Major International Business Headlines Brief::: 08 December 2020

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Major International Business Headlines Brief::: 08 December 2020

 


 

 


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ü  JD Health soars on stock market debut

ü  Bharat bandh: India farmers protest against law

ü  Japan announces new Covid-19 stimulus for economy

ü  Hydrogen power: Firms join forces in bid to lower costs

ü  Brexit: Pound recovers ground as Johnson sets talks in Brussels

ü  Brexit: Toyota says no-deal outcome will be 'very negative'

ü  Congress faces Christmas showdown with Trump over tech and defense bill

ü  Second U.S. judge blocks Commerce restrictions on TikTok

ü  Asian stocks under pressure as pandemic concerns outweigh stimulus hopes

ü  China's Wang vows to uphold trade deal during Biden administration - U.S. business group

ü  Citi, Deutsche Bank, ANZ committed for trial in Australian criminal cartel case

ü  FCC awards $9.2 billion to deploy broadband to 5.2 million U.S. homes, businesses

ü  Nigeria's Power Grid Failed 206 Times in 10 Years - Report

ü  Rwanda Seeks to Turn Around Manufacturing Amid Covid-19

ü  Kenyan Banks' Profiles at Risk Over Increased Lending to Govt

ü  Africa Losing U.S.$25.7 Billion to Fraudsters Using Tax Havens

ü  South Africa: Minimum Wage Should Go Up 4.5 Percent, Says Commission

 

 


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JD Health soars on stock market debut

Shares of JD Health have surged 34% above the issue price in Hong Kong's biggest share market debut of 2020.

 

JD Health is the online pharmaceutical and healthcare spinoff of China's second-biggest online retailer JD.com.

 

The stock opened at HK$94.50 (£9.13 ; $12.19), well above the list price of $9.11.

 

The company raised $3.48bn and was valued at $29bn ahead of its trading debut.

 

JD.com will still retain a majority stake in JD health, which will remain a subsidiary of the e-commerce giant.

 

The company hopes to cash in on China's large and growing market for health services and pharmaceuticals.

 

According to the consultancy Frost and Sullivan, China is the world's second-largest market for health care, reaching $998bn in 2019.

 

What is JD Health?

JD Health started as an online pharmaceutical and healthcare product retailer, but has branched out into other healthcare services.

 

The firm's IPO prospectus showed it had 72.5 million annual active users as of June 30, compared to 53.5 million at the same time last year.

 

It is one of China's biggest pharmaceutical retailers, selling both to businesses and consumers, with a 30-minute drug delivery service to its users.

 

The company also offers a variety of online telemedicine services, including specialist medical services and traditional Chinese medicine.

 

JD Health launched an online primary care channel in August, with a target of serving 50 million Chinese families in the next five years.

 

According to the prospectus, the company makes more than 80% of its revenues from pharmaceutical and healthcare products.

 

However, the company said that in the first half of 2020, it had an average of approximately 90,000 daily online consultations, an almost six-fold increase from the same quarter in 2019.

 

JD Health isn't the only division of JD.com that's expected to list.

 

JD.com also has plans to list JD Digits, a consumer credit and supply chain financing company in which it owns a 37% stake.

 

The company also plans to list its logistics arm in the first half of next year, in a share market debut that it expects could raise up to $3bn.

 

Like many other e-commerce companies, JD.com saw strong growth during the pandemic.

 

The company's revenues were $25.7bn in the third quarter of 2020, an increase of 29.2% over the same quarter in 2019.

 

Annual active customer accounts increased by 32.1% to 441.6 million in the 12 months ending in September, according to JD.com.

 

Strong year for share market debuts

JD Health's listing comes during a particularly strong year for initial public offerings (IPOs) on the Hong Kong exchange.

 

The boom has been partly fuelled by US-listed Chinese companies seeking second listings in Hong Kong due to continuing trade tensions between China and the US.

 

JD Health's parent company JD.com was among those companies. The New York-listed company raised $4bn when it listed in June.

 

It's competitor Alibaba also listed in Hong Kong late last year.

 

Yum China, which operates KFC, Taco Bell and Pizza Hut in China, also listed in Hong Kong in September.

 

However, at least one other attempt to list in Hong Kong this year has gone wrong.

 

The Chinese government pulled the plug on the dual Shanghai and Hong Kong listing of Ant Financial, which was set to sell shares worth about $34.4bn (£26.5bn).

 

The company is backed Jack Ma, billionaire founder of JD.com's e-commerce rival Alibaba.--BBC

 

 

Bharat bandh: India farmers protest against law

Farmers in India have called for a country-wide strike amid a standoff with the government over new market-friendly reforms.

 

Tuesday's strike follows three rounds of inconclusive talks between the two sides over laws that farmers say are against their interests.

 

Thousands of them have laid siege to capital Delhi for the last 12 days choking almost all the entry points.

 

At least 15 opposition parties have backed the call for the strike.

 

Another round of talks is expected on 9 December.

 

The governing Bharatiya Janata Party (BJP) has said the reforms, which allow private players a greater role in the farming sector, will not hurt farmers' incomes.

 

But farmers are unconvinced. In recent weeks, thousands of them marched upon Delhi, in a convoy of tractors and on foot. They were met at the border by barricades and clashed with police and paramilitary troops to enter the capital.

 

Most of the protesting farmers are from the northern states of Punjab and Haryana, and belong to the country's richest agricultural communities. Their campaign has found resonance on social media, and among the influential Sikh community in Punjab and overseas.

 

Although they were later allowed to enter the city, thousands of them are still at the borders, vowing not to leave until the government rolls back the reforms. The protest sites have since turned into camps, with entire families cooking and sleeping in the open.

 

Farmers cook lunch along a street as they continue a demonstration to protest against the recent agricultural reforms at the Delhi-Uttar Pradesh state border in Ghazipur on December 7, 2020.

 

 

The protests come even as the pandemic rages in India - although case counts have been dropping nation wide, Delhi has seen a sharp uptick in recent months.

 

Images of thousands of elderly farmers from Punjab and Haryana - known as the "food bowl" of India - being tear-gassed and sprayed with water in the winter could have won them tremendous public sympathy in India and also from the diaspora around the globe.

 

The farm bills roiled the country's parliament when it was passed in September, which led to the suspension of eight opposition members.

 

What do the reforms propose?

Taken together, the contentious reforms will loosen rules around the sale, pricing and storage of farm produce - rules that have protected India's farmers from an unfettered free market for decades.

 

They also allow private buyers to hoard essential commodities for future sales, which only government-authorised agents could do earlier; and they outline rules for contract farming, where farmers tailor their production to suit a specific buyer's demand.

 

Protests in London and at the India High Commission against the farm reforms.

 

 

One of the biggest changes is that farmers will be allowed to sell their produce at a market price directly to private players - agricultural businesses, supermarket chains and online grocers. Most Indian farmers currently sell the majority of their produce at government-controlled wholesale markets or mandis at assured floor prices.

