Is there an exodus from SA?

house sale

By Chris Gilmour

A number of factors have recently persuaded me that there is a largely-unreported migration of people out of South Africa.

Official statistics are not necessarily showing this, but StatsSA relies on people leaving the country to inform them of their permanent departure, which is something that they rarely do.

It should be stated up-front that the people who are leaving comprise a wide spectrum of demographics – unlike in the 1960s, 70s and 80s when it was almost entirely white people taking off, for fear of a race war breaking out in SA.

Today, it is often highly-skilled black professionals who are leaving – for a perceived better future for themselves and their children.

I use the word exodus advisedly, as I am convinced it is genuinely a massive outflow of people from this country.

Factors that I have discerned that point to this include the collapse in residential house prices in Johannesburg and the inability of the state vet at Onderstepoort to cope with the volume of rabies tests sought by emigrants wanting to take their animals with them overseas,.

Then there is the ease of gaining access to good private schools in SA when previously there were waiting lists, and golf and country clubs actively seeking new members when previously there were, again, long waiting lists.

Talking to estate agents in the past three years, the response has been the same.

Roughly 70% of house sellers in Jo’burg are either “semigrating” to Cape Town or are leaving the country altogether.

Thus there is little – if any – recycling of demand back into the Jo’burg residential property market, which explains much of the slump in Jo’burg house prices.

To be allowed to take one’s pets overseas to most countries, it is necessary to provide evidence that the animal is rabies-free.

To achieve this, a so-called “titre test” is performed on the animal’s blood. This is normally done at the state vet at Onderstepoort and a certificate is provided.

However, such is the demand by people leaving the country that the state vet is now overwhelmed and simply can’t cope.

Vet practices are now sending titre samples to Germany for testing –  which is much quicker than sending them to Onderstepoort.

The third factor – education – is admittedly more tenuous.

Good private schools apparently no longer have waiting lists for admission, but this could be due to the exceptionally poor state of the local economy, and perhaps not so much to emigration.

However, in company narratives, the school companies which are listed have noted emigration as a contributing factor to decreased demand.

The same goes for golf and country club membership.

One has to remember, though, that golf club memberships are declining globally, so the decline in SA memberships may not necessarily be a reliable indicator of heightened emigration.

Putting all of these factors together, one paints a pretty bleak picture of the SA economy.

South Africa can ill-afford an exodus of skills.

When the economy turns, the lack of skilled and educated people will weigh heavily on both the economy and society.

Chris Gilmour is a writer, broadcaster, and investment analyst

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Warning of ANC Pension Plunder Plan

Shussler pix
Mike Schussler: Dire Warning

By John Fraser

A rapid rise in SA government spending will trigger a chain of events, culminating in the erosion of the value of your pension, leading economist Mike Schussler has warned.

He was (Tuesday) addressing a media briefing at the SA Institute of Race Relations (SAIRR), a leading independent think-tank, on an ANC plan to force financial institutions to channel a greater share of their assets into certain government instruments.

“The problem is that the government cannot stop spending,” he argued.

“(Rating agency) Moody’s must be pretty pissed-off.  They have been lied to so many times. Moody’s will downgrade us in March or November next year. All the other rating agencies will follow (with further downgrades in their own rating profiles)”.

This was the second time the SAIRR had hosted a media briefing by Schussler on the same topic, and he fretted that within months the likelihood of pension pillage has grown.

“The expenditure rate of government has been increasing, partly due to the bail-outs of SOEs,” he noted.

“Annual government interest payments are at 4.8% of GDP, from 2.2% in 2009/10.”

He suggested that the seemingly inevitable downgrade of South Africa to junk status by Moody’s will lead to a leap in interest rates, which will, in turn, push the government into a swoop on pensions and other savings.

“I guess this will be within a year from the rating downgrade. If we get a final downgrade in March, it will take a year,” he predicted.

“They are going to be looking for funds,” he warned, noting that “SA has one of the largest pension pots in the world.

“Will we run to the IMF?  No, we will run to our pension funds.

“SA has the 10th largest pension pot in the world in dollar terms. This is huge.

“The value is around 90%-100% of GDP.  If you add insurance and medical scheme assets, you get to 160%-170% of GDP.”

Schussler, who is CEO of economists.co.za, noted that SA’s debt-to-GDP “trajectory has changed tremendously.”

This has increased the likelihood of further pension pillage, through the mechanism of prescribed assets.

“You (the State) need to get hold of assets that (will then) have to invest in government debt, to help lower interest payments,” he predicted.

“You are being screwed by highly-paid civil servants,” he noted, referring to the inflated public sector pay rates.

“This means there is less money for dams, schools. The next problem is medicine and textbooks at school.

“They are not going to do enough about the public wage bill. It is very likely that prescribed assets are the easiest way out. It is already ANC policy, and (provided for in) the law.”

He suggested that returns on pension funds and other savings will fall if a greater share of the pot is defined as prescribed assets.

This will have a downward knock-on effect on the value of pensions while also making medical aid more expensive and less affordable.

“The JSE will take a hit,” Schussler warned.  “This will destroy the big financial firms.

