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Hello and welcome to World Business Report from the BBC World Service.
I'm Sam Fennec. Today we turn our focus to South Africa, where President Cyril Ramaphosa is preparing his State of the Nation address.
He'll outline key economic proposals aimed at driving growth and development, but there are some very big challenges to overcome.
If you go to social media, it only shows you the bad things.
It's not like everyone goes around here carrying guns or feeding people drugs and doing crimes.
We'll also discuss the latest report from the Bank of England on inflation and what it might mean for prices in the supermarket and the Irish dairy farmers who have struck gold and become millionaires.
But first, let's start in South Africa, where the President Cyril Ramaphosa is just hours away from delivering his first State of the Nation address since last year's elections.
Under the theme A Nation That Works for All, the President will outline key policy objectives, emphasising the importance of economic growth, job creation and social development.
But there are some really big challenges.
With more than 12 million people out of work, unemployment remains an obstacle to growth.
Let's talk to Wandele Silobo.
He's a member of the Presidential Economic Advisory Council and chief economist of the Agricultural Business Chamber of South Africa.
Thank you for being with us today on World Business Report.
We're only a few hours away from the speech to be delivered.
and can you give us a bit of an idea of the content of it and how some of the promises might be delivered?
Yeah I think Sam what is more important is firstly just the context at which the speech is coming on because remember we are now under what is called the government of national unity because the governing African National Congress for the past 30 years did not come up with the absolute majority in the last
election last year, and then leading up to this formation now of government, of national unity with many political parties coming together to form the government.
And I think the president now, while in the past he would have delivered this speech with perhaps maybe some particular focus of what the African National Congress also wanted in addition to broad national matters, he will now also have to consider what the other political parties want.
But I think at the core of it is, as you rightly introduced it, Sam, we face three broad challenges in South Africa.
It's a high unemployment, which is just over 30 percent.
It's a low growth over the past decade where we were growing barely under 2 percent.
And then lastly, there's still relatively high levels of poverty in particular regions of South Africa.
So whatever we do, we respond to that.
Shall we have a look at jobs first then?
So the World Bank says that South African economy only managed to create something like 500 ,000 jobs between 2019 and 2024.
That's against 1 .8 million new entrants into the labour market.
It's a huge challenge, isn't it, to try and increase that number of jobs?
I mean, that's a huge challenge.
Some of the studies from the very same organization, the World Bank, they show that for every one percentage growth in the South African economy, we usually see about 0 .5 % improvement in job creation.
So ultimately, what we need to do is to grow the South African economy to be able to absorb as many people as we can in the labor market and in turn resolve the challenges of poverty and everything else.
And I think the major hindrances in our economy in the past have been some of the structural things, the energy supply, which was a major constraint, some deterioration in the transport infrastructure, mainly the underperformance in some of the big South African ports.
and, of course, the mining difficulties with the mining rights and the other things and on a digital communication space, we do have now under the South African National Treasury a plan which is called Operation Vulin Lela, which is Operation Open the Way, that begins to address some of these hindrances.
And I think today is that we have in rural South Africa now have about 2 .5 million hectares of arable land that can still come into full production.
The idea then is to bring that in full production but at the same time address the dualism that we see in a sense to say, how can black farmers also get to produce at a commercial level?
Ultimately, if we are able to do that, we do think that the food fiber and the beverages sector could create close to a million jobs in South Africa while at the same time growing the rural economy.
So that's the one part where you may hear something about.
OK, well, just stay there because I want to play you a piece from our reporter, Ed Habersham, because he's been reporting from Johannesburg, where there are pockets of investment going on in the city.
Organisations are trying to make the city more liveable and attractive to visitors from home and abroad.
I'm at the base of the Ponti Tower, one of Johannesburg's most famous buildings, and it sort of represents what's happened to this city in recent years.
It opened in 1975 and became one of the most exclusive addresses.
Then in the mid -80s, it fell into disrepair as people fled the inner city for the suburbs.
It's a huge cylindrical structure with a hollow centre and people started throwing rubbish into the middle until it reached around the 15th floor.
But it was renovated around the time South Africa hosted the World Cup in 2010 and now, once again, it's seeing a renaissance.
