Ramaphosa will be hoping Mboweni’s speech treads a fine enough line to help him win a sixth term for the ANC, in power since the dawn of democracy in the country in 1994.

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Mali’s new mining rules end tax exemptions

The regulatory change seeks to bring a “substantial increase” in the contribution of the mining sector

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New Mali mining law removes tax exemption

Mining companies operating in Mali will no longer be exempt from value-added tax during production and will only be protected from fiscal changes for a shorter period.

The regulatory change seeks to redress the “shortcomings” of a 2012 law by bringing a “substantial increase” in the contribution of the mining sector to the economy, the Mines Ministry said in a statement.

However, some industry watchers view the code change as a new instance of so-called “resource nationalism” and will likely spark tensions between the Malian government and mining companies.

Mali is currently Africa’s third-largest gold producer.

The regulation shortens the “stability period” during which mining companies’ existing investments are protected from changes to fiscal and customs regimes.

Changes to regulatory stability clauses have been strongly opposed by international mining companies elsewhere in Africa, most notably in the Democratic Republic of Congo where miners spent months at loggerheads with the government.

Under Mali’s previous law, stability was ensured for 30 years. It was however not made clear what the length of the new stability period would be, but the Economy Ministry said last year that the government aimed to reduce those protections to the lifespan of a mine.

“It’s the reality of the playing field at the moment, a lot of companies in Mali will have looked at what happened in DRC and Tanzania and they will have to be very cautious,” said Warren Beech, partner and head of mining at Eversheds Sutherland in Johannesburg.

Mali’s government had been negotiating with a working group of mining companies to draft a new code but said last year that it would move to implement a new law unilaterally if no compromise was reached.

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Forbes lists South Africa’s Trevor Noah as world’s 4th-richest comedian

Noah, whose ranking makes him the richest comedian in Africa, earned a whopping $28m in the period between June 2018 and June 2019

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Forbes lists South Africa's Trevor Noah as world's 4th-richest comedian
U.S-based South African comedian, Trevor Noah. (Comedy Central/AFP)

South African comedian, Trevor Noah is the fourth-highest paid comedian in the world, according to the Forbes Rich List 2019.

This is the first time the 35-year-old star has made it into the magazine’s top 10 since he began his work.

Noah, whose ranking makes him the richest comedian in Africa, earned a whopping $28m in the period between June 2018 and June 2019 from various projects, including his day job as the TV host of Comedy Central’s “The Daily Show”.

Most of his income, however, came from his 70-stop world tour as a stand-up comedian, making him eligible for the list of richest stand-ups.

In the 2019 list, the South African came behind Kevin Hart ($59m), Jerry Seinfeld ($41), Jim Gaffigan ($30m).

Other than his tour, sources of Noah’s 2018 income were his two shows on Netflix, and book sales from his bestselling autobiography “Born A Crime”, which is still ranked No. 1 on the New York Times’ bestseller list for paperback nonfiction.

Forbes lists South Africa's Trevor Noah as world's 4th-richest comedian
Frederick M. Brown/Getty Images/AFP

As a group, the top 10 best-paid comedians raked in $272m, that’s $20m less than the previous period.

The reduction in earnings among the top comedians has been attributed to reduced action among some, including Chris Rock and Dave Chappelle, who came in at $30m and $35m last year, respectively.

Trevor Noah’s ‘The Daily Show’ has become quite popular, with the South African inspiring laughter from topics ranging from politics to daily life events.

Noah joined the show in 2014 as a contributor, some two years after making his U.S. television debut on “The Tonight Show With Jay Leno.”

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Zimbabwe to issue new currency notes to counter cash shortage

Zimbabwe abandoned the Zimbabwe dollar in 2009, after a bout of hyperinflation in favour of currencies like the dollar and rand

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Zimbabwe to issue new currency notes to counter cash shortage

Zimbabwe will issue new notes and coins soon to replace the country’s quasi-currency that was introduced three years ago in a failed attempt to counter a crippling shortage of cash.

The return to a fully-fledged local currency exchangeable outside the country’s borders will be backed by an undisclosed amount of foreign-exchange reserves, gold and loans, according to the country’s finance minister, Mthuli Ncube.

Zimbabwe abandoned the Zimbabwe dollar in 2009, after a bout of hyperinflation in favour of a basket of currencies including the US dollar and the South African rand.

In a bid to deal with the subsequent cash shortages, it introduced so-called bond notes and RTGS dollars in their electronic form, which are not accepted outside the country.

Ncube re-introduced the Zimbabwe dollar in June, accompanied by a ban on the use of foreign currencies-leading to a rapid erosion of spending power with the local dollar trading at almost 10 to the greenback.

Bond notes were officially said to be at parity as recently as February.

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