Eskom has been granted a 31.3% tariff increase by the National Energy Regulator of SA(Nersa). The hike will come into effect on 1 July 2009. Eskom had wanted a 34% increase but they have only been allowed to increase tariffs by 31.3% which is still a substantial amount. With the current state of the South Africa economy, this hike is not going to go down well with consumers. This increase will affect every consumer no matter who you are. But the consumer, as hard as it will be, will have to bare with Eskom as they needed this increase in tariffs. Eskom have been trying since January last year to get a hike. They need to increase the electricity infrastructure in the country to meet the increasing demand of electricity.

The wait is almost over, the cost of telecommunications and Internet connectivity is set to be slashed soon when the 17 000km SEACOM fibre-optic undersea cable comes online this month in Southern and Eastern Africa. The cable is set to go live on 27 June. SEACOM would offer wholesale internet bandwidth - several times the current availability - to companies such as Neotel, Telkom, MTN and Vodacom. That should mean that these companies will be purchasing their bulk bandwidth at a fraction of the cost that they are currently paying and thus they should pass on this savings to us the consumer! I would be very mad if they do not do so!

I for example spend R389 a month for 2GB of bandwidth from Vodacom. This 2GB is just not enough for me during the month and to get it up to 3GB I would have to pay an extra R200 for that extra 1GB!!! There is no indication yet from any of the companies on how much we will now be paying for Internet bandwidth but the hope is that it will be a substantial drop. I am hoping to hear something along the lines of R100 for 5GB!

This SEACOM cable should not only mean we have cheaper bandwidth but it is also going to result in us having faster internet connectivity. Faster connectivity will mean that we will be able to do more online in a shorter space of time and also be able to watch HDTV and multi-media over the internet. Could this signal the demise of DSTV? We may not need satellite dishes anymore if we can watch TV via the internet! I see a lot of changes taking place thanks to this cable and it should all benefit us the consumer and businesses as a whole.

Get set for a hike in the price of petrol! The department of minerals and energy has revised the price of Wednesday’s petrol increase from 16c to 17c a litre. They have given no reason for this change. The decrease in diesel prices has also been revised. Diesel prices will decrease by 11.5c a litre and not 12.9c as stated on Friday, while 0.005% diesel will decline by 12.5 cents instead of 13.9 cents. Wholesale paraffin still decreases by nine cents and illuminating paraffin by 12c. Petrol in Gauteng will now cost 752c a litre from 735c before and 738c on April 1, and it is now 727c at the coast from 710c before.

The Reserve Bank dropped their key repo rate by a further 1% today, led by the extremely weak economic data released 2 days ago. The repo rate is now 7.5% whilst the banks prime lending rate drops down to 11%. As most countries across the world have continued to lower interest rates during this harsh economic climate, there is suggestion that todays slashing of interest rates in South Africa could be the last cut we will see in a while. Some analysts predict that we will have one more rate cut in June and it will only be a 50 basis point drop and then from there we will not see any further cuts as the MPC (Monetary Policy Committee) would have done all it can.

We heard Maki’s views yesterday with regards to the recession in South Africa. Today it is now official that South Africa is in a recession according to the statistics released. South Africa’s real gross domestic product (GDP) dropped on a quarter-on-quarter basis by -6.4% in the first quarter of 2009, from -1.8% in the fourth quarter of 2008.This signals the first recession in 17 years for South Africa. Before the release of these figures today, analysts had predicted growth to decrease by 3.9% so considering that it came in at 6.4% was a big shock.

The global financial crisis has wreaked havoc and it appears to be the most popular subject to read about. Since everyone is talking about it daily, I might as well look at why this is such a hot topic and whether indeed SA is in a recession.

To get the technicalities out of the way; for SA to be in a recession it requires for there to be two consecutive quarters in reduction of the gross domestic product (GDP). This has not happened in 17 years until now.

In the 4th quarter of 2008, SA’s GDP dropped by 1.8%. This was the first drop in a decade. This is what brought about the alarm bells that SA may have been heading for a recession if the first quarter of 2009 showed another contraction as well.

In the 1st quarter of 2009, the SA economy is expected to contract following The Reserve Bank governor Tito Mboweni’s, comments in the past week that this would be the case. As governor, his view is held highly as he is responsible for the monetary policy in this country.

Some people blame him for his late reaction in decreasing the interest rates when the local and global economy had already started showing signs of a slow-down last year. Some economists expected for him to have been more proactive by reducing interest rates before SA was in a recession, instead of only gradually reducing rates now when the economy is officially in recession.
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The U.S. news media has convinced many investors that oil consumption is falling because of the global recession. While that may be true, it’s a disservice to millions of investors because

production is declining at a pace that’s actually three times faster.

And that suggests higher oil and gasoline prices in coming months - perhaps as much as 50% - 70% higher, or more - particularly if a U.S. economic recovery is truly in the offing.

To really see what I’m talking about, let’s start with a close look at consumption. I’m asked about this frequently in my global wanderings, most recently at the Las Vegas Money Show last week.

For months we’ve been hearing about a drop in global demand. It’s a popular story and one that sounds credible: After all, it seems logical to assume that during economic chaos, consumers and businesses alike will rethink their budgets and ratchet back their spending.

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