Economy
In GEAR?
Definitely not: our state is flirting with a recession owing primarily to politics which restrict our growth possibilities. The latest and most visible of this is the possibility of a Putin pass-by which caused the Rand to tank as investors expect Western economic retaliation. The fact is that investors see the SA economy as risky, which insight is highlighted by the IMF disagreeing with our Treasury as to our debt projections. This may be seen from the following graph, which shows that the market has priced in our economic risk into our Treasury bond rates – great returns, but at the risk of default:
Our government prioritises politics (precipitated by coming elections?) over what business sees as appropriate for growth. This take has increasingly led to self-help by business and a make-do attitude which one wants to believe is a South African trait. It would seem that that our state is starting to understand that it is not able to effectively run an economy, which is a starting point of sorts (I would be surprised, however, if this warming to business were to extend to base political policy). Examples of these are Transnet wanting to form partnerships with the private sector over the Durban and Ngqura container terminals, train lines and so on as well as the recent tête-à-tête between the Prez and business, in which he reportedly asked for business assistance to provide critical skills and so on.
At least the Reserve Bank does bring some sanity into government perspective in that the Governor of the Reserve Bank has warned of political censure on our Russian stance and bemoaned foreigners dumping Treasury bonds.
There is some financial hope – Nedbank sees a modest cyclical economic recovery from next year onwards, with growth averaging around 1.2% for the next three years; which is better than our current situation but still substantially below the level that we need to maintain to provide more jobs and so on (oh for the days of yore when we bemoaned a growth rate of 5%).
The fact is that GEAR died some time ago despite employment and redistribution needing to be led by financial growth; which simply will not happen in our current political scenario and continuing productivity decline.
General topical news is:
- The acronym GloBE stands for global anti-base erosion which is a new system of taxation that imposes a top-up tax in jurisdictions where the effective tax rate is less than 15%. Undoubtedly international entities will find a way to negotiate around investing in countries that opt into this structure.
- Codera published a graph, showing wages and profits by industry over the past 12 years: the financial, real estate and other business services industry, has a profit level which is almost four times its wage cost – this is the place to be, businesswise!
- Running a side hustle and need banking services? Consider the FNB Solopreneurs’ bundle
- Tiger brands recently closed one of the last two fruit canneries in our country with Rhodes’ cannery the only one remaining.
- We often see universities’ ranking, with typically UCT ranked top. The problem with ranking is that the criteria, used by those who rank, are certainly not what you and I would consider germane – consider the criteria in this article: https://businesstech.co.za/news/lifestyle/693577/new-rankings-for-south-african-universities-with-an-unusual-winner-announced/
- The latest least-miserable-countries index surprisingly lists Kuwait as the second least miserable country, worldwide!
- The EE water licence targets is set to attract a serious push-back from farmers. This is understandable – how can a family farming enterprise comply?
Practice
News:
- Two articles were published on trusts recently, neither covering more than the basics; the following is the more elaborate of the two: https://www.moneyweb.co.za/moneyweb-podcasts/money-rules/everything-you-need-to-know-when-setting-up-a-trust/
- As a student (very many years ago) we were taught that your tax affairs are confidential: going as far as to say that one could declare income from criminal activities and be safe from prosecution; true no more. Our Concourt ruled that the relevant tax and Paia provisions maintaining this confidentiality are unconstitutional on the basis that public interest overrode the harm to the individual taxpayer. Groundbreaking stuff precipitated by our local newsmaker, Mr Zuma.
- Lawyers misbehaving:
- A well-known Sandton law firm has been publicly accused of involvement in estate capture and luridly reported on regarding outstanding debt of R36m. This and the following report present an interesting dilemma. If the accused practice is not guilty, one expects it to take up the cudgels but, if such an action were to expose it to proof of questionable practices, hardly wise.
- Another, a Tshwane practitioner had his assets attached by the forfeiture unit in respect of money siphoned off a lottery grant…
- The Mkhwebane saga will simply not die, despite the post of Public Protector having been re-advertised. The latest salacious snippet is that her legal team fees have been increased to R102k per day with the SC taking R51k daily; not too shabby for a lawyer reviled by the press?
- An interesting note, on an issue that I had thought dead, was raised by a wannabe lawyer on what he believes to be an error by the SCA on its “old flag judgement”. Interesting but going against our biggest dogs: https://dailyfriend.co.za/2023/06/10/harmful-v-hurtful-speech-how-the-sca-got-it-wrong-in-the-old-flag-judgment/
- The question of to educate and train practitioners, has been an interest of mine for many years, primarily because of the education I received and which I resented intensely on going into practice. This topic has been revisited again: https://www.derebus.org.za/progressive-legal-education-for-candidate-legal-practitioners-what-role-should-universities-play/
- Lastly, the ability to swear with feeling and strong drink is arguably indispensable to practice… To guide you in this respect, is a report that Van Rhyn’s 15-year potstill brandy has, for the second year in a row, been named as the world’s best wine brandy. Tjorts!
