There were two huge bangs felt in South Africa this week. The largest one was a very unusual earthquake which happened about 10km below the surface right in the heart of the country near the Free Sate gold mining region. It is rumoured that government have set up an investigation to see whether or not the damage and fatalities (mercifully few) can be laid at the door of the previous regime. The second report was caused by the inevitable collapse of a business model founded on lending money to people who are always very close to the point of being totally unable to pay it back. This is what caused to so-called credit crunch in the USA and other places in 2008.
Disguised behind fancy names like “unsecured lending” and “micro lending” and drenched in good intentions – while charging eye-watering interest rates – far too many of African Bank’s borrowers come from communities badly impacted by the loss of wages and jobs loss through strike action. And so this week it had to disclose that there was an R8bn hole in its accounts. Now the Bank’s funding model has little direct exposure to the savings of the man in the street and so the country has been spared the sight of depositors queuing to withdraw their money. However, the big financial institutions who have been lenders to and investors in African Bank are obviously going to have a very bad weekend doing some nasty sums and working out what to tell their own clients. One of these institutions with the largest exposure is the Government Employees Pension Fund and so assuredly the aftershocks will rumble on for quite a while longer. Politicians will become involved and that’s lethal. It all happened so quickly. For detached observers it was fascinating to watch the speed and scale of the collapse of African Bank’s share price. Whether the person who bought at 689 cps on Monday was the same one who sold at 28cps yesterday we shall never know, but the spectacle has been a terrifying reminder of how savagely markets can work.
There is a really interesting story brewing over how the nation will get to watch the national soccer team on TV once the present contract between the SA Football Association and the national broadcaster expires in April 2015. Reportedly SAFA have sold the televising rights thereafter to an outfit called Siyaya TV for a billion rand. Opinions will differ about whether this is the right price for watching Bafana Bafana but it is strange that SABC failed to renew the contract. Siyaya TV was licensed just a few months ago and is a brand new entrant to the pay TV business in SA. It intends to service its subscribers using digital signals sent out from conventional land-based antenna and reportedly will be far more affordable than the well established digital satellite TV service that excludes many soccer fans because of its cost. But despite a frequent and repeated government assurance that roll-out of this technology is imminent it does not seem to catching on very fast. There is not a great deal of time left in which to get every soccer fan fitted out with the necessary decoder and contract. Once again there is a strong sound of money flowing in unusual directions.
This week a small space craft named Rosetta, which left Earth 10 years ago, reached Comet 67P/Churyumov-Gerasimenk. Now in orbit around this 4km sized lump of rock, Rosetta is taking a good look preparatory to landing on it. The pictures which are coming to us from 400m km away are of breathtaking clarity. As a planet we should all be very grateful that there is a nation which, for the time being anyway, has the resources and the skills to carry out such wonderful pure science.
Summer might be here. The first Yellow-billed kite swooped over the garden yesterday and soon it will be time to blow up the pool toys and crank up the ice making machine. The one concern of course is that the Currie Cup rugby season is only just starting and will run on all the way into October with a fiendishly complicated format that only the guru at the bowling club bar seems to understand. And then the Tests against the All Blacks and Wallabies. Perhaps it isn’t really summer after all.
8th August 2014