National Planning Commission wants energy crisis to be declared an emergency
The government’s national advisory body has called for a wide-ranging intervention to alleviate SA’s long-standing energy crisis, including a declaration of an energy emergency. The National Planning Commission (NPC), chaired by minister in the presidency Mondli Gungubele, said declaring an energy emergency would help rid the country of red tape that is making it difficult to bring in new generation capacity. Credit: Business Day
By Caleb Silver & Bill McColl
US. equity markets rose as minutes from the Federal Reserve's June meeting showed policymakers were strongly committed to bringing down inflation (more below). It was the third straight day of gains for the S&P 500 and Nasdaq. As was the case yesterday, tech stocks helped lead the advance. Shares of all the FAAMG firms were up. Shares of Intel (INTC) and other semiconductor companies increased. Cisco Systems (CSCO) shares gained more than 1%. Consumer staples stocks, including Procter & Gamble (PG) and Walmart (WMT), were higher. Northop Grumman (NOC) shares jumped 3% after the defense contractor said it will expand its missile production capability with a new factory in West Virginia. Rivian Automotive (RIVN) shares took off on its 2022 production forecast.
Fed ready to raise rates even if it slows growth
Federal Reserve officials signaled more significant interest rate hikes may be needed if inflation persists, even if that slows economic growth. Minutes from the Fed's June policy meeting also showed members were likely to boost rates by 50 to 75 basis points (bps) at their July meeting. Last month, policymakers increased the federal funds rate by 75 bps, the biggest increase since 1994. The minutes revealed participants recognized the possibility that “an even more restrictive stance” on interest rate policy could be appropriate if inflation remains high. Policymakers expressed concern the 8.6% year-over-year rise in the Consumer Price Index (CPI) in May indicated “inflation pressures had yet to show signs of abating.” Many indicated the jump in the CPI supported that inflation would “be more persistent than they had previously anticipated.”
Members noted getting inflation down to the Fed’s 2% target is “critical” to achieving maximum employment on a sustained basis, although they admitted that more tightening could “slow the pace of economic growth for a time.” Officials explained the Fed faced a significant risk that high inflation would “become entrenched” if the public didn’t see the central bank ready to adjust its policy stance as the situation warranted.
Crypto Market News
Bitcoin struggles to stay above $20,000, cryptocurrency market cap falls.
Crypto markets continue to struggle to attract new investors even as some recovery was witnessed on Tuesday. In the last 24 hours, the global cryptocurrency market cap decreased to $905 billion, falling 0.61% over the day while Bitcoin traded near $20,000. Prices of most of the top cryptos fell after surging for a few hours yesterday, according to CoinMarketCap data at the time of writing (10.49 am, India time).
The global crypto market volume over the last 24 hours increased 19.5% to $67 billion. The total volume in DeFi was $5.8 billion, representing 8.65% of the total crypto market 24-hour volume. The volume of all stablecoins was $61.16 billion, 91% per cent of the total crypto market 24-hour volume.
Bitcoin (BTC) dominance increased by 0.02 per cent to 42.41%. BTC’s price fell 0.45% in the last 24 hours. At the time of writing, BTC was trading at $20,155. In the last 7 days, the BTC price has fallen by 0.62%.
