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Natasha Turak
Source: <a href="https://www.cnbc.com/2018/06/19/south-africa-will-avoid-a-knee-jerk-reaction-to-currency-weakness.html">South Africa will avoid a ‘knee-jerk’ reaction to currency weakness, central bank deputy says</a>
<ul>
<li>Emerging markets have been under pressure as a result of a strengthening dollar and trade war fears, and central banks in turn are facing tough decisions on monetary policy.</li>
<li>But despite trade fears and a severely weakened currency, the bank is not rushing to raise interest rates, its deputy governor said 
Tuesday.
</li>
<li>Nonetheless, escalating trade tariffs between the world&#8217;s two largest economies and declining low confidence within the country will keep pressure on the bank&#8217;s policy makers.</li>
</ul>
Emerging markets have been under pressure as a result of a strengthening dollar and trade war fears, and central banks in turn are facing tough decisions on monetary policy.

South Africa central bank has plenty on its plate, especially within the context of a new president and unenviable credit ratings following years of corruption and economic mismanagement.
But despite trade fears and a severely weakened currency, the bank is not rushing to raise interest rates, its deputy governor told CNBC&#8217;s Annette Weisbach in Sintra, Portugal, on Tuesday.
&#8220;We are concerned — we are a small open economy, and conditions in our economy depend on the global economy, on trade conditions, on a strong demand for our goods. If there is to be a trade war, a slowdown in the global economy, that will affect us,&#8221; Kuben Naidoo said during the global summit for central bankers.
But despite the South African rand hitting a six-and-a-half-month low against the dollar, the bank is still taking a &#8216;wait-and-see&#8217; approach. The rand on Tuesday was at 13.8550 to the greenback at 2:09 p.m. local time. 
&#8220;So we don&#8217;t really act in a knee-jerk reaction to a currency weakness,&#8221; Naidoo said. He described what he saw as sound fundamentals in South Africa compared to other emerging markets that have had to hike rates, like Argentina and Turkey, adding that inflation is currently within range and the budget deficit, while high, is projected to decline.
Still, escalating trade tariffs between the world&#8217;s two largest economies and declining low confidence within the country will keep pressure on the bank&#8217;s policy makers, leaving the door open for future rate rises in response to the ongoing rand selloff.
&#8220;If there is persistence in that currency weakness and it feeds into other prices, we would have to act. It&#8217;s not an immediate response, we will wait — because the economy is weak we can afford to wait and see,&#8221; he said. &#8220;That may be a few months, maybe a few quarters.&#8221;
South Africa in March cut interest rates to their lowest in two years, down 25 basis points to 6.5 percent after judging that inflation would remain low and within the bank&#8217;s target of between 3 and 6 percent. Inflation in April jumped to 4.5 percent from March&#8217;s seven-year low of 3.8 percent.

Challenges ahead
The election by the ruling African National Congress (ANC) of 
pro-business President Cyril Ramaphosa 
 in December saw 
 business and consumer confidence improve 
, as well as a boost in the rand, following several years of damaged trust between investors and the government.
But the &#8220;Ramaphoria effect,&#8221; as many have called it, has faded alongside global trade worries and a depreciation in both the currency and domestic confidence, which has dipped to a seven-month low.
South Africa&#8217;s fairly new leadership faces a plethora of challenges, not least crippling unemployment at more than 26 percent, debt-ridden state-owned enterprises, high crime and poverty, and one of the highest inequality levels in the world.
The country&#8217;s government in late May passed a bill to 
 establish a minimum wage 
, meaning that millions of people will now earn 20 rand ($1.58) per hour, equivalent to 3,500 rand ($277) per month. South Africa&#8217;s main opposition party and several unions have opposed the bill, demanding a higher figure, and 
protests 
 surrounding the issue are set to continue.

