Latest news with #Nkonki
The Citizen
02-05-2025
- Business
- The Citizen
Weekly economic wrap: Rand stabilises while gold loses shine
The rand looked a lot better this week as China seems more likely to talk to the US about tariffs, but it cost gold a few dollars in price. It was a quiet week on the domestic economic front, with two public holidays and few data releases showing the South African economy's performance. The good news is that the rand was more stable this week, although gold lost a tiny bit of its shine after its record-highs of the previous week. Isaac Matshego and Busisiwe Nkonki, economists at the Nedbank Group Economic Unit, say the rand is benefiting from improved risk aversion as fears about the US-China trade war ease. China's commerce ministry was quoted as saying that trade talks with the US are imminent after the Trump administration expressed its readiness to start negotiations on tariffs. In South Africa, Finance Minister Enoch Godongwana announced that a revised budget for the current financial year and estimates for the Medium-Term Framework for the current and the next financial year will be tabled on 21 May. ALSO READ: Godongwana consents to court order against VAT increase Scrapping of VAT increase helped the rand Matshego and Nkonki say the announcement about scrapping the VAT rate increase to 15.5% from 15% has somewhat eased fears about the stability of the government of national unity (GNU), which helped the rand. The rand traded at R18.36/$ on Friday afternoon, firming from R18.59 on 30 April to its strongest level since 1 April. In the local equity market, the JSE Alsi is marginally higher despite a slump in basic materials, which was dragged lower primarily by the softer gold price. Gold was trading around 3,255.76 on Friday afternoon, its lowest level since 15 April, as global risk aversion eased. Platinum-group metal prices rebounded further, albeit marginally, the Nedbank economists noted. Brent crude oil fell to $62.21 a barrel, its lowest level since April 2021, after reports suggested that OPEC+ will announce further output expansion effective June. ALSO READ: Manufacturing PMI for April shows deteriorating SA economy Credit growth slowed in March Growth in private sector credit extension slowed further in March to 3.5% from 3.7% in February. Matshego and Nkonki say the moderation can be attributed to the bills and investments category, which contracted by 6.3%. Growth in loans and advances, which excludes bills and investments, increased to 4.3% from 3.9%, with credit in both the household and corporate sectors increasing. Household loans improved marginally to 2.9% from 2.7%, while growth in home loans was up slightly (2.3% from 2.1%) and overdrafts and personal loans continued to contract but at a softer pace. Instalment sales and leasing finance maintained its growth rate of 6.2%, while credit card usage eased to its lowest rate since January 2022, when it grew by 7.6%. Corporate credit growth increased to 5.6% from 5.1%, supported by a notable increment in overdrafts. ALSO READ: What does lowest inflation in 5 years mean for repo rate? Lower inflation and improved growth should bolster consumer confidence Overdrafts jumped to 10.3% from 4.9% in February, while commercial mortgages, instalment sales and leasing finance also edged higher. However, credit card usage by companies dropped noticeably to 2.5% from 11.1% and general loans slowed by a smaller margin, easing to 4.3% from 4.8%. Matshego and Nkonki say on the household front, lower inflation and improved growth and employment outlook should bolster consumer confidence, allow lenders to ease credit standards and therefore encourage growth in the coming months. 'For corporates, credit growth is set to remain modest amid spare capacity and heightened levels of uncertainty. However, conditions will likely recover more meaningfully later in the year as better growth outcomes boost confidence and bolster private-sector investment.' ALSO READ: Trump tariffs created unprecedented uncertainty — trade expert Trade balance: Exports expanding faster than imports According to Sars, the trade balance widened to a surplus of R24.8 billion in March from R20 billion in February, with exports leading the charge, increasing by 5.7% compared to February, although slower than the 9.8% in February, but still expanding faster than imports. The main positive contributors were machinery and electronics, which increased by 21%. Matshego and Nkonki say this suggests higher shipments to the US ahead of the Trump administration's reciprocal tariffs. Mineral products also added to the upside, up by 18%, while the unclassified goods subcategory made a surprising contribution, increasing by 467%. While a substantial increase, Matshego and Nkonki say the contribution to the headline figure is negligible, given that the category accounts for much less than 1% of the country's exports. The main export destinations during the month were China (10.2%), Germany (7.7%), the US (5.7%), Mozambique (5.6%) and India (5.3%). ALSO READ: Weekly economic wrap: Policy reversals and lowest inflation in 5 years Rebound in imports, but global trade tensions loom Imports rebounded by 3.2% in March after a 13.5% contraction in February. The recovery was driven by a 156% increase in animal and vegetable fats, with further support emanating from purchases of vehicles and transport equipment (28%), original equipment components (9%) and mineral products (7%). The main import destinations for the month were China (18.8%), India (7.9%), the US (7.2%), Germany (6.6%) and Thailand (3.7%). Over the year, exports recovered by 6.3% from 1.2%. In contrast, imports remained in contractionary territory for a second consecutive month. Matshego and Nkonki point out that the trade outlook has become increasingly uncertain due to ongoing global trade tensions. 'Imports may continue to increase as lower inflation and higher real incomes bolster import demand. The expected ongoing recovery in fixed investment will also provide an additional boost.' They note that the Trump administration delayed the tariffs imposed on most countries in late March for 90 days, providing some short-term relief for the US's trade partners, except China. However, Matshego and Nkonki say, South African exports will likely weaken this year given the gloomier global growth prospects, particularly from the country's key trade partners. 'The IMF expects global growth to moderate to 2.8% in 2025, down notably from the 3.3% estimated in the January World Economic Outlook Update.'
