BN Daybreak - Mon 18 May 2026: China trade; Joburg debt; BEE growth costs; and Soweto youth squash

Added: 2026-05-18

[00:00:00]Daybreak on Business News is proudly brought to you by Bonitas, the medical aid for South Africa.

[00:00:07]>> [music] [music] >> Johannesburg's finances are under fresh scrutiny with missed reporting deadlines, a downgrade risk, and billions owed to creditors raising serious questions about the country's biggest metro.

[00:00:27]Good morning. This is the Business Daybreak. I'm Asime Nyite.

[00:00:32]Coming up, the latest overnight world news from Bloomberg, Julieta Talleve on Joburg's deepening financial trouble, Connie Mulder on Solidarity's roadmap away from race-based policy, and Glynn Lazarus and Sharon Sibanda on how a Soweto squash initiative became a broader youth empowerment project.

[00:00:54]We begin with the global picture.

[00:00:57]First up, our partners at Bloomberg give us the latest overnight world news. The US and Iran remain far apart on a deal to end the war and reopen the Strait of Hormuz. And today, President Trump made clear his patience is wearing thin. More from Bloomberg's Monica Rix.

[00:01:15]President Trump warned Iran on Truth Social today posting the clock is ticking to make a deal and reopen the Strait of Hormuz. But a drone attack which sparked a fire at a United Arab Emirates nuclear plant is now highlighting the risks of a fragile ceasefire in the region. Iranian threats on shipping in the Persian Gulf have also brought the region's energy exports to a near standstill. Though Trump said three Chinese tankers went through Hormuz this week loaded with Iranian oil. A Vietnam bound tanker carrying 2 million barrels of Iraqi crude also made it early this morning. We're getting more details about last week's summit between President Trump and Chinese leader Xi Jinping. Today the White House said China has agreed to purchase at least $17 billion in agricultural products from the US annually through 2028. It was on Saturday that China's Ministry of Commerce said the two sides agreed to lower levies on some products to promote bilateral trade. Today US trade rep Jameson Greer spoke to CBS Face the Nation about some of these deals. We saw China over the past couple of days reduce a host of non-tariff barriers on agricultural products such as beef and poultry etc. And so we've seen them already starting to do things to facilitate imports from the United States. Now another agenda item at the summit was Taiwan. President Xi warned President Trump that mishandling the Taiwan issue could be dangerous. Now Trump said he made no commitment to Xi concerning Taiwan and Trump said he would make a decision soon over a planned $14 billion arms deal with the island. Today Taiwan's ambassador to the US Alexander Yu spoke about the potential arms deal. We believe in peace through strength. So actually makes more sense for the United States to sell us the arms so we can defend ourselves so you don't have to send your army 9,500 miles away to defend us. The focus now turns to Johannesburg and the numbers are not flattering. Currency co-founder Julieta Tallevey unpacks the city's financial position after Finance Minister Enoch Godongwana wrote to Joburg mayor Dada Morero warning over the state of the metro's finances.

[00:03:29]The city has just 3.9 billion in cash against around 25 billion owed to creditors. While Moody's has placed it on review for a possible downgrade.

[00:03:39]But Tallevey says the bigger issue is governance.

[00:03:42]Johannesburg's failure to produce audited financial statements on time has already led to its bonds being suspended on the JSE.

[00:03:50]With a key deadline at the end of May and a bond repayment due in June, this is no longer just a city hall problem.

[00:03:58]Here's Giulietta Talevi. Okay, so the Moody's thing actually was primarily initiated as a result of the city of Johannesburg not filing its audited financial statements uh within a time period demanded by the Johannesburg Stock Exchange. Uh because its bonds are listed, it has to do that. And it has You have 6 months in order to file your um audited financial statements. Um and uh this is for the results to the end of or to the 25th of June 2025.

[00:04:30]Okay? Or end of June 2025. So, it still hadn't done that. Um and so, it's uh securities, its bonds were suspended on the JSE by the exchange. Now, Moody's, which has a quite a generous rating according to a couple of the people I've spoken to, couple of the bond analysts, this effectively prompted Moody's to re-look at the rating it gives Johannesburg and to put it on review for a possible downgrade.

[00:05:00]Um now, they have to produce their statements by the 31st of May. This is absolutely uh paramount for the city of Joburg to do this.

[00:05:09]Um they've kind of brushed it off as a technical matter, and it was a technical matter with the auditor general, they say. So, but Moody's is actually saying that to us, the the failure to produce the financial statements indicates serious um uh deterioration in governance and not just um Joburg's financial health.

[00:05:32]So, that is why they have this on review for downgrade. And the bond analysts I spoke into say that if they don't produce these financial statements by the end of May, a downgrade is pretty much absolutely certain. And and there's a domino risk here, it seems, that if uh a potential default is on the way, this could mean a much much bigger consequences, is it not? Yeah. So, it's not necessarily the case that the downgrade prompts the defaults.

[00:06:03]So, what the city of Joburg I mean, it just it just says to you though that you're a much greater credit risk. So, anyone who was thinking of happily lending the city of Joburg money is going to think twice about it.

[00:06:17]The deeper into junk territory the city's ratings go. Healthcare [music] matters, but what matters most?

[00:06:26]Having cover for the people who keep this business going.

[00:06:30]Bonitas is there [music] for you when it counts.

[00:06:32]Bonitas Medical Aid for South Africa.

[00:06:34]Visit bonitas.co.za and find [music] your plan.

[00:06:38]From municipal governance to national policy, on the NDB Sunday show, Connie Mulder, head of Solidarity's Research Institute, sets out the organization's roadmap to move South Africa away from race-based legislation by 2030. His argument is that current empowerment policy carries a measurable economic cost while failing to deliver broad-based upliftment.