South Africa will avoid a ‘knee-jerk’ reaction to currency weakness, central bank deputy says

What is Cannes Lions? | CNBC Explains

Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/06/18/united-arab-emirates-gives-ethiopia-1-billion-lifeline-to-ease-foreign-exchange-crisis.html">UAE gives Ethiopia $1 billion lifeline to ease foreign exchange crisis</a>
<ul>
<li class="">Ethiopia&#8217;s foreign exchange shortage is due in part to its spending big on infrastructure projects. The current total left in the East African country&#8217;s coffers is equivalent to less than one month&#8217;s worth of imports, Reuters reported.</li>
<li>Landlocked Ethiopia is keen to shore up its international trade infrastructure; for example, taking a stake in the Port of Djibouti in May.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/18210224/105279279-GettyImages-975358548.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Minasse Wondimu Hailu/Anadolu Agency | Anadolu Agency | Getty Images"/>
The United Arab Emirates (UAE) is to deposit $1 billion in Ethiopia&#8217;s central bank to ease the latter&#8217;s foreign exchange shortage.
The sum is part of a total of a $3 billion aid and investment pledge from the UAE to Ethiopia announced Friday. The news came as Abu Dhabi&#8217;s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan visited Ethiopian Prime Minister Abiy Ahmed in Addis Ababa.
Ethiopia&#8217;s foreign exchange shortage is due in part to its spending big on infrastructure projects. The current total left in the East African country&#8217;s coffers is equivalent to less than one month&#8217;s worth of imports, Reuters has reported.

Over the weekend, Ethiopia and neighboring Somalia announced that they were investing in four seaports on the Red Sea to draw in foreign investment. Abiy and Somalian President Mohamed Abdullahi Farmajo, speaking in Somalia&#8217;s capital Mogadishu, issued a joint statement of pledges to cooperate on areas including infrastructure and visa services, according to Reuters.
In April, Abiy said that Ethiopia&#8217;s foreign exchange shortage could last up to 15 to 20 years, and that more cooperation with the private sector was needed to secure the country&#8217;s finances.
The Red Sea coastline is strategic because it leads to the Suez Canal, which serves as a gateway for shipping, moving between Eastern and Western markets.
Landlocked Ethiopia is keen to shore up its international trade infrastructure; for example, taking a stake in the Port of Djibouti in May.
The weekend&#8217;s news is the latest in a slew of reforms coming out of the Ethiopian government.
In early June, lawmakers voted to lift 
Ethiopia&#8217;s state of emergency two months 
 early. This was imposed following the sudden resignation of former Prime Minister Hailemariam Desalegn in February following anti-government protests fueled by ethnic tension.
Shortly after, the Ethiopian government said it would implement a historic peace deal with neighboring Eritrea, formerly a province of Ethiopia. The deal, though signed in 2000, did nothing to end a military standoff along the two countries&#8217; borders. Abiy, as reported by Reuters, said that Ethiopia and Eritrea should work to grow their economic and infrastructural ties.
In addition, the government also said it would allow private investment in some areas of the heavily state-controlled economy, including national carrier Ethiopian Airlines and the telecoms sector.
Ethiopia, a country that has seen double digit gross domestic product (GDP) expansion as recently as 2017, despite being among Africa&#8217;s poorest, has espoused a 
China-style state-led development model 
 in order to achieve economic growth.
According to the Central Intelligence Agency&#8217;s 2014 estimate, 29.6 percent of the population lives below the poverty line.

