Wednesday, 29 April 2020

Zimbabweans and other African Nationals based in South Africa face being elbowed out of that country after authorities adopted a nationalistic policy to favour locals on jobs, an official said.

Million of South Africans face losing jobs because of the coronavirus outbreak and last week President Ramaphosa announced a R500 billion package to bail out industry and protect jobs.

South African Finance minister, Tito Mboweni, at the weekend, was quoted as having said his government would only provide financial support to companies that would lean towards a new unwritten employment policy that favours more nationals as compared to foreigners.

Mboweni was quoted as saying: “The proportion of South Africans working in a restaurant must be greater than that of non-South Africans… The new economy after lockdown must prioritise South Africans, but this must not discriminate against non-South Africans either.”

He reportedly added: “We will assist those who show a willingness to hire staff from SA… Every spaza shop must be licensed to operate, must have a bank account and registered for tax and open itself up for health inspections from the Department of Health.”

The statement, analysts noted, could become a catalyst for a new round of xenophobic attacks.

In a statement to the NewsDay, Constance Chemwayi, the spokesperson for the Ministry of Foreign Affairs and International Trade said Mboweni’s statement was a reflection of the new policy thrust that Zimbabwe’s neighbours could take going forward, adding there could be need to utilise communication channels available to the two governments to settle the issue in the event disturbances broke out in South Africa over jobs.

“The South African minister (Mboweni) mooted the policy trajectory that his government might use,” she said.

“The Ministry (of Foreign Affairs in Zimbabwe) would fully respect the policy position that the government of South Africa would adopt. Every country has the sovereign right to take measures they deem necessary.

“Our two countries and governments enjoy excellent relations and we have mechanisms and channels to discuss matters of mutual interest to our two countries,” she added.

Chemwayi said Zimbabwe was ready to ensure its nationals were safe in the event xenophobic attacks recurred.

“However, in the event that xenophobia attacks ensue, the government of Zimbabwe; through our embassy in South Africa will ensure that the interests of Zimbabweans in South Africa are protected,” Chemwayi added.

In an interview from his base in South Africa late yesterday, Bongani Mkhwananzi, the spokesperson for the Zimbabwe Community in South Africa said Mboweni’s statement could “cause a lot of problems.”

“The minister might have spoken too soon and let the cat out of the bag on an issue that is sensitive. We believe this statement might create a lot of problems for our people (Zimbabweans) who are here in South Africa.

“As a matter of fact, the hotel and catering industry here is in the hands of mostly Zimbabweans. This is because they can adapt to very difficult situations which include strict regulations, low pay, and many other issues.

“There are a lot of exploitative mechanisms that are at play here in South Africa and we wonder whether the locals will be able to withstand the situation, according to the minister’s declaration,” Mkhwananzi said.


Credit– News Day

Published in Business

Nigeria’s President Muhammadu Buhari is seeking approval to borrow 850 billion naira ($2.36 billion) from the domestic capital markets to fund the 2020 budget, according to a request read in the upper house of parliament on Tuesday.

Buhari said the debt is needed to replace previously approved external loans, as conditions on international capital markets are “not conducive” to borrowing.

Parliament’s upper house - the Senate - had approved foreign borrowings of $22.7 billion before the coronavirus outbreak forced nations worldwide, including Nigeria, into lockdown. 

The shutdowns have decimated global economic growth and slashed oil consumption by roughly a third.

Nigeria, Africa’s largest crude producer, has already cut nearly $5 billion from its 2020 budget. The revised version uses a benchmark of $30 per barrel oil, though Brent crude was trading at just under $20 on Tuesday. 

Nigeria is also seeking almost $7 billion in emergency loans from multilateral institutions including the International Monetary Fund, the World Bank and the African Development Bank. 

Tuesday is the first day that lawmakers have conducted a full session since late March, when the capital Abuja went into lockdown.



Published in Economy

An industry body that represents 320 member organisations in the solar PV industry has written an open letter to President Cyril Ramaphosa, in which it calls on him to remove limitations to private power generation as a way of supporting efforts to kick start the economy post COVID-19.

The letter, by the Chairperson of the South African Photovoltaic Industry Association Mr Wido Schnabel was sent this morning (Tuesday 28 April 2020). In his letter, Schnabel writes:

“We are living in unprecedented times when our economic systems, our relationship with nature and our resilience as a global community are tested — all at once. We commend you Mr President, on the leadership you have shown and the difficult decisions taken to delay the spread of Covid-19, hopefully giving our healthcare systems enough time to prepare for a peak in infections.

