COMMENT
S
outh Africa continues to take a barrage of blows to
its body as the rand dipped slightly against the dollar
and the petrol price soared to another record high in
June, with the Department of Energy announcing a massive
increase in prices at the pumps. Soaring 82 cents a litre for
both 93 and 95 octane fuel, diesel was hiked between 85 and
87 cents per litre, and illuminating paraffin went up by 82 cents.
The impact is sure to be felt across the country as transport
costs soar, with the inevitable knock-on effect. That this comes
right after a one per cent VAT increase, only rubs salt into the
taxpayers’ wounds — and believe me, we are wounded.
Speaking to players within the construction equipment sector,
many cite the fact that Cyril Ramaphosa isn’t moving nearly fast
enough and the main perpetrators of state capture, the Guptas,
appear to be slipping the net — and setting an example to
criminals, sending out a message that crime indeed does pay.
This, against a backdrop of increased crime and criminal impunity,
exacerbated by former president Zuma fomenting discord and
calling for a counter revolution.
There is an air of impatience for positive action and, as Bob
Fogg of Spider Cranes says, “We are becoming weary of the
corruption and [business] confidence is starting to tip into no
confidence.” Fogg cites that the increase in equipment [and other]
theft is motivating businesses to close doors. “No one is doing
anything about it; neither the police nor the government,” he
says, referencing a recent burglary at his premises, where office
equipment and generators were stolen. “I’ve been in business for
27 years and the past two years have been the worst to date.”
Nevertheless, he reveals that there has been an increase in
equipment enquiries after the bauma CONEXPO Africa show in
March, “and there is quite a bit in the pipeline”, he adds with a tinge
of optimism.
While South Africans are bemoaning the VAT increase, however,
he says it is too soon to see if there has been an effect on
equipment sales and this is echoed by Rudi Jones, GM Volvo Penta
Take VAT...
...and that, SA!
While Jones may agree with Fogg on the VAT issue, as an engine
supplier into mining and construction, he is definitely more
upbeat about the sectors. “Construction has increased, and it is
going through a growth phase currently,” he says, “if you look at
the movement of mining and construction-related equipment,
compared to the same period last year,” he maintains. While he
cannot commit to percentages, he adds tentatively, “I think mining
is probably up double digits, as is surface [mining].” He also says
that screening and crushing equipment is following the upward
trend, “closer to 8 or 9% increase”. He cautions, however, “I cannot
quote exactly; I can only see in the upswing of our supply into
these segments.”
He draws attention to the Mining Charter sitting in the wings,
“where everyone is waiting for the adjustments” and observes that
this is impacting investor confidence. “There is enough capital to
be invested, it’s just that everyone is waiting to see what happens. I
think we’ll be in for a bumpy ride until the 2019 elections,” he adds.
Marc de Chalain, business development manager at Joy
Global, stresses that his focus is outside of South Africa. “What
we are seeing is commodity-dependent, as our equipment
is commodity-linked,” he says. De Chalain explains that while
Tete, in Mozambique, is “ticking along”, he points out that there
is buoyancy in the copper side, specifically in Zambia, whereas
in Namibia, the uranium sector is struggling, “there is next to
nothing and the guys are scratching to save money.” He adds, “It’s
business as usual; more conservative, but not on the down and
generally, I’d be cautious to say it’s on the up.”
And finally, another sucker punch comes from the Automobile
Association (AA), which warned in the first week of June that,
should market conditions continue on the
current path, motorists can expect yet
another petrol price hike in July, with the
price expected to shoot past R16 a litre
on a steady march to R17 a litre.
Southern Africa. “It’s being implemented across the board; the nett Kim
effect will only be impacted later on,” Jones says. Editor
JULY 2018
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