“Asset managers are scared. This is why they aren’t talking publicly about this.

“I want the assets in my pension fund to grow, but there will be a social problem if this doesn’t happen.

“Things will get worse if we don’t get the returns we need.

“Our danger is in not addressing the fundamental overspending and growth issues that SA faces,” he concluded.

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South Africa struggles to manage wildlife ranching: why it’s a problem

Game farms in South Africa often supply the canned hunting sector.
Shutterstock

Tariro Kamuti, University of Cape Town

Over the past few decades, South Africa has seen a dramatic conversion from livestock or crop farming to wildlife ranching – known locally as game farming. The result has been a rapid rise in areas enclosed by game fences and a high demand for wildlife. Animals are increasingly being traded privately and at wildlife auctions.

But regulation hasn’t kept up with this growth. This is despite the fact that key environmental and agricultural laws have been passed since 1994 that affect the wildlife sector in a number of ways. This includes property rights, the redistribution of land and the conservation of biodiversity. The policy changes were driven mainly by the need to integrate South Africa into the international community and to bring about economic and social transformation in a democratic state.

In the 1990s the state facilitated the early development of game farming by passing favourable legislation. The Game Theft Act of 1991 was hailed as a “game-changer” in the wildlife industry as the law gave farmers the right to own game as long as they had appropriate fencing.

Eight years later the Animal Improvement Act tightened up breeding rules in the livestock sector. But certain species of wildlife were exempted under this act. The result is that the law hasn’t kept up with developments in the private wildlife sector. These include new challenges that have emerged like breeding for colour variants, exotic species and canned hunting.

The result has been huge gaps in the way that game farms are regulated by the state at national and provincial levels. In a paper published in 2014, I looked at how the fractured state in the governance of private game farming in KwaZulu-Natal province, South Africa was affecting the sector. My findings remain relevant.

In the intervening years, the power of the private wildlife sector has been entrenched. Game farmers in KwaZulu-Natal often complain about strict local wildlife regulations. But, as my research showed, they benefit from the fact that there are holes in the law, plus the fact that there’s a strong, autonomous conservation body at the provincial level that has historically acted in their favour.

I concluded that schisms between the various government departments, locally and nationally, combined with a lack of clear direction on the private game farming sector have meant that their operations haven’t been directed towards being more socially or environmentally sustainable.

What’s wrong

Game farming connects the wildlife and agricultural sectors. Both are inherently connected to the land.

Land needs to be equitably distributed and sustainably utilised to meet the varied needs of a diverse South African population. The country has a long way to go on both scores.

Land distribution remains persistently skewed. At least 80% of the country’s land is privately owned, most of it in the hands of white farmers. On top of this, there are still mass evictions of former farmworkers, former labour tenants and even land restitution claimants. These evictions have mostly happened during the past two decades. It has also been the period during which wildlife farming has grown.

Game farming also has environmental consequences. Take the issue of game breeding. The high demand for the “new forms” of species puts pressure on game farmers to increase the introduction of exotic species. The genetic manipulation of species, for example, to create unusual colour variants, as well as intensive captive breeding methods,  are being used to produce “new” variants.

Variant species are seen as problematic because they have the potential of affecting species in the wild if they’re released to intermingle.

In addition, trophy hunting remains a controversial issue on its contribution to conservation.

What’s missing

At the national level, there is a schism between government departments.

The first area of tension is over which department should take the lead. Should it be the Department of Environment, Forestry and Fisheries or the Department of Agriculture, Land Reform and Rural Development?

The issues being played out include:

  • whether game farmers should be regulated as just another agricultural activity.
  • whether biodiversity conservation concerns should take precedence.
  • whether wildlife should be treated in the same way as livestock.

The government recently gazetted a list of 33 wildlife species that will now be treated as livestock. This opens the door to these species being treated as farming stock.

The change surprised environmentalists. It suggests that the government is gradually yielding to the demands of game farmers.

My research also found that game farmers in KwaZulu-Natal are protected by the semi-autonomous conservation authority, Ezemvelo KwaZulu Natal Wildlife, to their advantage. The organisation has a strong tradition of cooperation with private landowners in the province which has ensured that their interests are protected. However, the conservation authority still has difficulty in keeping track of what happens on game farms and enforcing legislation.

Recommendations

There is a need for a coherent policy which clarifies the position and role of game farming in South Africa. This needs to take on board the country’s political and socio-economic context, including the land question.

Government and all other institutions need to have the capacity to safeguard natural resources as well as to ensure marginalised communities are looked after. One possible route could be to delegate powers to the local level, though this would not necessarily be regarded as a positive move by game farmers.

This article is based on a longer article first published in the Journal of Contemporary African Studies. The study and the publication of the special issue were funded by the Netherlands Organisation for Scientific Research (grant number W01.65.306.00) and the South Africa Netherlands Research Programme on Alternatives in Development.The Conversation

Tariro Kamuti, Postdoctoral Research Fellow, University of Cape Town

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

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Podcast Wine tasting: Diemersfontein Prodigy Pinotage 2018

Diemersfontein
Luvverly pinotage

Food and wine superstar Michael Olivier introduces another delicious Cape Red for this wine-tasting, the Diemersfontein 2018 Prodigy Pinotage.

