Head of Capital Markets Peter Attard Montalto joined eNCA‘s Rofhiwa Madzena to shed light on Eskom’s financial woes and the proposed 32% tariff increase affects end users and taxpayers.

“In a sense it doesn’t matter who essentially pays for the tariff increase. You could have a low tariff increase which would then need a very high bailout from the government or the other way around. If say we were to have another 10-15% increase in the tariffs next year instead of this proposed 32% taxpayers would pay an extra 40 billion or so to Eskom because Eskom has very little cash in the buffer. So at the end of the day someone is going to pay for this – it’s either going to be taxpayers or tariff payers,” says Peter.

Watch the full interview below.

Is a radical shift in transparency on the beneficial owners of companies and trusts on the way?

A bill before parliament will make it a requirement that companies file their share registers and the people who have a beneficial interest in those shares to the Companies and Intellectual Property Commission (CIPC). The CIPC must then make this information available to any person “as prescribed”. A similar amendment is slated for the Trust Property Control Act to disclose beneficial owners of trusts.

On the surface, the bill, which amends various laws in an effort to get SA to comply with the recommendations of the Financial Action Task Force (known as the “General Laws Amendment Bill”), does not say that information will be made public.

But consider the Companies Act provides that companies must make the register of members and directors available to any member of the public on payment of a R100 fee, and case law has made it clear that share registers must be made available to anyone who asks for them, plus section 32 of the Bill of Rights of the constitution that reads: “Everyone has the right of access to any information held by the state”.

It is easy to see how the CIPC could be required to make these records available to the public.

Shock to the system

This will be a shock to the system. Corporate transparency in SA has recently taken a radical step backwards. The entering into force of the Protection of Personal Information Act in mid-2021 was used as an excuse for the share registers of JSE-listed companies to be removed from the public domain. Strate, the company responsible for all electronic share records, ceased to supply shareholder information to data services citing legal confusion over the Protection of Personal Information Act.

Strate shrugged and said it was waiting for guidance from the Financial Sector Conduct Authority, who in turn said it was waiting for guidance from the Information Regulator set up in terms of the act. That was more than a year ago, and we’re still none the wiser on when we can see the share registers of listed companies again.

Strate always struck me as giving a convenient excuse. The instinct in corporate SA is to default to secrecy, despite it being a core principle of the constitution that the default should be openness (and therefore Strate should have asked for guidance on whether it should stop providing the information, rather than ceasing immediately and seeking guidance on whether it should continue).

Since Strate’s move, much of the analysis routinely undertaken of shifts in ownership of SA companies has been impossible. Whether to assess progress in black empowerment, or shifts in foreign ownership, or creeping takeovers, much of the insight we used to have on listed companies has been obscured. Journalists are therefore much less able to hold companies and shareholders to account.

Strate, if it really was not able to interpret the law itself, could have obtained an opinion from senior counsel on whether it could continue to provide such information, but instead went for the option least likely to resolve quickly.

With the General Laws Amendment Bill, there is the prospect of share registers becoming available not just of public companies, but all companies, as well as the more meaningful step of identifying the natural people who are the ultimate beneficiaries. The CIPC should start preparing to make this information easily publicly accessible.

But what of privacy? I hear more discrete shareholders ask. The Protection of Personal Information Act defines personal information as many things, but it does not include what people own. The act is about information regarding the personal characteristics of people and identifying information such as ID and phone numbers.

This seems miles away from the information contained in the share registers that routinely used to be made public, which was no more than the shareholders’ names, most of whom were legal entities rather than flesh-and-blood people.

As a legal principle we should be far less concerned about personal information regarding companies. UK law, from which much of SA companies and privacy law takes inspiration, is clear on this point. Companies House, the UK’s equivalent of the CIPC, states: “In return for the benefits of limited liability, your company must be open and transparent.” That includes details about directors and “people of significant control”.

South Africans are often shocked when I show them how easy it is to freely look up the directors, shareholders and the financial records of any UK company. It is all in the public domain, including the personal addresses of many directors (though they have the option of providing a corporate address).

That future may be in store for SA. It would have helped if this future had been made explicit in the omnibus bill, with the CIPC required to maintain not just a register of all shareholders, but an explicitly public one.

The CIPC can still prescribe that it be public, after consulting the minister of finance and the Financial Intelligence Centre. I hope it will embrace the constitutional principle establishing a “democratic and open society”.

