Friday 25 February 2011

HOW THE LEOPARD LOST HIS LIFE

As one prescient writer put it: “beware the stealth taxes”. And that is indeed what happened in the Budget.  Minister Gordhan tried to divert our attention by stating that the revenue lost by shifting the personal income tax brackets would be R8bn. However, spending in the next fiscal year will amount to R979bn which is about R80bn more than in the current year. Clearly there is more than a little pothole to fill and pages of itty bitty bites at our pocket were then read out. It is definitely going to cost more to live and it will be very suspicious if the official inflation rate does not climb steadily from here on.
On the expenditure side, pensions and child grants will each consume about 4% of the money that the government wants to spend in 2011. This implies that 2.6m old folk and an astonishing figure of 11m children are expected to qualify for those distributions. Presumably disability grantees and war veterans comprise most of the rest of the much discussed number of 15m welfare beneficiaries. It is interesting that war veterans receive a monthly grant of R1160 which is R20 more than we taxpayers give to pensioners. Both groups will, however, certainly be comparing their meagre 5.5% increase this year with what the politicians and bureaucrats managed to pocket.
An even bigger impact on our living standards is resulting from the waves of violence that are sweeping some of the countries that supply large portions of the world’s oil. Oil prices well above $100 a barrel coupled to a weakening rand will have a severe impact on prices of just about everything. And that will not exclude the share prices which might go in the opposite direction as consumers choke.
The King of Saudi-Arabia thought it prudent to return home from sick leave in a hurry and distribute a precautionary R250bn to keep his approximately 20 million subjects focussed. If our President Zuma were to try that trick it would cost us plenty! Mind you he must have spent a bundle on leopard skins for all of his wives who turned up at the opening of the provincial talking shop in a frankly distasteful display of conservation disdain.
From here in the kingdom, the unfolding chaos about the Gauteng toll roads is both amusing and alarming. Undoubtedly this SANRAL outfit also have plans for the east and south west and once the 66 cents per km starts rolling in, they will be erecting their toll gantries in our sea breezes where they can gently begin to rust.. Can you remember when utilities were near invisible entities that unobtrusively went about their tasks of supplying water, electricity, railways, roads and radio to the nation? One neither knew nor cared who was CEO or chairman Now their boardrooms are battlegrounds never out of the headlines where sticky fingered soldiers serve just long enough to find the keys to the cash box before transferring to the next one..
A last word about the Budget. One fifth of the state’s expenditure goes to education. In 2011 that will amount to R190 bn. That suggests that each of the approximately 20 million pupils, students and other “learners” is costing taxpayers almost R10 000 a year.  Whether or not we are getting value for money is a good point from which to start an argument, but it does also display the amazing information provided by the National Treasury Budget Office which so deservedly received the award for the best and most transparent budget in the world.
How about them Lions? Watch that space. Nice start from the Proteas while Formula 1 has been black flagged in Bahrain. The boys who run Kyalami missed a trick there. A lick of paint, sweep the track and a few thousand old tyres and we could have hosted the circus down here on the southern tip.
James Greener
25th February 2011

