2023 looks set to be an eventful year in the South African business landscape. Here are some of the biggest developments you can expect.
Will South Africa be greylisted?
The Financial Action Task Team (FATF), a global body that monitors compliance with anti-money laundering and combatting terrorism financing measures, will make its decision in February.
It is expected to put South Africa on its grey list – which signals to other countries and international businesses that it is riskier to do transactions with South African companies and individuals.
This means that South Africans will face more due diligence from international banks when they want to transact, which could make it more expensive for locals to trade and have bank accounts or investment accounts abroad, according to a report by Business Leadership SA. Local banks may be hit by the biggest charges.
The economic impact could range between less than 1% and 3% of GDP depending on how quickly SA can exit the grey list, according to the report compiled by consultancy Intellidex.
What did the Competition Commission find in their dawn raids of Discovery, Momentum, Old Mutual and Sanlam?
In August, the commission raided the offices of eight major insurance firms over alleged collusion and price fixing.
READ | Insurance collusion and price-fixing probe is ‘quite advanced’, says Competition Commissioner
The companies were accused of sharing information and fixing fees for retirement annuities and other risk insurance products. According to the commission, it has evidence that the insurers shared information before they formulated pricing on new products – even sharing passcodes so that they could access other’s systems.
It seized documents to determine whether the companies contravened the Competition Act. Details on the charges may emerge in coming months.
Will the SAA deal go ahead?
Back in June 2021, government announced that the Takatso consortium would become the new controlling partner of SAA – subject to financing and regulatory requirements.
The conclusion of the deal has long been delayed, and now looks increasingly unlikely amid a rupture in the consortium.
Takatso consists of the infrastructure investment firm Harith as majority shareholder, and minority shareholders Global Airways, a full-service leasing company which owns airline LIFT, and an airline management company founded by Gidon Novick.
Novick, who represents the minority shareholders on the Takatso board, recently quit as director of the consortium – citing concerns about a lack of communication and the consortium’s ability to raise R3 billion needed for the deal.
Meanwhile, Harith said it is unable to raise the money until government pays SAA’s outstanding debt. This remains an unresolved issue, with no clear indication from government if and when this could happen.
How serious are the issues at Spar?
The JSE-listed Spar has faced a range of accusations of dodgy accounting and fraudulent loans in recent weeks, forcing its former CEO Graham O’Conner to step down as chairperson.
Fraud charges were filed against senior executives of Spar, including O’Conner, amid allegations that the grocer falsely claimed in 2019 it was owed money in order to gain control over certain supermarkets.
The group is also facing off with one of its store owners in Johannesburg amid allegations it inflated the price of a store.
In addition, Business Day reported that two ‘fictitious’ loans had been uncovered in a report compiled on behalf of Spar’s board, which was looking into allegations of unfair treatment and racism.
Will Markus Jooste finally get his comeuppance?
More than five years after his dramatic resignation at Steinhoff – which triggered a collapse in the company’s share price – Markus Jooste will go on trial for accounting fraud in Germany early in 2023. Steinhoff’s primarily listing is in Frankfurt.
The local authorities have yet to charge Jooste or anyone connected to Steinhoff.
Steinhoff is also still waiting for a court date in its bid to recoup R850 million from Jooste. The company has launched a civil case to claw back the money paid in salaries, bonuses, and other incentives to its former CEO.
We may also learn more about Jooste’s finances if he decides to fight the Reserve Bank’s order to attach his assets. The former Steinhoff boss has until the end of April to apply to have the order set aside, which may be followed by a case in open court.
Meanwhile, Steinhoff looks set to exit the JSE after the group reached an agreement with its largest creditors, which could see them holding 80% of the company.
If shareholders agree to the deal, they would end up owning 20% of the company, with creditors entitled to the rest. The company will no longer be listed on any stock exchange. The company has a debt burden of €10 billion (R185 billion).
Will Telkom stay single?
Telkom started 2022 as a relatively hot property, with MTN looking keen to buy it.
But the mobile giant then walked away from negotiations, apparently demanding exclusivity in discussions. Telkom was also approached with a merger bid from Rain.
With Telkom’s prospects now looking increasingly grim – its interim headline profit halved, and the company downgraded its profit forecasts due to higher costs – some investors are hoping that MTN would swoop back in, and Telkom’s CEO said he remained open to talks with the mobile giant. Meanwhile, a merger with Rain can also not be ruled out.
How will Luno be affected by the crypto crisis?