UAE gives Ethiopia $1 billion lifeline to ease foreign exchange crisis

Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/06/18/china-middle-east-are-spending-on-sudan-but-us-policy-is-confused.html">China and the Middle East are pouring money into strategic Sudan, but US policy is &#8216;confused&#8217;</a>
<ul>
<li>More interest from foreign investors is starting to trickle into Sudan after the U.S. lifted long-standing sanctions last October.
</li>
<li>But, China and the Middle East are currently the biggest international players in the East African country.</li>
<li>One expert on Sudan has told CNBC that the U.S.&#8217; policy on Sudan lacks clarity.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/18210230/105221010-GettyImages-898553932.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Kayhan Ozer | Anadolu Agency | Getty Images"/>
Since the U.S. lifted long-standing sanctions on Sudan last October, foreign investors&#8217; interest has started to trickle in, an expert on the region has told CNBC.
But it&#8217;s Chinese and Middle Eastern actors who already have first-mover&#8217;s advantage, Matthew Kindinger, sub-Saharan African analyst at emerging markets advisory firm Frontier Strategy Group, added.
&#8220;Any firm that was prevented from entering Sudan because of the U.S. sanctions now has much larger scope to expand in the market,&#8221; he said. &#8220;(But) the current administration&#8217;s Sudan policy appears to have become confused at the least, or at best a very low priority.&#8221;
Given the U.S.&#8217; sanctions, some of which date back to 1997 over human rights concerns and terrorism links, China and countries including Saudi Arabia and the United Arab Emirates have instead been Sudan&#8217;s most prominent foreign investors.
&#8220;These countries want to maintain access to resource exports, such as petroleum to south Asian markets, and livestock to meet growing food demand in the Gulf states,&#8221; Chris Suckling, senior analyst at IHS Markit, told CNBC.
Sudan, located on the Horn of Africa and one of the continent&#8217;s largest countries by area, has suffered from brutal conflict for much of its history and saw its economy hit hard by the 2011 succession of its oil-rich southern region. The International Criminal Court (ICC) has issued President Omar al-Bashir with arrest warrants for war crimes twice in the past decade.
Given its troubled past — and present — the country is yet to fully capitalize on its strategic potential.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/18210234/105220968-GettyImages-958301068.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Ashraf Shazly | AFP | Getty Images"/>
Sudan boasts a Red Sea coastline just ahead of the Suez Canal, a shipping passage that permits access between Eastern and Western markets. The country borders landlocked Ethiopia, Chad and South Sudan, with the former in particular keen to boost its export capacity and diversify the transport infrastructure it relies upon. Turkey, Qatar and Ethiopia have all inked deals to develop Sudan&#8217;s ports.
The country is also resource-rich, with significant gold and oil reserves.
Sudan, for its part, has been attempting to position itself as open to business after two decades as an investment pariah under the U.S.&#8217; sanctions. In 2013, the government passed its National Investment Encouragement Act, which prohibits discrimination against foreigners in business.
&#8216;Confused&#8217; U.S. foreign policy
According to Frontier Strategy Group&#8217;s Kindinger, the U.S. has been sending out mixed messages on its Sudan policy.
He said that while ties improved under former President Barack Obama&#8217;s administration, current President Donald Trump added Sudan to his travel ban list in 2017, only to remove it eight months later.
Last October, the Trump administration revoked sanctions on Sudan. &#8220;This decision was meant to be taken four months earlier, but couldn&#8217;t because Mr. Trump had not yet made the requisite appointees in the Africa department,&#8221; Kindinger said.
Nonetheless, Sudan remains on the State Department&#8217;s list of official sponsors of terror, despite sanctions being revoked partly because of Sudan&#8217;s backing of U.S. counterterrorism strategies. Inclusion on this list is an obstruction to any debt relief.
For its part, the State Department website says that trade and investment in Sudan is &#8220;not favorable for American firms,&#8221; citing &#8220;endemic corruption&#8221; on top of other factors including conflict, multiple exchange rates and poor banking and transport infrastructure.
An internationally untouched market
Shahram Safai, a partner at Dubai-based Afridi &amp; Angell Legal Consultants who advises on investment in Sudan, said that potential opportunities lie in mining, agriculture, livestock and industry. &#8220;Sudan is one of the few internationally untouched markets and the investment opportunities are unique,&#8221; he added.
Meanwhile, Kindinger pointed out increasing investor activity in sectors such as health care, information technology and consumer goods. He added that any much-needed expansion of the country&#8217;s infrastructure also presented an opportunity, highlighting Turkish firm Summa&#8217;s March deal to build a new international airport in the capital Khartoum for a reported $1.15 billion.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/18210239/105220976-GettyImages-940963156.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Ashraf Shazly | AFP | Getty Images"/>
But, moving into Sudan&#8217;s nascent market requires caution. The country ranks 170th out of 190 on the World Bank&#8217;s Ease of Doing Business index, for example.
Sudan&#8217;s &#8216;impending economic crisis&#8217;
Regardless of Sudan&#8217;s scope as a foreign investment destination, the country&#8217;s bloody conflict between the Arabic north and non-Arab south has spelled economic disaster thus far. South Sudan&#8217;s secession in 2011 took with it 75 percent of the country&#8217;s oil reserves. According to the International Monetary Fund (IMF), gross domestic product growth for Sudan plummeted by 10.6 percent the following year.
The removal of U.S. sanctions &#8220;has so far done little to avert the continued deterioration of Sudan&#8217;s oil-dependent economy or improve the country&#8217;s attractiveness to foreign investors,&#8221; Suckling said. The resulting rise in international trade has also compounded the country&#8217;s foreign exchange shortage.
Nonetheless, investment from the U.S. is expected to pick up, although China and the Middle East remain dominant for the moment. According to Afridi &amp; Angell&#8217;s Safai, the Sudanese authorities are working to improve the country&#8217;s banking sector to better facilitate the transfer of money.
&#8220;Once the full benefits of the lifting of U.S. sanctions is fully realized and implemented, we expect to receive far more interest,&#8221; he said.

