Friday, 12 May 2017


Despite the nation’s ratings downgrade, there have been few share price moves to get pulses racing in recent months. And average earnings (at least for the non-mining sectors) have also been very steady. Now over 100 of the JSE listed companies publish their half-year results in May. But any ratings impact will likely have taken place too late in the reporting period to be significant. So, there should be scant effect on earnings and dividends in the appropriate indices. However, good companies will have factored in well-signalled events like this long ago. It’s the unexpected that can do the big damage.
Only the very bright and well-connected will ever understand how government makes decisions. Brian Molefe, the fellow who left after just 18 months as CEO at Eskom, the power utility, is going back to his old corner office on Monday. The reasons for his abrupt and early departure were never made clear. Famously he was brought to tears when faced with questions about a rather odd deal that he may have structured to the very great benefit of president Zuma’s great chums, the Gupta family. His alleged success at Eskom of eliminating the necessity for load-shedding had far more to do with the alarming decline in electricity demand as the economy slowed, than astute supply management. Even a cabinet minister, however, was shocked by the R30m pension pay-off that Mr Molefe claimed would make him feel much better. The minister insisted that this amount must be reviewed. However, negotiations about the amount have collapsed and until resolved, the sole solution seems to be to send Brian back to his old job. But what about his new job as an MP? Not only was some back-bencher booted out of the House to make way for this luminary who, it was whispered, was in line to be fast-tracked into the finance ministry.  Will there be an equally hasty swearing-out ceremony? And it’s not as if Eskom doesn’t already have a boss man (well, acting of course) who has demonstrated his credentials for the post by denying that he knows anything about a lucrative tender awarded to a family member.
All of which makes it even harder to concur with the government’s tougher stance about private sector companies appointing patently unsuitable individuals. The appalling performance and effectiveness of state owned and run enterprises tells the whole story. Organisations which have followed this “transformation” policy have seen benefits accrue only to the unsuitably promoted individual. Customers, clients and citizens in need of their services are unsatisfied and frustrated to the point of violent and terrifying protests. The wilful and unjust refusal by the “leaders” to acknowledge it is they and their racist precepts and policies that are the problem is so very depressing. What skill these deplorable schemers do have is to mislead people and redirect anger by ascribing their leadership failures to other races and groups who these days are all but insignificant in the decision-making process. Undeniably of course these allegedly evil groups are the source of most the funds. They provide employment, pay tax and indulge in charity and altruism. They don’t deserve to be targeted and harmed and their numbers are shrinking. Sadly, of course Africa has demonstrated that provided the elite are OK, the welfare of everyone else is unimportant Even if they are reduced to using livestock as currency it’s not a problem for the Big Man and his cronies.
The speed and manner in which South Africa is plunging into a financial black-hole is going to provide material for shelves-full of academic research in the years to come. Chief culprit is going to be the Social Grant system that in the absence of economic growth and employment has been created to prevent almost half the nation from starving to death. Grant distribution cannot be allowed to falter for even one month and is now an unstoppable monster. The intransigent and probably corrupt minister in charge, Bathabile Dlamini has now reported that the cost of moving the payment system in-house to her ministry will be R6 billion. This is ludicrous. She could buy a controlling interest in the private company that currently does the job for far less than that. But watch this space. She is, reportedly related to Number 1 by marriage.
I am told that being drawn in Pool C alongside New Zealand for the 2019 Rugby World Cup is good news. As long as we manage to beat the other teams in the Pool it means that we would not meet the All Blacks again until we reach the Finals. That sentence contains so many conditionals I think I’ll now go away and read up where or what Repechage is since they are the fifth team in our Pool. GP back in Europe Yea!
James Greener
Friday 12th May 2015