 

These markets are run by committees made up of farmers, often large land-owners, and traders or "commission agents" who act as middle men for brokering sales, organising storage and transport, or even financing deals.

 

The reforms, at least on paper, give farmers the option of selling outside of this so-called "mandi system".

 

What has brought India's farmers to the streets?

Farm bills: Are India's new reforms a 'death warrant' for farmers?

India farmers: The viral image that defines a protest

So, why are farmers angry?

The issue is that it's unclear how this will play out in reality.

 

"We will lose our lands, we will lose our income if you let big business decide prices and buy crops," Gurnam Singh Charuni, one of the main leaders of the agitation, told the BBC recently.

 

"We don't trust big business. Free markets work in countries with less corruption and more regulation. It can't work for us here," he said.

 

Farmers are mainly concerned that the reforms will eventually lead to the end of wholesale markets and assured prices, leaving them with no back-up option. That is, if they are not satisfied with the price offered by a private buyer, they cannot return to the mandi or use it as a bargaining chip during negotiations.

 

The government has said the mandi system will continue, and they will not withdraw the floor prices they currently offer. But farmers are suspicious.

 

"First, farmers will feel attracted towards these private players, who will offer a better price for the produce. The government mandis will pack up meanwhile and after a few years, these players will start exploiting the farmers. That's what we fear," Multan Singh Rana, a farmer in the northern state of Punjab, told BBC Punjabi.--BBC

 

 

 

Japan announces new Covid-19 stimulus for economy

Japan's Prime Minister Yoshihide Suga has announced a fresh round of stimulus for the Japanese economy.

 

The 73.6tr yen ($708bn; £530bn) package is expected to include subsidies for green investment and spending on digitalisation.

 

The additional spending is aimed at pulling the country out of its coronavirus-induced economic slump.

 

Japan's economy has started to rebound in the third quarter after a dismal second quarter.

 

But revised data released Tuesday shows that the Japanese economy suffered its worst post-war contraction in the second quarter, shrinking by 8.2%.

 

Although the economy grew by 5.3% in the third quarter, many analysts expect Japan's recovery to be muted due to a third wave of covid-19 cases.

 

About $384bn of the stimulus package will come in the form of direct spending.

 

The package will include extensions of subsidy programs aimed at promoting domestic travel and spurring consumption.

 

It will also include a $19.2bn fund to promote carbon neutrality by 2050, $9.6bn to accelerate digital transformation and $14.4bn in subsidies to support restaurants hurt by shortened trading hours during the pandemic.

 

"We have compiled these measures to maintain employment, sustain business and restore the economy and open a way to achieve new growth in green and digital areas, so as to protect people's lives and livelihoods," Mr Suga told a party meeting.

 

Mr Suga's cabinet is expected to endorse the stimulus package later on Tuesday.

 

It will bring the combined value of coronavirus-related stimulus to about $3tr.

 

Earlier this year, Japan unveiled two stimulus packages worth a combined $2.2tn, including cash payments to households and small business loans.--BBC

 

 

 

Hydrogen power: Firms join forces in bid to lower costs

The possibility of a future powered significantly by clean hydrogen has taken a small step closer.

 

The world’s biggest “green” hydrogen developers have joined forces in what they call the Green Hydrogen Catapult.

 

Their ambition is to expand production 50-fold in less than six years to radically drive down the cost.

 

The companies involved include ACWA Power, CWP Renewables, Envision, Iberdrola, Ørsted, Snam, and Yara.

 

Green hydrogen produced by renewable energy using electrolysis is currently much more expensive than obtaining hydrogen from natural gas.

 

The firms hope that their economies of scale can drive the cost down to $2 a kg, which recent analysis suggests could make it cost-competitive.

 

Some energy experts doubt whether the objective is achievable, especially as green hydrogen currently costs between 3.5 and 8/kg.

 

PM's climate vision: 10 steps forward, 10 steps back?

 

UK energy plant to use liquid air

 

Is the hydrogen tech 'revolution' hope or hype?

 

The new initiative will see industry leaders deploy 25 gigawatts of renewables-based production through 2026.

 

If the target is reached it would make a substantial contribution to world attempts to decarbonise society by helping transform carbon-intensive industries, including power generation, chemicals, steelmaking and shipping, by supplanting use of gas or coal.

 

Hydrogen could also be used for heavy transport such as buses, trucks and construction vehicles – like the prototype JCB digger.

 

One potential location for production is the vast, relentlessly sunny Sahara, where solar power is already established.

 

One member of the consortium, Paddy Padmanathan, from Saudi-backed ACWA said: "Having led the race to deliver photovoltaic energy at well-below $2 cents per kilowatt-hour, we believe collective ingenuity and entrepreneurship can deliver green hydrogen at less than US$2 per kilogram".

 

"From an industry perspective, we see no technical barriers to achieving this, so it's time to get on with the virtuous cycle of cost reduction through scale up.”

 

It’s part of a techno-optimistic rush towards hydrogen.

 

But while the fuel has benefits, says Michael Liebreich, an energy analyst in the UK, “it displays an equally impressive list of disadvantages”.

 

Techno-optimists

“It does not occur in nature so it requires energy to separate,” Mr Liebreich writes in recent essays for BloombergNEF.

 

“Its storage requires compression to 700 times atmospheric pressure, refrigeration to -253C… It carries one quarter the energy per unit volume of natural gas… It can embrittle metal, it escapes through the tiniest leaks and yes, it really is explosive.”

 

Despite this, Mr Liebrich says green hydrogen still “holds a vice-like grip over the imaginations of techno-optimists”.

 

Among that number are the UK's Prime Minister, Boris Johnson, who is preparing a hydrogen strategy, the EU, which has drafted a strategy, and the German government, which is investing $10bn in hydrogen as part of its green recovery.-BBC

 

 

 

Brexit: Pound recovers ground as Johnson sets talks in Brussels

The pound has fallen against the euro and the dollar, as traders reacted to the growing prospect of a no-deal Brexit.

 

But news that Prime Minister Boris Johnson will travel to Brussels in a last-ditch effort to salvage a trade deal with the EU, caused it to recover some losses.

 

Sterling fell about 1% to €1.098 in afternoon trading in London, its lowest level in more than six weeks.

 

Later it rebounded slightly to €1.10.

 

The pound also slipped against the dollar before recovering ground to trade 0.49% lower at $1.34.

 

Traders' hopes were raised when it was announced Mr Johnson will meet with European Commission President Ursula von der Leyen later this week.

 

UK and EU negotiators have been locked in talks to secure a post-Brexit deal before 31 December, when the UK's transition period ends.

 

Disputes over fishing and business rules remain, with the UK government saying discussions in Brussels have reached "a critical moment".

 

The EU mood was described as "gloomy" as chief negotiator Michel Barnier met UK counterpart Lord Frost.