My name is Delight Stolle.
I'm from an organisation which is called Lalandje, which is a Zulu word which means just play.
You said you do a lot for the children in the community.
I know you also give tourists tours.
What's the motive for that?
Why do you want to show people this area?
If you go to social media, you go online, on the news, and then you read about Hillbrook, it only shows you the bad things, right?
So we are trying to challenge that perception.
As much as it's bad, but then there are also normal people living around here.
It's not like everyone goes around here carrying guns or feeding people drugs and doing crimes.
So what we do, we come here for a tour, we take you around and then you decide later on whether Hillbrow is bad or not.
At the end of the day, you will have your own judgement.
I've just come to the top of a very steep street in Hillbrow.
The change is quite remarkable.
If I look back down the hill, in the distance I can see Ponty Tower and what's called a hijacked building.
that's a building that's been taken over by criminals but then if i look to my right the streets are almost spotless there's a street cleaner sweeping in the street there are security cameras everywhere very little litter and i'm surrounded by lots of apartment blocks rising above me and they look almost
brand new and that's because of a property company called a timber that is trying to turn around a lot of the buildings in downtown johannesburg they buy up these old apartment blocks do them up renovate them and then rent them out and for them business is booming.
We're in an area called Jewel City.
In the heydays, it used to be the area where all the diamond dealers used to operate from.
I've travelled south through the city to meet Alan Tate from Mutemba.
We launched Jewel City about five years ago, just as COVID was hitting.
So the timing was a little bit out.
But as soon as COVID lifted, I mean, the buildings were filled up quite quickly.
So currently 7 ,200 flats that's under our management, and we're going to double that in the next two years, three acquisitions and also three additional development as well.
So quite an exciting time to be working for your timber.
It is at odds with the streets nearby, wander not too far away, and dangers do lurk.
But there are also signs of improvement.
So we've now reached the end of the precinct.
We've passed all six blocks.
If you look under the bridge, you'll see brand new white cabling and lighting.
This is part of the Josie My Josie project.
So Josie My Josie is an association.
Josie My Josie was formed just two years ago, a collaboration between some of the biggest companies in South Africa to improve the city.
Generally there's a much more vibrant atmosphere in the city.
Bia Swanepal is the CEO.
The whole aim of Josie My Josie is to bring hope back to the residents of the city and by bringing hope back we need to show some visible improvements and impactful projects so that they can see there's a way out of where we are currently and to live in the city of the future where people can be safe
and where they can thrive and where there are jobs.
Among those projects is one to improve the 10 gateways into the city, making it more welcoming and repairing the lights of Nelson Bandela Bridge, a centrepiece of Johannesburg, which has made it safer and busier.
And there are other positives on the horizon.
The city library, home to 1 .5 million books, is due to reopen after four years.
Later this year, Johannesburg is hosting the G20 conference, which will bring investment and global attention.
To be totally blunt, Johannesburg has a pretty bad reputation overseas.
Can you ever see this city being spoken about in the same way that, say, London, New York, Paris has spoken about?
Well, that is the intention.
We have a long way to go.
I mean, there's no doubt about that, but it's not impossible.
That was Bia Swanepoel ending that report there from Ed Heberson.
And Wandili, we heard some positives there.
As we said, the G20 will be held in February later this month, the first time in Africa.
Sadly, though, the Americans won't be there.
How big a blow will that be?
I mean, look, I think firstly, just on the improvement that's happening, I think we forget that South Africa has gone through a decade of what here at home we call state capture.
That was B .S. Swanepoel ending that report there from Ed Hebberson.
Wandili, we heard some positives there.
As we said, the G20 will be held in February later this month, the first time in Africa.
Sadly, though, the Americans won't be there.
How big a blow will that be?
I mean, look, I think firstly, just on the improvement that's happening, I think we forget that South Africa has gone through a decade of what here at home we call state capture.
And that did a lot of catastrophic damage, which is what now the president is working to repair, while at the same time, of course, creating jobs and growing the South African economy.
As to what happens with the G20, I mean, the hope, I guess, it's still that all of the countries that must participate will participate.
It's still a long year.
