South Africa’s President Cyril Ramaphosa’s recent State of the Nation address has injected a fresh wave of optimism into the country’s business community. With the ANC’s diminished electoral share leading to a coalition government, Ramaphosa’s commitment to economic revival signals significant shifts for credit.

The promise to “re-industrialise” South Africa aims to counter a decade of stagnant growth. The alliance with the market-friendly Democratic Alliance (DA), now holding six key ministries, bolsters the credibility of these ambitions. The Johannesburg Stock Exchange (JSE) has already responded positively, with a 2.2% rise post-election, reflecting renewed business confidence. Cutting through bureaucratic red tape and ramping up infrastructure investment is a cornerstone of Ramaphosa’s strategy. Dean Macpherson of the DA, now Minister of Public Works, is tasked with attracting R10bn ($547mn) in private investment for energy, communications, water, and transport infrastructure projects.

The prospect of economic rejuvenation teases better creditworthiness for SA businesses. Improved industrial activity would be particularly impactful for sectors like manufacturing and construction. However, this optimism must be balanced with vigilant monitoring of how these plans unfold. Infrastructure projects typically enhance liquidity and stimulate economic activity, presenting opportunities for extending credit. Yet, the potential for delays and bureaucratic challenges necessitates robust contract management and payment tracking. Credit should be poised to capitalise on these developments but keenly mitigate associated risks.

Other major highlights of Ramaphosa’s address were stabilisation of South Africa’s energy sector and a surge in renewable energy projects, valued at around R400bn ($21.9bn), representing a significant influx of private investment. A pledge to streamline visa processes for skilled foreign workers also aims to create a more conducive business environment. Easier access to skilled labour could boost business capabilities and growth, indirectly supporting better risk profiles.

Overall, Ramaphosa’s pro-business agenda, backed by a diverse coalition government, heralds significant economic shifts in South Africa. For credit managers, these developments open up new opportunities to reexamine the South African marketplace and businesses based there. The potential for improved business conditions and enhanced creditworthiness presents a promising landscape. However, it’s crucial to balance these opportunities with the risks of implementation delays and socio-economic instability. 

ACG Acquisition Company Limited, led by former UC RUSAL executive Artem V. s, is making waves with its ambitious plan to become a top copper producer. With a $300 million deal for Turkey’s Gediktepe mine, ACG aims to consolidate copper mines across Africa and the Americas, targeting 300,000 tonnes of annual production by 2027. This move holds significant implications not just for ACG, but for the broader market, supply chains, and the many industries dependent on copper.

ACG’s aggressive expansion strategy is set to reshape the copper supply landscape. Copper, vital for renewable energy, electric vehicles, and technology, is facing a looming supply-demand imbalance projected to hit 5 million tonnes by 2030. ACG’s increased output aims to address this gap, but what does this mean for credit?

The renewable energy and electric vehicle sectors are copper-intensive. Increased copper production from ACG would help stabilise supply chains, ensuring these industries have the raw materials needed to meet rising demand. This stability is crucial for maintaining production schedules and financial health, reducing the risk of defaults and late payments in these rapidly growing sectors.

Copper’s role in manufacturing and technology more generally cannot be overstated either. From electronics to AI infrastructure, the demand for copper is ever-growing. A steady supply from ACG’s mines will help mitigate supply chain disruptions, supporting continuous production and innovation. This reliability enhances the credit profiles of companies across these industries, as predictable copper supplies reduce operational risks and improve financial stability.

ACG’s deal involves a complex mix of debt and equity, with significant investments planned for expanding the Gediktepe mine. This financial structuring reflects a broader trend in the mining industry, and others, where securing diverse funding sources is crucial for large-scale projects. Credit managers involved directly in the sector should scrutinise these funding structures, understanding the implications for liquidity and solvency.

Whilst ACG’s expansion could attract more investment into the sector, boosting market confidence, the history of failures in the mining industry, like Horizonte Minerals’ collapse, serves as a reminder of the inherent risks. We need to balance optimism with caution here, drawing lessons from past industry setbacks to inform strategies – the extensive supply chains in this sector can get badly burned.

The air was electric at Fulham FC’s historic Craven Cottage as the inaugural O2C Transformation Forum unfolded, bringing together some of the brightest minds in finance. This exclusive gathering was the beginning of a revolution in the order-to-cash (O2C) process. With 43 industry leaders, Global OTC experts, Process Owners, and GBS professionals in attendance, the forum marked the start of an ongoing journey to redefine the future of O2C.

What exactly is the O2C Transformation Forum? It’s a dynamic community of professionals committed to exploring and shaping the latest trends, challenges, and innovations in O2C. The forum provides a unique platform for exchanging ideas, learning from peers, and collaborating on developing best practices. It’s a space where the passion for enhancing O2C is palpable, and where meaningful connections are forged.

The recent event at Craven Cottage was a testament to the forum’s potential. The venue’s historic charm provided the perfect backdrop for in-depth discussions on groundbreaking technologies and methodologies. The atmosphere was informal yet charged with enthusiasm, encouraging open conversations about achieving excellence in O2C transformation. Attendees left with not just new insights but also a renewed sense of purpose and direction.

