Economy/business

Trends

• The IMF predicts a slowdown of the world economy to 3.2% – KPMG estimates a slowing to 2.5%. Our economy shrank marginally by 0.1% from the expected 0.7% to 0.6% growth in the first quarter of this year – the IMF predicts our growth for the year at 0.9%.
• The bad news – following Heystek’s analogy, bats:
  • Our imports and exports plunged in the first quarter of this year – exports of minerals and fruit especially, as our ports grappled with inefficiency. This is not that noteworthy; the sting in the statistic is that we were one of only two countries, surveyed by the UN, to experience such a decline in trade.
  • The Eastern Cape has entered a technical recession; this is not as bad as it seems as those of our provinces which grew, as may be seen from an average of 0.9% for the entire country, grew marginally at best.
  • Codera published GDP stats which make for dismal reading:

• This result is not that unexpected, but given our dismal productivity growth, compared to our Bricks compatriots – and, looking at the following graph, one can hardly expect an amazing recovery:
  
• Our Minister of Finance says that we are falling behind on his intent of trimming our budget deficit to 3.4% of GDP.
• The good news – again in Heystek’s terminology, butterflies:
  • Sacci reports that the Trade Activity Index reached its best level in June as trade conditions recovered after its depressed-level early this year. In fact, the Durban business confidence index surged to a record high as it increased by 17.07 points, up from the first quarter.
  • Our latest set of business cycle indicators recorded positive yoy gains at the beginning of this quarter.
  • Gauteng, the Western Cape and KZN have grown their economies faster than that of the national average.
  • The JSE sits at a high level with the ALSI having grown by 8.5% (Moneyweb says 7%) since the beginning of this year.
  • The predictions are that factory and mining output is likely to continue growing.
  • Retail sales are accelerating.
  • Predictions are that high interest rates will soften this year – even by September.
  • Ramaphosa announced a wide-ranging infrastructure investment intent; promises…
  • The US group Remitly has ranked South Africa the friendliest country in the world.
  • Heystek was an economics student at the then RAU, and was quite a useful squash player, playing at number 1 for RAU. We were given R4.50 per player by the University which would pay for a beer and a steak roll each; early 70s – which does show the ravages of inflation and which does lend credence to Heystek’s take on our economy. Heystek (read Brenthurst) has held a steadfastly negative view on investing within South Africa but, so reports the Daily Investor, is now cautiously optimistic about our economic future!

Scandals

• The DMRE missed the deadline for adjusting our fuel prices owing to delays in the formation of our new GNU. This came at a cost to business.
• The Reserve Bank lost R1bn on its stake in African Bank. Blame the wonderfully termed “impairments”.
• Hackers stole R300m from Public Works. Former minister de Lille was reportedly unaware thereof.
• Undoubtedly the implication of ministers Malema and Shivambu (and the DG of the National Treasury) in reportedly having taken R16m from VBS was the most fun news recently. These gentlemen deny having received any such benefits – but apparently they refrained from including the EFF in their denial. Any bets on the NPA acting in the next six months?
• SARS says that it lacks the resources to inspect containerised goods entering SA save for a token 2%.
• Eskom – the newsmaker of the year for several years running:
  • Our Minister says that the R78bn, owed by municipalities to Eskom cannot be recovered. Unless checked, this debt is estimated to reach R3.1trn by 2050.
  • Minister Mantashe says that the procurement study for a new nuclear power station has been completed. I think this to be a great idea but, if one takes his record on Karpowerships, I would not yet crack out the champagne.
• A minor unpleasantness resulted when Stats SA’s latest census was called into question by the Medical Research Council. The result, predictably, was that there was a rush to defend that institution.
• Boeing will plead guilty to fraud relating to the 737 Max crashes; hardly reassuring!
• I had refrained from including local business Ren-Form on the issue of corruption/scandals, as this entity was involved in such a scandal in Zim; it now turns out that this entity supplied VDMs to our IEC and that these devices may have contributed to our voting delays (the IEC had blamed connectivity issues but is reportedly taking a second look). Dealing only with the best!

General news:

