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A South African minister responsible for arms control said on Friday the government had not approved any weapons shipments to Russia late last year - a move that could have been a possible breach of Pretoria's declared neutrality in the Ukraine conflict.

The US ambassador to South Africa said on Thursday he was confident that a Russian ship had picked up weapons at a South African port in December.

South African President Cyril Ramaphosa's office said an inquiry led by a retired judge would look into the allegation.

On Friday, Communications Minister Mondli Gungubele, who chaired the National Conventional Arms Control Committee (NCACC) when the alleged arms shipment to Russia took place, said that if weapons were loaded onto a vessel bound for Russia from South Africa that was illegal and inappropriate.

"We didn't approve any arms to Russia, ... it wasn't sanctioned or approved by us," 702 radio host Clement Manyathela quoted Gungubele as saying in a Twitter post.

Clayson Monyela, a spokesperson for South Africa's department of international relations and cooperation (DIRCO), also wrote on Twitter that the NCACC "has no record of an approved arms sale by the state to Russia related to the period/incident in question".

Neither of them said whether or not an unapproved shipment had left South Africa.

Monyela said his department would speak to US ambassador Reuben Brigety over his remarks and that Foreign Minister Naledi Pandor would talk to US Secretary of State Antony Blinken later in the day.

Brigety had told local journalists that Washington was confident a Russian vessel had uploaded weapons and ammunition from South Africa in December, although he offered no evidence.

He said the arming of Russia by South Africa was "fundamentally unacceptable" and that senior US officials had "profound concerns" about South Africa not respecting its professed policy of neutrality over Russia's war in Ukraine.

The ambassador's assertion saw the rand and South African government bonds sell-off as currency traders said they were worried South Africa could face Western sanctions.

South Africa is one of Russia's most important allies on a continent divided over its February 2022 invasion of Ukraine, but says it is impartial on the conflict and has abstained from voting on UN resolutions on the war.

Washington has repeatedly warned countries against providing material support to Russia, cautioning that those who do may be denied access to US markets.

During a briefing on Thursday, US State Department deputy spokesperson Vedant Patel did not repeat the allegation that arms had been loaded onto the vessel.

He said Washington had serious concerns about the docking of the ship at a South African naval port and had raised those concerns directly with South African officials.

South Africa's presidency said the issue had already been discussed with US officials who had agreed to let an investigation run its course, and that no evidence had yet been provided by Washington.

The rand crashed to its previous record low on Thursday, losing more than 30c of its value against the dollar in minutes after the US ambassador accused South Africa of providing weapons and ammunition to Russia.

News24 reported that US ambassador to South Africa Reuben Brigety said the weapons and ammunition were loaded onto a Russian ship that docked at the Simon's Town naval base in Cape Town in December last year.

The rand hit R19.36 - its previous record low, reached in 2020 - following the news. It also came close to hitting a record low against the pound, and was last trading at above R24 on Thursday.

The report triggered fears that the US will take economic action against South Africa, perhaps by scrapping the duty-free export benefits it receives thanks to the African Growth and Opportunity Act (Agoa).

"For many, the fortunes of the rand are becoming more overtly entwined with the political prospects of the African National Congress," Robert Hoodless, an analyst at InTouch Capital Markets, told Bloomberg earlier on Thursday. "President Cyril Ramaphosa seems nowhere to be seen. Perhaps this is because of yet another calamitous diplomatic decision over relations with Russia."

The currency has already been under pressure, breaching the R19/$ level earlier on Thursday amid a toxic cocktail of loadshedding and a deepening economic crisis, as well as interest rate concerns.

"The rand is in a fragile state, with local factors, in particular loadshedding, weighing on the local economy and currency. Rand weakness is expected to continue in the short term," said Bianca Botes, director at Citadel Global.

Earlier this week, SA Reserve Bank governor Lesetja Kganyago warned in a speech at the University of Johannesburg that loadshedding will reduce economic growth by 2% this year. The Reserve Bank economy now forecasts growth of 0.2% this year, and to average 1.0% in the following two years. "[This] is barely an expansion," he noted.

Aggressive hikes in interest rates have also hurt the economy. While the Reserve Bank has insisted that this should help to tame inflation, the reality is also that South African interest rates need to remain competitive to protect the rand.

Investors are used to South Africa offering much higher interest rates than developed markets like the US, which has made rand investments attractive and kept global money flowing to local markets, supporting the rand.

But following aggressive US rate hikes, that differential between the US and local rates has now shrunk, and South African rates are not that attractive anymore – which is compounded with the increased risk about the country's economic outlook.