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

Watch Head of Capital Markets Peter Attard Montalto on Business Day TV as he speaks on the energy crisis and why South Africans should manage their expectations as loadshedding persists.

“I think the real challenge is to manage expectations. We’re going to see prolonged periods of most likely Stage 6 and Stage 8 loadshedding between October and November and again around February – before we start seeing the new generation really coming on stream.

There is a lot going on in the long-term but in the short-term we’re going to have to manage expectations very carefully. It’s going to get a lot worse,” says Peter Attard Montalto on Business Day TV.

Watch the full clip here:

Head of Capital Markets, Peter Attard Montalto, was a keynote speaker at the Presidential Climate Commission energy dialogue on the Structure of the Electricity Industry. He spoke on “The interplay between industry structure and both new and legacy financing.”

Watch the full webinar below.

You can read the full presentation here.


It’s interesting to consider that GDP growth data revisions are on average positive — indeed, quite large, with revisions up of +0.4 percentage points, as calculated by Codera. What does this do to the desire to invest?

It’s an interesting problem that reforms are occurring — albeit  slowly — yet investment levels are rising exceptionally slowly. An uptick recently in the share of investment to GDP to 14.3% was mainly down to the denominator being rather weak — SA is still only just above the all-time lows. This compares with the government’s target of 30% of GDP and peers that generally come in at about 25% of GDP.

Could it be that the economy is actually more robust than it is given credit for, while the narrative is just a bit too pessimistic? The proliferation of crises conspire, however, to keep expectations low.

There is always something to keep expectations low: if not electricity, it’s logistics; if it isn’t logistics, it’s crime, and if it isn’t crime, it’s water.

Managing expectations when unemployment is at about 42% and inequality is so wide, and you’ve just come through a serious period of social unrest, isn’t easy. Still, some honest explanations could be supportive.

Take electricity. The president’s national energy crisis committee (Necom) is making good progress even at this early stage. Yet there’s nothing they can do to avoid short-term load-shedding. Indeed, the power cuts will get much worse in the coming year before things improve. That needs repeating, given how regularly people’s expectations seem misplaced in that regard. Stage 5 will seem like a walk in the park compared with what’s likely in the next 12 months as the energy availability factor continues to fall.

Yet there is huge potential to invest now — in the energy solutions themselves and the broader just energy transition, and generally. If reform momentum can be maintained and load-shedding can be solved in the coming 36 months, the environment will be ripe for faster growth and the decisions to invest in that — if one wants to be appropriately ahead of the curve — will need to be made soon.

This is a classic emerging-market problem: clouds and rain in the short term and sunny uplands in the long term. It just seems much starker in SA, where trust is low and we struggle to look beyond the short term.

Government’s job

Probably the least we can say is that as load-shedding gets worse the push for households to buy their own batteries and rooftop PVs will accelerate faster, and the demand for embedded and wheeled generation projects by corporates will similarly leap. Indeed, as I pointed out two weeks ago, 40 more such projects are due for registration approval at the National Energy Regulator (Nersa).

While managing energy expectations may well be the government’s job, those for election outcomes are a matter for every corporate and individual.

My most recent column appeared to cause some coffee to be spat out after I suggested the ANC could feasibly get above 50% in the 2024 general elections. The point is that current polling doesn’t suggest a collapse in ANC support of the order of 15-20 percentage points that some might (want to?) see.

Ranking the outcomes for 2024, quite high on the list must be an EFF-ANC coalition, which would be even more alarming. Yet the ability of the current set of opposition parties (minus the EFF) to form workable coalitions looks even less likely. One needs to start thinking about decent, well-funded and well-structured new opposition parties where everything goes just right to start to shift the chances of a stable, broad opposition coalition.

The lesson is that one’s expectations about 2024 need to be carefully weighted between the probability among many scenarios and the effect of the outcome on the economy. Even moderate-chance, highly negative events (like the EFF in a coalition) therefore need some focus.

The same is true of the ANC’s December elective conference or the Phala Phala farmgate outcomes. The baselines may well be “all fine”, but the tail risks with low probability have the potential to be seriously negative. That is why I often describe the alternatives to the Ramaphosa baseline in December as “unacceptably high”, even if one might only put a 30% probability on them.

That, then, is the root of so many of SA’s investment problems. The same for energy — while we can map a path from things getting worse in the short term to a better tomorrow, the tail risks of this not happening and the extremely negative implications of that are unacceptably high.