China and the Middle East are pouring money into strategic Sudan, but US policy is ‘confused’

Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/06/14/google-ai-research-center-to-open-in-ghana-africa.html">Google&#8217;s next A.I. research center will be in Africa</a>
<ul>
<li>Google will open an artificial intelligence (AI) research center in Accra, Ghana, later this year, its first on the African continent.</li>
<li>Other African cities including Addis Ababa, Kigali and Lagos have also been pushing their credentials as tech hubs.</li>
<li>Ghana likely appealed to Google because of its high quality education system and political stability, an expert in the region told CNBC.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/15070227/105273218-GettyImages-934210100.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Seun Adatsi | Bloomberg | Getty Images"/>
GoogleGOOGL has announced that it will open an artificial intelligence (AI) research center in Africa, its first on the continent.
The Silicon Valley giant said that the new research hub will open in Accra, Ghana, later this year, announcing the move in a blog post published on Wednesday.
&#8220;We&#8217;re committed to collaborating with local universities and research centers, as well as working with policy makers on the potential uses of AI in Africa,&#8221; Google&#8217;s blog post said.
Accra, located in the west of Africa, joins cities including Paris, New York and Tokyo, as well as Google&#8217;s Mountain View headquarters, in hosting an AI research center.
While the decision is the first of its kind for Google in Africa, the company has had offices on the continent for the past decade. It already operates a digital skills training program that it believes can ultimately benefit 10 million Africans. In addition, Google runs a separate initiative called Launchpad Accelerator Africa that it says supports 100,000 developers and over 60 technology startups in Africa.
But, Accra isn&#8217;t the only city in Africa positing itself as a tech hub. Ethiopian capital Addis Ababa and Rwandan capital Kigali are both known for their credentials in tech development, for example. Meanwhile, 
Kenya has been singled out 
 by Microsoft founder Bill Gates for its &#8220;pioneering&#8221; innovation of digital payments platform M-Pesa.
Ghana likely appealed to Google because of the quality of its education system and other feeder institutions, Lucy James, associate consultant with Control Risks&#8217; Africa team, told CNBC via telephone on Thursday. The search company is focussed on &#8220;drawing in local talent and there&#8217;s no shortage of that in Ghana,&#8221; she said.
Ghana also enjoys relative political stability, James explained. Meanwhile, it&#8217;s neighbor Nigeria — the continent&#8217;s largest economy which also promotes business center Lagos as a burgeoning tech hub – is more prone to civil unrest.
Nonetheless, the choice may seem unusual given that Ghana ranks 12th for Sub-Saharan Africa in the World Bank&#8217;s latest Ease of Doing Business index. Rwanda, Kenya and South Africa – another of the continent&#8217;s big economies – all come in the top five by comparison.
But, Ghana&#8217;s pro-business government and entrepreneurial society may have contributed to its selection. People in Ghana share the &#8220;sense that you can disrupt something and make a difference,&#8221; James said.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/15070232/104442872-rsz_gettyimages-619259384.1910x1000.jpg" alt="Google's Mountain View, Calif., headquarters. " height="1000" width="1910" data-licensor-name="bennymarty"/>

