Remember your sunscreen. And your sheep.


Baaaad for tourism

By John Fraser

Wow!  Who would have thought just a few weeks ago that the country would be in a tizzy over:

a) first the presence on a beach of a band of security guards, and then

b) a sheep having its throat cut on one of CT’s poshest beaches?

The racial polarisation over this issue would be hilarious, were it not so worrying.

Before my own questions on all this, here is a fairly measured statement by the CT Mayor:


31 DECEMBER 2018


City outlines actions around events at Clifton 4th Beach

The City of Cape Town will be taking a series of actions in response to the events which unfolded at Clifton 4th Beach in the last week.

In respect of events on Sunday 23 December 2018, where a private security company, Professional Protection Alternatives (PPA), were accused of requesting beachgoers to leave the beach following several alleged safety concerns, the City will be laying a complaint with the Private Security Industry Regulatory Authority (PSIRA) once its offices reopen after the festive season.

The organisation is a nationally constituted body that governs the private security industry. We are laying the complaint so that the matter can be fully investigated by the appropriate structure so that any wrongdoing can be identified and addressed accordingly by PSIRA.

In respect of events on Friday 28 December 2018, where a sheep was slaughtered during a protest on the beach, the City will serve a notice on the protest organiser as the act was performed in contravention of the City’s By-laws. It is our understanding that the Cape of Good Hope SPCA will also open a case of animal cruelty.

Many persons have asked why the City did not act. It should be noted that during public order policing situations, the South African Police Service assumes command over all policing staff on the scene. Senior SAPS officials in charge of the situation at Clifton on the day would not allow City and SPCA staff to act to prevent the slaughter.

We will be engaging with the SAPS on this matter, as well as with the Western Cape Police Ombudsman, as we cannot allow anyone to undermine City By-laws and prevent them from being implemented.

At issue was an allegation by the African National Congress (ANC) that a private security company acted inappropriately and this claim subsequently went viral on social media – at no point was an actual complaint directed via the correct channels for investigation.

The feedback I have received is that, despite the insinuation that particular races groups were targeted, all race groups were in fact asked to leave the beach; and they were asked in a peaceful, non-aggressive manner. PSIRA will have to get to the bottom of this, but to manipulate this information as has been done over the past week is disgusting and plays on the emotions of many.

Going forward, we remind the public that our facilities are open to all and that only uniformed City staff have the power to enforce by-laws.

Anyone else who claims to have such powers is likely impersonating a peace officer, which is an offence.

Furthermore, we encourage visitors to City-owned public facilities to report any problems or concerns about the conduct of staff or any person claiming to have peace officer status to our 24-hour hotline on 0800 32 31 30, which is monitored by an independent service provider.

Any safety concerns or requests for emergency assistance can be directed to the City’s Public Emergency Communication Centre by dialling 021 480 7700 from a cellphone or 107 from a landline.


Issued by: Media Office, City of Cape Town

OK?   Well, I have a few questions:

Given the sensitivity of the issue, why did we not immediately know exactly what happened when people were asked to leave the beach?   Why were they asked to do so?   If there was no racial discrimination, why was the situation not immediately diffused by a statement to that effect?  Sorry, Mr Mayor.  This was a fuck-up of note.

Why was there no clear plan to prevent the sheep slaughter on the beach?  Why were the correct authorities not deployed – early and in force?  If the SAPS had the authority, why no proper liaison with the City?  Which political and police authorities were incompetent?  Or has some other agenda?  They must be identified and sacked.

There is, as yet, no law preventing people who do well from purchasing expensive properties in Clifton, and other seaside spots, and enjoying the lifestyle.

Equally, there is no reason why people who follow the law and behave responsibly should be stopped from enjoying each and every one of our public beaches.

All of this is a very dangerous storm in a turbulent teacup.

Instead of making it all go away, the bungling authorities have taken a tense situation and made it far, far worse.

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Podcast: Marketing SA wines. And tasting a couple from Lanzerac.

John Fraser hosts another podcast, which explores the opportunities and challenges of marketing SA wines around the world.  He is joined by Malcolm MacDonald from Clientele, Gumtree’s Jeff Osborne, and top economist Mike Schussler.