 

The pair will continue talks on Tuesday, drawing up a list of the differences that remain between the two sides.

 

Cabinet Office minister Penny Mordaunt told the House of Commons: "We are all working to get a deal, but the only way that's possible is if it's compatible with our sovereignty and takes back control of our country's trade and waters."

 

Asked when the cut-off point for a deal was, a European Commission spokesman said: "We are not going to speculate on a last-chance date.

 

"We are fully committed to substantial negotiations. We've always said and continue to say it's the substance that prevails over timing."

 

Earlier, Irish Foreign Minister Simon Coveney described the EU negotiating team's frame of mind as "gloomy" and "downbeat".

 

The FTSE 100 share index drifted in and out of positive territory during the day, and finished virtually flat at 6,555 points.

 

Investors are also awaiting an EU summit starting on Thursday to break an impasse over a 1.8 trillion-euro coronavirus aid package, as well as the last European Central Bank policy meeting of the year on the same day.--BBC

 

 

 

Brexit: Toyota says no-deal outcome will be 'very negative'

The boss of Toyota's European business has warned that a no-deal Brexit could make its UK plants uncompetitive.

 

Dr Johan van Zyl said such an outcome would create a "very negative investment environment" in Britain and be "very, very negative" for his business.

 

He told the BBC the combination of Brexit and the Covid crisis was a "double whammy" for the carmaker.

 

Toyota has two plants in the UK, which employ about 3,000 people in total.

 

But Mr van Zyl said no decisions on the future of its UK plants - a car factory at Burnaston in Derbyshire and an engine facility at Deeside in North Wales - could be taken until the outcome of trade talks was known.

 

Like other manufacturers, Toyota has been badly affected by the Covid outbreak. Both its UK plants were forced to suspend production during the spring lockdown, while showrooms were also forced to close.

 

Now the company is forecasting a strong recovery for its European business. But according to Dr van Zyl, its UK recovery could be made more difficult by Brexit.

 

"We have Brexit, and we have Covid, and this is a double whammy which is happening to us", he said during an online media event.

 

"When it comes to the recovery… it's going to be more difficult if Brexit of course is negative, or a hard Brexit".

 

The company has, he said, already taken steps to mitigate the impact of a no-deal scenario - but there is a limit to what it can do.

 

Investment

"What we could put in place, we have done - in terms of adjusting our systems, looking at customs procedures which will be required, looking at increasing stock levels.

 

"Up to a point we can do it. But you can't do a huge amount of that - it's only a limited few days.

 

"So it can be very, very negative for our business if we have a no-deal scenario. Very negative. And even if there is a deal, we need to know the content of the deal. We need to get those details to really be able to establish what is the real impact. We haven't seen those yet".

 

It is not yet clear what the future holds for Toyota's UK plants. The company recently invested £240m in equipping the Burnaston factory to build its latest vehicle platforms.

 

Dr van Zyl insists that: "We have confidence in our colleagues in the UK. They're doing an excellent job so far".

 

'Difficult situation'

But the longer-term outlook may be bleaker, in an industry where product cycles tend to last around seven years.

 

"We have always said that if, for instance Brexit, is very negative, it will be a very negative investment environment, so we need first to see the outcome before we can judge what we are really going to do", he says.

 

Tariffs on cross channel trade, he explains, could make a big difference.

 

"If 90% of what you produce in the UK is exported to the EU, and you've got to do it at a duty, then you're not competitive. You will not be able to compete with plants in Europe. So it is a very difficult situation

 

"But let's see what the outcome of the negotiations is, then we can really decide what we're going to do."--BBC

 

 

 

Congress faces Christmas showdown with Trump over tech and defense bill

WASHINGTON (Reuters) -The U.S. Congress will return to Washington during its Christmas holiday break if necessary to override President Donald Trump’s threatened veto of a $740 billion defense bill, lawmakers said on Monday, with one senior Republican saying Trump’s stance risked “punishing” the troops.

 

Trump last week repeatedly vowed to veto the annual National Defense Authorization Act, or NDAA, if it does not repeal a law that protects companies like Alphabet Inc’s Google, Twitter Inc and Facebook Inc from liability for what appears on their platforms.

 

His threats angered lawmakers, including some of Trump’s fellow Republicans, who said the tech measure has nothing to do with defense and that Trump’s concerns - voiced only after his defeat in the Nov. 3 election - should not block major annual legislation that Congress has passed for 59 consecutive years.

 

“He did not raise the issue until the end of November, when we were literally almost a year into the (NDAA) process,” Representative Adam Smith, Democratic chairman of the House of Representatives Armed Services Committee, said on a conference call with reporters.

 

“There really are no other possibilities. If the president vetoes it, we will come back and vote to override,” Smith said. He said he believed the legislation would receive the two-thirds majorities needed in the House and Senate to overcome a Trump veto.

 

Trump has issued eight vetoes during his four years as president. All of them were sustained.

 

Representative Mac Thornberry, the House panel’s top Republican, said failure to pass the NDAA would threaten policy provisions in the bill intended to combat threats from China and Russia, and harm troops more directly by cutting their pay and delaying construction of new housing.

 

“I’m hopeful that a strong vote can persuade the White House that there’s a better approach to that issue so you’re not punishing the troops for something that is totally unrelated,” Thornberry told reporters on a separate conference call.

 

The Democratic-led House is due to vote on the NDAA on Tuesday. If it passes, as expected, it would go to the Republican-majority Senate, where it is also expected to pass, sending it to the White House for Trump to sign or veto.

 

The NDAA includes a provision that would strip the names of Confederate generals from military facilities. Trump has also threatened a veto over this provision, although his focus more recently has been on the tech measure.

 

As they seek to overturn his defeat in the Nov. 3 presidential election, Trump and some Republican allies have been insisting tech companies are biased against conservatives and should be punished.

 

Tech firms deny having any such slant.

 

Trump’s fellow Republicans, who rarely break from him on policy matters, have come out against the veto threat, saying the tech issue may need to be addressed but it has nothing to do with the military.

 

Because the NDAA is one of the few major bills to pass every year, lawmakers often use it as a vehicle for policy measures that extend beyond the Pentagon.

 

However, this year’s NDAA has been in the works for months and is at a point where it cannot be amended.

 

 

 

Second U.S. judge blocks Commerce restrictions on TikTok

WASHINGTON (Reuters) - A second U.S. judge late on Monday granted a preliminary injunction blocking the U.S. Commerce Department from imposing restrictions on Chinese-owned short video sharing app TikTok that would have effectively barred its use in the United States.

 

U.S. District Judge Carl Nichols in Washington issued an order in a suit filed by TikTok-owner ByteDance more than a month after U.S. judge Wendy Beetlestone in Pennsylvania blocked the same restrictions that were set to take effect on Nov. 12 in a suit brought by some TikTok users.

 

Nichols on Sept. 27 had separately blocked the Commerce Department from banning Apple Inc and Alphabet Inc’s Google app stores from offering the app for downloads by new users.

