Economy
Big brother:
There was a minor rash of businesses being taken on for price gouging during the lockdown. These touch on two related issues being:
the business concerned are tagged and fined. If these entities were to dispute the finding against them the cost of dispute far outweighs the cost of submission. Using state apparatus in apparently arbitrary fashion is little else than economic gangsterism;
if the price increases of the goods on offer were legitimate, the threat of prosecution results in the product not being offered by anyone rather than the run the risk of prosecution. To explain: assuming a dire need for a product, which is not readily available, a merchant must often buy at a premium and offer to the public at what appears to be an arbitrary price increase. Rather than the run the risk of prosecution, merchants would rather wait for such a product to become available in the ordinary course of business than run the risk of being targeted for price gouging. This results in a shortage of the goods in question which could have been filled (albeit at a much higher price) if the state not interfere. The question is which of these scenarios one would prefer?
Undoubtedly it would be better for locals to invest savings (think social bonds) in our local economy. The use of the stick of compulsion rather than the carrot of return to woo pension funds will result in those funds no longer being supported. There is a huge amount of money available to invest locally if one could successfully tap pension funds. The obvious problem is that our state has not been able to run its SOEs successfully for years. In fact, as things stand now, I have little doubt that most pension payers would want the maximum external exposure to their funds, even though local returns might look quite promising.
Wonderful to watch but stomach-churning is the pending face-down between unions and Mboweni on raises agreed to prior to our current financial crisis.
The antithesis of big business is quite probably our so-called Kasi Economy: (township) small people doing big things. Such is the breeding ground of entrepreneurs which may well rise up to occupy the void left by those who go under.
The fact is that the CV19-led weeding out of the weak will leave many voids which may well be filled by those who have simply not been able to break into established markets. Even more: our formal economy is stuck in lockdown-level 4 while the township economy is probably operating at level I; a running start?
Business
Buying dop by surname is being bandied around as the new normal: the only rational explanation for this could be that minister D-Z could be exacting revenge upon her ex; imagine, she could be shopping first and Nummawan only days later! See below.
There is a god! Reports have it that CV19 has broken out in several SARS centra.
ESCOM on the rack: there appears to have been under-reporting (the article says gross misrepresentation) by Eskom of air pollution ex power stations, which has now led an internal forensic investigation (I love the term forensic – it lends legitimacy to almost anything). The state has weighed in on this and has given the Kendal station a deadline to comply with emission standards for years of neglect. The questions that need to be asked are: if anyone will ever be held responsible; and whether Eskom has the finance to fix the problem (if it does not have the finance – will Eskom close that station down and push the country into load shedding?).
Whilst I have not been able to fully trace the history of Cell C, I seem to recall that its creation was made possible by our government insisting on greater competition, leaning on Vodacom and M-Tel to share facilities and so on. Cell C is still on the ropes and, for the second time in three years there is talk of sale-offs, recapitalisation and so. A failed experiment?
Buy a new car now: the weakening Rand will push up the local cost of imported vehicle parts and lead to a price rise. On the other hand, you may pick up a good second for a song.
An interesting aside was a note that mention of erstwhile media darling, Magda Wierzycka, has all but vanished from our newspapers. One hopes that her media bloopers are not carried over into Sygnia and its investments.
Hertz (the second-largest US car-rental company) has filed for bankruptcy.
I have come to wonder whether those warning of global warming takes our solar cycles (which produce waxing and waning heat cycles) into account? Do look at this note on the topic: Reference
We must all be eyeing our local authorities with some alarm: most of these were teetering on insolvency prior to the Lockdown – rates is probably the last thing you want to pay when financially in trouble. Even worse, resale by municipalities of water and electricity is severely compromised by their obligation to provide free basic minimum services, neglect-shrinkage and outright theft. In Msunduzi (which one should be reminded is the capital of KZN and which might serve as an example) it is estimated that there are some 20,000 electricity meters which have been bypassed. In addition parastatals owe it millions. If well-run businesses cannot survive, then our municipalities embroiled in such apparently inescapable “challenges” are bound to go bankrupt, with resulting local chaos. Seriously: get yourself a water tank and a solar power unit.