Kganyago highlighted that the rand has been one of the worst-performing emerging market currencies over the past year.

"Idiosyncratic factors such as persistent loadshedding and the recent greylisting of the country by the Financial Action Task Force have kept investors wary."

He warned that rand weakness could worsen South Africa's worrying inflation situation, as imports like fuel will keep prices high.

All of this has left the Reserve Bank in an impossible situation: interest rate hikes are harming a stricken economy, but it also has to fight inflation and protect the rand's appeal.

"Fighting inflation is much harder when the economy is already underperforming, as tighter financial conditions have the effect of cooling economic activity more broadly. Yet, if allowed to persist, high inflation will either fatally undermine the economy’s growth potential or raise the nearer-term costs of eventually bringing inflation back to target," Kganyago said, possibly indicating that another rate hike will be implemented at the end of month. The market has already priced in a hike of more than 25 basis points.

But Momentum economist Johann van Tonder believes further rate hikes won't bolster the rand.

"The rand is experiencing many setbacks: S&P's downgrade of the country's credit rating outlook, greylisting, weak an...

Cabinet stressed on Thursday that government is working closely with embattled State-owned enterprise Eskom to fast-track the repair of power station units that have resulted in Stage 6 loadshedding in recent days and frustrated progress in the programme to improve energy security in the country.

Briefing the media on outcomes of the Cabinet meeting on Wednesday, Minister in the Presidency Khumbudzo Ntshavheni outlined steps taken by government and Eskom to combat loadshedding.

“Intense work is underway at Eskom to increase the utility’s energy availability factor through substantial maintenance, maximising the use of open cycle gas turbines, securing additional generation capacity from private investment in renewables and scaling up awareness to improve demand side management from large electricity users and from households,” she said.

Further, she noted that acts of sabotage continued to plague Eskom’s infrastructure which had forced government to deploy 880 South African National Defence Force members to safeguard power stations, and which she stated were part of government measures “to prevent attempts to collapse the national grid”.

Cabinet also welcomed the decision to appeal the recent Pretoria High Court ruling that instructed Eskom to exempt public institutions, including schools, clinics, hospitals and police stations, from loadshedding.

Meanwhile, Finance Minister Enoch Godongwana has introduced a debt relief package that writes off historic municipal debt to Eskom to help free up revenue at municipalities to provide reliable basic services.

Municipalities would be required to meet 33 strict conditions to qualify, said Ntshavheni.

The conditions include among others maintaining minimum average revenue collection targets for electricity and water services; ring-fencing all electricity, water and sanitation revenue collected; and paying the Eskom current account first and the bulk water current account second before any other monthly payments.

Electricity Minister Dr Kgosientsho Ramokgopa will on Friday provide a weekly update on progress in the implementation of the Energy Action Plan (EAP). Ntshavheni explained that this weekly briefing provided an opportunity to update media and the nation on progress realised in addressing loadshedding in the past week but also account for and explain the factors contributing to recent incidents of loadshedding.

The US has accused South Africa of providing ammunition to Russia through a Russian ship that docked at the Simon's Town naval base in Cape Town in December last year.

US ambassador to South Africa Reuben Brigety said America was convinced that SA, despite the fact that it claims it takes a non-aligned stance on Russia’s invasion of Ukraine, had supplied arms to Vladimir Putin’s army.

"Among the things we noted was the docking of the cargo ship in the Simon's Town naval base between 6th to 8th December, 2022, which we are confident uploaded weapons and ammunition onto that vessel in Simon's Town as it made its way back to Russia," said the ambassador.

Brigety told journalists that the US government took the matter seriously.

"The arming of the Russians is extremely serious, and we do not consider this issue to be resolved, and we would like SA to [start] practising its non-alignment policy," he said.

Brigety's spirited engagement with the media on Thursday follows his trip back to the US with a delegation of SA officials led by Sydney Mufamadi, who sought to ensure that South Africa did not fall foul of the Africa Growth and Opportunity Act (Agoa).

On how accurate the US’s intelligence was that SA supplied ammunition to Russia, Brigety said he would bet his life on it.

The docking of the ship, Lady R, at the naval base in December caused speculation and concern. At the time, Brigety said he had formally written to Defence Minister Thandi Modise, who had lashed out at the US over its relationship with Africa.

He added that the other concerns raised by US officials with the SA delegations included the country’s participation in military exercises with Russia and China during the anniversary of the invasion of Ukraine.

"We expressed as well our serious concerns for the timing of the joint naval exercises that SA participated in with Russia and China in SA waters that coincided with the anniversary of the Russian invasion of Ukraine."

