JOHANNESBURG - South Africa is on the brink of economic disaster.
The country is in a recession for the first time in nine years, unemployment is at a decade high, the currency is collapsing and the economy is rattled by international developments.
eNCA reporters and anchors Michael Appel, Aldrin Sampear, Shahan Ramkissoon and Jane Dutton traverse the globe to see the situation in other emerging markets.
From Monday 24 September, eNCA will broadcast their reports. You can also follow their daily blogs, vlogs and tweets here.
Aldrin Sampear brings us the latest from Argentina
Small to medium companies in Argentina employ 75 percent working population.
But they too are now under distress as the economic recession continues to deepen.
Unemployment is up by 9,6 percent and the GDP is on a downward spiral with 4,2 percent decline in the second quarter of 2018.
But it's the SMMEs that are now feeling the pinch as production levels decline, production costs are on the rise. Electricity costs for one company, Tikvatex, increased by at least 1,300 percent since 2015.
In a year's time from now, Argentines will head to the polls.
It'll probably be a few months after South Africans would have decided in their toughest elections yet.
Ironically both countries - emerging markets, are facing an economic upheaval, Argentina is in a more precarious tide.
A few weeks ago, after the announcement that South Africa has slipped into a recession, I remember the chairperson of the ANC's Economic Transformation Sub Committee, Enoch Godongwana saying no governing party wants to go into an election with a recession.
That's because the consequences will be dire. This explains why here in Argentina, opinion polls indicate that President Mauricio Macri's popularity is slipping. And who is beating him, you ask? It's the former President Christina Kirchner, who currently faces corruption charges.
Macri's government announced on Thursday that the unemployment rate has increased by 0.5 percent to 9.6 percent. This figure may seem low but it's significant in the sense that since Macri took over from Kirchner in 2015 unemployment has nearly doubled. Also on the increase is the inflation rate and the interest rate which sits at a world record of 60 percent.
Is the IMF $50-billion (R718-billion) deal the silver bullet? Labour says no and that's why on Monday they'll take to the streets.
#OnTheBrink: Aldrin Sampear blogs Day 1
So much of Argentina reminds me of South Africa. From the social assistance from the government like the child support grant to free public education, from primary to tertiary (well even though our's is partially free).
And today we went to the biggest shanty town in the country, Barakas. We drove in and immediately starting thinking of home. Alexandra to be specific...
Residents at a shantytown in Argentina build multiple storey buildings without government permission.
How much free can we do?
That's the question that keeps coming back as we wrap up this series of emerging markets in distress.
In Argentina education is free, from Primary all the way to Tertiary. But what good is an education in an economy that's not creating jobs? We met a 21-year-old Mayra at one of the soup kitchens in one of the poorer areas in Buenos Aires. She is a mother if 2, both with heart conditions. Her last born is just a couple of months old; she conceived her first born at the age of 15. Mayra's story indicates that even the open doors to free education don't sway people into classrooms.
Also numped into a Venezuelan yesterday, who has left his country where education is also free yesterday. Gustavo "fled" last year just before obtaining his degree in International Affairs because the situation was becoming unbearable. Gustavo shed a tear when he told me that his friend is graduating this year and here he is working in a convenience store.
At a grass root level, at least, the environment is conducive for work seekers. Like a subway to take for interviews which used to cost the equivalent of R1 a trip. Now it's slightly up due go government cutting subsidies to companies running the public transport system. So the ride to go to a potential employer is nearly free, but the problem is the economy has a sign that reads "No Jobs".
One thing though that still strikes me is that the unemployment rate is way lower than ours. They are at 9.6 and we at just over 27%. When I told our fixer she was SHOCKED. LoL
The $57-billion IMF loan agreement with Argentina explains why countries, especially in Africa, are knocking on Chinese doors for funds.
The agreement which still needs the IMF board's approval essentially gives the New York-based funder influence over the country's monetary policy. According to the conditions attached the government has agreed that the Central Bank will adopt a free-floating regime. It means that the Central Bank will have restricted powers to intervene in the exchange rate.
Imagine if this was to happen in South Africa, I am sure Lesetja Kganyago would have thrown in the towel like the Argentine governor Luis Caputo did two days ago.
But at least one economist believes that the intervention was necessary. Gustavo Neffa says the IMF agreement says would force the government to meet its zero deficit obligation by next year.
#OnTheBrink: How much free can we do?
Argentina's The Pink House. Photo: Aldrin Sampear / eNCA
The Argentine version of "The Whitehouse". It's appropriately called "The Pink House"
Ask anyone in Argentina to tell you any story about The Pink House, I mean ANY STORY. They'll first start telling you about "well in 2001, during the unrest over the economy, President Fernando de la Rua left the Pink House in a helicopter when people were protesting outside"
Despite the economic uncertainty in Argentina, everyday life continues for the citizens. The troubled Peso currency is also encouraging people to travel to the country.
Shahan Ramkissoon brings us the latest from Turkey
Like Johannesburg, Istanbul’s traffic is absurd, but the difference here is that it’s not just during peak hours.
