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
