From goings-on in politics to info drops in the economic world, we’ve got you covered on what to expect this week.
Politics
South Africa resumes trade talks with the US
South Africa was set to resume trade talks with Donald Trump’s administration from Sunday, running until Wednesday June 25, on the sidelines of the US-Africa Business Summit. The proposed framework, first presented to the Trump administration when President Cyril Ramaphosa visited Washington on May 21, includes:
- A joint fund for the exploration of critical minerals in South Africa;
- A duty-free quota of 40,000 vehicles a year for the auto industry and duty-free access for automotive components sourced from South Africa for production in the US;
- A duty-free quota of 385-million kilograms of steel and 132-million kilograms of aluminium annually; and
- Increasing imports of liquefied natural gas from the US to as much as 100 petajoules annually for 10 years, which could generate as much as $12bn in trade over a decade.
South Africa is behind countries such as India and the UK in the queue for negotiating a trade deal with the US, making it challenging to reach an agreement by the July 9 deadline, when tariffs will triple from the current 10%.
Local government white paper talks
Kicking off the week on Monday, co-operative governance minister Velenkosini Hlabisa will convene more than 300 delegates from every party represented in parliament and municipal councils for a high-level dialogue themed, “Every Municipality Must Work – A Call to Collective Action”.
The meeting, flagged in last week’s co-operative governance and traditional affairs advisory, is part of the formal review of the 1998 White Paper on Local Government. The one-day session in Midrand is billed as the launchpad for a reform bill that could tighten audit rules.
Metro municipalities’ finances are in a very sorry state. Earlier this month, auditor-general Tsakani Maluleke did not hide her disappointment in the poor financial health of local government, writing: “Three years into the administrative term, metros still struggle to take the lead in ensuring service delivery to all their residents in a financially responsible manner.”
Read The South Africa Brief’s latest Municipal Review here.
By-elections
Three by-elections will be contested on Wednesday: Ward 56 in Tshwane (Gauteng), Ward 9 in Mossel Bay (Western Cape) and Ward 8 in Knysna (Western Cape).
In the 2021 local government elections, the DA won 62% in Ward 56 with ActionSA coming in second at 10% and the FF+ third at 9.8%. Candidates from the DA, ANC, EFF and FF+ will be contesting the ward.
In Ward 9, Mossel Bay, the DA in 2021 won 44.8% of the vote to the 23.2% of the Independent Civic Organisation of South Africa. The ANC and PA won 17.3% and 7.1% of the vote respectively. In the 2024 provincial vote, the PA finished a close second to the DA. Ward 9 will be contested on Wednesday by the DA, ANC, PA and an independent candidate.
In Ward 8, Knysna, the ANC won 72.4% of the vote in 2021, with the DA a distant second at 9.5%. The PA won 5.5%. Wednesday’s by-election is being contested by the ANC, EFF, PA, Knysna Independent Movement, Land Party and MK.
Economics
The producer price index, May data
This week’s key data drop, May’s producer price index, arrives early on Thursday morning. We are likely to see a bit of upward pressure, edging up to 0.8% month on month after two flat months (0.5%), pushed higher by food costs but capped by petrol (-18.9% year on year) and diesel (-15.5%), as softer Brent prices are reflected.
A firmer rand/dollar exchange rate helped in May, and production costs in most of the other components are also expected to have remained contained, reflecting some improvement in infrastructure constraints and less disruptive load-shedding.
SARB Quarterly Bulletin
Less than two hours later, the South African Reserve Bank’s Quarterly Bulletin headlines Q1. Lower inflation and the new “two-pot” pension withdrawals are likely to have padded household disposable income. Still, firms are likely to have remained somewhat cautious about new borrowing.
However, the Bank’s own Financial Stability Review, released last week, cautioned that “South Africa is vulnerable to the spill-over effects of trade-related tensions and international conflicts”.
With a US tariff deadline firmly on the horizon and turmoil in the Middle East still brewing, analysts will pay close attention to the Bulletin’s current account and credit tables for clues as to how much shock-absorber South Africa really has left.
This article was originally published by The South Africa Brief, a political newsletter published on Substack which is a collaboration between Paul Berkowitz and Jonathan Moakes. It provides analysis and insight into the new, uncertain era of South African politics heralded by the 2024 general election. Including a specific focus on municipal politics, it will provide full analysis in the run-up to next year’s municipal polls.
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