Source: Financial Express
International News Highlights
British Airways to cancel 10,300 more flights
British Airways is to cut 10,300 more short-haul flights due to feature in its schedule between August and the end of October. This latest announcement means nearly 30,000 flights will have been removed from BA's schedule between April and October this year. The cancellations affect London Heathrow, Gatwick and City airports. The industry has struggled with staff shortages as demand for air travel has rebounded after Covid restrictions. "The whole aviation industry continues to face into significant challenges and we're completely focused on building resilience into our operation to give customers the certainty they deserve," BA said. Rory Boland, editor of Which? Travel, said the latest cancellations were a "damning indictment" of BA's failure to manage its summer flight schedule. Credit: BBC World News/EPA
Chickpeas in short supply since Ukraine war
It is not a great time to be a hummus fan.Global supplies of chickpeas, the main ingredient, could dip as much as 20% in 2022, according to data from the Global Pulse Confederation. Weather and war have hurt supplies of the protein-packed bean, driving up food prices and creating headaches for food manufacturers. Chickpeas are made into hummus, flour, soups, stews and curries. While they are growing in popularity in the US, they have long been key to the diets of people in India and the Middle East — places already struggling to cover rising costs of food imports. Farmers in the US — the number four chickpea exporter — planted fewer chickpeas in 2022 as poor weather bogged down spring planting and they prioritised more lucrative commodity crops like wheat and corn, government data shows.Meanwhile, top buyers from South Asia and the Mediterranean are trying to scoop up dwindling US stocks as supplies shrink worldwide and as the war between Russia and Ukraine — both producers of chickpeas — worsens disruptions to global supply chains. Credit: Business Day/123RF/Baiba Opule
Boris Johnson digs in after Conservative allies urge him to quit
British Prime Minister Boris Johnson defied pressure from senior ministers and a mounting rebellion within his party to quit on Wednesday, vowing to stay on as prime minister and fight off any attempts to oust him. After more than 35 resignations from within the government and with many MPs in his Conservative Party in open revolt, some cabinet ministers went to Downing Street to tell Johnson he needed to go. One encouraged him to make a dignified exit by setting his own timetable rather than face a confidence vote. But despite the clamour for him to resign, Johnson was continuing to focus on the important issues, a government source said after his meeting with members of his top cabinet team. A senior Conservative said the prime minister was digging in.The BBC reported Johnson had sacked senior minister Michael Gove after he called on him to resign. Credit: Business Day/Bloomberg
Local News Highlights
Lanseria still hammering out strategic way forward after Comair collapse
The Lanseria International Airport continues to welcome guests on a daily basis as Flysafair continues to fly out of the facility, same as general aviation. The privately owned airport’s chief executive, Rampa Rammopo, said yesterday that the airport would make announcements when it was ready with all the strategies that were being implemented. Last month, the privately owned airport said that the now liquidated Comair, through kulula.com, contributed significantly to its business. Rammopo said that while they had anticipated a slow recovery of the kulula.com business in their strategic business plan, due to the myriad of operational challenges the business encountered since Covid-19, they had never anticipated a scenario where the business would be liquidated. The facility said that it would likely scale down on some of its commercial activities until such time as it found another operator able to fill this gap. Discussions were therefore ongoing with some of these operators. Austerity measures were also being contemplated in the short term. Credit: IOL/Lanseria Airport
Pension funds allowed to invest heavily in infrastructure
National Treasury yesterday published final amendments to Regulation 28 under the Pension Funds Act, which apply to investments in infrastructure, hedge funds and private equity. The amendments are in line with changes announced by Finance Minister Enoch Godongwana in his Budget speech in February. Regulation 28 governs the allocation of assets in retirement funds. It protects fund members’ savings by limiting the extent to which a fund may invest in a particular asset or asset class, thereby reducing concentration risk – excessive exposure to a single investment or type of investment. On February 25, the South African Reserve Bank published the Exchange Control Circular No. 10/2022, which detailed changes to the prudential foreign investment limits for South African institutional investors. Credit: IOL/File
Commercialising cannabis offers huge opportunities for jobs, economic growth
South Africa has excellent resources and is an ideal climate for the cultivation and commercialisation of cannabis production. And global demand for medical cannabis creates significant opportunity. The Department of Agriculture, Land Reform and Rural Development estimates that the cannabis industry is worth an estimated R28 billion in South Africa and could create anywhere between 10 000 and 25 000 jobs across the sector. The cannabis sector has huge potential in terms of the development of small, medium, and micro enterprises (SMMEs). It could be especially beneficial for rural areas, where unemployment levels are typically high, because these are the areas where cultivation would most likely take place. Credit: IOL/ Department of Agriculture, Land Reform and Rural Development
NHI not conducive to quality health outcomes
By Chris Hattingh
There is resounding societal support for universal healthcare in South Africa, in which the entire population would have access to free health services. However, the problem arises from the vehicle that would administer such services; in South Africa’s case, this vehicle is potentially the National Health Insurance (NHI) model. The NHI model presents a serious sticking point for many citizens who desire universal care, but are doubtful that a government-run system is the best way to achieve it.