Zawya
03-04-2025
- Business
- Zawya
South Africa: Eastern Cape blended finance scheme supports 30 agribusinesses
A blended finance scheme by the Eastern Cape Development Corporation (ECDC) and the Eastern Cape Rural Development Agency (ECRDA) has provided R50.5m in funding to 30 agricultural businesses since its launch in 2023. The scheme, designed to enhance growth and competitiveness in the sector, disbursed funds as a combination of loans and incentives. ECRDA contributed R33.3m toward incentives, while ECDC allocated R25 million for loans. By 31 December 2024, R28.3 million had been disbursed as incentives and R22.2m as loan funding. Beneficiaries are spread across the Amathole, Chris Hani, Sarah Baartman, OR Tambo, and Alfred Nzo districts, as well as Nelson Mandela Bay and Buffalo City metros. The funded farmers produce a range of agricultural products, including beef, dairy, poultry, sorghum, cannabis, yellow and white maize, macadamia nuts, and seasonal crops such as spinach and cabbage. Supporting sustainable agribusiness growth Zinzile Nkonki, ECDC executive manager for enterprise finance and business support, says: "The response to the scheme was overwhelming, to the extent that we were not able to fund all farmers that had applied for consideration due to limited resources. The blended finance scheme mainly funds input costs, production and processing equipment of qualifying applicants as set out in their respective business plans. "These include fertilisers, seeds, irrigation, mechanisation, livestock feed and other agricultural operations activities against which a clear income stream will be derived. It also provides asset-based finance for tractors, vehicles, agricultural machinery, and other movable assets required in the agricultural operations of the applicant enterprises. 'The ECDC in partnership with the ECRDA, launched the pilot phase of the Agri-Blended Finance Scheme to promote access to finance for agri-businesses operating in the agriculture value chain, by providing de-risked loans given the high risk nature of the agriculture sector which often results in funding institutions being reluctant to issue funding. "This is a useful instrument in an environment where agriculture funding is mainly directed at established commercial agricultural enterprises." Nkonki says the agri-blended finance scheme aims to leverage public and private sector resources to increase the scope of available support (financial, technical, and non-financial) and to unlock and enhance agricultural value chains with a clear commercial intent. The idea is to use blended finance instruments such as this one to de-risk credit and financial risks that tend to render agribusinesses refundable. Case study: LM Holdings expands production One of these agribusinesses is LM Holdings, whose 15 Idutywa-based co-operatives farm sorghum, white maize, soya beans and other grains. The scheme disbursed R3,9 million to the business, with R1.9m being an incentive and R1.9m being a loan. Their business model involves partnering with communal landowners and smallholder farmers in commercialising the use of their land. "The funding helped LM Holdings to acquire production inputs, a planter, boom spray and harvester. The business also has United National Breweries in Durban as its market. "This season, LM Holdings has cultivated 600 hectares in the Ngxakaxa cooperative, 300 hectares in the Chachazela cooperative, 150 hectares in the Qhorha cooperative, 210 hectares in the Ndakeni cooperative, 150 hectares in the Nqandu cooperative, 90 hectares in the Mangwevini Cooperative, and 200 hectares in the Fort Malan cooperative. The crops planted in these cooperatives include sorghum, soybean, sunflower, white and yellow maize," Nkonki says. Founded by two rural youths, Mzimasi Jalisa, 29, and Siphe Joyi, 31, Jay Jay Farming is based in rural Mputhi in Mthatha. Jay Jay Farming received R2,2m from the Agri-Blended Finance Scheme. Of this amount, R1.084m was an incentive and R1.1m a loan. The funds went to the procurement of maize crop production inputs, the development of infrastructure such as the construction of a storage shed, and working capital. A total of 202 hectares have been planted with white maize, while 130 hectares have been cultivated with soya beans. The business has employed 15 permanent workers and employs a further 15 seasonal workers. Their produce is being sold to Mthatha, Ngcobo and Kokstad retailers, animal feed companies and to local communities. Also based in Mthatha, EC Poultry received R1,026m from the scheme, with R706,400 being an incentive and R320,367 being a loan. The enterprise specialises in the rearing of chickens (layers) and the cultivation of vegetables. The funding facilitated the purchase of feed, medication and vaccines, as well as infrastructure development for the installation of a solar-powered borehole, storeroom and fencing. Additionally, a storeroom is being constructed. Fencing has been completed for an area of over 3.5 hectares. The business has access to markets for eggs, while cabbages are sold to local hawkers and residents. Furthermore, the project maintains a positive relationship with the Department of Defence, which is advocating for the farm to supply its branches. Tailored loan repayment structures for farmers "The farmers are repaying the loan portion of the scheme, with pineapple farmers enabled by off-take agreements. Farmers have different revenue intervals informing the repayment plans agreed upon with the ECDC. For example, most maize farmers will repay their loan portions after the June to August harvest. "Similarly, beef cattle farmers generate revenues on the sale of weaners; hence, repayment terms for several farmers have been structured accordingly. This means if production stock was funded, the scheme takes into account the gestation period as well as the time it takes for a calf to be ready for the market as a weaner. Crop farmers are generally granted a moratorium to allow them sufficient time to grow their seasonal crops so that they are ready for the market," Nkonki concludes. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
