Economy
Hungry for good news: a somewhat startling prediction, made by PwC, is that our economy should grow by 3.4% overall this year. I confess to being somewhat sceptical as we could, even in recent memory, not get near to this kind of figure.
The fact is that our economy has proved more resilient than expected and most jobs lost during the lockdown appears to have been recovered.
Speaking of recovery: the JSE has taken off spectacularly and I confess that, a year ago when the ALSI was sitting at 37575, a friend asked a prediction for recovery and I guessed that this would take a few years. Clearly wrong. The difficulty with the current stock run is that a few swallows do not a summer make: many, if not most of the smaller counters are still in the red, and the value pushing the JSE to its present height, is centred in a dominant few.
The Steinhoff debacle has seen Deloitte offer R1bn in a settlement proposal, which is directed at putting all claims behind it once and for all, without making any admissions. The sheer scale of the loss becomes apparent when it is considered that the offer is estimated to amount to some 6 – 7 cents in the Rand, of the losses suffered.
The origin of public debt: I came across an interesting extract from monetary history, authored by Jin Xu: he notes that Venice’s parliament had authorised its government to mortgage its tax revenue for the purpose of raising funds to wage war and, when a fiscal deficit developed, the Administration issued government bonds (i.e. borrowings from the public) paying interest. This borrowing innovation summoned the magic power of public debt as capital and led Europe into an era of financial revolution.
Business
Legacy debt? Some ten municipalities owe Eskom 70% of the total outstanding municipal debt to that entity. Cutting off electricity to such municipalities has proved awkward and Eskom has therefore adopted a collaborative active partner model in which it will maintain municipal electrical infrastructure and assist with billing and detecting false meters and so on. A pragmatic approach to a problem which is now conveniently termed a legacy issue, suggesting than someone else caused this. The fact is that the practice of installing cadres rather than the competent, brought us to this: Eskom is reportedly overstaffed but, even so, must feel the strain that would be imposed by having to do the work of others. Heaven help us if this effort over-strains the last surviving pool of competency.
The hubbub caused by the increase of farm workers’ minimum salary to just less than R19 per hour has led to threats of mechanisation and so on. The fact is that mechanisation is an economic choice which all businessmen, including farmers, face: at some point it becomes cheaper to mechanise than to employ labour, if one can raise the necessary capital. Objectively, the increase in salaries takes the monthly salary of a farm labourer, working 7 hours a day, to some R3000 per month; which is hardly excessive?
An interesting development, is an announcement by Nedbank of a direct link between small business accounts and Zero accounting, which seems to have taken off. The automated linking of an accounting system, with payments made and received, appears to be a very logical and simple step.
It is all in the execution – consider the following:
Our state resolves to assist PDIs to obtain pilot licenses. It sends 6 cadets to the prestigious Ecole Nationale de l’Aviation Civile for training at great cost. Two years later none of them has gone solo; yet the ordinary PPL student does so inside a month.
The Magwa/Majola Eastern Cape tea farm extends to some 1800 ha, which makes it one of the biggest tea farms in the southern hemisphere. This is now run at a loss and produces tea at thrice the cost elsewhere. Solution: second and third-tier government must buy their tea from this project and the problem is solved! The solution shifts financial support of a loss-making project to funding by local taxpayers elsewhere.
Our state sends doctors to be trained elsewhere, ignoring the fact that these students need to learn to speak, for instance in Cuba, Spanish, before they can attend local universities.
Meritorious if not grandiose ideas all, except that an investment of the same sum here, or proper decision-making, would have delivered much better and lasting returns.
Another great idea, which the apartheid regime enforced by restricting long distance transport licences, is to revitalise our rail network. Mbalula says the right things: giving traction to the road/rail shift; long-term interventions; efficient and competitive freight and passenger transport. Oh yes, he targets scrapping 63,000 taxes by 2024 and implementing a new public transport funding model that includes the taxi industry… Good luck with that!
Property
As the expropriation of land debate peters out, that hero of the revolution, Ms Joemat-Petterson, has announced that MK veterans will be rewarded by being awarded repossessed farms as part of the expropriation process. Such rewards in South Africa are not new: consider the award of East Griqualand farms to British officers post the Anglo-Zulu war. The difficulty is that the thrust of repossession is not to reward but to empower, and the intended MK rewards are given indiscriminately: soldiers are not necessarily farmers and must needs have little capital. Making the same mistake often is so… here.
