Business
Strikes in South Africa Impede Business
CAPE TOWN — Reeling from worker strikes and falling commodity prices, South Africa is facing fresh challenges in drawing investors to its resource-rich economy.
Africa’s biggest economy is a trove of precious metals and coal, and is believed to have the world’s largest reserves of platinum. But some companies say they are reassessing business in the country, as labor strikes upend production and hurt exports.
On Tuesday, police fired rubber bullets and stun grenades to disperse a crowd of striking mine workers outside an Anglo American Platinum Ltd. AMS.JO -3.69% mine in Rustenburg, northwest of Johannesburg. Police said the striking workers were preventing those not on strike from going to work and that they started to throw stones at police, before the crowd was dispersed. Two men were arrested.
The work stoppage at the world’s three largest platinum companies has cost $18 million in lost revenue a day, according to the companies. It is also the biggest strike in the platinum sector since 2012, when police killed 34 protesters during an illegal work stoppage at Lonmin LMI.LN 0.00% PLC’s Marikana mine.
On Tuesday, the World Bank lowered its South African growth forecast to 2.7% this year, pointing to the country’s sluggish mineral export growth and commodity prices that peaked a few years ago.
The troubles are hardening battle lines between the South African government and big business.
The South African government wants companies and workers to settle their differences at the bargaining table, and appears wary of jeopardizing political support from labor groups. Many companies are looking for ways to lighten their labor footprint—whether that is through closing mines, introducing new technology or steering clear from the mineral-rich economy.
“You’re not going to see a huge wealth of investment coming into South Africa,” said Rajat Kohli, the head of global mining and metals for Standard Bank.
Anglo American AAL.LN +2.36% Platinum has warned that if the current platinum strike continues it would consider closing more of its marginal mines. On Tuesday, the company’s executive director for South Africa, Khanyisile Kweyama, said the operating and production risks brought on by labor strikes, and rising costs, will prompt Anglo American to rely more on machines and less on workers.
“The labor intensity of the industry has come to haunt us,” she said.
Foreign-direct investment into South Africa more than doubled in 2013 to $10.3 billion, the United Nations Conference on Trade and Development said last month. But the bulk of that investment was in South African retailers, the U.N. said, and investment in the mining industry has steadily declined. Unctad doesn’t detail precise investments into specific industries.
Speaking at global mining conference in Cape Town on Tuesday, South Africa’s mining minister, Susan Shabangu, said the government understands how labor disruptions hurt foreign investment but that the country’s constitution protects the right to strike.
“We want a solution that will enable us to attract investment but also recognize the rights of workers,” she said.
Ms. Shabangu urged companies to do more to meet workers’ needs, including skills training, and to put more equity into the hands of local black South Africans. She also urged workers to protest peacefully.
But mining executives say that as they seek to meet transformation targets, union leaders continue to demand steep salary increases that could cause more mines to close, dissuade investment and shift focus to wage agreements rather than broader employee development.
The striking platinum workers are demanding that their employers raise entry-level salaries to 12,500 rand ($1,150) a month from around 5,000 rand.
A centerpiece of the ruling African National Congress’ campaign ahead of elections a few months from now is a pledge to create six million new jobs, if it wins a new term through 2019. Officials also acknowledge, however, that growth is too slow to dent official unemployment rates that hover near a quarter of the workforce.
The World Bank, in its new report, said the government’s current policies don’t go far enough to encourage exporters to invest in job-generating enterprises. It cited infrastructure bottlenecks and labor policies, which constrain employers from hiring and firing, as among the obstacles for investors.
“South Africa is playing against its strength as a large emerging market: It’s not taking advantage of its large pool of unskilled labor,” said Catriona Purfield, a World Bank economist and co-author of the new report.
The South African Chamber of Commerce and Industry echoed that gloomy assessment on Tuesday, releasing survey results showing its business confidence index slipping to a six-month low in January.
“South Africa’s competitive position amongst other emerging markets is not favorable,” the chamber said.
The country’s currency, the rand, has dropped some 7% against the U.S. dollar this year as investors sold more than $1 billion worth of South African stocks and bonds.
– WALLSTREET JOURNAL
The need for stronger regional collaboration, government-private sector synergy, and innovative market solutions to unlock Africa’s economic potential has been brought to the fore.