Eskom’s acting chief executive officer travelled to China, as the South African State-owned utility implements record power cuts that are hobbling the nation’s economy.

Calib Cassim accompanied South African Public Enterprises Minister Pravin Gordhan on the trip to Beijing, Chairperson Mpho Makwana said by phone on Wednesday, declining to provide further details.

“The minister will address those issues via a press conference when he is back,” Makwana said.

Gordhan’s department oversees Eskom. His spokesperson, Ellis Mnyandu, referred a request for comment to Eskom. The utility’s media desk didn’t immediately respond to a request for comment sent by email.

Eskom has been implementing rolling blackouts since 2008 to reduce reliance on its ailing power plants. Those outages have intensified in recent years and the country has been subjected to 16 consecutive months of blackouts that can last as long as 12 hours a day.

Gordhan travelled to China earlier this month to discuss an impasse that’s blocked the delivery of locomotives and spare parts needed to improve the performance of State rail and ports operator Transnet. South Africa’s Minerals Council, an industry lobby group, estimates that the sector forfeited R50-billion in 2022 because of constraints on the nation’s freight-rail network.

Gordhan met Zhang Yuzhuo, the director of China’s Assets Supervision and Administration Commission of the State Council on Tuesday.

The commission will “support China’s central enterprises in accordance with the principles of marketization and rule of law, and strengthen cooperation with South African State-owned enterprises in transportation and energy security,” it said in a statement on Wednesday.

The rand has slumped to its worst level since April 2020, reaching R18.81/$ earlier on Wednesday. Less than a year ago, it was trading below R15.30.

Global markets are jittery ahead of US inflation data, which will give some indication of where rates in the world's largest economy are headed.

Investors are used to South Africa offering much higher interest rates than developed markets like the US, which has made rand investments attractive.

But following aggressive US rate hikes, that differential has now shrunk.

"The US has hiked by a huge 500 basis points to date in its current cycle, and South Africa by only 425bp, causing the differential between SA and US interest rates to drop substantially during a risk-averse period, which has weakened the rand," said Investec chief economist Annabel Bishop in a note.

The US Fed has likely reached the end of its rate hikes, but the European Central Bank recently said it is "extremely clear" that it won't pause soon.

The rand was trading at R20.54 to the euro and R23.65 to the pound at lunchtime on Wednesday.

The market has already priced in a 25 basis point hike in South African interest rates in May, but Bishop says 50 basis points are possible.

"(Still), SA’s 'real return' [return after inflation] on interest rates is low and not attractive to investors comparatively, adding to rand weakness," said Bishop.

Adding more pressure on the rand is foreigners selling local bonds - a net R11.4-billion has so far flowed out of the country due to these sales.

The rand, along with other emerging markets, has also been hit by risk aversion, amid uncertainty about a US recession, cooler growth in China and the ongoing Ukraine war.

"In a risk-off environment [where investors tend to avoid risky assets], South Africa should offer a higher risk premium return on the rand, not a lower one, in order to keep the rand stable, but the erosion of the differential between SA and US rates has lowered the risk premium instead," added Bishop.

The rand weakness will add to hot inflation in South Africa, as the country imports most of its fuel, and key crops like maize and wheat are priced according to import and export parity (in dollar).

In addition, government's fiscal position is taking strain, which will weigh on the rand. For the past financial year, Treasury was expecting a primary budget surplus of R6.7-billion – instead it suffered a deficit of R1.53-billion, it was confirmed last week.

Over the past two years, government tax income has been bolstered by mining companies which earned super-profits during a commodity price rally.

However, this is falling away, warns Casparus Treurnicht, portfolio manager and research analyst at Gryphon Asset Management.

He says Sibanye's recent "shocking" production report shows that government may be set for large budget deficits, if the mining sector is an indication.

"We are in trouble."

Businesses in the City of Johannesburg (CoJ) have been alerted to the possibility of having their electricity or water disconnected, owing to the sizable monetary debt owed to the municipality.

The City has decried the “millions of rands” owed to it by businesses.

Pre-termination notices of imminent disconnections have been sent out to all affected customers across the City.

The City’s Group Finance Department maintains that it will recover debt owed as set out in its Credit Control and Debt Collection Policy.

“The Credit Control Policy stipulates that if a customer has not fully paid the outstanding amount and/or an Acknowledgement of Debt Agreement (AOD) is not entered into with the City within the stipulated period, electricity may be disconnected, and water restricted and throttled without any further notice,” noted CoJ communications and stakeholder engagement director Kgamanyane Maphologela.

