5 things you need to know in SA business today and an alarming map of municipal debt
1. The petrol price is on track for a cut of around 86c a litre cut next week, according to the Automobile Association. Diesel should go down by 68c.
2. SA Reserve Bank deputy governor Daniel Mminele has resigned amid speculation that he could be Absa’s next CEO. Finance minister Tito Mboweni is in charge of picking his replacement. Mminele was with the bank for two decades.
3. Business Day, TimesLIVE, the Sunday Times and other media titles in the same group have been sold by Tiso Blackstar to Lebashe for R1.05 billion. Lebashe is a local investment group which owns a 7% stake in Capitec. One of its directors is Jabu Moleketi, deputy minister of finance in the Mbeki government.
4. Tongaat Hulett says the police are investigating an unnamed former executive for his role in an accounting scandal. The company opened a criminal case against the exec. Trading in the company’s share price has been suspended because the company says its financial results can’t be relied on. PricewaterhouseCoopers has been called in for a forensic investigation.
Tongaat has blamed “certain past practices” for the apparent inaccuracies in its books, but didn't go as far as implicating former CEO Peter Staude nor financial head Murray Munro.
Staude served as CEO since 2002 while Murray Munro served as CFO since 2003. Both resigned days before Tongaat’s annual meeting in August 2018. Staude received a total pay package of more than R13.5 million in 2018, and R20 million in the previous year - which included a R6.6 million cash bonus.
5, Grand Parade Investments has sold its shares in Spur back to the restaurant group company for R260 million. It also appointed its acting chief executive officer Mohsin Tajbhai as the new head of the company from July 1. Smaller shareholders have been in open revolt against GPI’s chairperson Hassen Adams over the past year. He recently sold his shares in the company and resigned.
An alarming map of municipal debt in SA
This week, the Auditor-General Kimi Makwetu released the annual municipal audit report, which painted a grim picture:
· Only 7% (18 of 257) of municipalities received clean audits in the past financial year.
· A third of municipalities spend more than they earn.
· Municipalities owe Eskom more than R9 billion and had outstanding water bills of almost R6 billion.
The new report also shows that South Africa’s 257 municipalities were owed more than R72 billion in the past year.
An analysis by Statistics SA shows that consumers owed two-thirds of this amount, mostly for water, sanitation, refuse removal and electricity.
The amount owed to municipalities is steadily increasing every year. There could be many reasons for this, says Statistics SA. “A number of municipalities may have poor strategies in place to collect debt. On the other hand, residents could be prioritising their spending on clothing, food and other commodities above those of rates and services.”
South Africa’s net current debtors to current assets (those assets that can be easily converted to cash within a year) ratio for municipalities was 56% in 2018. This means that for every R100 of funds available in the form of current assets, there is another R56 that is locked up in the form of debt owed.
The ratio for all local municipalities is 62% and for metropolitan municipalities 54%. The City of Johannesburg, Mangaung, City of Tshwane and Ekurhuleni have ratios above 50%.
The ratio varies across municipalities, as can be seen in the map below.
A number of
municipalities have a ratio close to 100%, says Statistics SA. Examples include
uPhongolo (KwaZulu-Natal), Matjhabeng (Free State), and Enoch Mgijima (Eastern
Receive a single WhatsApp every morning with all our latest news: click here.
Also from Business Insider South Africa:
- These South African towns could be the next hotspots for R20 million homes
- The best paying industries in South Africa - and the industries most likely to pay below the minimum wage
- There are now more dollar millionaires in Stellenbosch and Paarl than in the whole of Pretoria
- Almost a third of South African dollar millionaires hold an LLB - while only 5% studied IT
- Here's where South Africa's super rich are making their money
- South African shares may be on the brink of a breakthrough - but two things need to happen
- These municipalities are wasting the most taxpayer money