Friday 18 February 2011

THE INTERNET RULES


By this time next week the State Budget will have been presented. It is very worrying that someone has shown the politicians what comes after billion. This week’s headline reported that they are now going to spend a trillion. Rands I think it is. But it is all just waffle in lieu of actually doing anything and spending a hundred to repair a school desk or a hospital bed or something else that they have promised.
Another number this week was 33335. This is the new all time high for the All Share index set on Monday. Once achieved, however, everyone lost heart and the rest of the week has been spent in retreat.
Also retreating appear to be some of the world’s rulers for life who are eyeing the hordes that have pitched up to demand a change of regime. Again I am delighted to see that the new age of instantaneous and mobile communication is causing the elected to fear their electors. It is increasingly difficult to lie about what is happening when people can contradict you with a picture emailed to a website in a heartbeat. It is telling that a spokesman for the ruling party here at home angrily denied any similarity between what is happening up north and some very violent demonstrations about the government’s broken promises of a better life for all. The pictures suggest he is mistaken.
An excellent leader in Business Day asked what it is that the government expects of business. Indeed the haranguing of businesses and the people who run them is almost a national disease. Every government department – and many related organisations - have no hesitation in demanding something. Whether it is money or information or a job for their clueless nephew, the most annoying claim is on time. Even the JSE got into the act by warning listed companies that they need to adopt yet another accounting standard or else. I doubt the Budget will reduce any burdens on the nation’s desperately few and dwindling wealth creators.
The African Exploration Mining and Finance Corporation will be launching its first mine within a month. Leaving aside the question of how one actually launches a hole in the ground, it is sad to see that this state-owned company has already adopted a typical government secrecy attitude. They have declined to say what or where they will be mining.  If, as they say, they already have the mining rights to the deposit, what possible “strategic” reason could there be for not telling us what it is. It will be interesting to see if they ever transform from tax eater to tax payer. Anyway rest assured, much of the work in the forthcoming month will go into planning the launch party.
A desperate pensioner (not a client) has called to complain that Anglo’s dividend announced today is derisory. Their decision to pay just 40 US cents out of earnings of 413 US cents makes one wonder which of these numbers tells the real story. Adding further to her woes is that like all these London listed shares, payment date is way in the future on only 28th April.  Perhaps by then the rand will be a bit weaker, but still an annual dividend of about 470 SA cents on a price of 37650 cps is just 1.2%pa yield. Not generous. This may be a symptom of the often headlined “regulatory uncertainty” of mining in SA that is perhaps prompting management to keep a lot aside for a rainy day – preferably in another country and currency.
Unless the weather changes it will be brutal playing rugby at Kings Park tomorrow. February in Durban is too early for our winter sport. I have adjusted the TV so as to be able to watch from the pool. I trust the sight of Captain Smith being ferried around the Dhaka stadium is not an omen for SA once again getting carried out at the semis.
James Greener
18th Februray 2011

Friday 11 February 2011

STATING THE OBVIOUS

The All Share once again fell back after making another attempt to break the three year record high. It is silly the way we watch this number assail the peak as the weightings and constituents have changed a lot in that time. Many of the heavy-weight constituents of the index are still a long way below their record highs but a few are already probing blue sky.
Never one to miss a photo opportunity, our President was this week pictured waving off the Proteas, warming the co-pilot’s seat in a new SAA aircraft and allegedly working on his State of the Nation speech in his office. The bookshelf in the background of that picture appeared to have been recently looted. The speech as usual comprised mostly of promises and assurances that things that will soon be done. Very little was said about the actual state that the nation was in – mainly I suppose because even the politicians know that that state of the state is not that good and is not that much better than it was a year ago when previous promises were aired. In fact leaders all over the world ought to be banned from making speeches on this topic and instead be obliged to tour their nation regularly. Citizens could then be given the opportunity to point to the state of the things the government is responsible for. No speeches would be permitted except for summary dismissal of at least three layers of appropriate local officials.
Too often I forget my own advice and try to make sense of the avalanche of numbers that crash down on us. Company reporting season is underway and the accounting wizards are hard at work making the books tell whatever story the directors think will confuse the most and reveal the least. About the only entries I look for are in the Cash Flow statement where I am concerned if the company reports that it paid more money to the taxman than to the shareholders. Stats SA issued unexpectedly disappointing news about manufacturing data in December – which turned out to be data about manufacturing - and the civil servant in charge of this outfit exploded in a very uncivil and rude way about a private data collector daring to suggest that the informal sector was a lot larger than his official view on the matter. His next offence was to appear in a yellow suit at the opening of parliament.
Although the daily cost to feed each delegate at last year’s World Youth Festival was a mere R142.38 it has yet to be explained why taxpayers had to foot the bill for the 15 000 youth who allegedly participated in the 14 day jolly. In the days when I still thought it was fun and useful to attend a conference I don’t recall the hosts picking up the tab. Mind you, we South Africans are a hospitable lot. We have been caring for ex-dictator Aristide of Haiti ever since his country tossed him out several years ago. The good news for us now is that he has decided to slip off back home, presumably in the belief that life there is now so miserable that the folk will have forgotten all about him. I wonder what he left behind.
The proposal that the state will operate a data base to match job seekers with job vacancies is an especially stupid idea. This news appeared alongside the stories that the same government is failing to deal timeously with work permits for a relative handful of applicants and also the project to combine various ratepayer databases in Joburg is not going well. Not only is there ample evidence that government is generally unable to manage this kind of project, the real foolishness lies in the believing that there are jobs to be matched with applicants. Any prospective or potential employer will tell you of the queues outside the gate and the reams of CVs in the in mail. The unemployed know far better than any bureaucrat where there might be a glimmer of hope.
Next week's Duzi canoe race is still dealing with the idea of having crocodiles in the river. I wonder if anyone has checked the Midmar dam. It would be embarrassing if we had to send the future Princess of Monaco home with teeth marks in her leg after the one mile swim.
James Greener
11th February 2011

