October 7th, 2023 | Business, Economics, Practice

October 7th, 2023 | Business, Economics, Practice

Gentle Reader

 

          Yes, I did get married.

 

Daan Steenkamp

          under new management

 

 

Economy/business

Trends

  • Our exchange rate was trading at its worst level against the dollar since early June this week past. This prompted one writer to start talking currency crash; down from R13.7 in mid-2021 to a current level of about R19.1 to the US $.
  • Market sentiment is reflected in our long-term government bond yield which now sits at just under 13%. By way of comparison, the US 10-year yield is 4.79%, the Turkish equivalent is 26.7% and the Brazilian 10-year yield is around 12%. Nervous or a great investment, pick one.
  • Foreigners are still (inexplicably?) selling South African shares, with R1bn having been sold within the past week.
  • Locals are equally cagey as foreigners about investing here: the following graph reflects planned capital expenditure in South Africa:

  • The PIC, our largest single local investor, has been forced to invest in unlisted companies owing to the shrinkage of investment opportunities on the JSE. A sceptic might wonder whether this presents a great opportunity for backends?
  • The financial crisis, stemming from poor state management in South Africa hardly bears mentioning as the initial trickle of dysfunction has become a very tangible wave, as services and so on deteriorate. SANRAL has awarded multi-billion contracts to Chinese companies who did not meet the eligibility requirements set out in the tenders; Eskom requires little comment (except disbelief: our Minister in the Presidency says that high loadshedding stages are temporary and that our government has measures to tackle blackouts in place); Transnet and Portnet are in meltdown and costs us billions in lost exports annually. The Post Office is bankrupt and postal services are virtually non-existent. The topic of the latest hoo-ha is the crippled UIF with COSATU and BUSA saying that dysfunction and corruption are destroying this entity.
  • Sub- Saharan economic growth is expected to slow to 2.5% this year, down from 3.6 last year. With any luck, this rate should improve next year to 3.7% and higher in 2025.
  • The default rate for non-payment of TV licences stands at 81.7% – entirely avoidable if our government had been prepared to encode.

 

We have a non-functioning railway system, but our Gauteng Premier wants to build a fast train to Limpopo… Presumably this will be in the same wish-list league as the high-speed train to Port St Johns (who wants to export anything from there?).

 

Of interest to employers is a collective misconduct case in which 12 employees were discharged for stock deficiencies: https://businesstech.co.za/news/business/720504/you-could-be-fired-because-of-your-co-worker-in-south-africa/

 

Good news of sorts is that Stellantis, the world’s fourth-largest automaker, will be building bakkies at Coega from 2026.

 

Practice

News

  • The conduct of colleagues (I hesitate to describe these as such) has led to 310 attorneys being struck off the roll over the past three years at the instance of the LPC. Given that there are just short of 30,000 practising attorneys in South Africa the number of rogue practitioners who are prosecuted is low. Having said this, my experience of the LPC is that its insistence on propriety is much lower than the Law Society of yore. Even more worrying is a report on that body urging the public to do background checks on attorneys before engaging practitioners.
  • The ABSA/SARS dispute gave rise to a debate on SARS’ slow dispute resolution and the reluctance of courts to become engaged in tax disputes. Of academic interest unless it affects you!

 

Hard news:

 

 Property

Trends

  • Industrial and retail sales activity is still declining with office sales stabilising. The FNB prognosis is that with the stabilising economy and interest rates, the property sales activity will trend sideways.
  • TPN reports that the national vacancy rate for residential units is slightly up to 7.27% for Q2. The Western Cape still has the lowest percentage of vacant units with KZN standing four times higher. Gauteng has an even higher vacancy rate – this being attributed to semigration to the Western Cape. In fact, supply in that province has outstripped demand for the past five years. Generally, more tenants are falling into arrears, the percentage on a national basis standing at 18.4% for Q2 (the Free State figure is 25.2%), the highest since the close of 2021. This increase is said to be driven by the rising cost of living.
  • The Pietermaritzburg deeds office lodgement statistics for June was 42% down and that for September was 32% down, compared to lodgements for the same months last year. Dismal.

 

Discovery Bank gives up to 1.5% off interest rates on home loans – worth looking into.

 

Amended POPIA rules for complexes, estates and gated communities are on their way.

 

The rates stand-off in eThekwini continues. SAPOA has had to bring an application to compel the municipality to deliver the record that led to its decision to double the rates randage on vacant erven. This dispute hones in on municipal dysfunction that compels those who comply, to pay for those who don’t.

 

Paddocks are in the process of publishing a series on Life Rights which is worth following. I can send you the first two in the series, on request.

 

I hold an article on the retention of deposits as well as the text of an as yet unreported case on commissions, from West – the latter case is complicated by a multitude of issues having been broached – if interested, ask me for a copy.

 

Oh yes, in passing, without taking this seriously in any way, Nummawan’s latest rant is that our constitution amounts to ‘codified land theft’. One could respond by saying that this piece of legislation has massively benefited the previously disadvantaged up.

 

Comment

State of the nation: I suspect that the majority of Seffricans would rather live in South Africa than elsewhere. Having said this, it has become harder of late to remain positive. Take the following examples:

  • Last year 27066 South Africans were murdered. This year, between April and June, that figure stood at 6228. This amounts to some 68 – 74 persons per day. The Global Organised Crime Index shows that South African’s experience the seventh worst criminality rate in the world. Recent reports hold that mafias have become prevalent here and are even embedded within the state.
  • Unarguably, cadre deployment has cost our economy dearly and for the ruling party having to approach our apex court, arguing that its records of such deployment should not be disclosed, does raise suspicion that it has something to hide.
  • The appointment of friends rather than those able is typified by the disaster that is Transnet and the eventual discharge of Derby, which brought all manner of unpleasant facts into view; one of them is that the lady’s ex-husband is embroiled in a civil case to recover nearly R4bn apparently looted from Eskom. Fortunately, she stressed at the time that she was committed to rooting out corruption, which clearly assuaged any concerns that anyone might have had.
  • Another example of commitment to self, rather than communal interests, came out of the KarPowership saga: the requisite BEE partner would take 49% of the funds to be generated by the deal, plus a slice of the to-be-built gas terminal in Ngqura. To pay that kind of public money to a non-productive individual, in the name of empowerment, is criminal, blind or stupid. My money would be on the first.
  • Altogether less expensive, but indicative of non-attention to one’s post, are reports that our national teams might be stripped of the right of playing under our national banner, owing to the relevant minister’s failure to deal with the required anti-doping code.
  • Failures of management, like the above, has led to well-known public figures suggesting that we should pay as little tax as possible without breaking the law. Yes, few would argue with such an approach has one does this anyway. However, this argument is bolstered by the knowledge that our government mis-/overspends. Once the majority of taxpayers feel this way, funding the future will become increasingly difficult.

 

Quotable

“We are confident that the president will also talk to the nation because we do not want to create the impression that there is a crisis and South Africa is going to collapse. South Africa is not going to collapse; we have everything on hand.”

Minister in the Presidency

 

Lighten up

“The avoidance of taxes is the only intellectual pursuit that carries any reward.”

Keynes

 

“Congress can raise taxes because it can persuade a sizable fraction of the populace that somebody else will pay.”

Friedman

 

“The income tax has created more criminals than any other single act of government.” Goldwater

 

Written by: Daan Steenkamp

Daan Steenkamp Attorneys

 

 

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

 

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