There
was scant good market-moving news this week. Just about every tale told of
falling sales, collapsing harvests and the increasing difficulty of running
profitable enterprises. Not only gold but that very mysterious cyber-currency,
Bitcoin has been getting plenty of attention from the talking heads. Anything
that governments can’t easily see and tax and importantly control is becoming
increasingly interesting as the fear of rampant inflation seeps into investor’s
minds. We do indeed live in interesting times.
Getting
fined $5.2bn is not a trivial matter. This sum is what the Nigerian government
reckons will make them feel better about some administrative function that MTN,
the South African cell phone company, failed to carry out. Indeed, the task of
keeping track of the tens of millions of customers that mobile phone operators
have is nearly impossible, and perhaps it would have been better if the two
parties had scheduled a quiet chat before salvos of this nature were fired into
the air. It spooked the shareholders badly and everyone from parliament down
had something to say. It is unkind of course to suggest that the oil price slump
is causing the Nigerian state a bit of a cash flow crisis, and prompting them
to feel down the back of every chair.
But
keeping tabs on the customers is presumably behind the new local rule that
insists that a proof of residence is produced when renewing a driver’s or a vehicle
licence. It is terrifying to think how many reams of paper, rooms of filing
cabinets and hectares of “server farms” are being used simply to record where
we live. As usual this newest piece of bureaucratic idiocy has triggered a wash
of complaints and queries about what people should do if they do not actually
have exactly the right pieces of paper. For those souls crammed into squatter
camps the problem is particularly thorny and the official reply that they need
to seek a rubber stamp from some local headman is quite pathetic. And sadly
there is no evidence that this thirst for records has yielded any improvement
in service or reduction in crime.
The
leader of the Economic Freedom Front political party, crowned with his
traditional red beret marched around Joburg a week ago handing out letters of
demand to institutions such as the JSE and the Reserve Bank. Intriguingly none
of his targets is these days headed up by a pale male – once upon a time the
baddie of choice – and so the confrontations were rather less photogenic than
he would have liked. Also interesting is the sober and reasoned reaction and analysis
that many commentators have applied to those lists of demands. It has become
good form to read them closely and treat them seriously. Like the student demands however, most of the
rhetoric betrays a woeful lack of understanding about where the government gets
it money. Inevitably the proposals for structural reform of the private sector
will reduce profitability and hence taxes, with dire consequences for the deficit.
Ironically
everyone in South Africa already enjoys near total economic freedom to fight
for a place in the sun. However, what so many people don’t have is the financial
independence to take the first steps. Hence the ubiquitous demands for money
shops (aka banks) who will fund everyone in need. The missing part of course is
that banks can’t forever lend money they don’t have and in due course need some
repayments to keep the thing afloat. Affordability receives no mention and too
little has been said about where the nation spends it resources without return.
Clearly those students reading economics are too busy protesting to attend the
lectures on that topic.
The
dreadful drought now widespread in the nation is exposing shortfalls in
planning and managing resources that are probably decades old. But doing this sort of hard and unglamorous work
is no fun especially when it also exposes that most of the current incumbents
have little knowledge of what to do beyond designing t-shirts and hard hats for
the next grand opening of a pump station or pipe line.
Presumably
the idea of QEII handing Ritchie McCaw a gong at the next medals parade will
soon be raised again. The Decorations Officer, or whoever is responsible for these
things must of course ensure that it comes with several Offside Bars. It doesn’t look as if the Proteas’s first test
against India will run the full five days. Pundits will no doubt moan about the
pitch. I think it’s more to do with going out too soon.
James Greener
Friday 6th
November 2015