It’s a tough message for the government, but this is why reforms require patience and doggedly pressing on with them even as the fruits of such change are still (for now) not seen. We will get there in the end, but it will take a lot of patience and fortitude.

We will see come December and 2024 how two different electorates treat this need for patience, or decide on potential alternatives.

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

The question of greylisting by the Financial Action Task Force (FATF) must turn to how quickly SA can get off the grey list and mitigate the impact while on it. The chances of avoiding greylisting are dwindling, and SA is set to become the most sophisticated economy yet to be greylisted when the FATF plenary meets in February 2023.

Greylisting will mean that any SA company (and individual) that transacts with international counterparts will find itself subject to enhanced due diligence. The EU is particularly stringent in its response — it designates countries on the grey list as high risk and requires member states to require entities to apply “additional mitigating measures”, including enhanced due diligence.

What this means in practice varies from state to state, but typically banks and other multinationals will increase the frequency and stringency of their due diligence review of clients. For example, an SA multinational now doing business in European markets will have to provide detailed information on its activities to banks there and its procedures to mitigate possible money laundering and terrorist financing. Before, it would have done this every three years at a fairly high level, but now it will be required to produce more detailed evidence and be subjected to review annually.

While the EU is explicit in this requirement, many other jurisdictions also use FATF greylisting as a factor for risk assessment, and many global banks incorporate it into their risk analysis too.

The effects of greylisting depend on how SA pulls together to deal with it. Mauritius managed to exit the grey list in just 20 months, but its response was swift and led from the presidency. It corralled a national effort to meet FATF’s recommendations. It provided a textbook example of an effective and detailed response.

SA has so far not been meeting that high bar. Certain parts of the system have been effective in dealing with the 20 areas highlighted by FATF as deficient in its mutual evaluation in 2021. The SA Reserve Bank, for example, has been effective in amending its bank supervision processes to comply. An omnibus bill that will amend a wide range of legislation to comply with FATF recommendations is before parliament.

Double staff

But there are far more tricky areas of the recommendations and immediate outcomes FATF expects where SA will struggle. For example, the country needs the Hawks to become an effective investigator of sophisticated money-laundering crimes, which will require teams of financial forensic investigators to be appointed. That could take years, and so far the Hawks have not shown any interest in getting going.

We also need to implement effective regulation of non-financial institutions that deal in large amounts of money, such as real estate agents, casinos and Krugerrand dealers. If we expect the Financial Intelligence Centre to do that job, it will need double the staff and budget it now has. Getting it into the right shape could take a long time.

If SA is perceived to be a long-term member of the grey list, counterparts will be less willing to put up with the trouble of conducting enhanced due diligence. Existing relationships are likely to be more resilient than new ones. An EU bank considering opening an account for a new SA-based client will be wary. If SA’s greylisting is seen as a short-term aberration, the odds will move in favour of opening such an account. But if SA is seen as a long-term miscreant, counterparts will be increasingly reluctant to deal with SA clients.

To some extent, SA will be in uncharted territory. It won’t be the biggest economy on the 23-member grey list, with Turkey, Pakistan and the Philippines all bigger, but it will be by far the most financially sophisticated, with considerable financial engagement with the rest of the world. Equity and bond markets are much bigger than any previous grey listee with considerable international participation. This level of integration will make it hard for the rest of the world to isolate SA compared with, say, Syria or Yemen, implying that the costs will be less. Yet, SA is more exposed to international financial links, so if counterparts do move to cut ties, the effect will be greater.

To mitigate these effects, companies should prepare for enhanced due diligence. They need to assemble the documents and be ready to engage with international counterparts to assure them they have extensive and appropriate mitigation for risks of money-laundering and terrorist financing. The government will also need to send the world a clear message that it is taking greylisting seriously.

SA will succeed on some of the FATF’s recommendations even if it falls short of the bar needed to avoid greylisting. The fact that SA does meet many FATF recommendations should be made clear to global counterparts who will be tempted not to look at the complexities behind the “greylisted” headline. Ultimately, SA will need to convince the world that greylisting will be short-lived and that their relationships with SA companies are worth the hassle.

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

Watch senior banks analyst, Nolwandle Mthombeni, discuss the Intellidex Banking Monthly for August on Business Day TV’s Business Watch with Michael Avery. She joins as a panellist alongside David Buckham who is the MD of Monocle Solutions.

