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South Africa’s ‘second miracle’ coalition fights to endure

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Paul Mashatile

Cyril Ramaphosa, South Africa’s president, used his speech at the UN General Assembly last month to brand the Government of National Unity his country’s “second miracle”, marking a growing bullishness that the unlikely coalition will hold.

It was quite a claim to make for a grand political bargain in which the African National Congress is sharing power with its ideological foe, the pro-market Democratic Alliance, and eight other parties after the ANC’s share of the vote fell to 40 per cent in May’s election.

The “first miracle”, the party’s largely peaceful ascent to power in 1994 after the hated apartheid system collapsed, is the stuff of legend for the ANC faithful. As the GNU moves past its first 100 days in office this week, ministers and investors are confident the coalition will also have an enduring significance, overriding political divisions to boost the economy over its five-year term.

“Even within our ranks there were people who thought you cannot work with the enemy,” Paul Mashatile, the deputy president, told the Financial Times, saying some ANC rank-and-file members still considered the DA, traditionally the party of white and other minority voters, to be anti-worker.

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“There is excitement that the situation is stable,” Mashatile said. “The GNU is not quarrelling, we are focused and we are ensuring that we run a tight ship.”

Investors, he said, had picked up on the new atmosphere in South Africa. Since the GNU was announced, the stock market has risen nearly 20 per cent in dollar terms and the rand has strengthened 6 per cent against the dollar. Ramaphosa has forecast economic output can nearly triple to more than 3 per cent next year.

Paul Mashatile
Paul Mashatile, South Africa’s deputy president: ‘The GNU is not quarrelling, we are focused and we are ensuring that we run a tight ship’ © Anna Gordon/FT

Many in the ANC baulked at the idea of working with a party they considered antagonistic to its agenda of income redistribution and government intervention. Some had openly called for a deal with Julius Malema’s Economic Freedom Fighters or former president Jacob Zuma’s uMkhonto weSizwe (MK) party, both radical ANC splinter groups.

On the DA’s side, some officials worried that by joining the coalition their party risked providing a figleaf for the ANC’s pervasive corruption, mismanagement and failed policies that stalled economic growth for 15 years. They worried that in accepting a taste of power, the DA would lose its electoral identity.

Tony Leon, a former DA leader, said the party made huge compromises in coalition negotiations, getting only six seats in the cabinet when its voting share merited nine. The DA also complains that the ANC reneged on giving it the powerful trade and industry portfolio.

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But business had been spooked, urging the DA not to pull out of talks and instead conclude a deal to stop the ANC allying with the EFF or MK, Leon said.

“We were a trump card short in negotiations,” he said.

Signs of friction have already surfaced including over a controversial amendment to the education law, which would give the government, rather than schools, the power to determine language policy in classrooms— disadvantaging Afrikaans-only schools. 

The DA insists it is unconstitutional in part because it threatens schools’ right to educate children in their home language.

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Initially, DA leader John Steenhuisen said the law would “endanger the future of the government of national unity”. Ramaphosa signed the bill but held out an olive branch by delaying the implementation of clauses on language and school admission policies.

Patricia Delille talks to Siviwe Gwarube
Siviwe Gwarube, education minister, left, speaks with Patricia de Lille, tourism minister. Gwarube said, ‘Given the history of the DA and ANC, we cannot expect that within three months we’re going to agree on everything.’ © Rodger Bosch/AFP/Getty Images

Siviwe Gwarube, the education minister and the only female Black DA cabinet member, told the FT that the ANC would be playing a dangerous game if it consistently overrode the DA’s concerns over the legislative agenda.

“If that happens, and the DA withdraws, the ANC would have to account to South Africans for why they ruined the country’s best chance of salvaging our economy,” she said.

“They could try to put together the government without the DA — and we’d be happy to take our seats in the opposition benches — but ultimately, there is a strong sentiment from all parties to make it work.”

Gwarube defied convention by skipping the signing of the law in what was considered by some as a snub to the president’s authority. But like Mashatile, she said the coalition could weather the storm.

