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
Nigeria’s economic fortune is benefiting from the Middle East crisis, as the impact of capital inflows from stronger crude oil earnings has seen her foreign reserves climb to record $53.1 billion, beating the $51.04 billion year-end target.
Data available on the Central Bank of Nigeria’s (CBN) website indicated that the reserves closed at $53.1 billion on August 24, which is the highest level in almost 18 years.
Any analyses of the growth shows that the difference in reserves position places the Nigerian economy in good stead, because it can cover over 12 months import.
It is noteworthy that Nigeria’s external reserves fuel the CBN’s capacity to support the local currency and meet external obligations, have continued to rise steadily, since the face-off between the United States and Iran.
Further analysis of the data displayed by the CBN showed that the liquid portion of the external reserves stood at $52.5 billion.
Biztellers reports that Brent crude traded around $87 per barrel, within the week, well above Nigeria’s 2026 federal budget benchmark of $64.85.
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With the Middle East crisis not showing signs of abating, analysts believe the price rebound would largely bolster Nigeria’s fiscal revenues.
The line of thought is popular among those who know, because as a crude oil exporter, Nigeria will continue to earn more petrodollars, which they argue would support the domestic currency – naira’s stability, while pumping the volume of external reserves.
In its economic projections for 2026, the CBN targeted stronger oil earnings, foreign exchange market reforms and improved external capital inflows to achieve the year-end reserves projection.
According to analysts, the current reserves position reinforces the steady growth in Nigeria’s external buffers.
The founder/Chief Executive Officer of the Centre for the Promotion of Public Enterprise (CPPE), Dr Muda Yusuf, earlier hinted at a positive outlook for Nigeria’s external reserves as he does not see anything derailing the forex and fiscal reforms that have brought about stability and improvement in external reserves, as reported by The Nation.
Yusuf said: “Well, the outlook for me is positive because I don’t see anything derailing these forex reforms, fuel subsidy etc. It is these reforms that have brought about stability.”
The CBN data further showed that Nigeria’s external reserves have maintained a steady upward surge in recent months.
The reserves started June at $49.80 billion and crossed the $50 billion mark by June 5, reaching $50.12 billion.
On June 15, reserves had increased further to $50.81 billion before rising to the current position. The reserves stood at $51.9 billion on July 31, and continued.
The sustained increase reflects stronger foreign exchange inflows and improved liquidity conditions in the country’s external sector.
The CBN Governor, Olayemi Cardoso, said: “This strong buffer continues to reinforce investor confidence in the Nigerian economy and support exchange rate stability.”
The CBN’s decision to clear over $7 billion unsettled FX backlogs raised investors’ confidence in the economy, supporting dollar inflows and foreign reserves accretion, Cardoso added.
The CBN boss had explained that although he had no idea where the fund for the backlog clearance would come from, when he assumed office, he believed it was the right thing to do, and gave investors his word.
He said: “Credibility is at the heart of any central bank. If you don’t have credibility, people do not trust you and they do not invest in your economy. When I took office, I made a promise we would pay the backlog, the verifiable backlog of monies that were owed by Nigeria to third parties.
“And it was, at the time, estimated at over $7 billion US dollars. And to be honest with you, I had no idea how I was going to do it, but I just felt it was not something to be negotiated.”
Cardoso explained that Nigeria needed to ensure that its integrity is maintained. Analysts believe the higher reserve level could enhance the CBN’s capacity to support exchange rate stability and meet external obligations.
Up to 30% equity in the upcoming Dangote Refinery in Kenya, has been placed on the table for East African countries, which makes about $1.5 billion worth of the planned project available to regional investors.
David Ndii, Kenyan President William Ruto’s economic adviser, disclosed this on Thursday at a capital markets forum in Nairobi, where he said Kenya would take a 10% stake while Ethiopia and Rwanda had also expressed interest.
Dangote’s planned refinery is expected to be developed in Lamu, a coastal town in southeastern Kenya, though the project was initially proposed for Tanga in Tanzania.
According to the billionaire industrialist, the decision to move the proposed location to Kenya was informed by commercial and technical considerations.
Ndii disclosed that Kenya’s proposed 10% participation would be worth approximately $500 million.
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He said the combined regional participation could amount to about $1.5 billion, with Dangote prepared to support the project if some participating countries are unable to commit as crude off-takers.
“The total for the region is about $1.5 billion,” he said. “I don’t actually see a challenge in doing that, and if some of them are not off-taking we will backstop.”
The proposed regional participation would give East African countries a direct equity interest in a major energy infrastructure project while potentially securing access to refined petroleum products for participating markets.
The United Nations Geoscheme (UNG) for Africa defines Eastern Africa as comprising 18 sovereign countries, alongside two French overseas territories, meaning the proposed 30% allocation could potentially involve a broader regional investor base beyond Kenya, Ethiopia and Rwanda.
The Nigerian authorities have been called upon to focus on strengthening domestic refining capacity.
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) made the call in a communiqué issued at the end of the three-day PENGASSAN Energy and Labour Summit (PEALS 2026).
It stressed the need for adequate protection for refineries operating in the country.
The PENGASSAN said Nigeria must reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products by creating an environment that supports domestic refining and other value‑adding activities.
The communiqué, signed by the union President, Festus Osifo, and General Secretary, Jerry Amah, stressed the need to protect refineries, including Dangote Refinery and Waltersmith Refinery.
The association said the expansion would enable Nigeria to retain a greater share of the value generated from its petroleum resources while creating jobs, conserving foreign exchange and stimulating industrial development. PENGASSAN linked the growth to wider opportunities in petrochemicals, gas processing and other downstream activities.
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The communiqué reads in part: “The summit called for sustained policies and investments to expand Nigeria’s domestic refining capacity and reduce the economic inefficiency of exporting crude oil while importing significant volumes of refined petroleum products. The need to protect refineries (such as Dangote Refinery, Waltersmith Refinery, etc.) within Nigeria’s jurisdiction was emphasised.
“Nigeria must progressively retain more value from its petroleum resources through domestic refining, petrochemicals, gas processing and other value‑adding activities capable of generating employment, conserving foreign exchange and stimulating industrial growth.
“Ultimately, the strength of Nigeria’s oil and gas industry will not be measured merely by the resources beneath the ground, but by the projects delivered, the value created, the Nigerian capabilities developed, the decent jobs sustained and the prosperity generated for the Nigerian people.”
The association also warned that abrupt policy changes, overlapping mandates, repetitive approvals and conflicting directives increase the cost of doing business and weaken Nigeria’s competitiveness for global energy capital.
The PENGASSAN called for faster regulatory approvals, digitalised processes and clearer timelines, arguing that the effectiveness of regulation should be measured by its impact on investment, production, government revenue, job creation and national value rather than simply by the number of licences or approvals issued.
On gas, the PENGASSAN advocated an integrated approach to developing Nigeria’s more than 215 trillion cubic feet of proven reserves, including investments in processing facilities, pipelines, storage, LNG, LPG and CNG infrastructure. It said gas should be deployed more aggressively for power generation, manufacturing, transportation, fertiliser and petrochemical production.
The association also urged stronger protection of workers’ rights, occupational safety and employment during mergers, acquisitions, divestments and asset transfers, saying sustainable investment requires skilled and fairly treated workers and that increased production must not come at the expense of workers’ lives and wellbeing.
In addition, the PENGASSAN said the next phase of Nigeria’s petroleum industry must focus on execution with measurable targets and clearly assigned responsibilities to ensure policies translate into projects, production, investment and sustainable employment.
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