2022 was a tough year for crypto currency investors and entrepreneurs. Crypto prices plummeted, while one of the industry’s biggest exchanges, FTX, collapsed as customers rushed to get their money out. For most of them, it was too late. FTX’s founder Sam Bankman-Fried, since arrested, is accused of channeling billions of dollars in client money to his own projects.
South Africa’s largest cryptocurrency exchange Luno, which has 10 million clients, has been dragged into the turmoil. Its sister company Genesis Global Capital is facing liquidity pressures, and has warned that it may need to file for bankruptcy. Luno uses Genesis’ services for its savings wallet.
Luno and Genesis are owned by US parent company Digital Currency Group, which warned of “extreme market dislocation and loss of industry confidence caused by the FTX implosion” and said it was in “constructive conversations with creditors”, the Financial Times reported.
Luno says its customers have been unaffected, but 2023 will shed light on whether it can remain unscathed amid the damage wreaked on its global owner.
Will Engen get a new owner?
According to a Bloomberg report, the Malaysian state energy company Petroliam Nasional wants to sell its 74% stake in Engen in a sale that could fetch about $2 billion (almost R34 billion).
Insiders say the Singaporean-based Swiss trading firm Trafigura Group, and Vitol Group in the Netherlands may be interested in getting control of the local fuel giant.
Will British Airways return to SA?
British Airways’ long-standing franchise agreement with Comair came to an end this year, after the local aviation group was liquidated.
It is reportedly still keen to partner with a local player and SAA confirmed that it is talking to its British counterpart about taking over its franchise agreement in South Africa.
What will happen to RBPlat?
Impala Platinum launched a takeover bid of Royal Bafokeng Platinum back in October 2021. Northam Platinum offered a competing bid to some investors, which it recently extended to all shareholders. Implats received the go-ahead to buy RBPlat from the competition authorities this year. But it – and Northam, potentially – still faces a massive hurdle: the Public Investment Corporation is refusing to sell its 10% stake in RBPlat.
How much will Woolworths get for David Jones?
After a disastrous six years, Woolworths has inked a deal to sell the Australian department store chain.
In 2014, Woolworths paid more than R21 billion to buy David Jones. It turned out to be a terrible investment and cost it billions in write-offs.
It has not yet confirmed what it will get from the Australian private equity fund, which agreed to buy the chain. But CEO Roy Bagattini said the firm would “realise value” from the sale and there would be no writedowns related to the transaction.
Will the Tongaat execs and a Deloitte partner end up in jail – and what will happen to the sugar producer?
In 2023, the fate of former Tongaat Hulett CEO Peter Staude and six others, including former ex-directors, may be decided in court as they are prosecuted in an R1.5 billion fraud case. Former Deloitte audit partner Gavin Kruger will appear alongside them. The fraud charges relate to sales of the sugar producer’s land between 2015 and 2018.
Tongaat’s business rescue practitioners are currently in talks with Deloitte, which could result in a large payout from the auditor, which charged Tongaat Hulett R299 million in fees over 11 years. During this time, there were major misstatements in the company’s annual finances that eventually led to the collapse of the company’s share price.
Meanwhile, Tongaat is in dire straits. The company entered business rescue in late October after lenders opted not to approve the sugar producer’s restructuring plan, which was aimed at solving an excess debt pile in SA of more than R6 billion. A takeover bid by Mauritius-based company Magister Investments – which has close ties to the Zimbabwean Rudland family, which owns the controversial cigarette group Gold Leaf Tobacco Corporation – failed.
Now a consortium of cane growers that supply Tongaat has expressed interest in acquiring the assets of the embattled sugar producer. They believe their offer is one of the few viable options to save 11 000 small-scale growers and 20 000 cane grower jobs.
What will happen to Sapref?
In February, the Durban refinery’s joint owners, Shell and BP, announced they would stop operations.
Sapref was the largest crude oil refinery in Southern Africa with 35% of South Africa’s refining capacity. It produced 24 000 tons of fuel per day. The oil giants refused to commit more money to the refinery. The suspension of the operations came just ahead of an annual maintenance shutdown, which would have required a considerable investment.
At the time, Mineral Resources and Energy Minister Gwede Mantashe hoped that the Central Energy Fund would buy Sapref. However, this was seemingly abandoned after the KwaZulu-Natal floods caused severe damage to the refinery.
Mantashe has now pinned its hopes on the Saudi oil giant Saudi Aramco to launch a refinery in SA.
READ | Sapref isn’t the first and won’t be the last refinery in SA to shut down
Will Dis-Chem face legal action over its hiring policies?