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“Given the history of the DA and ANC, we cannot expect that within three months we’re going to agree on everything. But what we do need are cool heads,” she said. “Political differences within grand coalitions of this nature are not fatal — they are somewhat to be expected.”

Yet some within the DA have concluded that the ANC’s apparent determination to push ahead with the education amendment, and another controversial law on national health insurance, showed that Ramaphosa’s party intended to ride roughshod over the DA.

Dean Macpherson, the DA’s public works and infrastructure minister, said that while the ANC played nice in public, its proxies were still attacking the DA behind the scenes and at the local government level.

“The foghorns that exist within the ANC need to turn down the volume,” he said. “No party can say it’s my way or the highway.”

Still, he said, while Ramaphosa remained ANC president — a position he will hold until 2027 — there was enough common ground and mutual self-interest to keep the coalition together.

“If the ANC didn’t want us to succeed, they’d be land-mining their own electoral prospects,” he said. “If we don’t succeed, the government doesn’t succeed.”

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No1 Lounge to open at Heathrow T2

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No1 Lounge to open at Heathrow T2

Airport Dimensions and Swissport are opening their third No1 Lounge at Heathrow this December

Continue reading No1 Lounge to open at Heathrow T2 at Business Traveller.

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Advent International prepares takeover bid for Tate & Lyle

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Advent International prepares takeover bid for Tate & Lyle

Offer would value UK ingredients group at premium to its £2.8bn market capitalisation

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Warwick University reveals £700m investment in West Midlands science campus

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Warwick University reveals £700m investment in West Midlands science campus

Investment will be focused on the Social Sciences and STEM subjects: science, technology, engineering and mathematics.

The post Warwick University reveals £700m investment in West Midlands science campus appeared first on Property Week.

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Amazon buys stake in nuclear energy developer in push to power data centres

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Amazon buys stake in nuclear energy developer in push to power data centres

Citadel’s Ken Griffin takes part in X-energy’s $500mn fundraising alongside ecommerce group

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We must get messaging right amid pension pot panic

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Rachel Vahey - Illustration by Dan Murrell
Rachel Vahey - Illustration by Dan Murrell
Rachel Vahey – Illustration by Dan Murrell

Over the last few years, the Financial Conduct Authority has been very clear it is keeping a close eye on the advice given when someone decides to take a retirement income.

Earlier this year, it published its review into this area.

It discovered no systemic issues with advice firms but wasn’t completely happy with the consistency of how many advisers were approaching this area of advice. Particularly around record keeping.

It’s too early to see exactly what effect the FCA’s findings have had on both advice firm’s behaviour and clients’ decisions, but the latest statistics on this market still makes interesting reading.

Savers withdrew over £52bn from their retirement pots in 2023-24 – 20% higher than the previous year

The regulator publishes stats every six months and this latest batch covers October 2023 to March 2024. The key takeaway is the number of people accessing their pension for the first time and the amount withdrawn is continuing to increase apace. Savers withdrew over £52bn from their retirement pots in 2023-24 – 20% higher than the previous year.

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There seems little doubt the cost-of-living crisis is the main culprit behind this increase. Savers are turning to their pensions to make ends meet to get through a temporary period of financial pain. The most popular decision for those accessing their pensions for the first time is to cash in the pot completely. And while this initially seems concerning, it’s worth noting most of these pots are worth less than £10,000. Faced with a tuppence ha’penny income or a useful lump sum, many people will opt for the latter.

Those setting up a retirement income are still mostly choosing drawdown, although the numbers buying an annuity increased by 40% last year. In one respect, this isn’t surprising – annuity rates have recently been buoyant – but on the other, this behaviour has been slow to adapt, with the FCA retirement income advice review lamenting low annuity sales.

There is evidence savers are currently taking retirement decisions based on fear and speculation ahead of the Budget

If the latest bunch of stats are showing record numbers of people accessing their pension pots, I have a feeling the next lot – covering April 2024 to October 2024 – will cast this set in the shade.