[00:07:05]Mulder says Solidarity's research estimates BEE compliance costs at between 1% and 3% of GDP growth.

[00:07:15]And argues that South Africa needs an end date for policies that still use race as the main proxy for disadvantage.

[00:07:22]Here is Connie Mulder. So, the first step was to just doing some research as to what is the damage that these race-based legislations that they do.

[00:07:31]And we were shocked to find that we we were the only ones who've done this sort of research. So, for most public policy, everyone assumes that there's a cost. Let's say you we've got a police force. So, there's a cost we have to pay salaries, etc. But, there's a benefit as well. So, as the public, we go, "All right, cost is worth the benefit." And but, the moment you start talking about costs associated with BEE, you suddenly get uh denial. Uh you have president once again now stating, "No, there's no cost." Now, now that's uh crazy, lad. Uh meaning um obviously, there's a cost. You're raising the regulatory hurdle that companies have to go through. You're raising the cost of compliance. Uh obviously, there will be a cost. And we started a research report that says, "What is the the actual cost of BEE? What does it cost companies to comply?"

[00:08:16]Um and the results were quite shocking. Um from our perspective, we found And this is using the BEE Commission's reports, using the JSE payroll data, and using Stats South Africa data. So, it's not our own data.

[00:08:27]We just uh had these different data sets talking to one another.

[00:08:30]And the costs, uh conservatively estimated, is between 1 and 3% uh of GDP growth per year that companies are rather spending on complying with this extremely burdensome system.

[00:08:42]Now, that means um uh we went back and said, "Let's say this system wasn't in place."

[00:08:48]Uh well, if South Africa had grown at the at the same rate as our peers, which is which is a weird thing. It's every peer country that has have uh had has outgrown us. Um and and the question should be why. But, if we had grown at the same rate of as our peers by reducing this penalty that we seem to be paying for a a race-regulated system, uh unemployment would have been roughly about 17% today.

[00:09:12]Uh so, uh not ideal. Obviously, there's still other macroeconomic conditions that that are a challenge for South Africa.

[00:09:19]But, uh that would have been 4 million more people um having jobs. So, then the question is, what does BEE policy actually do?

[00:09:25]And what we've seen uh and Professor Lumedia has shown it uh etc., is um it it does not work on any of the metrics that it says it should.

[00:09:36]It has not reduced unemployment. In fact it has increased it, specifically black unemployment. It has not reduced poverty, in fact it has increased it.

[00:09:43]Every single South African citizen is poorer and more unemployed due to these policies.

[00:09:47]Except a small elite who have gotten very rich off the back of this policy. And then that means um as Solidarity when we look at this it's one of those lessons that you learn quite early in your life is if you're in a hole, the first step is to stop digging. And that is why we've got a great push with this report etc. and the general debate on this to say um we need an end date.

[00:10:11]An end date for these policies. We need a date on which South Africa no longer discriminates on uh based on race.

[00:10:17]Uh a date in which South Africa then can be truly non-racial. And that is the goal of the whole campaign that we're launching with comes to Switzerland and we've got some local uh levers that we're also pushing.

[00:10:28]But just saying uh this policy is damaging to the economy. Uh when does it end? What does it look like? Um how do we get this? And finally, a story about what happens when sports becomes more than sports.

[00:10:42]Egoli Youth Empowerment began with squash in Soweto. But directors Glenn Lazarus and Sharon Sibanda say it quickly became clear that the children needed more than a court and a racket.

[00:10:55]The program now includes academic support, life skills, leadership development, nutrition, and mentorship for young people in Soweto and Johannesburg's inner city. As Sharon puts it, the aim is not to pretend they can change every child's reality overnight, but to walk the journey with them.

[00:11:15]Here's that conversation. We started introducing squash and as we ran more programs, we expanded it into the inner city and realized that we were only touching the tip of the iceberg because the youth needed the outcomes in terms of sport, but all the other issues that we were facing on a day-to-day basis weren't being addressed. And that's when we got Sharon involved. Sharon is a psychologist by trade and been involved in the program since the early days. And she identified some of the key issues that are faced in the inner city and Soweto.

[00:11:51]Whether it be social issues, all the different things that kids face on a day-to-day basis. And as we progressed, we started introducing more and more additional programs. So from life skills to academic support, um my healthy lifestyle, nutrition, and so on. And and this evolved over period of 3 or 4 years.

[00:12:14]We're now at a stage where after, you know, quite a time period, we decided to change the look and feel of our image because it was no longer just about squash. It became about producing uh for at-risk youth to have to get guy leadership, become great citizens of our country, and have outcomes that give them opportunity to be employed and become leaders. Yes. So, with squash, we we realized that yes, squash we using squash as an entry point, but then the challenges that the inner city and Soweto kids are facing in their day-to-day lives, we had to address them if we were to fully run as a program.

[00:13:02]You know, we're talking about kids whose realities waking up to communities that are ridden with poverty, crime, violence, and environments that could easily sway them in the wrong direction. We felt that we must please provide them with this safe space. A safe space where they have caring adults who are nurturing and who could listen to them to say we know the realities that you're going through.

[00:13:33]We're not going to say perform a miracle and say we're going to change your realities, but we're going to walk this journey with you. We're going to provide you with life skills, we're going to provide you with leadership [music] skills, and empower you to be resilient young South African citizens.

[00:13:53]And that's Business Daybreak. I'm Asime Nyide.

[00:13:57]Thanks for listening. We'll keep track of what matters and leave the noise to everyone else.

[00:14:03]Cheers.

[00:14:04]Daybreak on Business Daybreak News is proudly brought to you by Bonitas, the medical aid for South Africa.