June 22nd, 2024 | Business, Economics, Practice

June 22nd, 2024 | Business, Economics, Practice

Economy/business

Trends:

  • An economic inflection point? From a BusinessTech talk on change, I learnt that from 30 years ago, some 75% of the then JSEs biggest businesses, have not survived. 85% of those then big businesses, have fallen out of the JSE top 100 listed entities.

So, if one looks at both our JSE All Share Index and the Rand exchange rate, it is clear that our markets have interpreted the GNU very positively. Yes, there are those who question whether the centre will hold, but overall, it is clear that businesses expect better economic circumstances in South Africa from now on.

  • The ABSA Manufacturing Survey for Q2, improved by seven points, presumably mainly on the back of loadshedding relief. It would be interesting to see the figure for Q3, as sentiment towards better times is swinging markedly.
  • Perhaps we are being put overoptimistic? One cannot, in the long term, grow an economy if one’s workers are not productive; take a look at the following graph: https://codera.co.za/productivity-matters/

 News:

  • The SCA, in its Shell/Department of Mineral Resources judgement, dealing with oceanic survey of the wild Coast, had an interesting comment on how the Department of Mineral Resources had dealt with the issue at hand; saying that community participation by that department had been illusory. Yes, this is what happens when you believe that you have the final say/delusions of power?
  • Some months ago, the Department of Transport had, in response to criticism, reported that it had drivers’ license card printers all sorted out – this appears to have been, how does one say lying without using those terms? The latest is that, and of course the word ‘challenge’ is used, the Department is on the cusp of a ’new dawn’ of the driving licence card environment! Amen.
  • Nersa has ameliorated the effect of Eskom tariffs on consumers for some time – that entity has been taken to court by Afriforum , claiming that Nersa had been approving municipal electricity tariffs unlawfully for over a decade. The intent is to ensure that costs, driven by municipal inefficiency, is not passed on to consumers. If successful, this is going to have a dramatic effect on municipal income. To a certain extent one must have sympathy with Nersa as few municipalities have complied with its request to provide cost-based budgets.
  • Brics has reportedly started off towards a common currency target – yawn.
  • The Bank of China has been fined a suspended R30.5m for non-compliance with our money laundering legislation.
  • An interesting article, from CDH on unequal pay for equal work, is worth a read: https://www.cliffedekkerhofmeyr.com/en/news/publications/2024/Practice/Employment/employment-law-alert-10-june-unequal-pay-for-equal-work-when-is-it-discrimination
  • The alacrity with which Transnet has taken on the World Bank on its trashing our container ports, is indicative that the report had stung.
  • Packing for… Standard Bank had reported a 121% increase in the number of South Africans opening overseas accounts.
  • The IDC has as mission, the generation of balanced, sustainable economic growth and empowerment of citizens in South Africa. In its annual results for last year, this entity reported an impairment ratio of over 35% and, for non-performing loans, 28%. By way of example, commercial banks’ impairment ratio is around 5%. Great going; clearly giving money away will achieve the IDC mission in no time at all!
  • The economic boom/tax haven era for Mauritius is fading: https://theconversation.com/mauritius-next-growth-phase-a-new-plan-is-needed-as-the-tax-haven-era-fades-231008?
  • So, what’s new…unsurprisingly, yet new, is the Department of Higher Education’s latest scandal, centred on a substantial sum of its training for youth-owned SMMEs not finding its way to the intended beneficiaries!
  • The older generation will recall that hot-desking was introduced in the late 1990s intending to save space, optimise resources and so on. Bloomberg says that this trend is being reversed in order to lure employees back into offices.
  • Statistics, provided by Codera, holds that electric vehicle sales still represent a less than 0.5% of the total vehicle sales in South Africa.
  • For those interested, the CLUR Shopping Centre Index is available at chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://propertywheel.co.za/wp-content/uploads/Q1-2024-Clur-Index-Suite-with-Provincial-Indices-Press-1.pdf
  • A newly unearthed dinosaur, sporting immense curved horns has been named after the Norse god Loki, who is often similarly depicted: Lokiceratops!