After an internal memo, penned by its CEO Ivan Saltzman, announced a ban on external appointments and internal promotions of white people, union Solidarity threatened to take legal action against Dis-Chem in the Labour Court.
Solidarity contends that the company overstepped by imposing an “absolute barrier” when it came to staff hires.
Dis-Chem said it would “strenuously” defend any legal action against it.
Will SARS try to claim R1 billion back from MTI?
In July, SARS lodged a claim against bitcoin trading site Mirror Trading International (MTI) for R931 million in back taxes and penalties.
MTI’s liquidators of disgraced have denied this, saying its actual tax liability is zero.
MTI was a South African cryptocurrency investment portal that enticed thousands of members to buy bitcoin with promises of sky-high returns. It collapsed in late 2020 after securing billions of rands in investments.
Were the site’s liquidators to hand over R931 million to SARS, there would be little left to pay out to claimants and investors as part of the winding-up process.
SARS is currently considering the objection, with the liquidators saying it was the fault of MTI’s former leadership that no tax returns were submitted.
Will the analogue television broadcast signal finally be switched off in 2023?
Following years of delays, and a successful court bid in 2022 by free-to-air private broadcaster e.tv to postpone it, Minister of Communications and Digital Technologies Khumbudzo Ntshavheni said that SA’s analogue television broadcast signal in South Africa will be switched off on 31 March 2023.
Will SA carmakers start to pivot to electric vehicles?
South Africa’s manufacturing sector urgently needs to move towards producing electric vehicles, as the European Union and others move to stop imports of internal combustion engine vehicles.
Around 100 000 jobs may be at stake in the next five years if local manufacturers don’t start to pivot soon, government has warned.
Will Karpowership win in its bid to provide electricity in SA?
The Turkish energy group won the largest share of an emergency tender issued by the Department of Energy in late 2020 to quickly add capacity to SA’s overburdened grid.
But its bid stalled in June last year after the Department of Forestry, Fisheries and the Environment (DFFE) rejected its application for environmental authorisation. The department criticised its public consultation process and failure to submit an underwater noise modelling study.
A subsequent appeal process dragged on for over a year before the department again found against the group.
But rather than reject the application outright, Environment Minister Barbara Creecy ruled that Karpowership SA could resubmit parts of its environmental impact assessment once it had conducted a fresh round of public hearings.
It conducted public hearings towards the end of 2022, and the group plans to submit its environmental impact assessment to the DFFE before 13 January.
If environmental authorisation is granted, powerships could start feeding electricity into the grid in early 2024.
Will Coca-Cola list on the JSE?
From more than 800 companies in 1999, the JSE now only has 304 listings – after another 25 companies were delisted in 2022. Among them were Makro and Game owner Massmart, Imperial Logistics, PSG – and Distell and Medi-Clinic will follow soon following takeovers.
New entrants are desperately needed, with Coca-Cola Beverages Africa’s planned listing the biggest on the horizon.
CCBA is the biggest bottler on the continent, and the eighth biggest in the world. It produces 40% of Coca-Cola products in Africa and has 40 plants in 14 countries, with around 8 000 employees in South Africa alone.
It was previously owned by SABMiller, with US giant Coca-Cola buying out the brewer in 2017. After announcing plans for an initial public offering for CCBA in April 2021, Coca-Cola decided to delay it in 2022.
Coca-Cola said it would “continue to evaluate macroeconomic conditions in deciding future timing for an IPO in 2023”.
Who will be the next CEO and COO of Eskom?
André de Ruyter will leave the utility at the end of March 2023. Mpho Makwana recently appointed chairperson of the Eskom board, is the acting CEO.
He was widely expected to step into the role of Eskom group chief, permanently – but the Eskom board denied this.
Eskom will also have to find a new operating chief, with Jan Oberholzer retiring in April 2023.
What will the settlement between Eskom and Stefanutti Stocks be?
Construction and engineering firm Stefanutti Stocks is eyeing a settlement with Eskom over the work it did at the controversial Kusile Power Project, which has been mired in corruption and massive cost overruns. Eskom has said it overpaid Stefanutti for its work, which the company disputes, and an independent body of experts is expected to issue a binding decision in the second quarter of 2023. Both parties may refer the matter to arbitration, and to date, Stefanutti has submitted a provision R1.14 billion in claims. It still needs to submit claims related to commissioning costs and interest in the new year.
Additional reporting by Jan Cronjé, Greg Arde, Lisa Steyn and Karl Gernetzky