Sitting in a Pretoria cafe, the lights went out and it was pitch black. But my policymaker coffee date and I just kept talking like nothing had happened.

The dangerous thing about load-shedding is that it has become entirely normal. Sure, the economy loses about R1bn a day during stage 4 load-shedding (Nova Economics estimates for Eskom) but that is far lower than estimates done in 2007 or 2019 — as the economy has adapted and the unpredictability of Eskom’s ancient fleet has become predictable.

The investment that has been dissuaded hasn’t happened and the economy has found a new (rather unsatisfactory) equilibrium. Of course, the media and political outrage gets repeated as usual. But we have yet to see meaningful shifts to actual action. Yet I have my doubts that, despite so many advisers pointing out issues for so long (including the Eskom CEO with his list of asks last week),  the problems in the system are really, fully understood by those who need to take action — politically especially.

There is no innovative or decisive policymaking. There seems a kind of happy daze that IRP2019 is being implemented (tick), energy procurement is done (bid window 5, tick; bid window 6, tick; a signing ceremony coming up for the risk mitigation round, tick).

Actually, there is serious procurement and market failure occurring that is not sinking in and so load-shedding risks being extended into the future. A significant minority of bid window 5 projects cannot reach financial close because they do not meet local content requirements as local producers don’t have the capacity and imported capital goods prices have shot up by about 30% even before the onset of the Russian invasion of Ukraine (meaning the projects now have negative returns).

There is a choice to have failure of a large number of projects in the round or continually delay it, hoping magically that capital goods prices will fall back and local content will emerge (neither will).

Bid window 6’s request for qualification and proposals then came out too early before the mess of bid window 5 was cleaned up and with many of the same potential flaws (especially in local content) in it. This is now causing confusion. The risk mitigation round similarly is underwater.

The president’s implicit admission in his state of the nation address was a positive in February that the expensive (and not to mention smell-test-failing) Karpowership deals were a non-starter when he mentioned that only 800MW out of a total of 2GW was ready to close.

Yet financial close has been delayed further waiting for the Karpowership deals to come back from the dead (they won’t, they will be bogged down in legal action forever).

This prevents other power coming on grid faster. If there were predictable, periodic procurement rounds every three to four months, then the failure of any set of projects at any time would not matter.

Instead, we are chasing our tail trying to ensure no-one fails while then locking in future procurement to the same mistakes. Equally, the lack of movement by Eskom on smaller procurement opportunities (due to a lack of action by the department of mineral resources & energy and the Treasury) or the inability for any player to push forward with fast, radically different procurement methods like feed-in tariffs all means we are locked into the current situation.

The Renewable Independent Power Producer Programme (REIPPP) does not need to be scrapped — it just needs to be reformed; the independent power producers office needs to loosen its grip on its baby. It should be made ship shape for a future where there is competition, with corporate energy buying and an independent transmission system and market operator creating a market.

There is a much deeper problem, and that is that energy procurement and the just energy transition more broadly are bound up within a political and bureaucratic mindset that all of SA’s problems must be solved through this one process — employment creation, community ownership, woman and disabled access to projects, social stability, local content and industrialisation.

The point here is not to throw all this out of the window completely — REIPPP has been highly successful at starting to answer some of these questions. The point instead is that each is not served by such a fixation that nothing ends up happening and we end up with more unemployment, projects with community ownership stuck on this merry-go-round, the demand required to create sustainable localisation not being realised.

This is why the intervention of the RMB CEO last week was so interesting — as was the polarised backlash against it. The point in scrapping local content requirements in the short term is not that localisation isn’t a fine long-term goal — it’s that you can’t create localisation in a short period of time without the demand in the first place and without the scale and predictability of rounds moving forward at pace.

For me, scrapping the targets now as well as allowing some preferred bidder projects to fail actually increases the chances of successful and sustainable localisation in the long run. Originally, the vaguely bullish view was that new procurement now coming on stream after a lag meant you just had to wait out a period of two years or so of load-shedding to get to the new nirvana.

Yet the mess procurement is in now means we are moving our own expectations of when there is new energy on grid from current rounds of procurement and so load-shedding risk starts to fall, from H2 2023 out into mid-2024. This should be deeply worrying for policymakers, with the risk of prolonged load-shedding over those crucial elections now much higher.

Many years ago I said (in these pages) that only a full blackout would galvanise the political economy to make the right decisions on energy fast enough to liberate growth and a recovery. I still believe that — as painful an outcome in the short term as it would be.

• Attard Montalto is head of Capital Markets Research at Intellidex, an SA research-led consulting company. This article first appeared in Business Day.

Amid Sekunjalo Group’s high-profile efforts to force banks to provide it with accounts, I want to pose an awkward conceptual question: should banks be forced to do business with companies they don’t want to? I think there are some narrow circumstances in which the answer is “yes”.