They also sniff and slurp two red wines from the Lanzerac Estate in Stellenbosch – the Merlot and the Pinotage.

Click here to give it a listen:

Jeeves and the artisanal gin fad (with apologies to PG Wodehouse)


 By David Bullard

I’d just popped into the old flat after lunch at the Drones in time to catch the news on the wireless that some political Johnny had threatened to kill five white people for every black person killed.

Now killing a couple of surplus-to-requirement aunts or even Sir Roderick Spode would have been fine in my book, and I may well have mailed the killer a fiver or two as a sort of inducement. But killing perfectly decent, law-abiding chaps whose only vice in life is to overstay their welcome at lunch, or put some money on the gee-gees, is a bit rich. I don’t mind saying I was a somewhat unsettled and in need of some refreshment.

As if by some sort of telepathic miracle, in shimmered Jeeves. Now, for those of you who haven’t kept up with my past adventures (shame on you) Jeeves is my valet. He prefers to call himself my gentleman’s personal gentleman, but valeting is what I call it. And he’s very good at it, particularly as he has the uncanny ability to anticipate the young master’s needs.

For example, I was late dressing for dinner at the Kelvin Grove one evening and had misplaced a cuff-link. Couldn’t find the bally thing anywhere when in floated Jeeves (he does sort of float rather than walk) with a perfectly serviceable pair of spares. I hadn’t even let out a wail of distress, and yet somehow he knew I was experiencing grief in the lost cufflink department.

Anyway, back to the story and the need for some refreshment to soothe the troubled brow, with the threat of genocide looming.

“Jeeves,” I said. “I think I’d like one of those local artisanal gins I’ve been reading so much about lately. You know the ones: they lob in some fynbos or black pepper and strawberries and charge double the price of normal gin for the bottle”.

Jeeves coughed discreetly.

“I shouldn’t advise it, sir.”

“And why jolly well not?” I demanded of him.

“Well sir, if you permit me saying so, they are what I believe is known as a ‘rip off’ among the gin cognoscenti. Gin is traditionally made with juniper berries and that formula seems to have worked well thus far.

“To add garden cuttings and bits of left-over vegetable matter to the solution adds, in my opinion, no great value. Particularly as gin is usually drunk with something sweet and sickly like tonic water”.

I felt I had to remonstrate with the man: “But Jeeves, my dear, deluded valet, they come in very fancy bottles, they’re locally-produced, and they cost twice as much as imported gin. They must be better”.

He hit back: “It’s a common misconception I fear, sir, that if something costs a lot of money it must be more valuable than something that doesn’t. Many owners of Breitling watches would no doubt agree with me. However, a closer examination of the labeling on a gin bottle reveals a uniform alcohol content of 43% by volume. Without wishing to labour the point, sir, five doubles of any of the artisanal gins in question will have much the same effect on your driving skills as five doubles of the cheaper variety. And with your morning-after headache, you’ll have the residual taste of whatever was added to the mixture to add to your misery.

“Now, if you’ll excuse me, I will mix your usual London gin and tonic with a dash of Angostura bitters and a twist of lemon”.

“But Jeeves” I pleaded, “I’ve been collecting all sorts of fancy gins these past few weeks. Even one from my old chum David Bullard, the disgraced ex-scribbler. What am I to do with them?”

Jeeves sniffed in that sniffy sort of way he has.

“I have taken the liberty of donating them to a local organization where I am sure neither price or quality will be of any consequence. The ANC Women’s League are having their Christmas party next week and Mrs. Dlamini was a most grateful recipient. She asked me to wish you Joyeux Noel”.

David Bullard is an accomplished luncher, wit, and writer

SA may need crisis plan if there is a hard Brexit


Embattled Theresa May

By Raymond Parsons

The latest U.K. political developments regarding Brexit now need to be closely monitored by SA to protect its economic interests in the event of a hard Brexit on 29 March 2019.

There remains a great deal at stake for SA in the eventual outcome of Brexit, as the EU and the U.K. are SA’s largest trading partners. The decision by the U.K. Government to delay the Parliamentary vote on the Brexit deal has now pushed the process back into uncharted waters.