The politicians summit is only later in the year.
So there's a lot that can unfold in the coming months.
So I guess for me, my hope is that all of the countries will be there.
And there's a lot that is yet to be set out on what the agenda of the G20 will look like in South Africa.
The theme, we're all aware of it.
Thank you very much for coming on the programme.
Wanderley Silobo, member there of the President's Advisory Group.
And just to say, the speech is due to start at 7 p .m.
South African time.
You're listening to World Business Report from the BBC World Service with me, Sam.
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Now, last month was the hottest January on record according to EU scientists.
While various factors contribute to this phenomenon, the primary cause is believed to be human -induced climate change due to burning fossil fuels and this has led to calls to cut fossil fossil fuel use but in an interview with the BBC the chief executive of Norway's biggest oil and gas company Equinor Anders
Opidel says that the firm is planning to increase oil and gas production by 10 percent and scale back investments in renewables.
We are scaling down our investments in renewables and low carbon solutions because we don't see the necessary profitability.
But it's not surprising.
It's been rumoured for a while the share price dropped significantly once they stuck to their renewable investment targets last year and they're really following in the footsteps of many other oil majors.
Well, it also comes hot off the heels of the world's biggest offshore wind developer, Orsted, cutting investment by a quarter.
What do you think is the message then being picked up from governments?
I think in general, people feel that support from governors for the green transition is weakening.
And for renewable energy in particular, where all the costs are taken up front, higher interest rates, cost inflation, falling power prices has meant that economics just don't add up for investors on the current framework.
And if the government really is sorry.
Go on. I was going to say Donald Trump has also tried to stop 300 billion dollars worth of US green infrastructure funding.
That came through the IRA, the Inflation Reduction Act through Joe Biden.
And I wonder if it's making all of this kind of noise around this, around the world.
Is it making it harder for businesses like yours to attract funding?
Well, at Burden, we're focused on Europe.
And so this doesn't affect us that directly.
We just completed a 700 million euro fundraising for decarbonisation last year.
And we've been doing this for 20 years in the green transition.
And, you know, things go up and down and we invest for the long term.
I believe that this sort of are solving our greatest challenges is also some of our greatest investment opportunities.
And, you know, as someone wise once said that when everyone else is greedy, be afraid.
When everyone else is afraid, be greedy.
So we're certainly all in and believe that this is really a megatrend.
And that hopefully, and if it is wrong, then we have much bigger problems and the returns for our funds is something that will shape our generation.
But you still do need government support, don't you?
Because a lot of this technology is still very young and it still does need financial support through grants, through the IRA, things like that.
Yes, I mean, what we need more than anything else is markets, right?
And if European governments really want to help drive that energy transition and the decarbonisation more broadly.
They do need to start pricing carbon and other so -called externalities in a way that create more attractive markets for businesses.
And if we have those markets, we can invest and we can grow and we can get out of this, but governments, I think, need to help us by beginning to take carbon pricing, for example, more seriously than they do today.
Does it feel that the green transition isn't fashionable at the moment?
Yes, very much so. And what's the conversation like in Norway?
As we said, it's a kind of a reputation of building itself as a sustainable, environmentally conscious nation.
Lots of people driving round with electric cars.
How do they feel about Equinor's decision?
It's fascinating, actually.
It's a real lot of debate because some feel… …around the world.
Is it making it harder for businesses like yours to attract funding?
Well, at Bernade, we're focused on Europe.
And so this doesn't affect us that directly.
We just completed a 700 million euro fundraising for decarbonisation last year, and we've been doing this for 20 years in the green transition.
And, you know, things go up and down and we invest for the long term.
I believe that this sort of are solving our greatest challenges is also some of our greatest investment opportunities.
And, you know, as someone wise once said that when everyone else is greedy, be afraid and when everyone else is afraid, be greedy.
So we're certainly all in and believe that this is really a megatrend, that hopefully, and if it is wrong, then we have much bigger problems and the returns for our funds is something that will shape our generation.
But you still do need government support, don't you?
Because a lot of this technology is still very young and it still does need financial support through grants, through the IRA, things like that.
Yes. I mean, what we need more than anything else is markets, right?