 

Practice

News:

  • Criminal defamation, i.e. the unlawful and intentional publication of matter which tends to injure the reputation of another, was repealed in April.
  • Property, held illegally by another, may be spoliated by the owner of the land if agreed to earlier: https://www.financialinstitutionslegalsnapshot.com/2024/06/04/order-preventing-spoliation-self-help-not-possible-contrary-to-agreement-or-law/
  • Par for the course? Our LPC, had, for years, not taken action against one of our colleagues who had repeatedly stolen money. The Bloemfontein High Court was not pleased…
  • The SAPS has been taken on by a Limpopo farmer for neglecting to take action against locals trespassing and stealing from his groves –R7m’s worth! If this is successful, the ripple effect within the farming community bringing claims for the non-exercise of its duties by the SAPS, will be interesting.
  • For those following legal news, this will not be new, but still, failure to prevent corruption is now an offence: https://www.africanlawbusiness.com/news/20855-south-africa-enacts-new-anti-corruption-legislation
  • When last did you attempt to publish anything via the Government Gazette? SAPIPA has finally launched an application to compel the Government Printing Works to “ensure the timeous, complete and accurate publication of legal gazettes…and to comply with their (sic) statutory obligations”. Good!
  • Collapse fees for counsel is an evergreen source of outrage. Do take a look: https://www.macrobert.co.za/insights/posts/collapse-fees-and-the-taxing-masters-discretion
  • I love this guy – he clearly has a great ego: a Mr Malaudzi has issued summons against the NPA for detention and malicious prosecution for R5bn – (yes you read this correctly) but then, a seven-year trial is no trifling matter!

 

Hard news:

 

Conveyancing:

  • Two recent events prompted the following:
    • many of our colleagues will have encountered sectional corporate bodies – especially smaller ones – that are non-functional. How does one provide a certificate that no levies are due when it is clear that levies were never collected and reserves, which should have been built up for the maintenance of common property, are absent? If you have any suggestions, I should be glad to hear from you.
    • Some years back it was fashionable for forestry companies to create community trusts, holding land which had been afforested by the forestry company. The idea was that the trust would, on behalf of the community owners of the land, let the afforested area to the company and distribute the rental and capital share in due course amongst the members of the community. These inevitably ran into problems – the following article goes some way to addressing the issues: https://www.businesslive.co.za/bd/opinion/2024-06-11-ramabina-mahapa-avoiding-the-pitfalls-of-community-shareholding-bodies/
  • ‘Section 10(2) of the Recognition of Customary Marriages Act has been declared inconsistent with the Constitution and invalid to the extent that it permits the conclusion of contracts that change the parties’ marital property regimes’; the case emanates from the Pretoria High Court and is not yet available on Saflii – ask me for a copy. (ex West)
  • Creditors do not necessarily owe a legal duty to debtors to protect them from the possibility of accounts being hacked: http://www.saflii.org.za/za/cases/ZASCA/2024/90.html (ex Libo v Aswegen, PHINC)
  • I was recently provided with statistics by our Registrar of Deeds, Pietermaritzburg: lodgements for May were 11956, with 9246 registrations. This roughly equates to a 22% rejection/withdrawal rate.

 

Property

Trends:

  • Residential property prices have more or less flatlined for the past two years, coinciding with interest rate growth since the pandemic. This market is seemingly starting to turn, with Ooba reporting a 7.6 yoy, average price growth for January. Best performing (as usual) was the Western Cape at 13% yoy.
  • Despite the above, many sales were negative in the sense that houses were sold for less than they were bought for. Despite the obvious difficulties with such figures, Lightstone reports that a number of properties have been sold for less than they were bought 10 years ago! Of this number, Gauteng, followed by Mpumalanga and KZN reported the highest number of negative sales with 9%, and 6.5% for the latter two. The Western Cape reported only 5% of such sales, arguably not that much less.
  • The slow-down of house sales and the resulting increase in letting, has caused buy-to-let property purchases to climb. (In fact, residential vacancies are at their lowest level since 2016 – TPN) The highest number of such purchases are, expectedly, recorded in the Western Cape, where it is estimated that 30% of Ooba loans may be attributed to such purchases.
  • Despite the above note on by-to-let houses, rental growth slumped in from 4.6% in the previous quarter to 3.8% in Q1.
  • The Western Cape accounted for just short of 30% of Ooba semi-gration loans, up from 14% three and a half years ago, whilst semi-gration to Gauteng declined from 34% four and a half years ago, to 25% during the first quarter of this year.
  • It was noted above that our economy seems to be turning the corner on the back of a perceived positive take on the GNU. This has impacted on national credit ratings and is bolstered by the expectation of a drop in interest rates later this year. Expect better sales.