 

A TikTok spokesman said it was “pleased that the court agreed with us and granted a preliminary injunction.”

 

Nichols, who was named to the bench by President Donald Trump last year, said the Commerce Department “likely overstepped” its legal authority in issuing the effective TikTok ban “and acted in an arbitrary and capricious manner by failing to consider obvious alternatives.”

 

The Commerce Department said it would “vigorously defend” Trump’s August executive order that authorized the restrictions and said it “is fully consistent with law and promotes legitimate national security interests. The government will continue to comply with the injunctions.”

 

Nichols’ order enjoins the agency from barring data hosting within the United States for TikTok, content delivery services and other technical transactions.

 

On Friday, the Trump administration declined to grant ByteDance a new extension of Trump’s August order requiring it to divest TikTok’s U.S. assets, but talks will continue, Reuters reported.

 

The Treasury Department said late on Friday the government “is engaging with ByteDance to complete the divestment and other steps necessary to resolve the national security risks.”

 

The Trump administration contends TikTok poses national security concerns as the personal data of U.S. users could be obtained by China’s government. TikTok, which has over 100 million U.S. users, denies the allegation.

 

Under pressure from the U.S. government, ByteDance has been in talks for months to finalize a deal with Walmart Inc and Oracle Corp to shift TikTok’s U.S. assets into a new entity.

 

A U.S. appeals court will hear arguments on Nichols’ app store ban injunction on Dec. 14.

 

 

Asian stocks under pressure as pandemic concerns outweigh stimulus hopes

WASHINGTON/HONG KONG (Reuters) - Asian stocks came under pressure on Tuesday as investors struggled to balance hopes for more economic stimulus and vaccines with anxiety over a surge in COVID-19 infections.

 

A mixed Asian open followed a similarly mixed Wall Street session with the tech-heavy Nasdaq Composite closing at a record high as investors flocked to mega-cap growth stocks, while the two other major U.S. indices fell.

 

“You saw more than a slight moderation to the S&P 500, and the Dow, but you’re still looking at these markets at record highs,” said Tom Piotrowski, a market analyst with CommSec. “It’s a matter of looking out for what the next catalyst is for these markets.”

 

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.25%. Australia’s S&P/ASX 200 inched up 0.23% as gold miners rose on strong bullion prices, though gains were capped by losses in energy stocks triggered by an overnight slump in oil prices.

 

Japan’s Nikkei 225 narrowed its losses from early trade, down 0.27%, as Prime Minister Yoshihide Suga unveiled 73.6 trillion yen ($708 billion) in fresh economic stimulus measures, signalling his resolve to pull the country out of its coronavirus crisis-induced slump.

 

Chinese blue-chips fell 0.2% while Hong Kong’s Hang Seng were down 0.62%.

 

On Wall Street, the Nasdaq Composite rose 0.45% while the Dow Jones Industrial Average dropped 0.49% and the S&P 500 lost 0.19%.

 

Some investors are watching whether U.S. policymakers can reinvigorate efforts to pass additional pandemic stimulus. The U.S. Congress is expected to vote this week on a one-week stopgap funding bill to give negotiators more time to strike a compromise, as the business community cautioned inaction could spur a deeper recession.

 

At the same time, California, the nation’s most populous state, announced new restrictions on travel and business activity after record case numbers and hospitalizations. And officials in New York warned similar restrictions could be employed soon, which further weigh on the nation’s recovery.

 

The dollar slid against most currencies as investors eyed potential stimulus and vaccine development. An index that tracks the dollar against a basket of currencies was little changed at 90.889 , not far from 90.471, its weakest since April 2018.

 

Sterling clung to hopes of a meeting between British Prime Minister Boris Johnston and European Commission President Ursula von der Leyen salvaging a Brexit trade deal.

 

The British currency was on edge but holding on at $1.3351 in the Asia morning session, well above Monday’s low of $1.3225.

 

The yield on the benchmark 10-year notes rose slightly to 0.9327% on Tuesday.

 

Oil prices fell, adding to losses from the previous session. Brent crude fell 0.68% and U.S. crude dipped 0.59%. Prices came under pressure after Reuters reported the United States was prepping sanctions on at least a dozen Chinese officials over alleged roles in Beijing’s disqualification of elected opposition legislators in Hong Kong.

 

Spot gold prices were 0.06% higher at $1,864.91 per ounce, and U.S. gold futures settled up 0.25% at $1,870.6, as investors bet on more stimulus money being pumped into the financial system.

 

 

China's Wang vows to uphold trade deal during Biden administration - U.S. business group

WASHINGTON (Reuters) - Chinese Foreign Minister Wang Yi assured U.S. executives during a video conference on Sunday that Beijing remained committed to the Phase 1 trade deal with the United States, the head of the US-China Business Council said.

 

“He definitely re-committed. On the Chinese side, it’s all systems go. They will fulfill their commitments,” US-China Business Council President Craig Allen told Reuters on Monday.

 

Wang’s comments to the business group come amid recent moves by the government of outgoing U.S. President Donald Trump to crack down on Chinese military companies and box incoming President-elect Joe Biden into hardline positions on Beijing.

 

The US-China Business Council, which represents 240 companies doing business in China, said it was pleased with Beijing’s progress in implementing policy changes under the trade deal signed in January, although China had fallen short of targets for increased purchases of U.S. goods and services.

 

As of October, Beijing’s purchases of U.S. goods and services, specified in the Phase 1 deal at $75.5 billion for 2020, were about half the level they should be on a pro-rated annual basis, according to the Peterson Institute for International Economics.

 

“They are behind, but it’s a two-year agreement,” Allen said. “This has been a successful agreement in terms of changing China’s policies that prevented a level playing field. But it’s not complete. It’s not finished, that’s what Phase 2 is about.”

 

Allen said members of the council’s board pressed Wang on continued concerns about equal treatment of U.S. companies, visa concerns and intellectual property rights, adding his hope that the world’s two largest economies will start negotiations on a Phase 2 agreement without delay after U.S. President-elect Joe Biden takes office on Jan. 20.

 

The U.S. executives met for over an hour via videoconference with Wang and other Chinese officials. Such meetings generally take place every year and are normally in person, he said.

 

Wang said little about the Phase 2 negotiations, which will by led by Vice Premier Liu He, Allen said.

 

Allen said Wang was “very forthcoming and replied to our concerns very clearly.” Wang told the group there were over 100,000 U.S. companies in China, and a lot were doing very well.

 

He said the group was keen to ensure that U.S. companies are able to expand their access to their most important market, given China’s middle class of around 400 million people, and the fact that it will generate 30% of global growth in coming years.

 

 

 

Citi, Deutsche Bank, ANZ committed for trial in Australian criminal cartel case

(Reuters) - Australia’s competition regulator on Tuesday said Citigroup Inc and Deutsche Bank AG have been committed to the Australian Federal Court for trial on criminal cartel charges in the country’s biggest white collar criminal case.

