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South Africa Jobless Rate Rises to Record 27.1% in Third Quarter

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Unemployment Rate
  • South Africa Jobless Rate Rises to Record 27.1% in Third Quarter

South Africa’s jobless rate rose to a new record in the third quarter as more people started looking for employment.

The jobless rate rose to 27.1 percent in the quarter through September, the highest in at least eight years, from 26.6 percent in the previous three months, Statistics South Africa said in a report released Tuesday in the capital, Pretoria. The median of six economist estimates was 26.6 percent. The number of people without jobs rose by 239,000 to 5.9 million while those employed increased by 288,000 to 15.8 million.

South Africa has struggled to rein in unemployment after the 2009 recession as economic growth stayed below 3.5 percent annually and is projected by the government to slow to 0.5 percent this year. The sluggish economy, policy uncertainty and rigidities and instability in the labor market are some of the factors that rating companies like Moody’s Investors Services and S&P Global Ratings Ltd., which will publish their assessment of the nation’s creditworthiness in the next two weeks, have highlighted as risks.

“While you still have lots of people looking for jobs and new entrants to the labor market, companies appear to be stepping up their cost-cutting programs and what that means is that we are not seeing the uptake of new employment,” Kevin Lings, chief economist at Stanlib Asset Management Ltd., said by phone before the release of the data. “It’s part of the overall concern of the ratings agencies.”

A panel of experts commissioned by the National Economic Development and Labor Council, known as Nedlac, which promotes negotiations among labor unions, government and business, recommended on the weekend that a minimum wage of 3,500 rand ($246) a month to be phased in over two years. This is part of a plan to stabilize the labor market and retain an investment-grade credit rating. The nation’s biggest union has rejected the proposal.

South Africa has the highest jobless rate of more than 60 emerging and developed countries tracked by Bloomberg. The economy needs to expand at 7.2 percent a year from 2018 to achieve the government’s goal of reducing the jobless rate to 6 percent by 2030, the World Bank said in February. Finance Minister Pravin Gordhan projected output growth of 2 percent and 2.2 percent for 2018 and 2019 in his October mid-term budget.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Crude Oil

Oil Holds Near Highest Since 2018 With Global Markets Tightening

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Crude Oil - Investors King

Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.

Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.

China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.

Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.

“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.

At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.

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Energy

Unlocking Investments into Africa’s Renewable Energy Market

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green energy - Investors King

The African Energy Guarantee Facility (AEGF) is launching a virtual roadshow of free webinars allowing a deeper understanding of risk issues for renewable energy projects on the continent, and conversations around risk mitigation solutions. The first webinar will take place on Thursday, 23 September from 14:30-16:00 hrs. EAT. 

The session will be oriented on how to get more energy projects from the drawing board to the grid. While the energy demand in African economies is expected to nearly double by 2040, and although the potential for renewable energy is 1,000 times larger than the demand, only 2GW out of almost 180GW of this new renewable power were added on the African continent.

Clearly not good enough! To improve the situation within the next two decades, new solutions need to be implemented urgently. De-risking and promoting private sector investments will play a crucial part of it.

In this 90-min interactive session, AEGF partners: the European Investment Bank (EIB), KfW Development Bank, Munich Re and the African Trade Insurance Agency (ATI) will share their experience and provide valuable insights on how they were able to come together and design practical solutions for investors and financiers of green energy projects in Africa aligned with SDG7 objectives.

Across Africa, the complexity of renewable energy projects and their long tenors hold back crucial energy investment. Tailored to the specific needs and risk profiles of sustain­able energy projects, AEGF will tackle the investment challenge by providing underwriting expertise and capacity tailored to market needs.

The AEGF will significantly boost private investment in sustainable energy projects, both expanding access to clean energy and contribute to achieving UN Sustainable Development Goals. The scheme supports new private sector investment in eligible renewable energy, energy efficiency and energy access projects in sub-Saharan Africa.

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Energy

Shell Signs Agreement To Sell Permian Interest For $9.5B to ConocoPhillips

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Shell profit drops 44 percent

Shell Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached an agreement for the sale of its Permian business to ConocoPhillips, a leading shales developer in the basin, for $9.5 billion in cash. The transaction will transfer all of Shell’s interest in the Permian to ConocoPhillips, subject to regulatory approvals.

“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Upstream Director. “This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”

Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.

The cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to our shareholder distributions in the range of 20-30 percent of cash flow from operations. The effective date of the transaction is July 1, 2021 with closing expected in Q4 2021.

Shell has been providing energy to U.S. customers for more than 100 years and plans to remain an energy leader in the country for decades to come.

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