News:

 

Comment

 

The recent electioneering was quite amusing, as parties sought to out-do others with pronouncements which only a cynic would enjoy fully:

  • Who pays? A report by Bloomberg on a suburb of Atlanta, Georgia having obtained a judicial confirmation of its right to become a city, raised the ire of those less wealthy – termed by those left behind as white fortressing! This raised the ire of locals as this excision will withdraw a source of dependable revenue from city coffers. The demands by our VF+ for constitutional recognition of Orania, brought this to mind. The fact is that the wealthy amongst us are increasingly withdrawing from institutions, in which they have to fund have-nots.
  • The MK party’s intent to open a criminal case against its expelled former leader, for lying under oath, is rich: the MK leader was recently too ill to attend all manner of meetings which would implicate him in impropriety, but is clearly hale and hearty enough to head a political party – in fact, heading for a presidency!
  • The evergreen promise of more jobs by those who would govern us is laughable, unless one runs a totally socialist country. An article by Vegter highlights the underlying weakness of such a policy: extracting value requires minimal effort; maximising labour input is an exercise in wealth redistribution rather than maximising efficiency: possibly one reason why our public spending is not producing the desired results.
  • Lastly, and you have to love this: a note on the ANC failing to correctly interpret its statement of intent underlying the GNU, led to its cadre euphemistically described as being “intellectually deficient”. Us ordinary folks have a succinct term for this… Clearly success in politics does not equate its current leaders with those intellectuals who set up the ANC a hundred years ago. 😊

 

Lighten up

Rishi Sunak and Keir Starmer are on a plane, Sunak looked at Starmer, chuckled and said, “You know, I could throw £1,000 out of the window right now and make somebody happy.”

Starmer shrugged his shoulders and replied, “I could throw twenty £50 notes out of the window and make twenty people happy” Hearing… their exchange, the pilot said to his co-pilot, I could throw both of them out of the window and make 64 million people very, very happy!”

 

Why do Americans choose from just two people to run for president and 50 for Miss America?

 

A politician running for office was asked about his policy on liquor. He answered, “If you mean the demon drink that poisons the body, ruins the mind, destroys the family and creates criminals, then I’m against it! But if you mean the beautiful drink used for a wedding toast, the foundation of a fun Friday night and the biggest source of tax revenue to fund needy orphans, then I’m for it! And I won’t change my mind, no matter what you say.

 

A tourist wanders into a back-alley antique shop in San Francisco’s Chinatown. Picking through the objects on display he discovers a detailed, life-sized bronze sculpture of a rat. The sculpture is so interesting and unique that he picks it up and asks the shop owner what it costs.

“Twelve dollars for the rat, sir,” says the shop owner, “and a thousand dollars more for the story behind it.”

“You can keep the story, old man,” he replies, “but I’ll take the rat.”

The transaction complete, the tourist leaves the store with the bronze rat under his arm. As he crosses the street in front of the store, two live rats emerge from a sewer drain and fall into step behind him. Nervously looking over his shoulder, he begins to walk faster, but every time he passes another sewer drain, more rats come out and follow him.

By the time he’s walked two blocks, at least a hundred rats are at his heels, and people begin to point and shout. He walks even faster, and soon breaks into a trot as multitudes of rats swarm from sewers, basements, vacant lots, and abandoned cars. Rats by the thousands are at his heels, and as he sees the waterfront at the bottom of the hill, he panics and starts to run full tilt.

No matter how fast he runs, the rats keep up, squealing hideously, now not just thousands but millions, so that by the time he comes rushing up to the water’s edge a trail of rats twelve city blocks long is behind him.

Making a mighty leap, he jumps up onto a light post, grasping it with one arm while he hurls the bronze rat into San Francisco Bay with the other, as far as he can heave it. Pulling his legs up and clinging to the light post, he watches in amazement as the seething tide of rats surges over the breakwater into the sea, where they drown.

Shaken and mumbling, he makes his way back to the antique shop.

“Ah, so you’ve come back for the story,” says the owner.

“No,” says the tourist, “I was wondering if you have a bronze politician.”

 

 

 

Written by: Daan Steenkamp
https://www.daansteenkampattorneys.co.za/ 

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