Friday, 29 September 2017


Thinking of the currency exchange rate as a sort of share price of the country is quite handy. And it shows that sellers of South Africa outnumber buyers at the present. Rands are on offer and it takes more of them than it did ten days ago to buy a dollar or a pound or a euro. Nearly 5% more! Which of the many dreadful tales doing the rounds has tipped the balance against our currency and was it one big seller that started the run or a host of small trades that appeared unfortunately simultaneously?  Certainly, the story that follows is worrying. But it’s not new.
This weekend the hapless contributors to and beneficiaries of those funds managed by the Public Investment Commissioner (PIC to their mates) may learn that the hopelessly bankrupt and very badly run national airline (SAA) has been identified as just the right sort of investment for their money.  Another once reasonable company also seeking bail-out money is the national broadcaster (SABC) which is so bust that it’s even considering no longer spending money to televise the funerals of prominent people. Now there’s a splendid idea anyway! In fact the total sum of money desperately needed by a long list of state-owned deadbeats is probably close to R100bn and the PIC-managed funds are one of very few place where that kind of dough is laying. And while the gate keeper to this cash is bleating his refusal to hand over the keys, the wolves are well connected and very large.
Stats SA published their quarterly Labour Force survey recently. Just over 16 m people are in employment but this dire and bleak statistic is sliced and diced by gender, province, age, occupation and even by race to fill 133 pages. Alarmingly 3.6m -- almost a quarter -- work in the community and social services sector while 2.4m shuffle paper and peck at keyboards in finance and business. Just 1.8m work in manufacturing. There’s a problem right there. While the survey is mute on earnings, the press helpfully told us that the Principal Officers of two state employee medical aids each pocket a salary of almost R10m a year. This sounds like far too much. As does the half a million present given to Collen Maine the youth leader who facilitated a coal deal for a grateful sponsor. Did he report this short spell of employment to Stats SA under the correct category?
Another new exchange for dealing shares and similar securities opened this week. These developments are similar to the Uber, Airbnb and Bitcoin phenomena. They are understood and used by those who are interested in the outcome and have little interest in the process. Over the years the established bourses have wrestled with the problem of ensuring that trades done are settled to the satisfaction of all parties as to cost and delivery. It took hundreds of years to create and refine paper based transaction registers, certificates and cheques. But now in just a few years their electronic replacements have gained the trust of nearly everyone. It is only regulation which requires intermediaries and their commission charges to be part of every deal. Drop these and also the taxes and investing will simply become an information business deciding what to buy or sell at what price. All the rest will be done by the machines and no one cares whose computer the trade went through. Some careful thought shows that the notoriously fee-intensive capital raising efforts will soon go the same way.
Many readers and the author of this letter have felt for many years that there is not much chance of finding economic quantities of gas onshore in SA. This is because we worked at Soekor in the old days at the time when it moved its exploration efforts offshore after pretty much declaring the mainland worthless. While the fracking process does usually help to extract more reserves from a single well, the likelihood is that there very little to recover and so the Karroo and other equally picturesque landscapes are unlikely to be ruined by a natural gas industry.
There’s a tone of frantic desperation in the press forecasts about the ‘bok test against the Wallabies tomorrow. No one dares mention the zero in their last outing against antipodeans. Who knew they played test cricket in Potch? The ground is a good looking oasis in the drone picture. With about as many people visible as you’d find in any desert.
James Greener
Friday 29th September 2017