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Financial market update

Quantifying financed emissions is a critical first step in building trust that financial institutions are integrating climate change concerns into their core business and that net zero pledges are being taken seriously.

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Bitcoin: digital insulation from sovereign risk?

It can be argued that Bitcoin has the potential to safeguard the value of your savings, depending on the relative state of each currency. The digital asset has been maturing for almost a decade and our analysis demonstrates that it appears to act as a safe haven in the face of adverse macroeconomic conditions, thus far.

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The 2nd annual Number 43 business roundtable

The 2nd Annual Number 43. Business Roundtable was held in Swaziland on 21 June 2015. This Roundtable event forms part of the annual celebrations recognising the contribution made by the Number 43. Trelawney Park household in the fight against Apartheid. Given the recognition of cross-border support to this cause, regional integration forms the core theme of the Roundtable discussion. This year, the Roundtable welcomed the South African Reserve Bank Governor, Mr. Lesetja Kganyago, as the event’s “Chief Instigator”. The resulting discussion was robust and serves to highlight some of the key constraints and opportunities to regional integration in SADC.

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To hike or not to hike interest rates?

The South African Reserve Bank (SARB) has a difficult decision to make ahead of its Monetary Policy Committee (MPC) meeting and announcement on Thursday 17 July 2014. It needs to decide whether or not to hike interest rates, and if so, by how much. This is against the backdrop of a grim macro-economic environment.Currently, the inflation rate stands at 6.6%, clearly outside of the SARB’s inflation target range. At the same time GDP growth has fallen into negative territory at minus 0.6%.

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The crucial role of pension funds in the National Development Plan

It has been argued that pension funds, being a unique vehicle through which the interests of millions of South Africans come together, are the critical component to build a social compact on which the success of the National Development Plan (NDP) relies. In the South African context, what is a social contract – who should be the parties to it and with what objectives?

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South Africa’s importance and reputation as an investor in Africa

The formation of the BRICS, Africa’s rising importance as a destination for foreign investment and the continent’s favourable growth prospects have ensured renewed focus on the continent, and South Africa is seen and marketed as a “gateway to Africa”. What is often missed however is the extent to which South African companies themselves have invested in the continent, and the positive light in which these companies are viewed by consumers in many host countries. A recent report by DNA Economics and TNS Surveys for NEDLAC’s Fund for Research into Industrial Development, Growth and Equity (Fridge) places the importance of South Africa’s outward FDI into context and assesses the attitude of host countries to South African investors.

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Increased financial openness in SADC – an invitation for trouble?

Recent and dramatic changes in global financial markets have had disastrous effects on some less developed countries in Africa. Although these countries may not have strong and direct financial sector linkages with the rest of the world, their dependency on a limited number of primary sector goods has exposed them to changes in world demand, resulting in a slowing of growth. There is some risk that a prolonged global slowdown might reverse the successes attained in overcoming the food and fuel crises of the 1990s and bring social and economic development to a halt. These challenges raise questions about the rationale (or at least the timing) of global and regional efforts to deepen economic integration.

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Infrastructure investment and the risk of carbon lock-in

Investment in infrastructure in South Africa peaked in 1981, and then languished for two decades. From 2000 onwards, gross fixed capital formation increased dramatically, doubling in a period of 8 years. In the wake of the global financial crisis of 2008 investment levels dropped somewhat, but as a result of the FIFA 2010 World Cup and the related infrastructure projects, remained at a high level. South Africa’s infrastructure investment drive has been spearheaded by public corporations. Whereas the spending patterns of general government and private business have remained relatively stable since 2000, investment by public corporations has risen sharply, and this largely explains the recent rise in overall capital formation.

Over the same period, the contribution of the tertiary sector (which is typically less energy-intensive than the primary and secondary sectors) to GDP increased by 8 percent (to 69.6 percent), while the contribution of the primary sector fell by almost a third (to 7.9 percent). It is clear that the energy intensity picture in South Africa is changing over time. What is not clear yet, however, is whether this is predominantly due to increased energy efficiency and decoupling between economic growth and energy use, or whether this is being driven by structural changes to the South African economy.

A cost-benefit analysis is only as good as the assumptions that underlie it. If a rigorous assessment of the relative merits of exploiting Karoo Basin shale gas is to be undertaken, it is important that these two factors (amongst other critical assumptions – on both the cost and benefit side of the analysis) are considered in detail.

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Why Greece doesn’t matter…and does

Following a second bailout of Greece earlier this week, the likelihood of immediate default and contagion effects have diminished in the short-term, though the EU region’s structural debt problems along with the possibility of a future default remain. The Greek (and EU) debt crisis will have a significant impact on South Africa’s economic prospects through various different channels. Most directly, South African exports to Greece are likely to suffer. But does this really matter?

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2011 AGOA forum: assessing the impact of AGOA

The 2011 AGOA Forum will be held in Lusaka, Zambia, on June 9th and 10th. This year’s event marks the 10th anniversary of the AGOA Forum and is an opportune time to reflect on the impact that AGOA has had over the past decade.

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