Group CEO of the Nigerian Exchange Group Plc (NGX Group), Temi Popoola, shed light on the transformative potential of Africa’s capital markets at the launch of the Ethiopian Securities Exchange (ESX).
The NGX Group’s strategic investment in ESX underscores its leadership in advancing Africa’s capital market infrastructure. “The launch of ESX represents a pivotal moment for Ethiopia and the broader African financial landscape,” Popoola stated. “ESX will serve as a crucial mechanism for capital formation and market liquidity, driving sustainable economic growth.”
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Expounding on NGX Group’s investment rationale, Popoola highlighted Ethiopia’s immense market potential and the shared vision of fostering economic growth through innovation. “Our partnership transcends traditional investment parameters,” he explained. “It is about ensuring that ESX evolves into a key player in Africa’s financial ecosystem, enabling cross-border investments and setting benchmarks for market development.”
Popoola also drew parallels with global success stories like India, which has leveraged its capital markets to achieve significant economic transformation. He emphasized the importance of responsible market opening to attract local and continental capital. “By following this path, Ethiopia can become a financial hub in Africa,” he remarked.
Prime Minister Abiy Ahmed lauded the launch of ESX as a transformative milestone in the country’s journey toward economic modernization. “Today, we have officially rung the bell to launch the Ethiopian Securities Exchange, our nation’s first stock exchange,” the Prime Minister announced on X. “This is a call to global investors: Ethiopia offers immense potential, a fast-growing economy, and a clear trajectory toward shared prosperity.”
CEO of the Ethiopian Securities Exchange, Tilahun Esmael Kassahun, expressed confidence in the partnership with NGX Group. “We are pleased to welcome NGX Group as a strategic partner, building upon the existing support we continue to receive from them,” he said. Kassahun also emphasized the value of NGX Group’s expertise in shaping ESX’s growth and success.
Drawing from NGX Group’s six decades of experience, Popoola shared insights on diversifying financial instruments and expanding access to investment opportunities. “With the right mix of innovation, policy support, and regional collaboration, Ethiopia’s capital market can play a transformative role in driving economic development and establish itself as a leader in Africa’s financial ecosystem,” he concluded.
With the ESX poised to redefine Ethiopia’s financial landscape, NGX Group’s involvement highlights the critical role of partnerships and shared expertise in advancing Africa’s economic narrative.
The Office of the Auditor-General of the Federation has uncovered financial irregularities amounting to ₦514 billion in the 2021 operations of the Nigerian National Petroleum Company Limited (NNPC Ltd).
The revelations were contained in a comprehensive audit report highlighting non-compliance and internal control weaknesses within Ministries, Departments, and Agencies (MDAs) during the 2021 financial year.
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Breakdown of Infractions
The audit detailed four major financial discrepancies within NNPCL:
“Irregular Deductions: A total of ₦343.64 billion was deducted from domestic crude oil sales at source without proper documentation.
“Sinking Fund Deposits: ₦83.66 billion, categorized as miscellaneous income, was retained in a sinking fund account.
“Unauthorised Refinery Deductions: ₦82.95 billion was deducted from federation revenue purportedly for refinery rehabilitation.
“Unsubstantiated Payments: ₦3.75 billion was flagged for transactions related to petrol sales that lacked proper verification.
The Auditor-General’s report stated that these financial activities violated the 1999 Constitution and the Financial Regulations Act of 2009, underscoring significant lapses in compliance with statutory guidelines.
According to the report, NNPCL generated ₦484.73 billion from domestic crude oil sales in March and May 2021.
However, ₦343.64 billion was deducted for various purposes, including “Value Shortfall,” “Strategic Stock Holding Cost,” and “Pipeline Maintenance.”
The deductions were made unilaterally by NNPCL without adequate documentation or justification.
Additionally, the report flagged ₦50 billion of the net payable amount for May 2021 as unaccounted for, creating a significant gap in the federation’s revenue.
“Audit observed from the review of NNPC SAP payment record for March and May 2021 payments that the sum of ₦484.73bn was the gross amount generated for the sale of domestic crude for the months of March and May 2021.
“The sum of ₦343.64bn from the gross amount was unilaterally deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, the reasons for the deductions could not be justified by the management.”
On the unremitted ₦50 billion from May 2021, the report noted: “In the month of May, the net payable that could have been remitted ought to have been ₦127.075bn, but only the sum of ₦77.075bn was remitted, leaving an unremitted balance of N50bn to the Federation Account, which has remained unaccounted for.”