Love looks not with eyes… Especially young uns shack up with their latest love and buy property, destined to found their relationship: if love runs true, a great start, if not, still a good investment; right? Consider the following article: Reference A jilted girlfriend once quoted to me: hell hath no fury like a woman scorned, and therein lies the problem.
The mantra, that supported last year’s raft of property purchases by the lower middle-class, is that it is cheaper to buy than to rent: the accuracy of this is questioned by Joan Muller, citing hidden costs, rising residential vacancy rates resulting in lower rentals and so on. Irrespectiv of your take on this, the fact is that the many, who have availed themselves of this opportunity, must have pleased the property industry greatly.
Practice
An interesting, if political, legal exercise, is the PAIA application brought by the DA for the minutes of ANC meetings, resulting in the placement of ANC cadres in the civil service. One suspects that minute-keeping will wane in future.
Our Solicitor-General (why was it necessary to import the English term solicitor into our legal terminology) has embarked on cleaning up the rampant collusion and mammoth fraud in the State Attorneys offices. They start off by appointing six heads of state attorney officers…
Briefs:
Freedom of testation? A will, executed in 1902, which discriminated against female descendants, was declared inconsistent with our Constitution (courtesy of Allen West); Reference
A Brusson scheme is explained at paragraph 10 of the following judgement – worth a read for property practitioners: Reference (courtesy of STBB)
Some years back, inheritances of debt by a debtor from the creditor testator was frowned upon as such bequests triggered a CGT event: no more. Read paragraph 12A(6)(a) of Schedule 8 of the Income Tax Act.
I hold an article by Schulze on estoppel and writing back of EFTs… ask me for a copy.
Quotables
“If people in Zuma’s position had the power to decide for themselves which court orders to obey, the entire legal system would collapse.”
De Vos
“In that direction,” the Cat said, waving its right paw round, “lives a Hatter: and in that direction,” waving the other paw, “lives a March Hare. Visit either you like: they’re both mad.”
“But I don’t want to go among mad people,” Alice remarked.
“Oh, you ca’n’t help that,” said the Cat: “we’re all mad here. I’m mad. You’re mad.”
“How do you know I’m mad?” said Alice.
“You must be,” said the Cat, “or you wouldn’t have come here.”
Carroll
Comment
Punching above their weight: Crawford released its IEB top-achievers results; predictably, of the top nineteen, eleven were Indian, six white and two black. When the matric results are released, look at the KZN figures: typically, Indians make up about half of the top ten or twenty local matriculants. I suspect that most of those achievers are descended from the so-called passenger Indians, who were immigrant traders, artisans, teachers, and the like. Indians are a minority group in KZN but far outdo their peers academically.
Jonny Steinberg is one of our better political commentators: an article by him on the original sin of a deal struck, between the blessed circle of insiders, and which excluded others from the trough of corruption, is worth a read if you are able to access this: Reference
Imagine the Wit Wolwe declaring their leader untouchable by law enforcement agencies: how does this differ from the MK laager circus surrounding the Nkandla lair of Nummawan, at which he hosts Mad Hatter tea parties? The absurdity of Nummawan’s latest projectile vomit stream of accusations, which encompasses everything from the impartiality of judges to political victimisation, is seemingly lost upon his supporters (especially praise-singer Niehaus). Consider his following statement: We sit with some judges who have assisted the incumbent president to hide from society what on the face of it seemed to be bribes obtained in order to win an internal ANC election.
The fact is that, if Nummawan were an ordinary mortal, as we all declare him to be, he would have been in jail a long time ago. Yet, he will be handled with kid gloves by the ANC, who now want to talk – imagine our president having to negotiate inappropriate conduct with his precursor – one can hardly describe them as being friends? A seminal moment awaits us – one hopes.
Is it or isn’t it? Another circus is that hosted by the Ingonyama Trust: the trust holds that public finance legislation does not apply to it and that a 45% salary cost-to-company hike over the past two years is in order. Remarkable – in 2012 the SCA held that the trust’s property was indeed State land: Reference