Vishal Brijlal, Director of the Clinton Health Access Initiative, recently stated that of the 117 people who made oral comments on the NHI Bill in the past two and a half years, only 20% unequivocally supported it. The Clinton Initiative is a global health organisation committed to helping save the lives of people living with HIV/Aids. Brijlal was speaking at the annual congress of the Board of Healthcare Funders, the representative organisation for the majority of medical schemes in Southern Africa.
Such findings indicate that, while many South African organisations and citizens support the idea of universal healthcare, they are very far from convinced that the NHI model would be the most appropriate vehicle to achieve such an outcome. The government would do well to listen to this view, and to fundamentally change how it views its role in ‘managing’ people’s healthcare.
The NHI model will grant increased power to the Minister of Health, as well as concentrating private and public sector resources in the hands of the state through the NHI Fund. The Fund would be the sole provider and contractor of healthcare services. The Minister would also have the additional power of being able to appoint everyone on the board of the Fund. This is one sure method to bring about more (real and perceived) corruption, cronyism, and inefficiencies. By pooling so much money in the hands of bureaucrats and politicians, the incentive for unethical conduct will only increase.
During his address, Brijlal added that the responses received by the committee indicate great concern that the health minister will have too many powers under the NHI. Given the numerous corruption issues that have plagued the government of late, this concern ought not fall on deaf ears among policymakers.
South Africa: How much is spent on health – 2018, and in the future – and from which sources?
We have seen the consequences of mixing the state with the private sector, as the numerous powers and controls of the government have steadily extended over every aspect of the economy and daily life. This control increases the chances of abuse, and politicians and bureaucrats, regardless of which party they may belong to, have more scope to interfere with people’s decisions. These incentives for cronyism must be pared back considerably.
It is also unclear whether the Department of Health has the requisite expertise and skills capacity to manage a system as complex and intricate as the NHI would be.
Simply putting more money into a centrally managed fund would in no way solve the infrastructure or management issues that plague most public facilities. There could be scope for public-private partnerships and skills-sharing, as we have seen throughout the COVID-19 pandemic. But for that to happen, and for South Africa’s excellent doctors and nurses to remain in the country to share those skills in the first place, they need to know that they will be free to work where they find the best fit, and be able to move around as necessary. NHI would simply add another reason for such professionals to consider emigration.
What causes the most deaths in South Africa?
Christoff Raath, co-CEO of Insight Actuaries & Consultants, spoke at the same congress as Brijlal.
Raath said that millions of poor South Africans paid out of their own pockets for private doctor and dentist visits. They were forced to do this because they could not afford to queue for hours at public clinics and hospitals. He added that low-cost medical benefits (LCBOs) and the availability thereof, through the necessary regulatory changes, could alleviate pressure on state facilities. Such changes could then also, most importantly, help poorer citizens gain to access private medical services.
The Council for Medical Schemes has been dragging its feet with the adoption and implementation of a new LCBO framework since 2015. It is regulatory barriers against products such as LCBOs that inhibit people’s healthcare options, and which force poorer South Africans into yet more dependence on declining state services.
Instead of focusing its limited resources on an unachievable system such as the NHI, the state should rather pivot towards upgrading and maintaining public facilities and opening more of these to private ownership. Speeding up the adoption of a new LCBO framework will also ensure that poorer citizens can access quality care through private sector options.
Lastly, the state can provide vouchers for indigent citizens to access care at any facility of their choosing. It is immoral to continue to force citizens to inferior state facilities, and to promise them that a system such as the NHI would ever truly work when all the evidence points in precisely the opposite direction.
Source: Free Market Foundation, Medsuite, Institute for Health Metrics and Evaluation
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