Friday, 10 June 2016


Ever since economists devised a method for measuring the pulse and temperature of a country the fellows in charge have promised that they know how to make it even healthier. The mere fact that every nation experiences ups and downs in this parameter (usually termed the GDP) glaringly demonstrates that this promise is impossible to fulfill and must be ignored for the bluster it really is. Largely oblivious and indifferent to the government’s hand waving and finger pointing, economies lumber on as the gross effect of every citizen’s private effort to improve their own circumstances. There are many shocking results in the detailed report of how our nation’s GDP declined by 1.2% in the first three months of the year but perhaps the most frightening is the admission that “General government services grew by 1.1% due to an increase in employment reported for central government.” Unsurprisingly all these extra tax eaters utterly failed to impress the wealth creators and so the second alarming figure in the report is that the country is using less power and water than before. The picture of our minister for public enterprises releasing a flock of white doves to mark the launch of an Eskom project shows just how clueless politicians are about what really has to be done.

Mind you, confusion is not restricted to the public services. The Lesotho Institute of Accountants has bought a pricy advertisement in the SA papers calling for expressions of interest in their programme for the “Operationalisation of Lesotho(‘s) Professional Accountancy”. Just what this might mean is unknown but there are warning signs that bureaucrats night be at work when it is revealed that this “programme” forms part of Phase II of the European Development Fund Poverty Reduction Budget Support (sic). Businesses interested in this task must submit a fewer than 15-page document electronically as well as six hard-copies, with both submissions to arrive on the same day in Maseru. Undoubtedly this will reduce the Institute’s paper and printer ink bill but it does raise questions about the understanding the accountants have about this modern interwebs thingy.

After all the anxiety followed by public expressions of relief that another ratings agency has deferred their decision about downgrading South Africa, it is worth recalling what this is all about. The key point is that like most counties SA borrows money in foreign currencies – principally the US dollar. The “rating” published by these outfits is just their (frequently wrong) judgement of the borrowing country’s intention and ability to service that loan. This means it must earn enough foreign currency from its trade with other nations to cover the interest and principal payments at the appropriate times. While this is a rather obviously binary process (pay / don’t pay) the ratings agencies, to their benefit, have drawn it out into a lengthy scale from triple A down to Cs and Ds with an alphabet soup in between. At some arbitrary point on this scale a line is drawn and ratings below that line are termed “junk status”. The sole impact of any rating on a borrower is that it provides a guide to what level of interest a lender will demand. The painful irony is that high risk borrowers are asked to pay higher rates which only exacerbates their situation. But clearly if a payment is skipped, it matters not a jot what the borrower’s rating was. The lender is left whistling for his money and darting dirty looks at the ratings agency.  Those who remember our infamous “debt standstill” appreciate that South Africa has form in the “don’t pay” arena and our rehabilitation from then shows it is possible to regain the lenders’ trust.

Did AB Inbev have a chat with Walmart about their Massmart deal in South Africa before making a play for SAB? This latest mega merger is also wading into crocodile infested swamps over employees’ demands. South African labour laws and worker expectations are not for the faint hearted foreigner and undoubtedly battalions of document-toting lawyers are racking up substantial chargeable hours and air miles.

At least the Newlands test tomorrow against Ireland will not be played with a pink ball although it looks as if the Proteas might be about to meet the Aussies in Adelaide with one. It’s all so difficult for us traditionalists. Formula 1 racing under lights is also horrible.

James Greener

Friday 10th June 2016
I saw a leprechaun in Griquastad!