Property
Arguably one of the “challenges” (I am so gatvol of this term) that plague the provision of affordable housing in South Africa is the ingrained acceptance that brick and mortar is the only acceptable material for housing. Seventy percent of people in the developed world live in timber-frame structures. Sawmilling SA and the Institute for Timber Construction SA have approached the state with a proposal that timber be accepted as the construction material of choice in our housing crisis. It is time that our politicians face up to the fact that we need to produce housing for the poor at a faster and more affordable rate. They also need to impress on those in need that a wooden house is better than a shack.
Estate agents and conveyancers understand that the time-lapse between sale and transfer of property will be such that income, during the three months after agents resume operations, will be particularly poor. The CV19-rates backlog at municipalities may well even evaporate if sales volumes are thin.
An interesting development, which will play out in the next few weeks, will be banks re-evaluating bonds that were granted prior to Lockdown. How does a salary earner prove to a bank that he will be employed gainfully in future by a business that had cut his salary in the past two months?
Residential tenancies, valued at a rental of between R12k and R25k per month, is predicted by FNB to become the best performing residential rental sector in terms of tenants in good rental payment standing.
Practice
A class action has been brought by the Human Rights Foundation against the big four SA banks, accusing them of unfairly repossessing homes and selling at less than a reasonable value. Apparently, in South Africa the average value attained at repossession sales is in the order of 50% of estimated full value, whilst elsewhere in the world, these values are in the order of 90%. One wonders how successful the action will be given that they are taking on large institutions with deep pockets. Many thousands of properties have been sold over the years and prescription and acquiescence might well affect the prosecution of these claims.
Whilst I admire the work Afriforum has done to point out state overreach from time to time, it’s stances are often cringeworthy. The latest saga is it taking on the NPA for its lack of prosecution of advocate Jiba. The result of this is an NPA epiphany; a public volte-face with Jiba on the rack. If prosecuted with the zeal displayed in CVV19 transgressions, Mz Jiba faces lockdown/-up this week.
The landmark US Supreme Court decision of Roe v Wade is internationally recognised: this ruling struck down anti-abortion laws in the US. It now appears that the protagonist was paid by evangelical groups to switch sides. O lord!
SARS often appoints third party agents (read banks and attorneys) to collect monies from errant taxpayers on its behalf. I have not been able to access the judgement, but MoneyWeb reported that in SARS/SIP Project Managers, Standard Bank was forced to withdraw and pay over taxpayer funds to SARS. The High Court found that SARS had followed a flawed process and ordered repayment by SARS to the taxpayer. Apparently, the litmus test is to check whether the SARS final letter of demand is reflected on the taxpayers e-profile.
Last week I marvelled that the business rescue practitioners in the SAA debacle had managed to stuff up one of the highest profile labour issues in our history, when it was reported that the Labour Court had struck down their retrenchment procedure. That judgement is challenged by Werksmans who hold that the judgement is problematic: take a look Reference
Can a sub- contractor that has not been paid, bypass the primary contractor and claim payment directly from the client? Take a look: Reference
Quotables
Croc-wearing South Coast sage: I don’t believe in revenge. I just like to sit by the river and wait for the bodies of my enemies to float by.
Cometh the hour cometh .. shadenfreude?
Comment
RW Johnson has long been a prophet of doom, SA-wise. His latest predictions point to a showdown, OK Corral-style, between the good guys (Mboweni et al) and the Commies (EFF, SACP and so on). His track record as futurologist has been taken on by Cronin, who makes a valid point that Johnson warms to the SACP’s waning influence yet exaggerates its policy influence. Worth a read to see the opposing point of view: Reference
I have not bothered to listen to Mr Zooma’s weekly rants: the fifteen-second print version is more than enough; what is funny though is that his complaint, that today’s judges behave similarly in their reaction to him as those under Apartheid, unwittingly suggests that
he assumes judges hold the (political?) opinions of those who appoint them; and
he completely misses the point that if judges are constant in their opinions of him the problem may well be his conduct.
Mr Zooma’s about-turn on his Stalingrad strategy, coupled with his newly found enthusiasm for a public platform, points to his running out of money and seeking another audience (no longer politicians who support him but the public). The barbs he introduces into his promises would be fun, if they hold true: “I am ready to go to court to prove my innocence, perhaps my going to court will show people other things.” Yebo!