But let me be clear: banks’ shutting of accounts has been crucial to fighting state capture and corruption. I don’t think it is an exaggeration to say the banking sector stopped the Guptas. It was only when banks closed their accounts that the wheels of state capture ground to a halt. Without bank accounts, it is very hard to steal money at any scale.

While this was undoubtedly good for SA, it has always given me some discomfort. Banks are within their rights to shut the accounts of anyone they don’t want to do business with; moreover, they have a legal obligation to avoid business with anyone potentially involved in crime.

Banks that don’t have the systems to monitor client activity or report suspicious transactions are fined by the Reserve Bank. They also have a legal responsibility to protect themselves from reputational risks such as being identified as doing business with criminals. But there is little due process involved in decisions that have an existential effect on businesses as well as people’s ability to enjoy their freedoms.

I say this cautiously because there are some who might be emboldened by those words. It is only when a client fights back that we hear of banks shutting down accounts (though banks routinely shut accounts of others who prefer to keep quiet about it). The loudest fight right now is being waged by Iqbal Survé’s Sekunjalo, which is in a court and waging a propaganda war against banks that are trying to cut it off. Independent Media newspapers, a cog in the bigger machine, have become a paroxysm of outrage about banks in general and account closures in particular. I shudder at the thought of adding grist to its mill.

The banks’ reasons in that case are obvious: Sekunjalo and Survé have been fingered in many media reports for questionable, if not corrupt, dealings. Moreover, as made clear in recent court papers filed by Nedbank against an attempt by Sekunjalo to interdict the bank from closing its accounts, banks have a line of sight to individual transactions. Investigative journalist outfit amaBhungane has reported that among these is Survé paying R25m to his former wife as part of a divorce settlement out of a company account.

The group companies still have billions in cash, thanks largely to investments by the Public Investment Corporation that were heavily criticised for all kinds of irregularities by the Mpati commission of inquiry. The Nedbank legal papers show how this money seems to flow between companies without any underlying commercial rationale.

But these specific examples obscure an underlying concern. Having a bank account has become essential to most of our lives. Without one, many fundamental rights become impossible — you cannot exercise freedom of expression or freedom of movement without the means to buy communications or travel services. (Of course you may also not be able to exercise these because you don’t have the resources to do so, and that is why the eradication of poverty is also important.) You would also struggle to hold a formal sector job expecting to be paid in cash.

There are many aspects of public policy that encourage the trend to cashless societies, so public policy also needs to be concerned with the negative aspects of it. Such concerns led the EU to legislate for a right to a basic bank account in member countries. In Canada, banks must open an account for an applicant, conditional only on the applicant having appropriate identification. This is not just a developed world phenomenon. In India, the central bank has issued guidelines that banks should open an account for any applicant, though this falls short of a legal requirement.

These regulations are focused on natural persons. But case law in the EU is pushing this into business relationships too. There is a bridge to the rights of natural persons because the right to trade or transact is often seen as fundamental, and a business is a means to substantively enjoy these rights.

A fascinating, long-running case between Dutch bank ING and a sauna business called Yin Yang (which sweated through several appeals and counterappeals) led to the Dutch supreme court late last year ordering ING to reopen an account for Yin Yang. The court found that banks have a special duty of care by virtue of their socioeconomic role that may oblige them in certain circumstances to open accounts for businesses that cannot function without one.

This is an issue that we need to properly consider in SA, not least so that we can prevent the misuse of moral arguments by the likes of Sekunjalo. We must also ensure that we eliminate the potential for unfair actions by banks.

It is rightly a matter for the Financial Sector Conduct Authority to develop, though it would have to work closely with the Financial Intelligence Centre and Prudential Authority to find the appropriate balance between maintaining the integrity of the financial system and ensuring it treats customers (and non-customers) fairly.

• Theobald is chair of research-led consulting house Intellidex. This article first appeared in Business Day.

Many listed companies put extensive effort into their investor relations. Some take pride in delivering world class presentations and documents. They put countless hours of management time into engaging with shareholders. But many others do not. What difference does it ultimately make to their performance?
This is a question we are finally able to answer. We surveyed the analyst community on the buy and sell sides to find out what they think. There are some strong views – some companies were praised as outstanding while others were berated for treating shareholders with disdain.

Top Rated Overall

Absa Group

Top Rated Financial Services

Absa Group

Top Rated Consumer Services

Clicks Group

Top Rated Industrial Sector

MTN Group

Top Rated Resources Sector


Top Rated Large Cap

Absa Group

Top Rated Mid Cap


Top Rated Small Cap

EPE Capital Partners

Top Rated – Most Accessible Senior Management

Transaction Capital

Top Rated – Best Integrated Annual Report

Transaction Capital

Top Rated – Best Market Communications

Transaction Capital

Download and read our inaugural Intellidex Top Investor Relations 2022 report for all the high and low opinions.