“In our Stat of the Month for August, we focus on the loans to the non-financial corporate sector. We’re seeing a big change from December. We’re seeing corporate activity starting to pick up and banks have been waiting and are ready to open up the tanks to corporate again.”

Watch the full video below.

Watch Business Day TV on DSTV Channel 412.

As we approach 2024, I feel I should install something soft on my desk for the amount of head bashing that will be required at the misreporting of polling data. A reminder perhaps of how fragile the SA media is for all its successes with state capture.

The desperation for a narrative showing the ANC decisively below 50% might be leading much discourse, but investors must beware. While such an outcome is certainly possible (indeed perhaps likely, considering how things might evolve in the next two years), and maybe even one’s baseline, the polling evidence, appropriately adjusted, showing this is not overwhelming.

The desire perhaps to bash opposition parties instead is finding a foothold in what the polls are actually also showing us — that opposition parties are not decisively cutting through, collectively or individually.

Risks around 2024 are certainly preoccupying investors, though given a proliferation of shorter-term risks, especially regarding individuals and succession, they have taken a slight back seat compared with where they were a few months ago. Investors want to understand turning points in politics and paths towards better potential growth. There can at times be a desire among investors to hunt for things such as a “reformist top six” or an attempt to desperately map how things can improve. Such exercises normally stretch credibility.

Everyone loves a good turning point — but, again, the surface-level data might not be your friend. Recent labour market data felt like groundhog day of a quarter ago. Despite Stats SA clearly highlighting in its release the improvements in data coverage and survey responses, politicians and media were keen to jump onto record-breaking improvements in the number of people employed in the second quarter (Q2).

The data did not pass the smell test. Were 648,000 people really newly employed when there were devastating floods in KwaZulu-Natal and record levels of load-shedding? Unlikely.

Just as last quarter, when we get the second labour market data release (on September 27 — some time to wait, alas) — we are likely to see the same story again — that far fewer people were employed in the quarter and instead Stats SA was just picking up more people who were previously employed anyway.

Alternative story

It only takes a second for people to plot these different Quarterly Employment Survey and Quarterly Labour Force Survey data points over time to see what is actually going on.

The alternative story, like that of the political support, is far more interesting. There isn’t some mass momentum in the labour market but instead it (well, the formal sector at least) is actually far more robust to shocks — both through Covid-19 when fewer jobs were lost, but also in Q2 given the shocks. This is a more boring story, but also important, considering the effect on politics and social stability. It is also important in that it highlights the challenges of moving a far stickier labour market with reforms. A stickier formal-sector labour market will need more shock and awe to get it into higher gear than one that can add as many jobs as the data on the surface showed in Q2.

It is interesting to consider the political implications of a slower-moving formal-sector labour market on 2024. The marginal vote may well be elsewhere in the informal sector, where survey evidence showed more volatility through Covid-19 as people oscillated between more and less secure employment forms.

The reverse is sometimes true though — people struggle to see emerging turning points. The effect of the energy reforms is perhaps the key case of the moment. Reforms are often slow and frustrating — yet liberalisation is something different from the complexity of actually having to engineer new systems or turn around dependent state-owned enterprises.

Energy plan

We have seen 750MW of registered renewables (almost all photovoltaic) projects with energy regulator Nersa so far in 2022, with the existing 100MW cap. It is more than the previous years combined. Energy will appear on grid in 18-24 months after such a registration. Registration of 29 more such projects will be completed at Nersa on Monday. Yet most people are unaware of this momentum building or are willing to brush it aside.

Further momentum is coming, however, with the gazetting last Friday for public comment of a new schedule 2 to the Electricity Regulation Act. It was the first public success of the recent presidential energy crisis plan. Once enacted, the new schedule will remove the cap on the size of projects that can be registered rather than licensed. This is particularly useful for larger mining embedded generation projects, normally above 100MW.

The complexity of much of the energy turning point is maybe why people struggle to see it, but the lesson is we must carefully divine where the turning points are and where they are not in this area, as in many others.

The question then becomes if turning points occur fast enough to affect other issues. Whether the energy turning points occur fast enough to solve load-shedding before the 2024 elections is indeed an important question within the political economy — as is the state of household balance sheets (itself strongly affected by the labour market, but also grants and transfers) for the outcomes in 2024.

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