And if European governments really want to help drive that energy transition and the decarbonisation more broadly, they do need to start pricing carbon and other so -called externalities in a way that create more attractive markets for businesses.
And if we have those markets, we can invest and we can grow and we can get out of this.
But governments, I think, need to help us by beginning to take carbon pricing, for example, more seriously than they do today.
Does it feel that the green transition isn't fashionable at the moment?
Yes, very much so. And what's the conversation like in Norway?
As we said, it's got a reputation of building itself as a sustainable, environmentally conscious nation.
Lots of people driving around with electric cars.
How do they feel about Equinor's decision?
It's fascinating, actually.
It's a lot of debate because some feel strongly that a country and a company that has benefited so much from fossil fuels need to really lead that transition.
Others feel that, hey, Equinor is only doing what listed companies should be doing, which is to maximise returns for shareholders.
So, it's a really fascinating and live debate with very strong emotions on both sides.
Björn Lee, thank you very much for joining us today on World Business Report.
He is the co -founder of Verdane.
It's a Norwegian investment firm.
They specialise in sustainable start -ups.
He was joining us today from Oslo.
Let's head over to the UK now, where the Bank of England has cut interest rates today on Thursday, as expected, to 4 .5%, Cutting the rate makes borrowing cheaper and is intended to boost spending, but a lower rate can lead to smaller returns for savers.
The Bank of England's Governor Andrew Bailey warned that inflation will rise again later this year.
We expect to be able to cut bank rate further as the disinflation process continues.
But we will have to judge meeting by meeting.
Behold from here. So, yes, Andrew Bailey has said he expects inflation to be bumpy, and we expect that too, in part, not just because of domestic factors like national insurance contributions, rising wages, but also because of the global impact of tariffs, the global impact of actually increased demand in the U
.S. from those lower corporation taxes, lower personal taxes and deregulation.
But the fact that he said, we think we can cut again this year, has been really positive for markets.
So we've seen the power come down, we've seen bond yields come down, and we've seen the FTSE go up.
And really key, if you look at how the voting the members have voted, one member, Catherine Mann, who's renowned for actually saying, hold, hold, hold, in fact, even voting for rates to go up recently, voted to cut rates by 50 basis points, so half percent.
That's really key. So that gives you an indication, actually, of the trajectory from here.
I can hear more positivity in your voice than...
I'm excited. You're excited.
You mentioned the share price and the shares rocketing and doing quite well on this news.
AstraZeneca in particular, their share price went up 5 % rather, posting much better than expected results.
Yes, the FTSE is up 100 odd points, but a third of that rise entirely is all down to AstraZeneca.
So it's up as much as 7 % now at trading.
And that is because revenue is up 21%.
And actually underlying earnings per share is up 19%.
And what's driving that is really interesting is a rising sales of cancer drugs and also cardiometabolic drugs.
Why that's interesting is because for pharmaceuticals, actually the only game in town for the last 18 months has been very much obesity drugs.
And that's what's been driving good sales and therefore good share prices.
But Astra actually have had really good trials.
So nine positive readouts from key late stage trials with seven more anticipated this year and from new medicines.
That's just the new medicines they're developing.
So a bit more diversity, a bit more diversity in their portfolio, you would perhaps think.
Absolutely. OK, well, thank you very much, Emma Wall from How Greaves Lansdowne.
Thank you for joining us today on the programme.
We're coming to the end of the show.
We're just going to shift our gaze to the lush fields of County Kerry in Ireland, where over 100 hardworking farmers are on the verge of an incredible windfall.
Thanks to a groundbreaking agreement, their dairy cooperative has sold its shares to Kerry Group, one of the country's most prominent food giants.
Here's Leanna Byrne to explain more.
In 1973, dairy farmers in County Kerry formed a cooperative to sell their milk together and get a better deal.
That co -op set up a business to market milk under the name of Kerrygold, and that brand made Irish butter famous.
I think Kerrygold farmers have a great bond with the land.
Thanks to a groundbreaking agreement, their dairy cooperative has sold its shares to Kerry Group, one of the country's most prominent food giants.
Here's Leanna Byrne to explain more.