 

The Australian Competition and Consumer Commission (ACCC) has accused the investment banks of colluding over a A$2.5 billion ($1.8 billion) 2015 share issue to withhold unsold shares and keep the stock price from falling.

 

Their client, Australia and New Zealand Banking Group Ltd which conducted the share issue, has also been committed to the court for trial, along with six other senior banking executives from the lenders’ staff and former staff.

 

The development comes after a lower court in Sydney in August declined a prosecution request to delay proceedings, helping speed up the case that had been crawling through the court since the charges were laid in mid-2018.

 

“As this matter involves criminal charges, we will not be commenting further at this time,” ACCC Chair Rod Sims said in a statement.

 

Citi in a statement maintained that it denied the allegations, while Deutsche Bank said it had entered a not guilty plea and would defend the charges. ANZ declined to comment.

 

The case is being closely watched by financial markets participants around the world because it could influence how capital raisings are conducted.

 

For companies, each criminal cartel charge could mean a fine of up to A$10 million ($7.42 million) or three times the amount the company benefited from the actions in question, whichever is greater.

 

Individuals accused may be sentenced to up to 10 years’ imprisonment or fined up to A$420,000, or both.

 

 

 

FCC awards $9.2 billion to deploy broadband to 5.2 million U.S. homes, businesses

WASHINGTON (Reuters) -The U.S. Federal Communications Commission (FCC) said on Monday it has awarded $9.2 billion to provide high-speed broadband internet service to 5.22 million unserved homes and businesses, boosting access in rural areas.

 

The FCC said in its “Rural Digital Opportunity Fund” auction that Charter Communications Inc won $1.22 billion to provide service to 1.06 million locations, while Elon Musk’s SpaceX won $885 million to serve 642,000 locations.

 

The Rural Electric Cooperative Consortium won $1.1 billion to serve 618,000 locations and LTD Broadband LLC won $1.32 billion to serve 528,000 locations.

 

A lack of internet access in rural areas is a major political issue in the United States and hinders economic growth and economic opportunities in places without access, lawmakers say. President-elect Joe Biden has vowed to expand broadband access to all Americans.

 

A May FCC report said 18.3 million people in the United States lack access to broadband, but Democrats say that underestimates the problem, while Republicans note the report found the number without access has fallen by 30% since 2016.

 

The FCC estimated the latest funding will expand broadband to more than 10 million rural Americans.

 

SpaceX is developing a broadband internet system with low latency, or time delay, using low Earth orbit satellites.

 

Nearly all the locations will receive broadband with upload and download speeds of at least 100/20 megabits per second (Mbps) with an overwhelming majority - over 85% - getting gigabit-speed broadband. The funds will be distributed over the next 10 years.

 

The FCC said $6.8 billion in funding that was not awarded will be rolled over into a future auction that can use up to $11.2 billion to target partially served areas and remaining unserved areas.

 

FCC Chairman Ajit Pai said the auction was “technologically neutral” and structured to “prioritize bids for high-speed, low-latency offerings.”

 

 

Nigeria's Power Grid Failed 206 Times in 10 Years - Report

Nigeria's national grid failed at least once every month between 2009 and 2019, throwing the country into darkness, a report on the status of the electricity industry has disclosed.

 

Prepared by Spanish energy consulting firm, AF-Mercados EMI for the Association of Nigerian Electricity Distributors (ANED) - the umbrella trade association of 10 electricity distribution companies (Discos) in Nigeria - the report equally noted that none of the Discos' networks can guarantee stable electricity supply to Nigerians.

 

It stated that a comprehensive revamp of the Discos' network would be needed to guarantee quality and efficient service delivery.

 

The report which was obtained by THISDAY also explained that the report was done under the, 'Capacity Building and Technical Assistance Program for the Nigerian Power Distribution Sector.'

 

It was equally supported by the European Union (EU), mostly to proffer solutions to the challenges of the Discos.

"Between 2010 and 2019, Nigerian electricity consumers have had to contend with 206 power grid collapse, ten of which occurred in 2019," the report stated.

 

On the basis of this, THISDAY's computation of the figures showed that an average of 20 system collapses was recorded every year within the period, further resulting to at least a collapse every month.

 

According to the report the number of collapses were recorded because the country's transmission grid is "able to transmit only 3.5 to 4.5GW of power efficiently."

 

It noted that records obtained from the System Operator (SO) department of the Transmission Company of Nigeria (TCN) indicated this.

 

The report stated that: "While several hundred megawatts of power are regularly lost due to breakdowns. Industry, commerce and private households are suffering from a severe shortfall in electricity generation."

Frequent interruptions of power supply, it further disclosed, have forced most of the country's commercial and industrial customers to rely fully or partially on self-generation.

 

"Poor power supply is the biggest challenge to manufacturers, especially the ones in the small and medium enterprises sector, because they rely almost totally on public power supply. Even if the grid supply is available to a commercial or industrial installation, it is not continuous.

 

"There are frequent interruptions throughout the day resulting into loss of production and even failure of equipment. Many commercial and industrial customers are thus not willing to take supply from Discos.

 

"Inadequate generation, transmission, and distribution network is resulting into extremely low reliability of power supply especially to commercial and industrial customers. This situation is resulting into enhanced usage of generators by residents, commercial, and industrial customers.

"Current estimates indicate that over 90 per cent of businesses and 30 per cent of homes have diesel-powered generators, meaning that there are currently about 15 million generators in Nigeria," the report explained.

 

On the reliability levels of the Discos' networks, it explained that, "the reliability performance of almost all Discos in Nigeria is much worse than best in class utilities.

 

"The responsibility of this situation is not that of Discos but variety of other reasons."

 

It listed factors responsible for such low level of reliability to include inadequate power generation, inadequate and dilapidated transmission and distribution network, poor upkeep of transmission and distribution network and lack of investment.

 

Because of this, it stated that all the Discos currently have a great amount of suppressed load, with only residential customers as the main off-takers of electricity from the national grid.

 

The report explained that the poor paying capacity of majority of these customers is the real reason for very high aggregate technical commercial and collection (ATC&C) losses of the Discos.

 

"Poor condition of the distribution system is seriously affecting the quality and reliability of power. As a result, the residential, commercial, and industrial customers are forced to use self-generation to meet their daily requirements.

 

"This is not only leading to financial loss to utility and customers, but also causing great loss to Nigerian Economy. Nearly 81 per cent of the households gets less than eight hours electricity every day thus relying on self-generation. The cost of generating electricity through diesel gen-sets is reported to be in the vicinity of Naira 70/KWh to 130/kWh against the grid allowed tariff of Naira 28/KWh," it added.

 

To address the Discos' unreliability, the report stated that with the main reasons for the unsafe and unreliable network being attributable to poor planning and design of feeders and injection substations amongst others, the Discos will have to redesign the network to increase their reliability.-This Day.