It’s after 9.30pm and people are out soaking in the sights of this city. With a population of around 15 million, it’s no wonder we’re in a bumper-to-bumper situation right now.
It speaks of the way of life here, fast, loud, unique. They drive on the right side of the road, and when I had to get behind the wheel, it was the most terrifying thing I've done since I came here. To add to the road trauma, people don't really follow the rules. Hardly anyone indicates when switching lanes, they speed and almost drive into each other, but somehow don't.
I came here expecting to see the impact of an economy under pressure. I expected people to say they were worried about the crashing Lira and high inflation, but that's not what I'm finding.
Economic experts say that's because people aren't feeling the real pinch just yet, others say they are with interest rate hikes and inflation being at a 15-year high. But many are confident the government will act promptly and it'll ultimately protect consumers.
The strength of this economy has a lot to do with its geographic position, basically in the centre of Europe and Asia. I
t's a blessing that sees exporting made easy. So the government, business moguls and ordinary entrepreneurs take full advantage of that, whether it's all above board...well you know the answer to that. With US sanctions and import tariffs causing major volatility,
Turkey has lowered its growth expectations but it's still pretty high at 3.8 percent this year, down from 5.5 percent For some perspective, South Africa's economic growth is at less than 1 percent. Of course we have different factors at play. Nickolaus Bauer will explore that further next week.
Point is this, Turkey has been on an economic high for years now. Some question the government's 'overspending' and 'over-borrowing', but it's led to many people here being confident in their government. So many entrepreneurs I've spoken to say, "it'll be ok, our government knows what it's doing."
And because of that confidence in the state, they're not panicking about the turbulent markets. Some say while they are impacted by high inflation and increased interest rates, they'll put up with it, well for now anyway.
Like the edgy driving, it seems President Recep Tayyip Erdogan's edgy economic moves are paying off. Just last year GDP grew 7.4 percent and he has the confidence of his people.
Don't get me wrong, it's not all rosy here and there are serious questions about Erdogan's style of leadership but we'll talk about that another time. - Shahan Ramkissoon
Just one of the meals that Shahan Ramkissoon is battling to say no to in Turkey.
For people on a diet, Turkey is not the easiest place to be. My biggest enemy and love, bread, is served with everything. Save me!
Bread, bread and more bread is served at breakfast, lunch, and supper. It’s just as important as the main part of any dish. Cooking in butter is a norm too. Yesterday I had eggs made in a hot copper bowl, drowning in butter. Of course, I saw it on the menu and thought I shouldn’t go there, but how could I resist such tempting things? After all, it’s been a stressful trip with super long hours, live crossings to South Africa and stories to package, so I deserve to treat myself…right?
Problem is, it’s all so good and I’ve have been treating myself often, due to the stress of course. Cheese is as popular as bread here so, with your eggs, there’s cheese. And with your bread, there’s cheese, multiple options to choose from.
Expect to see loads of meat too, served with a unique ‘suzme yoghurt’ at times. The flavours are good and everything is fresh, but I often need to add salt.
Don’t worry, I haven’t forgotten why I’m here. This food I talk about has become a bit pricey for locals. It’s an increase they can’t avoid due to trade wars, high inflation, and a weaker currency. Gas prices have also gone up and in a country with 22.5 million vehicles, it’s hitting a large part of the population. But despite all that, people I’ve spoken to are not hopping mad. They say things like “we’re affected now but it’ll get better.”
So like their optimism, I’m hoping I will still fit into my suits when I get back home. Maybe my metabolism will work overtime and keep the kilos off. Ok, ok, I’m being delusional but just don’t send me emails saying I look ‘bigger’. I will, however, take offers for a sponsored personal trainer. :-) - Shahan Ramkissoon.
Michael Appel brings us the latest from Brazil
One of 11 UNHCR emergency shelters that have been setup in the Roraima State in the north of Brazil to deal with the influx of Venezuela migrants. Photo: Michael Appel / eNCA
The first few days
I’m privileged enough to have seen a lot of the world but this is my first time in South America, Brazil and Venezuela, in particular.
I’m happy to report that Brazil is everything and nothing like I imagined. If that makes no sense, I promise you, almost 16 hours and three flights later your brain would also be as frazzled as mine. That’s a nice way of saying I’m so tired I can hardly do the maths required to workout which one of Brazil’s three timezones I’m in. We flew in via São Paulo, on to the capital Brasilia, and then lastly to Boa Vista, which is in the northern most State of Roraima.
South America’s only Portuguese-speaking country is so massive it’s difficult to wrap your head around it. We know their soccer team, their famous samba music and pristine beaches, but just like South Africa, it has so much more to it than the websites say or than meets the eye.
Brazil is to this outsider, a deeply complex and intricate web of politics, social dynamics, inequality, hierarchy, and just like us, diversity that weaves together a country with more than 200 million people. Trying to understand it fully in the short space of time that we’re here for is simply impossible. But we’re going to do our best to see what our young democracy can learn from its BRICS counterpart. No country can claim to know everything. Learning from one another costs nothing. Not heeding the warning signs can cost you everything.