The real danger now exists that the U.K. may well crash out of the EU without a withdrawal agreement and, if that occurs, it would have serious ripple effects through key parts of the international trading system and supply chains, including SA.

If a worse-case no deal scenario happens, Britain would immediately change from the trade rules of the EU to those of the World Trade Organisation (WTO). Its economy would then also become subject to the EU’s common external tariff and customs requirements.

Changing to WTO rules is however more than about tariffs, and involves other legal and economic changes which would seriously affect many sectors of the U.K. economy with whom other countries do business.

Trade beyond the EU, such as with SA, might also be involved, as many trade deals Britain benefits from were negotiated through the EU, and would lapse with a no-deal Brexit. It would also require the imposition of a hard border between the Republic of Ireland and the six U.K. counties of Northern Ireland.

Various institutions, including the UK Treasury and the Bank of England, have emphasised the heavy economic cost of a potential Brexit no-deal for the U.K.

The International Monetary Fund estimates that, in the event of a no-deal, the U.K. would lose about 5% of its GDP within a few years – the Dutch, Danes and Belgians would lose 1% or more as well.

The Irish would probably lose about 5% of their GDP. And although the expected fall in the pound would be helpful to exporters, the resultant inflation and potentially higher interest rates are seen by some analysts as presaging a shrinking U.K. economy with much less market potential in future.

For SA, there will eventually be both risks and opportunities in the event of a hard Brexit in March 2019. A fresh audit of the latest EU-U.K. economic developments therefore needs to be made.

It is important now that both government and the business sectors in SA most affected by Brexit remain alert to the possibility of a no-deal Brexit as one possible outcome and how it might affect key EU-UK-SA economic relations.

It may be necessary to evolve contingency plans to ensure that SA’s economic interests in the U.K. and the EU are adequately protected and any likely disruption to trade be kept to the minimum.’.

Professor Raymond Parsons is at NWU

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Ramaphosa is missing an economic policy. What needs to be in it.

File 20181207 128220 104revm.jpg?ixlib=rb 1.1
South Africa needs a new economic policy that envisages an overhaul of the power utility Eskom, which can’t keep the lights on.
EPA/Nic Bothma

Mark Swilling, Stellenbosch University

As the entrails of the era under South Africa’s former president Jacob Zuma continue to be exposed each day before a commission set up to investigate corruption, so the country witnesses the consolidation of the political project spearheaded by the new head of state Cyril Ramaphosa.

But a key piece of the puzzle is missing: Ramaphosa’s government doesn’t have an economic policy. All that’s been forthcoming is a stimulus package, plus two summits – one on jobs, the other on investment. Do these add up to an economic policy?

The answer is no. Here’s why.

I agree with South African economist Duma Gqubule that the stimulus package is a mix of short-term stimulus measures and longer-term structural transformation measures, without doing justice to either. The short-term measures don’t include the usual elements of a stimulus package such as lower interest rates and increased spending. And the longer-term structural transformation measures, such as the infrastructure investment programme, is nothing new.

More importantly, the longer-term vision ignores the changing nature of the global economy. This is being transformed by three factors: new information and communication technologies, the renewable energy revolution and the recomposition of work, as old jobs fall away and new ones created.

South Africa urgently needs a coherent economic policy that takes account of these realities. This can’t be driven by an industrialisation strategy that relies on 20th Century capital intensive sectors like mining, chemicals, pharmaceuticals and the military. Many are in decline. Take coal mining: mines are being closed as countries switch to renewable energy, which is now cheaper than fossil fuels in nearly 100 countries, including in South Africa. Investment in renewables in 2017 was R280 billion, twice what was invested in fossil fuels and nuclear combined in that year.

And the new policy mustn’t be written only by economists, as in the past. Economists need to work with South Africa’s scientists.

South Africa has dug itself into a deep hole. Ramaphosa’s efforts to root out corruption are a good – but not sufficient – first step to getting the economy onto a sound footing.