The City is appealing to affected businesses that are struggling to service their accounts to sign AODs as a measure to avoid being cut off.

Maphologela also cautioned businesses against illegal connections and tampering with water and electricity supplies. Legal action will be taken against offending businesses, he warned.

Businesses which wish to make payment arrangements may contact the City’s Credit Control Department by emailing them on [email protected].

Solidarity has disputed the constitutionality of the Amendment Bill on Employment Equity in court papers, in which it urged that the law is contrary to international labour conventions and in which it accused government of being in contempt of the conventions.

The trade union announced on Wednesday that it had served summons on President Cyril Ramaphosa, the Department of Employment and Labour, Employment and Labour Minister Thulas Nxesi, Department of Employment and Labour director-general Thobile Lamati, as well as the Employment Equity Commission.

This after Ramaphosa signed into law the Amendment Bill on employment equity which gives the Minister of Employment and Labour the power to set employment equity targets per sector.

“The level at which the government wants to normalise discrimination in the workplace is shocking. The government wants to impose race targets that all employers in the country will have to meet. Through this law the Minister of Labour acquires unprecedented powers that will intensify the stranglehold race has on South Africa,” said Solidarity CE Dr Dirk Hermann.

In its court papers, Solidarity questioned, among other things, the fact that too much power was granted to the Minister of Employment and Labour, which it said undermined the nuanced approach to affirmative action as required by the Constitution.

Hermann also noted the law’s inconsistency in respect of the Republic’s responsibilities under international law.

“It is unacceptable that the government wants to usurp even more power, and then use it to exercise central control in workplaces, sector by sector. Solidarity was involved in the process throughout by participating in parliamentary processes over the proposed legislation, but these contributions and letters addressed to the Presidency fell on deaf ears. Clearly the government had every intention to implement the law in its current format, and of allocating more power to itself,” Hermann explained.

Solidarity further believes that this form of legislation, based on race, does not aim to correct historical inequalities, but rather aims to apply social control based on the colour of people’s skin.

The trade union highlighted that approaching the Labour Court was the first step in a major process to ensure that the African National Congress government did not succeed in “controlling South Africa through upside down legislation”.

“The South African government is now reckless with race and went too far. The Constitutional Court recently found that the government went too far when it only provided financial aid to black-owned businesses during the Covid-19 pandemic. With this race law the government is taking it too far once again. There is no justification for it. Solidarity is gearing up for a battle in court that will force the government here and worldwide to be held accountable,” Hermann concluded.

Former Eskom CEO André de Ruyter only submitted a report to law enforcement authorities on corruption at the utility the day before he appeared in Parliament in April, and long after he had resigned from the company, Hawks head Godfrey Lebeya told MPs on Tuesday.

A public official is required by the Prevention and Combatting of Corrupt Activities Act (Precca) to report evidence of corruption that involves amounts greater than R100 000. And, following the controversial interview De Ruyter gave to e.tv in February at which he alleged that senior politicians were involved in corruption at Eskom, both the Directorate for Priority Crime Investigation (Hawks) and the Special Investigating Unit reached out to him requesting an interview, to which the former CEO did not respond.

Parliament's Standing Committee on Public Accounts (Scopa) was hearing evidence from the SA Police Service, the Hawks and the Special Investigating Unit on Tuesday on their response to De Ruyter's allegations and his decision to institute a private investigation at Eskom.

On 26 April De Ruyter refused to tell Scopa the identity of a "senior politician" who is implicated in corruption at the power utility, citing security risks and the possibility of legal action against him.

He sidestepped the question multiple times and would not even reveal at which level of government the politician is involved. He indicated that he had informed Public Enterprises Minister Pravin Gordhan and President Cyril Ramaphosa's national security advisor, Sydney Mufamadi, of the information he had. He said that they would be best placed to provide more information about the identity of the person.

De Ruyter also said that he had reported the suspected criminal activity as a legal duty in terms of the Precca.

The Presiding Officers of Parliament have received President Cyril Ramaphosa’s authorisation of 880 South African Defence Force (SANDF) members to assist the South African Police Service to prevent and combat crime and preserve law and order in the country under Operation Prosper.

On Saturday Ramaphosa announced the deployment of soldiers to safeguard Eskom power stations across the country.

Parliament noted that SANDF members will remain in service until October 17. The deployment is expected to cost R146 718 427.

Previously, Ramaphosa deployed 2 700 soldiers to protect Eskom power stations from crime and sabotage with their contracts ending on April 17.