Google’s next A.I. research center will be in Africa

Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/06/15/zimbabwe-election-23-candidates-including-mnangagwa-chamisa.html">A record-breaking 23 people want to be the next president of Zimbabwe</a>
<ul>
<li>23 candidates have put themselves forward to contest Zimbabwe&#8217;s election on July 30.</li>
<li>Among those who will be on the ticket is incumbent President Emmerson Mnangagwa, who took power last November after long-term leader Robert Mugabe was ousted in a coup.</li>
<li>Mnangagwa has pledged that the vote will be free and fair. A delegation from the European Union will be present.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/15150232/105275679-GettyImages-968434492.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Jekesai Njikizana | AFP | Getty Images"/>
A record-breaking 23 people have put themselves forward to lead the southern African country of Zimbabwe in the country&#8217;s historic election next month, the highest number of candidates since the country gained independence from the U.K. in 1980.
Among those signed up to contest the presidency is incumbent President Emmerson Mnangagwa, who took power in November last year after long-term leader Robert Mugabe was 
ousted in a coup 
. Mnangagwa is Mugabe&#8217;s former deputy, and represents Zimbabwe&#8217;s ZANU PF party.
Also with his name on the ticket is Nelson Chamisa, the young leader of Zimbabwe&#8217;s main opposition party, Movement for Democratic Change.
The large number of candidates &#8220;is likely to work in Mnangagwa&#8217;s favor by splitting the opposition vote,&#8221; William Atwell, practice leader for Sub-Saharan Africa at emerging markets advisory firm Frontier Strategy Group, told CNBC via e-mail.
The election, to be held on July 30, is momentous because it will be the first without Mugabe on the ticket in nearly four decades. Mnangagwa has pledged that the vote will be free and fair, and has invited western observers. 
A delegation from the European Union 
 will be present.
Attwell added that he expected Mnangagwa to be re-elected, &#8220;albeit not with a thumping majority.&#8221; The sitting president could benefit from his incumbency, and has sought to present himself as a reformer.
Mnangagawa has pushed reform in Zimbabwe in an attempt to heal the economic wounds left from previous decades of mismanagement, which resulted in hyperinflation. He has 
courted foreign investors 
, and when launching the ZANU PF manifesto in early May, said that $11 billion had been committed.
Zimbabwe has also applied to re-join the Commonwealth, a bloc of former U.K. colonies which could bear economic fruit.
Earlier this week Mnangagwa hosted the China-Zimbabwe Business Forum in the capital Harare, at which he presented Chinese investors with an array of areas in which to put their money.
&#8220;The fact that we have 23 presidential hopefuls indicates that there is an opening of political space following the fall of former autocrat Robert Mugabe,&#8221; Attwell added.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/15150240/105275726-GettyImages-969073530.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Jekesai Njikizana | AFP | Getty Images"/>

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President Donald Trump and North Korean leader Kim Jong Un attended a working lunch during their historic Singapore summit meeting.
U.S. delegation members in attendance included Secretary of State Mike Pompeo, White House Chief of Staff John Kelly and National Security Advisor John Bolton.
U.S. President Donald Trump and North Korean leader Kim Jong Un participated in a working lunch Tuesday, following their face-to-face meeting at the highly anticipated summit in Singapore.
Who&#8217;s there 
American delegation members at the lunch included U.S. Secretary of State Mike Pompeo, White House Chief of Staff John Kelly and National Security Advisor John Bolton.
North Koreas in attendance included Vice Chairman of the Central Committee of the Workers&#8217; Party of Korea Kim Yong Chol, who determines foreign policy and defense strategy for the country.
Also present was Ri Su Yong, vice chairman of the Central Committee; Ri Yong Ho, minister of foreign affairs, and No Kwang Chol, minister of the People&#8217;s Armed Forces.
What they&#8217;re eating 
On the menu were prawn cocktails with avocado salad, green mango kerabu and fresh octopus and Korean stuffed cucumber (&#8220;Oiseon&#8221;) for starters.
For the main course, the participants had a choice of beef short rib confit, sweet and sour crispy pork and Yangzhou fried rice and soy braised cod fish.
For dessert, diners had the choice of dark chocolate tartlet ganache, vanilla ice cream and tropezienne.
Earlier in the morning, the two leaders shook hands and took a photo side-by-side before moving to another room, where they gave brief statements to the press.
It was the first time that sitting leaders of the two countries have met, and it came after years of bluster and threats from Pyongyang — and from Trump — that have raised fears of war.
— CNBC&#8217;s Everett Rosenfeld and Nyshka Chandran contributed to this report.