The report attributed these anomalies to weaknesses in NNPCL’s internal control systems, warning of the risks they pose to public funds.
It read, “The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd. This is a potential loss of Federation revenue, diversion of public funds, or misapplication or misappropriation of funds.”
The success of the maiden edition of the Lagos Shopping Festival (LSF), Africa’s first 72-hour non-stop commerce and entertainment event has been credited to the Governor of Lagos State, Babajide Sanwo-Olu.
This is the view of Managing Director/Chief Strategist of Chain Reactions Africa Ltd, Israel Jaiye Opayemi, one of the main organisers of the event.
According to Opayemi, though Chain Reactions Africa conceptualised the event, the festival could be rightly described as the Governor’s baby and owes its success to his leadership. “Firstly, the Lagos Shopping Festival could not have come to fruition if the Governor did not buy into our audacious plan when we first presented the idea to him during the Covid-19 pandemic in 2020. Secondly, it was the Governor’s exemplary leadership of the project as its Chief Marketing Officer which attracted the buy-in of key sponsors like Zenith Bank, Tolaram Group, First Bank Plc, and Guinness Nigeria Plc,” Opayemi revealed.
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While the duo of Zenith Bank and First Bank provided their bank on wheel platforms for buyers at the Lagos Shopping Festival, they also supported the Vendors with special Point of Sale Machines with which to process payments from buyers. The banks were also seen marketing their diverse banking products to guests within the shopping arena.
For Tolaram, it was a time to support the citizens and give back to society. Guests at the Lagos Shopping Festival were freely given some of the products of the group such as PowerOil, Indomie and Kellogg’s packaged into goodie bags and given out to prospective buyers at the shopping arena. The Children’s Arena was however activated by Indomie with the children entertained by Santa Claus within a well-equipped arena manned by the Indomie Brands team and the Lagos State Safety Marshalls. The children were daily treated to free Indomie meals daily and given various gifts to go home with.
On its part, Guinness Nigeria came through as the real life of the Nigerian party by organizing product sampling activation for the teeming guests at the festival using brands such as Singleton, Johnnie Walker, Ciroc, Don Royale and Captain Morgan to deliver pleasant experiences to guests aside from Guinness and Malta Guinness.
While unveiling the identity of the festival last month, Governor Babajide Sanwo-Olu had thanked the management of Zenith Bank Plc, Tolaram Africa Group, Guinness Nigeria Plc and First Bank of Nigeria for supporting the idea of a Lagos Shopping Festival, describing it as a value addition on the state’s tourism calendar and the overall efforts to grow the State’s GDP. The Governor further said, “I must specially acknowledge your pioneering sponsorship role. It is easy for a corporate sponsor to jump on the sponsorship band wagon of an already established festival and fund it. But you are supporting the maiden edition of this Lagos Shopping Festival with us. The competition is watching you now. Do not build this brand with us and yield the space for the competition to take over. I do hope you would all commit long term to this brilliant initiative.”
On his part, Girish Sharma, CEO Guinness Nigeria Plc, expressed enthusiasm for the initiative. “Lagos is the commercial heartbeat of Nigeria and Africa’s entertainment capital, and the Lagos Shopping Festival captures its essence. We see opportunities in this initiative because it is a creative fusion of commerce and entertainment. This partnership reflects our dedication to fostering economic opportunities and support the nation’s vibrant entertainment industry.”
A first-of-its-kind, the festival was a convergence of commerce and entertainment, bringing together buyers and sellers in the MSME ecosystem, and hordes of fun-seekers who were entertained with thrilling performances by A-list entertainers, including Adekunle Gold, Wande Coal, Teni, Young Jonn, BNXN, Ayo Maff, SB Live and EmmaOMG. The list also included some of Nigeria’s most sought after DJs such as DJ Neptune, DJ YK Mule, DJ Baddo while Gbenga Adeyinka the 1st and Larry J dished out rib-cracking comedy performances.
Held from 23rd to 25th Day of December 2024, at the iconic Mobolaji Johnson Arena, Onikan Stadium, Lagos, the Lagos Shopping Festival saw thousands of fans throng the main venue and select Lagos malls during the three-day period to bag the latest bargains from local and top global brands.
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