In 1973, dairy farmers in County Kerry formed a cooperative to sell their milk together and get a better deal.
That co -op set up a business to market milk under the name of Kerrygold and that brand made Irish butter famous.
I think Kerrygold farmers have a great bond with the land.
We are caretakers through the generations.
Kerrygold, which later became the Kerry Group, went on to become one of Ireland's biggest food companies.
But now, over 50 years later, the cooperative and the food business are separating with the proceeds from the sale going back to the descendants of some of the original farmers who set up the co -op.
We're actually producing butter now that's going all over the world.
It's a lovely cycle of life.
More than 100 co -op shareholders, including small farmers and their families, have each received shares worth more than $1 million.
Not everyone is getting that much but with an average payout of $1 ,400 for the 12 ,000 Kerry co -op shareholders, it's quite the Kerry gold rush.
That was Lianna Byrne there.
Well, joining us now is Pat O'Toole, the editor of the Irish Farmers Journal.
So this is quite a tale, isn't it, Pat?
From humble beginnings, they'll all be toasting it in the local bar tonight, I would imagine.
That's correct. In 1973, Kerry Co -op was set up in a caravan and Dennis Brosnan actually cycled to farms.
He had a car, But in order to coax farmers to sign up and to invest in the fledgling co -op, he chose to cycle around to show just how grounded he was.
And he remained grounded.
He built a business which became a PLC in 1986, now has a market cap of 16 .5 billion.
And the co -op is now separating, as you say, from the PLC.
But in an unusual way.
What they're doing is they're actually buying the Irish dairy business back off the PLC.
And in doing so, they're divesting about 350 million euros worth of PLC shares back into the PLC to pay for the purchase of 60 percent of the co -op.
And the remaining shares, 1 .6 billion at current value, are being shared out among the co -op shareholders.
About 12 ,000 people, most of them dairy farmers or descendants of dairy farmers.
and like you say, some millionaires being created in this.
Separating, as you say, from the PLC, but in an unusual way.
What they're doing is they're actually buying the Irish dairy business back off the PLC and in doing so, they're divesting about 350 million euros worth of PLC shares back into the PLC to pay for the purchase of 60 % of the co -op and the remaining shares, 1 .6 billion at current value are being shared
out among the co -op shareholders, about 12 ,000 people.
Most of them dairy farmers or descendants of dairy farmers.
And like you say, some millionaires being created in this.
And you've spoken to some of these farmers, haven't you?
What have they told you?
Share some of their personal stories and reactions.
There's some amazing stories.
I was at a meeting about six years ago, a co -op meeting when this was being floated first.
and one co -op member told me that his postman had come to him and said, we've a few shares in the drawer at home.
My dad milked a few cows back in the day.
Would you mind having a look at them?
So the few shares were worth 800 ,000.
They were sitting in an envelope in the drawer in the kitchen for 50 years.
So the initial shares cost a pound.
They're now worth 100 pounds.
Well, the initial co -op shares were worth a pound.
they are actually worth £500 in see -through value because shareholders effectively got just under five shares in the PLC for each co -op share that surrendered.
So it's a phenomenal story.
And yeah, I mean, we're talking about over a billion in county carry alone.
I was going to say that's a large concentration of millionaires in rural Ireland now.
Yeah, but being farmers, trust me, that money will be spent on land, on sheds, on equipment.
there's been a huge amount of dairy expansion since the ending of milk quotas 10 years ago.
Irish dairy production has expanded by 50 % because farmers have been able to tap into Ireland's natural ability to grow grass, turn that into milk and sell it all over the world.
Kerry have 21 ,000 employees and they sell product to 135 countries.
So it's a global conglomerate, mainly based in America.
Now the farmers are buying back the Irish business and cashing in.
So a financial boost for the local economy in County Kerry?
Yeah, and it's calculated that for every euro a farmer earns, he'll spend a full euro in the local economy.
And there's a multiplier of about 2 .5 % through the national economy.
So Kerry's going to do well and Ireland Inc is going to do really well at this deal.
Pat O'Toole, a fantastic story to end the programme on today.
Thank you for joining us today on World Business Report.