Hard news:
- A judgement (courtesy of West) dealt with a credit agreement concluded by electronic means. Amongst other things it deals with audio recordings used by the supplier of goods, which were accepted as evidence, and the section 12 of ECTA which deals with electronic signatures. The judgement is not yet available on SAFLII – ask me for a copy.
Conveyancing:
- In a similar vein (a reference to cases received which I have not been able to access on the net) STBB published a note on short notice given for the cancellation of a lease and overly-high bridging finance interest rates. The latter is of particular interest to the conveyancers as we are often called on to assist a party, to a property transaction, to obtain bridging finance. Ask me for the note sent and do consider subscribing to the STBB publication.
Property
Trends:
- The IMF forecast for global financial growth is some 2.7% for this year – the weakest since the GFC. MSCI estimates a total return for property, for last year, to be 3.6%, compared to 2021’s 13.1%.
- TPN reports an increased demand for residential property in South Africa which has and will lead to a lower rental vacancy rate and, usually, an increase in rental rates. Whether this will happen in the current market is uncertain as many tenants are under financial pressure.
So, who is buying and where?
Who: millennials apparently account for 30 – 42% of all property purchases in South Africa, with most of these purchasers lying in the “affordable” range.
Where: the worst place to stay (services -wise) appears to be the Joe Morolong Municipality (think Kuruman) and the best is the West Coast Municipal area. The latter sports an average asking price of R1.5m for a home.
I was intrigued by an offer of fractional (co-ownership) properties in Cape Town. Does one buy to let or, for instance, for own holiday use? I asked the developer, but received no response – possibly because I mentioned the phrase share block scheme; possibly because the Share Blocks Control Act says that one operates a share block scheme if any share in a company confers a right in the use of the immovable property owned…
News, but not news: our Land Commission reports a thirty-year backlog of land claims, coming to some R170bn. One hears little news from this source of late; save a recent note that Mr Boezak wants his family farm back.
Comment
The following quotation, drawn from a Daily Friend article is interesting, as it builds on comments by Mbeki and Malema, each representing very different interests:
“Populists do not generally reject democracy; rather, they would argue that they are restoring what the ‘elites’ have degraded. The claim to power of a populist movement is that it represents a profoundly democratic impulse; they are democratic innovators. It reclaims democracy in its true, etymological sense – the power of the people. ‘The people’, meanwhile, are ordained to power by virtue of the numbers they can muster, and theirs is a sort of authentic spirit of the nation.”
Today the Comrades was run, ending in eThekwini, a massive boost to that city’s finances. A whistleblower cast a shadow over the resulting financial boon by alleging that, of a sum of R16m made available to Durban tourism, only some R375k was allocated to the Comrades event, with the balance having been used to fund events organised by politically connected people from which the city derived little value. Yawn.
A phrase used by the Financial Mail writer, Rob Rose, drew my attention: cognitive dissonance; defined as the discomfort a person feels when their behaviour does not align with their values or beliefs. Rose says that our politicians are no stranger to this feeling; and the following, (not quoted by him) are examples of this:
The former SARS boss, Tom Moyane, had awarded a R200m IT contract to global advisory firm Gartner – with 40% of that sum ending up with a friend of his. Gartner stopped short of admitting guilt but paid a $2.45m sum to settle US charges for bribing SARS officials. Any bets on whether this will be taken up by our prosecuting authority?
Our government regularly investigates anti-competitive conduct by entities. Yet, this happens regularly in that taxi associations take on Uber and Bolt drivers that impinge on, what they feel is their territory only. Any bets on this being taken up by the relevant authority?
Lighten up
A priest and a lawyer died and went to heaven. They were met by Saint Peter at the gate, who told them he would be giving them some transportation to get around in. He gave the lawyer a big white limousine. The priest was given a bicycle. The priest said “wait a minute” you gave the lawyer a limousine and me a bicycle. Why is that? St. Peter replied, oh we get a lot of priests in Heaven, but this is the first time a lawyer has made it.
A man walks into a bar with an alligator. He says to the bartender, ‘Do you serve lawyers here?
‘Sure do,’ replies the bartender.
‘Good,’ says the man. Give me a beer, and a lawyer for my “gator”’.
What do you call an alligator with a law degree?
A litigator.
Still looking for your dream home, or wanting to sell? Feel free to give one of our developers a call today.
Tom Eastwick – The Gates, Hilton and Garlington, Hilton | 072 297 2699 | tom@devdirect.co.za
Janet Channing – Waterford Residential Estate, Howick | 082 570 5834 | janet@devdirect.co.za