 

 

 

Rwanda Seeks to Turn Around Manufacturing Amid Covid-19

Manufacturers operating in Rwanda currently produce below capacity, lack skilled labour, grapple with high cost of raw materials, and access to working capital is problematic.

 

These are just but a few challenges among many that still limit the manufacturing growth fortunes, despite the sector considered key to driving economic growth and transformation.

 

When the Covid-19 pandemic hit, many industries closed temporarily while others with limited capacity, particularly emerging firms like small and medium enterprises, permanently shut down.

 

The pandemic had a huge toll on industry, with estimates showing that the sector contracted at the rate of 19 per cent in the first half of the year.

 

Yet, the manufacturing sector was estimated to grow from 17 per cent in 2014 to 37 per cent by 2024, driven mainly by demand from rapid growth and development.

That, however, manufacturers think will be achieved only if a series of existing challenges are addressed.

 

Andrew Kanyonya, the Business Development Manager at the New Kigali Designers and Outfitters, a local garment company, say the skills gap is one of the challenges.

 

"Where we are right now is at the level where we need technical transfer because there's a skills gap and it's a huge challenge to any manufacturing subsector," he said.

 

In a garment subsector, for instance, he proposed a need to establish a 'Textile College' from where individuals that offer skills and teach techniques of the industry.

 

In the meantime, he thinks, the government can collaborate with the industry to establish programmes that enable manufacturing factories to hire experts at subsidized rates.

 

At the moment, Kanyonya indicated that the industry doesn't have skilled middle managers - production managers - and hiring them can cost up to $4,000 per month on a two-year minimum contract.

"Only a few here can afford that," he noted during the meeting of domestic manufacturers in Kigali on Friday, December 4.

 

Inside the sector

 

Rwanda's manufacturing sector is dominated by agro-processing such as staple food, meat, and dairy products, as well as light manufacturing which comprises soaps and detergents, pesticides, garments, wood and pharmaceuticals.

 

The industry is also driven by construction materials (cement and tiles, plastics, paints, and metals), and other cross-cutting enablers like paper and plastic packaging, as well as glass bottles and containers.

 

However, the country still faces a high supply deficit gap between the production of these products and imports, even though existing industries still have capacity to produce them.

Philip Lucky, the Head of Investment at the Rwanda Development Board, said for example the country still imports staple foods like rice, maize and daily products like meat and chicken.

 

He mentioned Africa Improved Foods, an agro-processing firm, which still imports most of their maize from Malawi and Tanzania, and rice that is still imported from Pakistan and Tanzania.

 

Sugar is dominated by imports from Brazil and Egypt.

 

"There are domestic supply gaps in garments and pesticides, and low utilization capacity in soaps and detergents, and many other industries," he noted.

 

Statistics from RDB show that local manufacturers only supply 11 per cent of the sugar market, 4 per cent of wood, 10 per cent of garments, and 18 per cent of plastics markets.

 

The maize and rice markets are supplied at 35 per cent and 45 per cent respectively.

 

Many domestic factories produce at 30-50 per cent on average of their capacity. Some even go below 30 per cent, take rice, with 25 factories across the country that produce at around 25 per cent.

 

So what's wrong?

 

Working capital, specifically for industries with low financial capacity, is hard to access. The current guarantee fund at the Business Development Fund (BDF) is not utilized.

 

Kanyonya believes this is because meeting the criteria is hard for many young industries. "If you are looking for Rwf100 million, the fund requires 120 per cent collateral. Not many startups can afford this."

 

But that's not all, the current investment code provides many incentives for investors.

 

Investors who invest more than $50 million get a 7-year corporate income tax (CIT) holiday, and those that export more than 50 per cent of their products outside the East African Community get a 15 per cent preferential CIT.

 

Moreover, businesses that add domestic value that is more than 30 per cent to their products and services enjoy lower import duties such a zero per cent tariff on raw materials.

 

Yet, businesses think only that helps large corporates and foreign companies that have the luxury of deploying massive investment capital for a long term, which renders small players at a competitive disadvantage.

 

"How can you compete at the market with someone who gets all that preferential treatment?" one local entrepreneur who's in the process of starting the production of pipes inquired.

 

The government, however, is working to revise the strategy to promote local manufacturing to enable it to drive economic recovery, according to RDB's chief executive Clare Akamanzi.

 

Led by Prime Minister Edouard Ngirente, the government initiated a 'manufacturing acceleration committee' that is going around on ground to assess the sector.

 

"We were tasked by our leadership led by the Prime Minister to assess the 'must-have' products, do whatever required to empower industries invested in making them available," she noted.

 

That result is expected to see change in policy actions that support local industries. Already, the new investment code establishes a financial scheme for SMEs.

 

It also seeks to attract angel investors to support early-stage companies, and provide for incentives such as a provision of 150 per cent deduction on expenses related to exports.

 

The pandemic had a huge toll on industry.-New Times.

 

 

 

Kenyan Banks' Profiles at Risk Over Increased Lending to Govt

Kenyan banks' credit ratings are in danger of a possible downgrade due to their high appetite for lending to a government staggering on the brink of a debt distress.

 

Global rating agency Moody's Investor Service said Kenyan lenders are heavily exposed to the government through substantial investment in treasury bills and bonds thereby linking their credit profiles to that of the Government of Kenya which at the moment is rated B2 Negative.

 

The agency through a brief on the Kenyan banking sector dated September 2020 said all the three rated banks' local currency deposit ratings -- KCB, Equity and Co-operative Bank -- are aligned with the government's issuer rating.

According to Moody's government bonds accounted for 37 percent of Kenyan banks assets last year and this sovereign exposure is likely to increase from these levels over the next 12 to 18 months.

 

"We expect Kenyan banks to maintain their strong liquidity buffers over the next 12 to 18 months, primarily in the form of government securities," said Moody's.

 

"Banks will likely continue to invest heavily in government securities due to both high supply and demand, particular as loan growth will be sluggish. Banks will likely continue to invest heavily in government securities as under current conditions they will take a more cautious approach holding extra liquidity and as both lending demand and loan supply are sapped by the coronavirus-related economic disruption."

 

"Black swan" event

 

On the other hand, the government will continue relying on domestic refinancing of its debt.

Higher coronavirus-related expenses and lower revenue amid lower economic growth and tax cuts will raise the fiscal deficit to over eight per cent of gross domestic product over the next two years.

 

This year, Moody's and its counterparts Standard and Poor's and Fitch rating agencies have so far downgraded Kenya's sovereign credit outlook to 'negative' from 'stable', citing the country's rising risks to meet its borrowing requirements and debt payments and stalled economic growth due to the Covid-19 Pandemic.

 

Stricken borrowers

 

It is argued that a sharp coronavirus-related economic slowdown in Kenya will weaken banks' loan quality and profits but strong capital and liquidity and government support measures will provide financial resilience.