The history

The recent resignation of Home Affairs Minister Malusi Gigaba from government should not be underestimated. It was on his watch, as head of several ministries, that the influential Gupta family, which sits at the centre of the country’s web of corruption, secured a free hand to “capture” key state owned enterprises. He, together with other ministers, agreed to participate in a political project that resulted in a silent coup that effectively marginalised and hollowed out the African National Congress (ANC). The goal was to capture and repurpose state institutions.

Gigaba represents a generation that has done okay under the ANC since 1994, but want to do a whole lot better by grabbing their share of key sectors. They gambled on the alliance with the Zuma-Gupta network. And burnt their fingers.

Zuma was elected president of the ANC at its Polokwane conference in 2007 on the back of a wave of discontent. Black business was no longer willing to hang onto the coattails of white business; trade unions were fed up with limited state intervention; the ANC was unhappy with the centralisation of power in the presidency; and provincial leaders felt snubbed.

After some years of dithering, what became known from 2014 onwards as “radical economic transformation” was in fact a strategy to build a black industrial class by using the procurement spend of around R200 billion by the country’s state owned enterprises.

In theory, not a bad strategy. After all, this is a way of using state resources to build real assets owned by black people. As recent research showed, 90% of all assets are owned by 10% of the population, most of whom are white.

To operationalise the strategy speedily it was necessary to circumvent the legal framework. For that, brokers who were prepared to take the risks were needed. And so, enter the Guptas. A host of politicians were drawn into the web as well as South African and global businesses, including KPMG, McKinsey, SAP, T-Systems and Bain.

Chicken and egg: investment and growth

During the recent investment summit Ramaphosa grandly announced that the “investment strike” was over.

But many economists, such as Professor Adrian Saville, argue that investment never drives growth. Instead, investment follows growth.

In theory, heavy state investment in infrastructure (as promised in the stimulus package) is a good thing. But what matters is the type of infrastructure and how private investment is crowded in, without flipping into privatisation (which has its own set of challenges). For example, the massive investment in renewable energy (over R200 billion) since 2011 would not have happened if the state did not reduce risk by providing guarantees for the loans.

Given South Africa’s vast array of state owned enterprises, which includes the power utility Eskom as well as the national airline SAA, it’s obvious the country needs an economic policy that prioritises their investments. Yes, most need to be cleaned up and refinanced. But that is not enough. Radical thinking needs to be applied to entities such as Eskom, which has requested a R100 billion bailout.

Its role could be redesigned entirely. But a plan for a complete overhaul would be best served by merging the country’s best economic and scientific thinking. Together, they could generate an economic policy that puts energy at the centre. In line with global trends, this would need to be renewable energy, because it creates more jobs, is distributed across small towns rather than concentrated in a few industrial nodes, and can drive a new job-creating industrialisation strategy.

In short, South Africa needs a policy that drives growth and positions South Africa for the 21st Century. For such a policy to work, the country will need an effective and capable state. And the great divide between science and economics must be bridged.The Conversation

Mark Swilling, Distinguished Professor of Sustainable Development, Stellenbosch University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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What is Eskom trying to hide?


By Chris Gilmour

Once again, power utility Eskom has come to spoil the festive spirit for everyone with its rotational power cuts (referred to in Eskom-speak as load-shedding). This hasn’t been a feature, thankfully, for quite some time now and most of us would be forgiven for thinking that the appointment of a new board at the beginning of this year should have put an end to power cuts.

But no – as we are in the dark literally regarding the physical lack of power, we are also in the dark figuratively about what has caused this dire situation. If this carries on much longer, not only will many peoples’ festive seasons be ruined, but economic growth will undoubtedly begin to suffer as well.

But this time around there is a different feel to that during previous rotational power cuts. It’s as if this shouldn’t really be happening – and yet a cadre of individuals at the top of Eskom and within the ANC government appear to know precisely what is going on, but are not giving us the full story.

Eskom is in deep trouble, not just at an operational level but also regarding its financials. Not only can it no longer provide a reliable source of energy; it is extremely doubtful whether it remains a going concern. With R419 billion of debt, there is no way that it can trade its way out of the mess in which it finds itself, an observation endorsed by chairman Jabu Mabuza’s remarks at the recent results presentation in which he said the current situation was “not sustainable”.

