Economy & Business News - 25 March 2024

25 Mar 2024

ECONOMY & BUSINESS

• Rail network access tariffs proposed by Transnet are “too high” and will not help rail operators claw back market share from road-hauled freight, says logistics expert and adviser to the government, Jan Havenga. In a draft statement released for public comment last week, the interim infrastructure manager created within Transnet Freight Rail (TFR) proposed a 19.7c per gross tonne kilometres (GTK) tariff for private operators seeking to access the rail network. Rail experts and economists have slammed the proposed tariff as predatory and outrageous. They have warned that train operating companies will simply pass the cost on to customers, mostly miners, and that this could exacerbate job losses in the already battered sector. (Source)

• Transnet reforms start in April. Transnet Freight Rail’s plans for rail reform, which includes opening its 21 200 km network for private sector participation, will begin in April with a maintenance backlog of R31 billion and debt of R39 billion. The programme, which commences two years after its initial start date, precedes the establishment of separate entities, the Transnet Rail Infrastructure Manager, and the Transnet Freight Rail Operating Company. However, the excessive multiyear tariff structure Transnet proposes has been met with dread from industry experts. (Source)

• Toyota South Africa Motors (TSAM) has added the Hilux double-cab and Fortuner 48 V mild hybrids to its local production line-up at its Durban plant in KwaZulu-Natal. The addition of the new models brings Toyota’s local hybrid production tally to three, adding to the existing Corolla Cross hybrid assembly. TSAM says the launch of the models “introduces electrification to the pick-up and sports-utility vehicle (SUV) range for the first time”. The Hilux is South Africa’s best-selling vehicle, while the Fortuner still commands the largest slice of the medium SUV segment in South Africa, with average sales of more 800 units a month and a market share of 40%. (Source)

• Money to stimulate infrastructure investment. Public Works & Infrastructure Minister Sihle Zikalala says the R600 million provided to Infrastructure SA from the fiscus over the next three years will assist in packaging projects for potential investors. This is the government’s key infrastructure project initiator, which is meant to close the investment gap between what the country requires, and the resources available to the fiscus to fund it. (Source)

• The Common Monetary Area (CMA) regulators decided to discontinue processing electronic EFT payments and collections within the CMA from April 2024. The Payments Association of South Africa is responsible for South Africa’s efforts to meeting this deadline. The CMA consists of South Africa, Namibia, Lesotho and Eswatini. The CMA’s decision means South African account holders will no longer be able to make EFT payments to account holders in other CMA countries. They will also not be allowed to receive EFT payments from other CMA countries unless they are initiated on a global banking channel. This decision is part of regulatory adjustments to enhance the efficiency and security of cross-border financial transactions. (Source)

• The results from the BER’s latest Retail Survey show that the business confidence levels of retailers dipped during the first quarter of 2024 despite an improvement in sales volumes. Non-durable and semi-durable goods retailers registered the largest upticks in volume growth, although profitability remained low. (Source)

• Where are the best places in the world to do business today? The Economist Intelligence Unit (EIU) latest business environment index finds that Singapore, Denmark and the US will be the three geographies with the best business environment over the next five years. Germany, Switzerland, Canada, Sweden, New Zealand, Hong Kong and Finland are the top ten best places in the world to do business. These are all advanced economies and long-standing strong performers in index, so tend to be safe bets for investments. 

• Income. Nedbank data shows incomes are down 3%. Data across Nedbank’s approximately 1.5 million main-banked clients shows that personal incomes were down an average of 3% in 2023 versus 2022 – a sharp turnaround from the 10% jump between 2021 and 2022. This sample includes its customers who received income or transacted during the July to December period. Nedbank highlights that this income data is an average, with “some clients receiving increases above inflation, some clients below inflation as their employers could not afford higher increases and some clients that may have lost or seen a reduction in their income”. (Source)

• The monthly BankservAfrica Take-home Pay Index (BTPI) saw another month of growth in February, it was down in real terms from a year ago. Amidst the improved operating environment, companies increased their employees’ average salaries over the last three months. “The average nominal take-home pay reached R16,085, which was 4.6% growth on a year-ago and also 2.5% up on January’s R15,692,” said Shergeran Naidoo, BankservAfrica’s Head of Stakeholder Engagements. 

• Headline CPI inflation for February came in slightly higher than expected at 5.6% from 5.3% in January as medical health insurance costs surged. (Source)

• Retail trade sales, measured in real terms (constant 2019 prices), decreased by 2,1% year-on-year in January 2024. The largest negative contributors to this decrease were: retailers in textiles, clothing, footwear and leather goods; retailers in pharmaceuticals and medical goods, cosmetics and toiletries. (Source)

• Could (more) manufacture of affordable vehicles help lift the country’s automotive sector? Affordability was a key factor driving consumer behaviour in South Africa, and it affected the auto industry as much as any other, Paul-Roux de Kock, Chief Analytics Officer at Lightstone, provider of comprehensive data, analytics and systems on property, automotive and business assets, told a recent Automechanika Johannesburg CEO event. De Kock was one of three speakers to flesh out opportunities and challenges facing South Africa’s automotive sector. De Kock highlighted insights from South Africa’s retail landscape which underscored the country’s “affordability” focus. He said that South Africa’s new vehicles sales performance mirrored Australia’s recovery following the Covid lockdown, until 2022, when South Africa fell behind. South Africa’s performance has been better than USA’s bit not as strong as China’s, felling behind Australia. (Source)