 

The Covid-19 pandemic, which could be regarded as a typical "black swan" event has sent alarm bells ringing for both bank shareholders and the banking regulator going by the quarterly performances of various lenders.

It is argued that the global nature and magnitude of the pandemic is most likely going to receive attention from the global banking stability body -- the Basel Committee on Banking Supervision -- a consortium of central banks that established a global accord designed to improve the regulation, supervision, and risk management within the banking sector.

 

Covid-19 has severely tested and exposed the resilience and sustainability of the different business models operated by Kenyan banks.

 

Further, the level of Covid-19-related provisioning that banks have had to do to offer relief to their stricken borrowers has also exposed put under test the effectiveness of existing credit risk analysis tools.

 

Normally, such shocks always lead to tightening of controls, with adverse effects on access on credit and financial inclusion.

 

Absa Kenya and KCB saw their net profit for the nine months to September 30 decline by 65 percent and 43 per cent respectively.

 

On the other hand, the net earnings for I&M bank, Standard Chartered Bank (Kenya) and Equity Bank fell by 31 percent, 30 percent and 14 percent.

 

Co-operative Bank recorded a modest profit decline of 10 per cent compared to its peers largely due to the lender's outsized customer focus on consumer lending, especially public sector payrolls that continue to enjoy full incomes despite the pandemic.

 

In addition, the bank's significant lending exposure to its strategic market segment --the Savings and Credit Co-operatives (Saccos) majority of whom draw their membership from 'permanent-and-pensionable' civil servants and related public sector payrolls, has ensured that loan repayments are honoured with minimal defaults.

 

During the year to September 2020, holdings of government debt by Ugandan commercial banks picked up, growing by 24.7 percent and driving the growth in total assets of 19 per cent.

 

Relative to their total assets, banks' exposure to domestic government debt has been rising, and on aggregate, commercial banks hold about 40 percent of the government domestic debt, according to the Bank of Uganda Quarterly Financial Review report dated September 2020.

 

The increased investment in government debt by banks partly reflects risk-aversion on concerns about asset quality in the Covid-19 period.-East African.

 

 

 

Africa Losing U.S.$25.7 Billion to Fraudsters Using Tax Havens

 

Klasing & Associates

What is a Corporate Tax Haven? A corporate tax haven is a state or country that structures its tax laws so as to attract corporations that are seeking to minimize their tax obligations. A number of characteristics that are common in corporate tax havens include: Few or no taxes for non-residents, Zealous protection of corporate or personal information and a general lack of transparency and information sharing, No requirement for a business to maintain a substantial local presence, Markets itself as an off-shore financial center.

 

 

Governments in Africa lose about $25 billion annually to corporate abuse by multinationals who transfer profits to offshore tax havens and to individuals engaging in tax evasion through undeclared assets.

 

Of these losses, $23.2 billion is to tax abuse by multinationals and $2.3 billion is lost to evasion by individuals and the money is equivalent to the paying annual salaries of 10.1 million nurses on the continent or enough to pay $21 per person of the continent's 1.2 billion people.

 

According to data collated jointly by the watchdog organisations Tax Justice Network (TJN), Public Services International (PSI) and Global Alliance for Tax Justice (GA4TJ), over $1.2 billion is lost by East African governments -- Kenya, Ethiopia, Burundi, Tanzania, Uganda, South Sudan and Rwanda.

 

Global Alliance for Tax Justice said tax loss of $25.7 billion every year is equivalent to 52.46 percent of the continent's combined health spending and equates to 28.67 percent of Africa's combined education spending.

 

 

"That loss is equivalent to 6.69 percent average tax revenue of 370.3 billion and greater than global average loss of 2.61 per cent tax revenue," said GA4TJ. Top five losers are Nigeria, South Africa, Egypt, Angola and Sudan.

 

Data opacity

 

An inaugural report released last week of November by Tax Justice Network, titled State of Tax Justice 2020 found that higher income countries were responsible for 98 percent of all the tax loss by countries around the world lost while a lower income countries were responsible for only two per cent.

 

The reports say; "Multinational corporations paid billions less in tax than they should have by shifting $1.38 trillion worth of profit out of the countries where they were generated and into tax havens, where corporate tax rates are extremely low or non-existent. Private tax evaders paid less tax than they should have by storing a total of over $10 trillion in financial assets offshore."

TJN's Miroslav Palanský, a data scientist, says $25.7 billion is lost in Africa to offshore tax heavens with most of the revenue losses incurred by Kenya are due to tax abuse by companies than wealthy private individuals.

 

"This means that there is a relatively high amount of economic activity reported by multinationals in Kenya compared with profits these companies report in Kenya and paid taxes," he said in an online presentation.

 

Mr Palanský said TJN with other partners are calling for full company-level data to be made publicly available as full extent of corporate tax evasion cannot be determined based on data self-reported by multinationals or published by Economic Co-operation and Development (OECD).

The Paris OECD ensured no individual company could be identified.

 

"Revenue loss can be attributed to the misalignment between economic activity and profits. The precise reasons for this cannot be identified with certainty using the country-by-country-reporting data," said Mr Palanský.

 

"We identify a number of actions countries can take to reduce amount of money lost to tax havens. One action, EAC members can take is to boost tax transparency by making data from country-by-country reporting publicly available at company level," said Mr Palanský.

 

The Tax Justice Network said Kenya is hardest-hit in the region, losing $565.8 million annual -- $502.4 million to corporates and $63.3 million to individuals -- depriving the country of much needed money for development and provision of essential services. The social impact of this loss is some 36.02 percent of the country's health budget.

 

Kenya's tax loss is equivalent to paying annual salaries of 240,781 nurses and equivalent to 13.28 per cent of country's annual education spend.

 

Vulnerability to illicit financial flows is through exports to Pakistan, Netherlands and the US who are among Kenya's major trading partners.

 

In Tanzania, the government lost $299 million by way of profit shifting by multinationals and imports misinvoicing by private tax evaders annually with the $279 million lost attributed to global tax abuse by multinationals while $20 million was lost to global tax evasion by private individuals."

 

This loss is equivalent to 40.76 percent of the public health expenditure or annual pay for 135,577 nurses. The country is also vulnerable to illicit financial flows through on inward trade (imports), with Saudi Arabia having 21.1 per cent risk, China (16.8 percent) and India (10.6 percent).

 

Burundi loses $1.9 million as annual tax to offshore tax evasion which is equivalent to 2.95 percent of public health expenditure or equivalent to annual salaries of 4,000 nurses.

 

In Ethiopia, the annual loss is $379.5 million, of which $362.6 million goes to multinationals and $16.9 million is lost to individuals' offshore tax evasion. The total loss is equal to the annual salaries of 436,648 nurses.

 

Ethiopia's vulnerability to illicit financial flows linked to outward trade (exports) with China, accounting for 10.1 percent risk, Saudi Arabia (9.9 percent) and Kuwait (9.7 percent). Burundi is vulnerable due to exports to Switzerland posing 15.4 per cent risk.