• Economically speaking, a move away from the JIBAR index to the ZARDONIA (South African Rand Overnight Index Average – yes, I didn’t get that either) is to be welcomed as this index is said to be more reliable.
• On to business: BEE is again in the spotlight as it has become clear that our policies to date have not produced nearly the changes sought. Not only that, employment equity demands the righting of gender imbalances also. The private sector, clearly, is to blame. The difficulty, of course, is that economic inclusion based on race or gender does not necessarily match the economic goals of those who put in the effort.
• SARS is said to be targeting tax advisers who assist taxpayers in evading taxes. This is going to be interesting. Oh yes, on tax by any other name; our government is again considering dipping into pension funds to fund “strategic sectors”. Whilst on tax; a note by Codera on the reaction of the 0.6% of income earners in South Africa, who pay tax at 41 – 45%, to tax increases, is interesting: https://www.linkedin.com/posts/daan-steenkamp-48a42520_how-do-tax-revenues-respond-to-tax-rate-changes-activity-7215936763817562113-D7tI/
• Whilst on tax; if a government overspends it needs more money and the obvious source is taxation. Do Google the Laffer Curve.
• When is a medical certificate valid? https://beechveltman.com/employment/top-tip-tuesday-guidance-for-employers-what-constitutes-a-valid-medical-certificate/
• In a downturn, marketing is paramount: may an advertiser use shock tactics to shift public’s perceptions? Copy and paste this link: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://media-podcast.open.ac.uk/feeds/b324-marketing/transcript/b324marketing03_00555_6761.pdf
• Try the following also on influencing and competitive advantage: https://www.adams.africa/intellectual-property/influencer-marketing-and-intellectual-property-how-to-gain-a-competitive-advantage/
• If you “personalise” prices, could this amount of price discrimination? https://www.cliffedekkerhofmeyr.com/en/news/publications/2024/Practice/Competition/competition-law-alert-17-july-price-personalisation-or-price-discrimination-can-your-computer-tell-the-difference
• Our Weather Service expects a drier and warmer than usual Spring

 

Practice

News

• RAF, our evergreen newsmaker:
  • The Pretoria High Court dismissed an application by the RAF to appeal the judgement that declared an RAF directive, that excluded illegal foreigners from submitting claims against the RAF. The RAF is appealing.
  • Prof Klopper published an interesting article in the De Rebus on the interaction between RAF claims and medical scheme benefits: https://www.derebus.org.za/navigating-road-crash-victim-compensation-are-medical-aid-payments-deductible/
  • The RAF adopted a different accounting standard which saw its liabilities drop from R331bn to R34bn! I wish I could find out who their accountant was as I am sure that his services will be welcomed by all! https://www.moneyweb.co.za/news/south-africa/deputy-minister-advises-raf-to-use-legislative-reform-not-arbitrary-changes-in-standards/
  • The topic of outstanding RAF claims and unpaid dues to experts, is again in the news with the new Minister of Transport tasked with a request to improve governance at that institution.
• Another unending newsmaker is Dr Hlope; the following quote says it all: “By designating an individual who has been found unfit to be a judge to the body responsible for the selection of judges, the National Assembly has fallen short of [its] duty.” Judith February. Freedom Under Law will challenge Dr Hlope’s appointment in court.
• The Inter-Cape judgement against the SAPS and MEC, dealing with taxi violence, has challenged the former to come up with a viable plan to deal with attacks on buses.
• Capitec, the bank darling of investors, is embroiled in the micro-lender/garnishee order fight dealing with so-called predatory practices and forum shopping, to obtain judgements against debtors. Of passing interest.
• More on banking details being hacked: https://www.cliffedekkerhofmeyr.com/en/news/publications/2024/Practice/Dispute/combined-dispute-resolution-and-real-estate-law-alert-9-july-a-prudent-question-is-one-half-of-wisdom-the-consequences-of-business-email-compromise-on-individuals-part-2
• Our NPA is regularly criticised for its inaction on high profile prosecutions: now the Life Esidemeni families want the top officials prosecuted. The elephant in the room is whether the institutions, which received such patients in care, are not also responsible for having starved patients to death?
• The DG of our justice department says that the rot/corruption at the Masters Office and Guardian’s Fund “is worse than anyone thought”.
• A news report on four persons, having, for nine months, faced charges of theft, housebreaking, assault, and the illegal possession of drugs, having walked free after the prosecution informed the court that there had been no money to pay witness fees, is noteworthy: imagine being the police, charged with such a docket, having to do all one’s work again!
• MK’s court bid to prevent the use of the term GNU, as a misnomer, is interesting – which case has been described as a publicity stunt. Pragmatically, saying that the voters empowered politicians to enter into such a union, is also stretching it.

Hard news

• Standard bank recently bit the dust in a dispute, dealing with a liquidation claim (which has a prescription period of 3 years) or a bond (which prescribes over 30 years); of interest to those who do bank collections. I could not find the case on Saflii yet but the following might assist: https://www.moneyweb.co.za/news/companies-and-deals/standard-bank-loses-home-loan-case-over-existence-of-bond/
• Do siblings have the duty to support each other and, if so, for how long? https://www.financialinstitutionslegalsnapshot.com/2024/07/09/when-does-the-duty-to-support-younger-siblings-end/
• A De Rebus article on the distinction between contractual and electoral damage may be of interest: https://www.derebus.org.za/damages-distinction-between-pursuing-contractual-or-delictual-damages-in-light-of-moorcroft-ajs-judgment-of-devland-cash-and-carry-pty-ltd/
• An interim award by an arbitrator can serve as a valid cause of action for enforcing the obligations under that agreement: https://bowmanslaw.com/insights/south-africa-sca-confirms-the-enforceability-of-interim-arbitration-awards/
• Few Internet sellers would want to deviate from their standard terms as such a deviation is contrary to the business model that makes dealings quick easy and clean – what to do? https://www.ensafrica.com/news/detail/8861/death-of-the-customers-paper-is-the-customers
• Determining a price on M&As? Read up on the “locked box” method of valuation: https://www.werksmans.com/legal-updates-and-opinions/understanding-the-concept-of-the-lock-box-locked-box-mechanism-in-the-mergers-and-acquisitions-space/
• Relationship between non-variation and waiver: https://www.saflii.org/za/cases/ZASCA/2024/107.html ex STBB

