An economic review of the past week

By Luyolo Mkentane Time of article published Jul 14, 2018

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JOHANNESBURG - This week saw embattled consulting firm McKinsey & Company apologising for their role in state capture and undertook to repay Eskom about R900m the utility had so desperately been demanding since last year.

However, Corruption Watch said not so fast and threw a spanner in the works by calling for a criminal prosecution of all those involved in the controversial Eskom tender.

Eskom had paid McKinsey and a Gupta family-owned consultancy Trillian R1.6 billion for advising the power utility on a turnaround strategy in 2016.

Corruption Watch executive director David Lewis has said McKinsey’s grovelling does not take away suspicions that the Eskom contract was mired in criminality and should be subjected to criminal investigation.

Also making news this week was the restructuring of operations by Tsogo Sun and Absa Group.

Tsogo Sun, South Africa’s largest hotel and casino operator, sold seven of its casino and hotel businesses to Hospitality Property Fund in a shares-and-subscription deal worth R23 billion.

It described the transaction as the board’s strategy aimed at restructuring the company into three separate and distinct operating divisions including: property, gaming, and hotel management divisions.

Absa on the other hand, formerly Barclays Africa, rebranded its identity following its much publicised separation from Barclays plc. Absa also admitted that it made mistakes in its retail banking business that saw it lose market share. The bank said it would now unleash its digital strategy to claw back lost ground. The group’s other ambitious plans are to double its share of revenue in Africa from 6 percent to 12 percent.

Many were left shocked when the SA Revenue Service embarked on a warpath this week, naming and shaming tax defrauders who included former Bafana Bafana star and current Cape Town City midfielder Teko Modise, among others.

As if that were not enough doom and gloom, the South African Chamber of Commerce and Industry’s monthly business confidence index retreated for a fifth consecutive month in June. It fell to 93.7 points compared to 94 points in May.

On a positive note, Public Enterprises Minister Pravin Gordhan announced that the board of SA Express was mulling a business plan that could see the state-owned carrier taking to the skies again.

In May, the SA Civil Aviation Authority (CAA) grounded the airline, which is battling financial and operational problems, for failing to meet safety requirements.

This week, SA Express said the CAA had reinstated its Aircraft Maintenance Organistaion certification, described as a step towards the resumption of the troubled carrier’s flights.


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