 

Uganda incurs losses of $115.3 million of which $96.5 million caused by corporate tax dodging and $18.7 million by individual, an equivalent of 31.43 percent of public health expenditure or annual pay of 83,658 nurses. But Uganda too inflicts tax loss of $14.3 million on other countries. It is vulnerable to illicit financial flows based on exports with Kenya posing 27.9 percent risk, the UAE (21.3 percent) Rwanda (9.7 percent).

 

Corporate abuse

 

Rwanda loses $72 million annually to unpaid tax with $69.9 million driven by corporate tax abuse and $2 million by individuals' evasion. The loss is equal to 34.78 percent of public health expenditure and lost money can pay 88,061 nurses annual salaries.

 

Rwanda faces illicit financial flows based on exports with Kenya posing 29.5 percent risk, United Arab Emirates (20.2 percent) and Switzerland (16.4 percent). South Sudan and Somalia lose $7.2 million and $291,652 respectively as tax.

 

Africa's tax havens cause other countries to lose $4.7 billion through the presence of tax havens here, an equivalent of annual salaries of 375,708 nurses.

 

The tax havens in Africa are responsible for 1.11 percent of global tax losses with $3.5 billion lost as multinationals are enabled to commit corporate tax abuse and facilitating private evasion of about $1.1 billion.

 

Corporate abuse is linked to multinationals shifting profits to tax havens in order to under report the profit made in countries of operation and paying less taxes than they should. Revenue is also lost when wealthy individuals hide undeclared assets and incomes offshore beyond the reach of the law.

 

Taxpayers worldwide lose $427 billion each year to private tax evasion by individuals and multinational corporate profit-shifting now under cutting public funding for Covid-19 response. Money lost is nearly 34 million nurses' salaries or one nurse's salary every second.

 

Global number of salaries is based first on calculating how much each country's tax losses is equivalent to in local average annual nurse salaries. The figures added to produce these totals are based on OECD nurse salaries data.

 

TJN's CEO Alex Cobham said the Covid-19 pandemic has exposed the grave cost of turning tax policy into a tool for indulging tax abusers instead of protecting people's wellbeing.

 

"We urge governments to introduce an excess profit tax on large corporations that short-change countries. For digital tech giants who claim to have our best interests at heart while having abused their way out of billions in tax, this can be their redemption tax," he said.

 

The five top destinations which are responsible for tax losses in other countries by enabling corporate abuse or private tax evasion are Cayman Islands, the UK, Netherlands, Luxembourg and the US. The Caymans is responsible for 16.5 per cent of global tax losses (over $70 billion), UK (10 per cent over $42 billion), Netherlands (8.5 percent over $36 billion), Luxembourg (6.5 percent over $27 billion) and the US (5.53 percent over $23 billion).-East African.

 

 

 

South Africa: Minimum Wage Should Go Up 4.5 Percent, Says Commission

The National Minimum Wage Commission's majority membership has recommended an increase in the minimum wage of 4.5%. Archive photo: Ashraf Hendricks

 

Nine of the 12 members of the National Minimum Wage Commission have recommended a 4.5% increase to R21.68 an hour next year. This is higher than the current annual inflation rate of 3%.

 

The other three members, representing business, said the increase should be limited to the inflation rate.

 

The commissioners also disagreed about how fast minimum wages of domestic workers and farm workers should be raised to the national minimum.

 

A majority of members of the National Minimum Wage Commission has recommended that the minimum wage be lifted from R20.76 an hour to R21.68 an hour.

 

This is an increase of 4.5%, which is 1.5 percentage points above the inflation rate of 3% a year in September.

Domestic workers should earn the same by 2022, say majority of commissioners

 

The commissioners said because of the impact of food prices, inflation was higher for low-income households. The effective rate of inflation for low-income households was 3.3% a year, they said.

 

They said the current minimum wage is below the lower poverty line of R3,360 a month for a household of four people. This poverty line measures what is needed to cover food and some essential items like shelter. Two in five households in South Africa earn this or less, they said. At R21.76 an hour, the current monthly minimum is about R3,320 a month.

 

The majority opinion of the commission defended the rise in the minimum wage in the midst of the Covid-19 economic downturn. "A modest real increase seems unlikely to aggravate the downturn and could assist by working in tandem with other measures to stimulate the economy," they said.

According to the majority opinion, "Initial research ... has found that the policy did not place an undue burden on employers."

 

South Africa's minimum wage legislation currently discriminates against farm workers and domestic workers as these workers can be paid at a rate lower than the minimum wage. The minimum wage of domestic workers is presently 75% of the minimum wage, while the minimum wage of farm workers is presently 90% of the minimum wage.

 

The majority of commissioners argued that the minimum wage for farm workers should be brought to parity with the national minimum wage in the 2021 adjustment (an effective increase of R350 per month). They said wages of domestic workers should be increased to 88% of the national minimum by 2021 (approximately R19 per hour), and to parity by 2022.

 

They found that farm workers were not subject to the pressures that caused mass unemployment in other sectors, as their work was declared essential from the beginning of the Covid-19 crisis.

The majority opinion was supported by nine members of the commission. These were community representatives Tumelo Zwane, Conti Matlakala and Isobel Frye, labour representatives Trenton Elsley, Edward Thobejane, Solly Phetoe, and independent experts Dr Sarah Mosoetsa, Professor Imraan Valodia, and Dr Neva Makgetla. The chairperson of the NMWC is Professor Adriaan van der Walt.

 

The minority opinion, from Jahni de Villiers, Jonathan Goldberg, and Kaizer Moyane, representing business, did not recommend an increase above the inflation rate. They wrote that, "any increase, in our opinion, will have an effect on job retention and creation."

 

They did not support the proposals on domestic and farm workers either, arguing that "no sector can absorb such increases." Instead they argued for a four-year phase-in period for both farm and domestic workers. "This is the only reasonable proposal to avoid the negative impacts of massive wage increases," they said.

 

Under the National Minimum Wage Act, the National Minimum Wage Commission annually assesses and reviews the minimum wage. The Minister of Employment and Labour then determines an adjustment based on these recommendations.

 

Written representations to the commission on the 2021 adjustment can be submitted to the Department of Employment and Labour by 30 days after 20 November.

 

GroundUp is being sued after we exposed dodgy Lottery deals involving millions of rands. Please help fund our defence. You can support us via Givengain, Snapscan, EFT, PayPal or PayFast.-GroundUp.

 

 

 

 

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2020

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Zimbabwe

National Unity Day

Zimbabwe

22/12/2020

 


 

Christmas Day

 

25/12/2020

 


 

Boxing Day

 

26/12/2020

 


 

New Year’s Day

 

01/01/2021

 


Companies under Cautionary

 

 

 


 

 

 

 


ART

Seed co Int.

Dairibord

 


Starafrica

Medtech

Turnall

 


Seed co

 

 

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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