Conveyancing

• Conveyancers regularly must have documents signed overseas. The following article deals with section 63 of the Uniform Rules of Court: https://www.macrobert.co.za/insights/posts/signing-documents-abroad-does-rule-63(2)(c)-help
• A Western Cape decision on fiduciary duties and funds held by a conveyancer: https://www.saflii.org/za/cases/ZAWCHC/2021/34.html do read clause 7.Ex
• A deed of alienation is not necessarily invalid if not cost to the standard format: https://www.saflii.org/za/cases/ZAGPJHC/2024/607.html Ex STBB.
• From time to time I come across a sale were the agent/conveyancer tells me that no body corporate for the sectional titles exists. Typically such bodies corporate exist but are not run – what to do? West has an answer of sorts – ask me for a copy.

 

As an aside, the following quote comes from the UK: “The time will surely come in every professional field, where those widely recognised practices and procedures will include the use of AI.”  Vos, the author, asks whether an AI system should be included as a member of a professional body… A now deceased colleague of ours, Pierre Odendaal, whose logo of Don Quixote, bastardised by me and which I took over, listed that worthy as his consultant. The then Law Society took exception; Pierre argued that the rule said that no person who is not an attorney could appear on a letterhead and that Don Quixote was not a person. Needless to say, his red herring was most effective and kept the LSSA going for a long time!

 

Property

Trends

• The property industry had called on the SARB to start cutting interest rates as properties sales had plummeted by reportedly 25%, owing to buyers delaying purchases while waiting out our high borrowing costs.
• Botha reports that the average home purchase price increased for all buyers by 7.6% during April and May. This is the first decent price increase in a while. Standard Bank reports that new home buyers are bullish, following on the expectation of rate cuts.
• SAPOA says that office vacancies have recorded an eighth consecutive quarter of improvement since COVID. The vacancy rate is 14.2% for Q2 2024.
• Semi-gration is old news in SA. BusinessTech ran an article saying that we have had, over the past two years 3645 immigration retirement visa applications, primarily from the UK, China, Germany and the USA. Why? A weak exchange rate, decent standard of living, cheap house prices and affordable household help.

 

Hoom.co.za is a website that matches you with estate agents by comparing profiles, commission rates and services. Worth a look?

 

A write up on the necessity of lease audits: https://kznindustrialnews.co.za/the-value-of-conducting-property-lease-audits/

 

If your land is invaded, you should immediately take action against occupiers as delay will cost you dearly: https://businesstech.co.za/news/government/782128/major-win-for-property-rights-and-fight-against-land-invasion-in-south-africa/

 

The Zulu king held a meeting with the Minister of Land Reform and Rural Development recently. Undoubtedly the King’s powers and those of his traditional leaders, to give permission for “subjects” to occupy land must go. You cannot, in the long run in a capitalist democracy, have paid for municipal systems in which owners of land, run side-by-side with a system in which areas cannot be developed as there is no source of funds and occupants don’t own land.

 

Spoor heads up a class action by Durban residents against UPL (a subsidiary of the world’s fifth-largest producer of agrochemical pesticides and so on) for 1.5bn of damages, resulting from a fire, set by looters to 5000 tons of toxic chemicals, three years ago. The allegation is that the disaster was allowed to occur owing to UPL’s indifference and neglect.

 

Lastly, “investors” in Zimbali Heritage Place (near Ballito ) are taking on the developer over the standard of the facilities they invested in. Interesting, primarily because Zimbali is a premier property site in KZN.

 

Comment

South Africans do not necessarily see South Africa as home to a violent society; yes we have theft and one has to be careful and so on. What is true is that political and other high-level murders (think councillors in KZN) are rampant. The recent assassination of a Johannesburg official investigating high-profile corruption cases and our SIU boss’ comments on death threats, rampant graft and so on, brought these to the fore. He said that crooked service providers had perfected the modus operandi and when uncovered, “things” become dangerous and even lethal. He partly blames our disjointed law enforcement.

 

 

Lighten up (on bats and butterflies)

 

• What’s a bat’s favourite movie? The Dark Knight Rises.
• What do you call a bat that likes to hang out with other animals? A social butterfly.
• Are fruit bats gay? They do swing both ways and they love blind dates!

 

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

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