South Africa

Starbucks serves up a tepid brew in Johannesburg

27 Jul 2015

The coffee giant has been blitzing China, but its move into South Africa is more cautious. Although the country offers a growing middle class, GDP growth is slowing. And too few Africans can afford the “Starbucks experience” for rapid expansion across the continent. 

SABMiller’s Coca-Cola push is Africa buy signal

27 Nov 2014

The UK brewer and the U.S. drinks giant are merging assets in southern and eastern Africa to create a soft-drinks bottler with $3 bln of sales. SAB gets control and gains market access. The move points to the continent’s strategic potential, and similar consolidation could follow.

South Africa’s bank bail-in better than Portugal’s

11 Aug 2014

A public bailout for reckless ABIL is sub-optimal. But unlike Portugal’s BES rescue, senior creditors will take some losses. And while taxpayers remain exposed to the new bad bank, the political desire to maintain lending capacity to poorer citizens is understandable. 

Anglo may struggle to make clean platinum break

21 Jul 2014

The UK-listed miner’s South African unit wants to sell high-cost mines that account for a quarter of platinum production and half of the workforce. It’s a sensible move for Anglo, but the politics are fraught. If the buyer gets into trouble, Anglo might end up back on the hook.

Woolworths pays too-steep ransom in Aussie battle

24 Jun 2014

The South African group is buying billionaire Solomon Lew’s stake in an Australian unit in return for his support in its $2 bln takeover of retailer David Jones. The $201 mln side deal lifts the effective takeover premium – raising the pressure on Woolworths to realise synergies.

Aussie billionaire has least to lose in retail war

19 Jun 2014

Solomon Lew’s purchase of 10 pct of retailer David Jones could scupper a $2 bln takeover by Woolworths. The move may be an attempt to force the South African group to raise its bid or buy the retail veteran’s shares in another subsidiary. The two companies have the most to lose.

Review: China gives Africa handy investment lesson

6 Jun 2014

Howard French’s new book paints an unflattering picture of the PRC’s heavy involvement in Africa. But China’s presence is not all bad. At a minimum, it gives African governments and businesses a benchmark for other offers now that the continent is attracting Western interest too.

BRICS bank: a good idea that can do grave harm

6 Jun 2014

Brazil, Russia, India, China and South Africa are sponsoring a World Bank clone. The new lender could ease the infrastructure deficit in emerging markets, but could also end up backing social and environmental disasters. The bank’s governance will decide if it’s a boon or a bane.

South Africa needs neighbors’ growth rates

1 May 2014

Two decades after Nelson Mandela became president, the post-apartheid generation will vote for the first time in the May 7 election. The ANC represents his political legacy, but that’s undermined by the party’s weak economic results. Maybe the “Born Frees” can help change that.

EM rate hikes aren’t enough to scare FX traders

29 Jan 2014

Turkey’s hefty rate rise gave the lira only fleeting respite. Traders scoffed at a smaller South African rate hike. Euro zone bond vigilantes folded at the ECB’s commitment to preserve the euro. But FX traders look set to test central banks’ capacity to defend EM currencies.

Western debt magic is poison for Africa

24 Dec 2013

A poor continent with limited savings is hugely vulnerable to a credit crunch. Africa desperately needs capital, but only the sort that can’t easily leave. Speculative investors and yield-hunters will eventually do more harm than good. There’s a caution here for Bob Diamond.

Mandela’s successors can shape his economic legacy

10 Dec 2013

As world leaders remember a great statesman, they may ponder South Africa’s middle-income trap. Compared with other post-colonial economies, even stagnation would be a tribute to Mandela’s peace-making. It’s up to those who followed him to buck recent trends and escape the trap.

South Africa looks like grim shadow-BRIC

29 Aug 2013

The country is sometimes listed as a near member of the group of developing world giants. Alas, it comes close in the wrong direction: Russia’s one-party rule, Brazil’s corruption, China’s spiraling labor costs and India’s inefficiency. It desperately needs a better growth model.

S. African miners have few options in wage talks

11 Jul 2013

In a healthy industry, prices of goods should support the cost of decent wages. In South Africa’s mines, a toxic mix of deprivation, politics and geology creates underinvestment and angry workers. With the prices of key metals falling, it’s hard to see the dynamic changing.

South African economy bogged down in old politics

30 May 2013

Real GDP didn’t even manage a 1 pct growth rate in Q1. That pales next to star economies like Ghana’s. Mining rebounded but manufacturing fell. While emerging near-neighbors are welcoming foreign investment and small business, South Africa’s leaders are reliving past battles.

BRICS inch towards alternative to dollar bloc

27 Mar 2013

Brazil and China will use their own currencies for trade and the five nations are still working on creating a rival to the World Bank. With nearly half the world’s population and 15 pct of its trade - and despite flawed policies - the group is a useful counterweight.

Anglo opts for high-risk, high-reward in platinum

15 Jan 2013

The embattled miner deserves credit. Its long-awaited platinum restructuring was more aggressive than expected. The task for the incoming CEO is to execute without more of the labour unrest that hit output in 2012. The shares’ subdued response suggests investors are rightly wary.

New Anglo boss needs free hand to make changes

8 Jan 2013

Mark Cutifani’s operational nous and South African experience make him a good choice to run Anglo American. But the miner’s incoming boss should set his own agenda, including examining a breakup. Anglo’s institutional inertia already threatens to undermine his authority.

Whole of sub-Saharan Africa is the real quasi-BRIC

14 Dec 2012

South Africa alone can’t match the others in the emerging club. But add non-Arab continental neighbors, and the combined GDP is over $1 trln and growing fast. Single countries are too small for most investors. But if the region can combine markets and trade, it could take off.

Lonmin doesn’t have to surrender to Xstrata – yet

9 Nov 2012

The big platinum miner spurned 25 pct owner Xstrata’s demand for management change in return for backing its $817 mln rights issue. It can afford to, for now: the fundraising is underwritten and Xstrata is probably loath to be diluted. But after this battle, Lonmin faces a war.