There is evidence savers are currently taking retirement decisions based on fear and speculation ahead of the Budget, with both contributions and the number taking their tax-free cash rising year-on-year.

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It has been just over a month since prime minister Keir Starmer stood in the Rose Garden at Downing Street and warned us of a ‘painful’ Budget to come. It feels like every government minister has been told to include the ‘£22bn black hole in public finances’ in every subject they talk or write about.

There is no doubt the message has struck home. After slowly recovering following the Covid pandemic, the long-running GfK Consumer Confidence Barometer took a recent dip, showing UK people are growing worried about their finances.

Exiting pensions in haste may be a choice clients are forced to repent in leisure

The government is keeping its cards close to its chest on what actual measures will be included in the Budget, but, in the absence of hard facts, rumours are swirling with a growing intensity on possible cuts in the amount of tax-free cash someone can take and the removal of higher-rate pensions tax relief.

This pessimism is leaking out. Advice firms are facing an increasing groundswell of client phone calls and emails asking if the rumours are true and what action they could take ahead of the Budget.

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This places advisers in an impossible position. None of us have a crystal ball. Only chancellor Rachel Reeves can tell us if these changes are really on the table and to what extent. Common sense tells us there is no point planning based on a rumour and clients should only make a decision that ties in with their long-term goals.

Ultimately, this is about making irreversible decisions regarding people’s long-term financial futures

Those who are insistent on crystallising quickly may find they lose out on longer-term tax benefits, as well as ending up with a lot of cash sat in their bank account they simply don’t need at this moment.

This episode has really driven home the importance of careful messaging around pensions and thinking through the implications. Ultimately, this is about making irreversible decisions regarding people’s long-term financial futures. And exiting pensions in haste may be a choice they are forced to repent in leisure.

Rachel Vahey is head of public policy at AJ Bell

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Hong Kong’s IPO market could benefit from robo-vehicle boom

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Interest in self-driving cars has gone up a gear thanks to Tesla’s recent much-hyped robotaxi event. Chinese autonomous driving firm Horizon Robotics has chosen a good time to raise funds in a Hong Kong listing. If it reaches its target of raising up to $696mn, it would be the city’s largest initial public offering this year.

The company, backed by Intel and Volkswagen, will sell 1.36bn shares. This would make the listing bigger than China Resources Beverage. Before Horizon’s announcement, this soft drinks company had been on track to hold the city’s biggest new share sale this year after it started bookbuilding on Tuesday.

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In Hong Kong, having multiple large listings in close succession has frequently meant more scattered funds from retail investors and less demand for companies that are not well-known household names. For Horizon, that should be less of an issue as it has already received significant interest from corporate investors. Cornerstone investors for the Horizon stock offering include the online business software unit of Alibaba Group and Chinese internet search giant Baidu. 

There are good reasons for the interest. Horizon manufactures advanced driver assistance systems and autonomous driving solutions for passenger vehicles in China. Unlike some self-driving and software start-ups that have yet to build a viable product or business model, Horizon has already supplied customers including Volkswagen’s Audi, Continental, BYD, Li Auto and SAIC. Volkswagen has invested in developing technology to integrate autonomous driving-related functions on to a single chip along with Horizon since 2022. Proceeds raised in the listing will be used for research and development as well as sales and marketing. 

Autonomous driving technology, especially fully self-driving cars, have been the topic of much debate. True, the commercialisation and mass production of driverless cars are likely to be many years in the future. But that does not necessarily mean it will take that much time to get individual autonomous driving functions — still requiring driver supervision — into today’s cars as lucrative add-ons.

Autonomous driving technologies use software, radars, lidar sensors and cameras to enhance safety and convenience for drivers. For example, the level of technology today can alert drivers to obstacles, help avoid collisions and assist in parking and lane centring — all of which carmakers can monetise through premium features. 

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Hong Kong’s deflated listings market could do with the kind of hype that self-driving cars are generating. But a successful Horizon IPO should at least provide another much-needed boost to shift it out of the slow lane.

june.yoon@ft.com

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