Tough yet necessary restrictions on trading, social gatherings, and travel have dealt a massive blow to our fragile economy. To recover from the economic impact of the pandemic, we agree with you Mr President that we need a “new social compact” to “forge a new economy”. We agree that “we can no longer work in the way we have before” and it’s time to “adjust to a new reality”. We stand with you in your resolve to build an inclusive economy. In order to achieve this goal, we call on your government to relax certain electricity regulations that have made it difficult for businesses in our sector to grow and create jobs.

Our economic recovery depends on the sustainable, affordable and reliable supply of energy. If we are to –– as you say –– “forge a new economy” then we cannot allow a return to the dark days of load shedding. Since the rolling blackouts of 2008, Eskom’s inability to provide a stable supply of power has throttled economic growth and battered the country’s credit rating to junk status, siting energy as the number one contributing factor.

Mr President, let us use this opportunity to fix yesterday’s problems, starting with our electricity supply woes. As an industry, we support both the state-run utility model and the integration of Distributed Generation methodologies, although the latter delivers electricity at a faster rate with no cost to the Government. The Distributed Generation approach provides additional capacity to the grid, promotes broad-based participation in the energy sector, and aligns with the tenets of a just energy transition. In fact, the Distributed Generation space plays a strategic role in balancing the country’s sustainable development needs with employment security.

To assess the potential of the sector to create jobs, we partnered with the Council for Scientific and Industrial Research (CSIR). According to our study, there are approximately 400 SMMEs (and growing) in the Distributed Generation space with the potential to create more than 100 000 jobs over the next 10 years. Unfortunately, the growth of the Distributed Generation market has been stymied by three factors linked to Schedule 2 of the Electricity Regulation Act (ERA). These problematic amendments came into effect in 2017.

There are three main issues:

  • The Integrated Resource Plan (IRP) does not explicitly spell out the allocation for Distributed Generation projects over the next 4 years. Without a clear allocation, the energy regulator does not have a clear mandate to grant licenses to entities wanting to generate electricity outside of the proposed state procurement process.
  • Schedule 2 imposes a 1MW threshold for licensing exemption, which makes the development of projects up to 10MW impractical for small and medium sized businesses.
  • Projects with a generating capacity of just over 1MW must endure the same onerous application process as large-scale projects. Both require a public participation process and hearings on a per project basis.

Under normal circumstances, NERSA can take more than four months to process applications for registration; licensing can take between six months to a year, despite the 120 day period described in the Act. As a consequence, many companies are incentivized to reduce the size of their projects to avoid a lengthy application process.

Although we support the goals of the ERA, the legislation’s generation licensing requirement does little to ensure that connections to the network are safe and orderly. In fact, there are other legal mechanisms in place to regulate the operation of electricity infrastructure. For instance, over and above the distribution code, most municipalities would have established electricity by-laws to protect their local networks. In addition, the Department of Mineral Resources and Energy (DMRE) has a registration system to determine how many megawatts of Distributed Generation are allowed to enter the network.

The limitations imposed by Schedule 2 of the ERA are weighing heavily on our industry at a time when the country is in the midst of a crisis. Nevertheless, we are confident that by working together with the Government, we will be able to power the economy back to life. This is precisely why we are calling for an urgent meeting with your administration to plot a way forward.

Mr President, we urge you to consider the following proposals:

  • Lift the licensing exemption threshold from 1MW to 10MW.
  • Make it a requirement for projects to register with the regulator by submitting an independent certificate of compliance against which the allocation to embedded generation can be measured, and ensure that the database of installed megawatts is public and updated.
  • Ensure there are clear guidelines on how to obtain a generation license for projects above 10MW in size.
  • Ensure that NERSA has the resources and capacity to process applications timeously and efficiently.

Mr President, we need urgent interventions from your government to drive growth in the energy sector. The Solar PV Industry stands with you to fight the COVID-19 pandemic and commits to positively participate in the recovery of the economy. As an industry we’ll continue to engage with you so that we can get our economy moving again.”

Published in Engineering

The curve of the coronavirus pandemic started to bend upwards in Africa only recently – just as the curve in the 10 most-affected countries around the world was flattening.

Policymakers in Africa must now absorb lessons from the experiences of other countries and avoid policy mistakes. Most importantly they need to implement a COVID-19 policy manifesto that is capable of inoculating African economies from the crisis and reignitng economic activities after the pandemic.

Such a manifesto would have to assemble all available levers of policy. This would require public health, fiscal, monetary, financial, labour market, environmental, industrial, regional integration, and social welfare policies.