Adding spice to the story is a report from the Mpumalanga Chamber of Commerce that states unequivocally that substantial coal stocks are piling up in that province, with Eskom showing no evidence of urgency in procuring this coal.

According to Eskom, the current situation is as a direct result of a lack of maintenance of its power plants, especially in the past couple of years, with ancillary factors being a loss of power from Cahora Bassa in Mozambique due to power lines being down, a shortage of diesel to operate the two open-cycle gas turbine (OCGT) plants in the western Cape and a lack of head of water to properly operate pumped storage systems properly.

The poor maintenance has resulted in a number of plant breakdowns (unplanned maintenance in Eskom-speak). To try to get a handle on just how bad this situation is, it is necessary to take a long, hard, look at Eskom’s total electrical generating capacity.

Currently the utility operates a fleet of 13 coal powered stations whose commissioning dates range from 1966 (Komati power station) to 1996 (Majuba power station). There are two other coal-fired stations being built, Medupi and Kusile, but both are years behind schedule and only a few units from each are currently supplying power to the national grid. Once Medupi and Kusile are both fully commissioned around 2022, the gap between new builds will have been 22 years.

There is a solitary nuclear plant at Koeberg in the western Cape, which produces approximately 1 800 Megawatts (Mw) of power. The thirteen coal-fired plants have a combined nameplate output of 37 530Mw. Thus, coal and nuclear combined can produce 39 330Mw of power. These stations produce what is referred to in the industry as “base-load” power. In other words, this is the basic power that is produced on a continuous basis, day and night, except when stations are switched off for essential maintenance.

In addition to these base-load stations, Eskom also derives power from a variety of other sources, including Open-Cycle Gas Turbines (OCGTs), hydro power, a variant of hydro power called pumped storage power, as well as buying power from the Cahora Bassa hydroelectric scheme in Mozambique. OCGTs, as the name suggests, were originally intended to run on natural gas, but have been modified to run on significantly more expensive diesel.

Eskom’s two OCGTs produce approximately 2 000Mw combined, while its four small hydroelectric plants – Palmiet, Gariep, Vanderkloof and Port Rex – have a combined capacity of approximately 1 000Mw. The two large pumped storage systems – Drakensberg and Ingula – do not produce additional electricity in their own right but are able to produce power at peak times

Eskom also has a power purchase agreement with an independent OCGT operator called Avon, which operates two diesel-powered plants called Avon and Dedisa – that collectively produce 1 000Mw of power when required.

And then there is renewable energy, comprising a number of solar and wind farms dotted around the country. These are mainly owned by the private sector and have been steadily producing power, in terms of the Renewable Energy Independent Power Procurement Programme (REIPP), for a number of years.

Opinions vary as to how much capacity is available from this source, but a figure of around 6 000Mw seems to be the consensus view. However, due to the intermittent nature of wind and solar power, only a percentage of this capacity can be relied upon at any given time. Industry experts usually agree on 25%, and thus the total available from renewables is probably no more than 1 500Mw.

To dimension just how bad the situation is, consider this: Eskom is able to produce around 45 000MW of electricity, if all plants are working at nameplate capacity and there are no breakdowns, planned or otherwise. It also has access to at least another 4 000MW in the form of electricity from Cahora Bassa and the combined output from independent suppliers, either in the form of renewable or non-renewable energy.

That is a total of around 49 000MW. In the first week of December, demand was running at around 29 000MW and from the 10th of December to the end of December, it is unlikely to exceed 25 000MW. Is it conceivable, therefore, that Eskom has outages totalling 24 000MW on any given day?

If so, the utility is plumbing new and uncharted depths in its breakdown patterns. And if that is indeed correct, it is exceptionally worrying and highlights the extent of Eskom’s operational problems.

Eskom hosted a media conference at its Megawatt Park HQ last week and Minster of State-Owned Enterprises Pravin Gordhan was in attendance. It appeared to be a full and frank discussion, and questions appeared not to be deflected to any great extent. Gordhan pointed out that the new build programme was disappointing – not only in terms of the time and cost over-runs, but also in terms of the generators at Medupi not meeting nameplate output.