A military dictatorship in Brazil ended in 1985 ushering in a dawn of democracy, nine years before our own. The last few years have been rocky in Brazil to say the least. In short, one of its former Presidents Dilma Rousseff, was impeached in 2016 and another former President Lula Da Silva, is currently behind bars serving a 12-year sentence for corruption. Lula, as he’s affectionately known here, left office with an approval rating of over 80%. Go figure. Even now behind bars he remains incredibly popular.
Brazil heads to the polls to elect a new President starting in a series of runoffs on 7 October. The current President Michel Temer is widely believed to have made a mess of things and reportedly has an approval rating of only 3%. Ouch. Needless to say he’s not even contesting in the upcoming elections.
Lula was the front contender but, and even this will make South Africans chuckle, the courts here ruled he’s ineligible as… well you know... he’s in prison. Kudos to him for trying though I suppose. His stand-in candidate is Fernando Haddad. He’s nowhere near as popular as Lula but he’s reportedly polling okay at about 19%. One of the most popular candidates is a very interesting character known as “Brazil’s Donald Trump”, a former army captain, Jair Bolsonaro. He’s reportedly garnered about 28% of the vote. He’s worth Googling I promise you. He advocates for arming citizens and wants the death penalty brought back. He doesn’t like foreigners or homosexuals. He’s a far-right nationalist and the roughly 150 million voters may have to choose between the ideological left and far right come next month.
But more about the upcoming elections in later posts.
My first few days in Brazil were spent up in the north near the Venezuelan border in the state of Roraima. The main city is Boa Vista. About 200 kilometres north of the city is the little border town of Pacaraima. My first few days in Brazil were focused on the humanitarian operation unfolding locally as the continuing economic crisis in Venezuela deepens.
If you haven’t been paying attention to world news lately you may have missed the fact that the country with the largest oil reserves in the world, Venezuela - once the richest country in Latin America - is both broke and broken. When the oil price went from over $100 per barrel to less than $40, its economy tanked. To simplify it, Venezuela borrowed far and wide against its oil reserves, spent way more than it could afford, and never saved a cent while the price of oil was high. To keep the workers happy, the minimum wage kept on increasing and the government started printing money. From that moment on, it was headed in one direction.
It has hyperinflation, mass unemployment, a crime rate which could make it the murder capital of the world, and a population this is by and large slowly starving. Some very smart people have measured the calorie intake of Venezuelans and realised they’re using more energy than they’re able to consume because of a lack of purchasing power and food. Do that for long enough and you’ll starve to death.
People trade on the black market because there aren't enough products in stores. Medicines are almost impossible to get and if you can get them, they’re insanely expensive. I spoke to a shop keeper in the Venezuelan town of Saint Elena who said that as a result of the changing inflation rate, he has to change his prices four times a day if he hopes to make any profit. I asked him how he survives. He says it’s only possibly because has has more than one source of income. “If you’re living on the minimum wage it’s impossible to live,” he tells me.
I’ve read that as many as 80% of Venezuelans rely on the minimum wage to live. The minimum wage regularly gets raised by percentages of over 100%. Maduro even raised it by 3000% recently. It means nothing though as they’re only able to afford a single bus ticket with their monthly wage. It can’t even buy you a kilogram of rice. You can maybe get two chickens. That’s it. That’s what a full month of work buys you.
I’m not taking these examples from reports on the internet or hearsay. Joe Komane, one of the best cameraman in the business, and I traveled to a United Nations High Commission for Refugees (UNHCR) emergency camp housing close to 400 Venezuelan migrants in Boa Vista to get the information firsthand. About 5 000 migrants have come through these emergency shelters and thousands, even hundreds of thousands more will. About 2 000 migrants have also already been relocated to other parts of Brazil depending on their skill set.
We also travelled the 200 kilometres to the border town of Pacaraima where we met more Venezuelans desperate to make a new start anywhere but their home country. The Deputy Head of “Operation Welcome” Major Luiz Roberto tells me they’re getting between 500 and 700 Venezuelans crossing the border applying for either temporary residence or refugee status in Brazil per day, every single day of the week. The most they’ve been able to process was 1 000 migrants in a day. People are getting medical care, vaccinations, food, shelter, and documentation.
The legal mandate for the military humanitarian operation at the border ends in May 2019, but the Major tells me it can be extended depending on how long the influx of Venezuelans continues for. Reports estimate between two and three million Venezuelans have left over the last few years.
It’s been incredible reporting from here so far. I’ve been bitten by some of the strangest insects. Trying to shoot a piece-to-camera (PTC) on the way to the border, Joe and I were attacked by insects which bite you and draw blood immediately. Apart from the blood the bite seemed small but the itching two days on is overwhelming. The heat up north of Brazil is Durban weather on steroids. It was close to 40 degrees Celsius on our second day and the humidity was a cool 90% at least.
More from us in the days to come.
Nigeria and Venezuela are struggling because of low oil prices. South Africa and Brazil are in recession. eNCA reporter Michael Appel filled a report from Rio de Janeiro, Brazil.