Read more: The biggest threats to Nigeria managing COVID-19: panic, politics and indecision

Public health policy is the first place to start. The Global Health Security Index shows that only 21 out of 54 African countries are somewhat prepared from a clinical perspective to deal with epidemic threats. The other 33 are completely ill-equipped.

Public spending

“The pandemic is no time for fiscal distancing,” the president of the African Development Bank, Akinwumi Adesina, recently noted. In other words, this is not the time to hold back government expenditure.

Fiscal policy needs to respond from both the expenditure and revenue sides. It can be used to cushion the impact of the shock and minimise economic dislocation – a dual objective of saving lives and livelihoods.

On the expenditure side, there needs to be urgent and generous spending on the health sector. This should happen regardless of how much room is in the budget.

Read more: Lagos' size and slums will make stopping the spread of COVID-19 a tough task

The pandemic offers policymakers an opportunity to build resilient health systems capable of withstanding the pressure from the pandemic and broaden access to health care. This can be achieved by:

  • boosting surveillance and assessment through upgrading laboratory capacity required for testing and detection;

  • efficient clinical management so that first responders do not become patients themselves, and

  • maintaining essential services such as food and agriculture, energy, law enforcement and public works to speed up recovery.

Assistance should also be targeted at the most vulnerable groups.

Vulnerable groups

Women and young people are among the most vulnerable groups to suffer the impact of the crisis. Policymakers should therefore extend direct financial payments to informal sector and insecure women and young workers with families.

In addition, small and medium-sized enterprises should be helped to stay afloat. In Africa, more than 80% of economic activity is in the informal sector. Small and medium-sized enterprises are much more vulnerable to both demand and supply-side shocks from lockdowns. Hence governments need to use specific policies that target formal and informal sector enterprises.

Since a significant number of small enterprises in the informal sector avoid or do not pay taxes, more general policies beyond tax relief, such as deferrals on rent and utility payments, can be used to target this group. This was done in Côte d'Ivoire. Lump-sum subsidies in the form of monthly one-off allowances can also be used to support small enterprises and keep them afloat.

These additional expenditures will likely exceed revenues during the crisis. Governments must therefore have a fiscal recovery plan that would seek a careful balance between fiscal stimulus and fiscal consolidation: that is, tightly cutting back spending after the crisis.

Managing debt

Debt sustainability should continue to be the priority. Without a post-crisis fiscal consolidation plan, sovereign debt defaults – a situation where governments are not able to pay back their debt – might be the next pandemic.

COVID-19 will add to the debt burden of African economies and heightens the likelihood of a widespread and far-reaching sovereign debt crisis, if not properly managed.

Before the pandemic, the projected average gross public debt for the continent for 2020 was as high as 60% of GDP. The African Development Bank estimates that the additional financing needed to deal with the pandemic would range from $110 billion to $154 billion in 2020 alone. This could further push up already high debt levels by another five percentage points to 65% of GDP by the end of 2020.

Read more: The five criteria low income countries must have in place for lockdowns to work

On top of increased expenditure and collapsing tax, non-tax, and foreign exchange earnings, countries are also experiencing disorderly capital flight because of extreme risk aversion by investors. In turn this is fuelling volatile market movements and widening spreads on African sovereign bond yields, making African debt instruments riskier and pricier to investors.

This leaves governments unable to refinance maturing debt.

Although they have already sought debt repayment moratoriums from the World Bank and International Monetary Fund, African policymakers need to actively seek debt repayment moratoriums from private, bilateral and multilateral creditors.

The crisis forcefully supports the case for including state-contingent clauses that stipulate actions to be taken when a catastrophic event occurs in sovereign debt contracts. Crisis-contingent clauses in the debt contracts would have meant automatic debt relief for affected countries without the need to actively seek debt rescheduling by creditors. This model is already working well for Haiti whenever an earthquake occurs.

Read more: Lockdown will hit Nigeria's smallscale entrepreneurs hard. What can be done

Financial lifelines

Institutions such as the IMF, World Bank and African Development Bank have announced financial packages tailored to the COVID-19 pandemic. These facilities provide a lifeline to implement the COVID-19 policy manifesto and inoculate African economies from the devastating effects of the pandemic.

Policymakers should act quickly to save African lives and livelihoods.

The Conversation

Chuku Chuku, OIC-Manager for Macroeconomic Policy, Debt Sustainability and Forecasting at the African Development Bank and Lecturer (on leave of public service) at the Department of Economics, The University of Uyo

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Economy
  1. Opinions and Analysis


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