The success of this inaugural event sets the stage for what’s to come. Our next meeting is being scheduled right now, where we will continue these vital discussions and expand our growing community. The forum is led by global brands and influential experts, dedicated to defining what ‘best’ looks like in the world of finance transformation.

If you’re involved in Global OTC, process ownership, or GBS, and you’re passionate about the future of O2C, we invite you to join us. The O2C Transformation Forum is an invite-only group, but there are no membership fees. This is your chance to be part of a leading network of experts driving change in the industry.

Express your interest in joining us for future events by signing-up here. Don’t miss this opportunity to be at the forefront of O2C transformation.

China’s exports grew at their fastest pace in over a year last month, providing a rare bright spot for the world’s second-largest economy amid growing tensions with Europe and the US. Exports jumped 8.6% year-on-year in dollar terms in June, accelerating from 7.6% in May, according to the National Bureau of Statistics. This robust growth beat analysts’ expectations, marking the strongest expansion since March 2023. Meanwhile, imports fell 2.3%, highlighting a lopsided economic recovery.

China’s increased export activity is partially driven by manufacturers front-loading shipments to avoid impending US tariff increases set to take effect in August. This rush to dispatch goods, coupled with disruptions to shipping routes through the Red Sea by Yemen’s Houthi militants, could lead to temporary supply chain instability. We need to be aware of potential delays and increased logistics costs impacting our clients.

The export growth was buoyed by shipments of cars and semiconductors, critical components for many industries. However, imports were dragged down by agricultural products and property-linked goods like timber and steel, reflecting weak domestic demand and a struggling property sector. We’ll need to keep an eye on these sectors, as their performance can have wide reaching impact.

The broader economic environment in China is marked by weak domestic demand and a prolonged property sector slowdown. Policymakers in Beijing have increasingly relied on exports and manufacturing to drive economic growth. However, persistent export strength alongside weak imports points to an imbalanced recovery. Consumer price growth slowed to just 0.2% year-on-year in June, while factory prices remained in deflationary territory for the 21st consecutive month.

The US and Europe have responded to the surge in low-cost Chinese exports with stronger trade restrictions. The US announced in May that it would sharply increase tariffs on $18 billion of Chinese imports, including 100% levies on Chinese electric vehicles. In June, the EU followed suit, raising some tariffs on Chinese EVs to nearly 50%. These measures create an uncertain trading environment.

We should prepare for potential disruptions in supply chains and adapt risk management strategies accordingly. This includes monitoring shipping routes and logistics issues, as well as evaluating the impact of tariffs on clients’ operations. The Chinese Communist Party’s upcoming economic policy conclave could introduce measures aimed at stimulating domestic demand and restoring investor confidence. However, Premier Li Qiang has tempered expectations for drastic interventions, suggesting a more gradual recovery approach. Staying informed about policy developments and being ready to adjust their strategies in response to any new economic measures is going to be important.

Samsung Electronics is in hot water. The tech giant is facing a labour crisis that’s shaking up its bid to dominate the semiconductor market, crucial for AI systems. Despite announcing a whopping 1,500% year-on-year increase in second-quarter profits, worker unrest and production hiccups are casting a long shadow.

The push to catch up with rivals in high-bandwidth memory (HBM) chips has hit a snag. Falling behind SK hynix and US-based Micron Technology, Samsung is struggling to meet industry leader NVIDIA’s standards. This delay is not just a missed opportunity—it’s a potential supply chain disaster.

The National Samsung Electronics Union has grown from 10,000 to over 30,000 members in a year and recently launched an indefinite strike, targeting production lines, including those for HBM chips. This move threatens to disrupt Samsung’s entire supply chain. Brace for potential delays and logistical nightmares that could impact clients relying on Samsung’s semiconductors.

These chips are essential for AI and high-performance computing. Falling behind means losing out on a lucrative market and pushing clients to look for more reliable suppliers. For credit, this means closely monitoring companies in the semiconductor space that might face disruptions – there’s risk and opportunity in spades here right now. 

We should keep in mind too that Samsung isn’t just a chip maker. Its woes extend to smartphones, displays, and home appliances, where competition from Apple and Chinese brands is fierce. Labour unrest and production delays could mean fewer products on shelves, missed sales targets, and a hit to retailers and end consumers. 

Add geopolitical tensions to the mix, with the US and EU slapping tariffs on Chinese imports, and the semiconductor sector is on edge. Samsung’s internal strife only adds to the uncertainty, making it essential for credit to assess the broader impacts on global supply chains and potential shifts in trade patterns.

In short?

• Assess the creditworthiness of businesses in Samsung’s supply chain. Delays and production issues can lead to financial strain and higher default risks. 
• Encourage clients to diversify their supply chains to avoid over-reliance on Samsung. Having alternative suppliers can mitigate risks.
• Monitor Samsung’s labour issues closely. Prolonged strikes or unrest can severely disrupt production, impacting global supply chains.