Friday 4 February 2011

“WELCOME TO SOUTH AFRICA. THE HOME OF DECENT CASTLE”


The rand has continued to weaken this week. Oddly enough, despite Australia’s quite dreadful weather woes which are hampering their mineral exports, the rand has suffered a particular mauling of almost 5% against that nation’s currency in the past few days. While January was characterised by share prices falling under the pressure of foreign selling, resources in particular have rebounded strongly this month. Presumably it is local interest that has pushed even some of the large cap shares up nearly 10%.
Then there was the news about how the Chinese may be interested in coming along not only to buy our minerals but also to repair and install the infrastructure that will enable them to ship the stuff out efficiently and speedily. Pretoria-watchers are wondering how this will fit in with the state’s grand, laudable but so far unimplemented local beneficiation plans. I too am puzzled what one can do with coal other than burn it.
Similarly the fine folk of the Karoo are getting very worked up about natural gas exploration companies sniffing around their koppies and sheep. I once worked for Soekor, the state owned exploration company which did a lot of geophysics and some drilling in that part of the world. They certainly established that there are some reserves of oil and gas in particular geological layers pretty deep below the surface of that lonely landscape. However the geology of the zones was such that a “gusher” was never going to happen – the stuff could just not flow into the boreholes fast enough; hence the current talk of using artificial methods to improve what is called the permeability of the rock. Unless the technology has changed radically these methods do not require huge volumes of water nor is there a significant risk of contaminating the much shallower aquifers. Since we all rather like driving and flying and using the myriad goods and benefits of the liquid fuels that are sourced from oil and gas I think we ought to let these newcomers try their hand at doing better than we did. But they need to be reminded that Africa is not for sissies.
Did you see that one of the requirements of applicants to fill the Telkom CEO vacancy is that they must have “extensive profit and loss experience …” Yup.
The suggestion that like Germany in the EU, South Africa may need to bail out ailing neighbours Lesotho and Swaziland is very alarming. The political, social and economic implications of such a development are staggering. It is definitely time for the tax man to lose my file. I also really object to any of my money being used to pay R140m to a team of creative posers for a new slogan for the country that actually turns out to be second hand. My (free) suggestion appears at the top of the page.
Meanwhile other people with time to spare have been expressing opinions on the appropriate serving dish for sushi. It seems that wealthy young men are now eating their raw fish and seaweed delicacies off underdressed young women who in turn are draped across expensive sports cars. Some have termed this practice disrespectful on a number of layers. I can’t see why myself. It certainly saves on the washing up.
A more important topic also receiving a lot of attention is the one of getting people employed. Union leaders are convinced that the state should be the employer of last resort. Comparing this view with the report that already one in eight South Africans works for the public sector and on average earn 44% more than employees in the private sector, suggests that the unionists need to do some simple arithmetic before they go much further.
I am not at all sure what the Neo Africa Tri-Series is, but if it delivers results like Lions 41, Sharks 10 it is obviously worth paying attention to.
James Greener
4th February 2011