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Justina Crabtree
Source: <a href="https://www.cnbc.com/2018/06/01/south-africa-minimum-wage-the-beginning-of-a-difficult-process-finance-minister-nene.html">South Africa&#8217;s new minimum wage is the &#8216;beginning of a long, difficult process&#8217;: Finance minister</a>
<ul>
<li>South Africa&#8217;s introduction of a minimum wage marks &#8220;the beginning of a long, difficult process,&#8221; Minster of Finance Nhlanhla Nene has told CNBC.</li>
<li>Africa&#8217;s most industrialized economy introduced a minimum wage of 20 rand ($1.58) per hour earlier this week. The change was originally intended for May 1 but was delayed over adjustments made to the legislation.</li>
<li>South Africa is one of the most unequal societies in the world, and infamously suffers from high unemployment. This was 26.7 percent in the first quarter of 2018.</li>
</ul>
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/04/30103531/105165163-GettyImages-951075784.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Rodger Bosch | AFP | Getty Images"/>

 The introduction of South Africa&#8217;s new minimum wage is the start of a &#8220;long, difficult process,&#8221; the country&#8217;s minister of finance said Thursday.
South Africa&#8217;s parliament passed a minimum wage bill by a large majority on Tuesday, meaning that millions of workers will now earn 20 rand ($1.58) per hour. This is equivalent to 3,500 rand ($277) per month.
&#8220;It&#8217;s the beginning of a long, difficult process, because at the end of the day we&#8217;ve never had (a minimum wage),&#8221; Nhlanhla Nene told CNBC on Thursday at the OECD conference in Paris.
The minimum wage was due to be introduced on May 1 but was delayed due to government bodies redrafting legislation. South Africa&#8217;s main opposition party, the Democratic Alliance, opposed the bill. The country&#8217;s second-largest trade union, unhappy with the proposed wage, 
organized a strike in April 
 calling for a higher figure.
<img loading="lazy" decoding="async" src="https://cdn.cnbcafrica.com/wp-content/uploads/2018/06/10125923/105244966-GettyImages-931267604.1910x1000.jpg" alt="" height="1000" width="1910" data-licensor-name="Simon Dawson | Bloomberg | Getty Images"/>
South Africa is one of the most unequal societies in the world. According to the 
World Bank 
, the poorest 20 percent of South Africans consume less than 3 percent of the country&#8217;s total expenditure. Meanwhile, the wealthiest 20 percent account for 65 percent.
Introducing a minimum wage could help alleviate this, and also stimulate much-needed economic growth by boosting consumer spending. South Africa&#8217;s consumer price inflation has been on a largely downwards trajectory since early 2016, hitting a seven-year low of 3.8 percent in March. But, in April it rebounded to 4.5 percent as a result of price rises in product groups that are specifically taxed, according to Statistics South Africa.
But, some fear that a minimum wage could lead to a rise in unemployment, already at 26.7 percent for the first quarter of this year.
While Nene acknowledged that laying off workers could be an &#8220;unintended consequence,&#8221; he argued that the new legislation has provisions to &#8220;protect&#8221; jobs, allowing for businesses struggling to pay their workers to submit to the government for an exception.
Establishing a minimum wage has been a key proposal of South African President Cyril Ramaphosa since he took power in February. Appeasing the country&#8217;s electorate may be on his mind as he faces election in 2019.
Mixed reaction from major trade unions
South Africa&#8217;s largest trade union group, the Congress of South African Trade Unions (COSATU), welcomed the news.
The minimum wage means that the incomes of 6.4 million South Africans will rise, Matthew Parks, COSATU&#8217;s parliamentary coordinator, said in a statement reported by Reuters. &#8220;This is equal to 47 percent of workers and will directly benefit half the nation.&#8221;
But the second largest trade union bloc, the South African Federation of Trade Unionists, said that it was &#8220;disgusted&#8221; by the news, adding that the government had bowed down to &#8220;white monopoly capitalists.&#8221;
It is pushing a living wage of 12,500 rand and has said that more protests are planned.

South Africa’s new minimum wage is the ‘beginning of a long, difficult process’: Finance minister

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