People have remarkably short memories.

The use of the Zondo reports, the latest instalment of which is due now (possibly on Eskom specifically), is not so much to tell us anything on the narrative of state capture that is not in the public domain. Instead, it is to ensure that no-one forgets what happened before the cleanup is complete (it’s still far from it, of course) and pull it all together into one place that then looks forward with recommendations.

The reports are a useful, official reminder that some people at the very top of government still don’t pass the smell test amid the lingering pong of the Zuma years. There has also been enough subsequent drama and mismanagement for the ouster of some, one random example being energy policy.

The problem of the Zondo reports is that by pulling together the narrative into one place and making specific recommendations on individuals, they raise the bar on the National Prosecuting Authority (NPA) for success. There used to be a view in 2018, post-Nasrec, that a few orange overalls would be sufficient, and we could all move on. That is no longer true. The level of NPA action required to move the business and investor sentiment dial is not so low.

Herein lies the complexity of what will happen next as the NPA still struggles to drive a lift-off in conviction rates and orange overalls. We can see this in much of the frustrated media coverage of the NPA. Without successes, it is only likely to become more intense.

Reinforced outrage

The lack of consequence management in general worries foreign direct investment (FDI) corporate and portfolio investors. One of the most frequent questions I still receive from such people is, what happened to the instigators of the July 2021 unrest? It’s the same for Russia.

SA’s all-but-support for Russia in the past month has reinforced not so much eye-rolling among investors and many SA business leaders as outrage. I’ve rarely seen a situation in which people have been so angry at a government stance.

Memories can be temporarily frozen however, and so some businesses welcomed the opportunity to fist-bump the president at the recent investment conference with no real mention of the issues such as the Russia-Ukraine conflict or the xenophobia gripping parts of Gauteng and spreading elsewhere.

I do wonder if this reinforces a bubble mentality around the president, though equally there are very good people around him who do know exactly what’s going on. Yet, puzzlingly, the president often seems surprised by events.

The recommendations, particularly in the final report due in a month, are likely to burst several bubbles. It will be important to watch in this key ANC election year.

Widely known

Markets have a loose relationship with retrospective introspection and popping its own bubbles. Through the period of the state capture of Eskom yields rose on the state-owned entity’s (SOE’s) debt and became too juicy versus the government’s backdrop of the entity for most investors to consider taking a higher road. True ESG (environmental, social and governance)  investing from 2014-2017 was not as entrenched as now.

Yet at the time events at Transnet before its leadership moved across to Eskom were widely known in the markets. Indeed, I remember writing quite openly about it at the time a new Eskom CEO was appointed. Similarly, the plundering of Eskom was clearly laid out in due diligence reports that banks and investors all read during the period. Markets should have been more worried when a CFO didn’t pass the sniff test.

Nenegate was so frustrating because it was the bringing into the open of more of what was going on — yet markets shrugged and moved on quickly in the face of attractive carry trades. Few investors boycotted Eskom debt. The rest would appeal to benchmarks and indices that must be religiously tracked.

Futuregrowth needs praise exactly for being so brave to stick its neck out, though a handful of investors onshore and offshore did similar things less vocally. By contrast, some individuals were intent on buffing up the image of the Zuma administration with investors.

Moral compass

Things started to change a little towards the end of the Zuma administration, in 2017, and financial conditions tightened meaningfully for SOEs and the sovereign. Yet the involvement of Gupta entities was widely discussed in markets from the start of the second Zuma administration and the Transnet-Eskom switcheroo in 2015.

ESG investing is a hideous term for applying common sense and a basic moral compass. After the Russia-Ukraine war, ESG lenses will be applied much more widely and rigorously by global investors, and it will affect SA.

But it is a useful moment, as we reach the end of the Zondo reports being released in the next month, to think a missing part of the narrative has been that markets did not re-price risk and do their homework sufficiently during the Zuma years of state capture. Things could have turned out very differently had that happened.

Investors should react faster than outsourcing common sense to “ESG governance score providers” who can take an age to update ratings in response to reality. Similarly, being index bound should never be an excuse. These issues are beyond Zondo’s scope, but yet important.

It is critical for the future that we shouldn’t fall into the “Mandela trap” of assuming benign leadership forever — as the ANC inexorably loses its grip on power and the NPA’s actions possibly fall short of requirements, risks will rise. Vigilance and appropriate applications of the ESG lens will be required.

Or perhaps just a simple sniff test to future-proof SA from another round of state capture.

• Attard Montalto is head of Capital Markets Research at Intellidex, an SA research-led consulting company. This article first appeared in Business Day.