We can draw some solace from the weekly status reports that Eskom supplies on its website. This shows that demand is forecast to plummet from the week beginning Monday 10 December, as industries wind down for the holiday period and families go on vacation. And yet, as this column is being written (Sunday 9 December) we have been subject to another Saturday of rotational power cuts. Something is seriously amiss.

There are those of a conspiratorial turn of mind who have suggested that Eskom is engineering this crisis with a view to turning public and government opinion in the direction of looking seriously at some type of privatisation.

It is rumoured that Eskom has already presented a turnaround plan to government that envisaged some sort of private sector involvement, splitting the utility up into its component parts of generation, transmission and distribution and widespread retrenchments. Understandably, government is believed to have been spooked by such a suggestion, just months away from a general election in May 2019.

It is not clear how Eskom can extricate itself from the mess in which it finds itself. The utility was hollowed out during the Zuma years, undoubtedly, but had been limping along long before that. When the utility was established in the early 1920s, its main aim was to provide cheap, reliable energy to the mines and industry.

Residential supply came much later and gradually replaced the host of municipal power stations that had been built up until the 1950s. To be sure, Eskom only catered for the white population from inception until the late 1980s/early 1990s. But with the dawn of democracy, it really came to the party in terms of electrifying the townships. Properly managed, Eskom could have been a genuine force for good in South Africa – but instead, it was hijacked for political purposes and has been badly mismanaged for over 20 years. There is now more than a 20-year gap in supply, due to Eskom prevaricating over its new build programme. The utility went from a huge over-supply situation to being in deficit in a remarkably short space of time and it has never really managed to catch up.

Thanks to successive substantial price increases over many years, Eskom’s global price-competitiveness has now totally evaporated. It has gone from being one of the cheapest global suppliers of electricity to being in the mid to upper band. And that situation will only get worse if the electricity regulator, NERSA, grants Eskom it 15% increases over the next three years.

Electricity demand has been falling in South Africa for a number of years now, due to a variety of reasons but predominantly because consumers are unable or unwilling to pay the expensive tariffs now demanded by Eskom.

There is a solution to Eskom’s situation, but it is one that is politically unpalatable. It is not too far removed form the plan that is rumoured to have been presented to government recently. First, Eskom must be split into its three component parts of generation, transmission and distribution.

Then the private sector must be invited to participate either in part or in whole. The private sector would leap at the chance of participating in distribution and transmission but there is unlikely to be an appetite for Eskom’s old and broken power plants. The various businesses will require to be streamlined with the attendant job cuts.

The consequences of maintaining the status quo are horrific. Eskom needs large chunks of institutional money, and fast. But with a rating deep in junk territory, it cannot in all conscience even consider taking on more debt. It has asked government for a R100m bailout, but unless extremely tight conditions are imposed, it will be yet another example of throwing good money after bad in another failed state-owned enterprise.

If it doesn’t get a bailout, it will limp along, attempting to patch up its creaking infrastructure and hoping that the highly-trained individuals at its operations nerve-centre at Simmerpan in Ekurhuleni continue to manage supply and demand.

If they don’t manage this delicate demand and supply balance, Eskom’s worst nightmare could result-a total breakdown of the entire system.

That would plunge the country into a situation from which it would be difficult and time-consuming to recover. Provided there is water in the two reservoirs at the Drakensberg and Ingula pumped storage systems, Eskom could use these two stations to attempt what is known in the industry as a “black start”. A black start is the equivalent of applying a defibrillator to the system, hoping that the grid can be gradually brought back up into service. Opinions vary as to how long the situation would persist, but most experts agree that it would take at least two weeks to get the power stations up and running again and synchronised to the grid.

This is a worst-case scenario and the odds of it occurring are extremely low. But in a dysfunctional utility like Eskom, with a continuing loss of institutional memory and operational ability, it remains a possibility.

Let’s just cross our fingers (or in South African parlance hold thumbs) that this cataclysmic situation never materialises.

Chris Gilmour is an Investment Analyst|Commentator|Writer

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