Guest tasters are economist Mike Schussler, analyst and writer Chris Gilmour and Gumtree Auto’s Jeff Osborne.

Michael Olivier also gives some fascinating insights into Pinotage history.

Click below for the podcast and salivate with delight….

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Remembrance Day: the enduring nature of the first two-minute silence

The 1919 Victory Parade passes down Whitehall, to mark the end of World War I. PA Archive/PA Images

Daniel McKay, University of Cambridge .

11am on November the 11th, 1919, a great silence fell over the British Empire. Everywhere people stood silently: in their workplaces, on the street, assembled in public squares, before war memorials and in churches from Sydney to Ontario and New Delhi to Edinburgh. At the Cenotaph in London, visiting Australian Methodist minister J. W. Burton recalled that the crowd was overwhelmed by an “awful silence”, which “was so intense that the flutter of the pigeons’ wings away above us in the calm sky seemed to deepen it”. For two minutes people were united by the silence.

In spite of all the divisions and pain caused by the war and regardless of political or religious differences, the simple act of pausing for quiet remembrance became the most successful monument to the dead.

Symbolically marking the first anniversary of the signing of the armistice, which concluded World War I, the first two minutes silence was intended to bring together a grieving empire. More than a million servicemen and women had been lost, many more had been injured, and families and communities were grappling with the upheaval to their lives.

The social dislocation caused by this mass sorrow was made worse for those who had lost loved ones abroad and were denied the ordinary practices of mourning, such as funerals with all their traditions and comforting rituals. Although the Imperial War Graves Commission was established in 1917, many would never be able to see the final resting places of the dead.

As the first anniversary of the end of the war approached, the Imperial government was faced with how to mark it. The proposal for holding an empire-wide silence was brought to the attention of the British Imperial cabinet by the colonial secretary, Lord Milner. Milner had been lobbied by Sir Percy Fitzpatrick – a South African politician inspired by the three-minute silence daily observed in Cape Town after the noonday gun. In a letter to Milner, Fitzpatrick emphasised the symbolic power of two minutes, where there would be “from the heart of the empire to its uttermost limits, just silence and remembrance”.

There was a reason to believe the silence would be successful. Similar silences had been held throughout the war, in England, South Africa and Australia. In 1916, an Anglican clergyman in Australia, Canon David Garland organised two-minute silences as part of an ANZAC Day commemoration. His innovation had been to treat it as an ecumenical moment – a bringing together of people from different religious traditions. Silence bridged sectarian differences as Protestants disavowed prayers for the dead, and Catholics could not be led in prayer by non-Catholic clergy. For the same reason, the silence was also inclusive of the many Muslims, Hindus, Sikhs and others in India and the rest of the colonial empire that had contributed to the war effort and suffered great losses.

On the day, things proceeded smoothly, with bells and factory whistles and other arrangements working to synchronise the silence. The effect, a writer for the Brisbane Courier, now The Courier-Mail, noted was a remarkable sight as: “Commerce was suspended, traffic came to a standstill, trains and trams ceased running, and the community observed a solemn prayerful silence, calling to mind the mercy of God and the heroism of her sailors and soldiers.”

A Times correspondent riding a London bus that had stopped spoke of how the sheer force of the collective emotion of the moment confounded cynics. Others reflected that it offered “a glimpse into the Nation’s soul” and that as life slowly resumed, things had been permanently changed by the silence as the private loss of the “humble widow” became public, shared now by everybody.

The two-minute silence continues to be successful because it is a simple collective act. For the first silence, all it took was a command from the king for everything to cease. So that: “In perfect stillness, the thoughts of everyone may be concentrated on reverent remembrance of the Glorious Dead.” It was short enough to focus the mind but long enough to mean something. It was later rumoured that the Grenadier Guards were enlisted for an informal rehearsal of silences of varying length, where it was decided that two minutes was ideal.

A century on, people still gather and observe two minutes of silence. The dead of subsequent conflicts joins the legions of the lost remembered in that hallowed quiet. Its universality has led it to become a powerful response to many human tragedies, like after the July the 7th, 2005, London bombings, or on the anniversary of the 1989 Hillsborough disaster. The enduring success of the two-minute silence is for the simple reason that, as for the millions across the British Empire who fell silent in 1919, there are some moments when there are no suitable words to collectively express the emotions we might feel. There is poetic solidarity in silence.The Conversation

Daniel McKay, PhD Candidate in History, University of Cambridge

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

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Hartenberg Riesling 2017

Hartenberg Riesling NV
A noble white

Join our intrepid tasters are we whoosh back to Cape Winelands for a wondrous white – the 2017 Hartenberg Riesling.

Corkscrew man Michael Olivier introduces the wine to our panel of Jeff Osborne from Gumtree Auto, economist superstar Mike Schussler and Scotsman Chris Gilmour.

Click below to join in the fun…..

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Investment conference or investment con?

Cyril at summit
Summiteer Cyril

By John Fraser

It was a little bit like the Oscars.  But the Oscars are normally better organised.  

The main day of President Cyril Ramaphosa’s Investment Summit – on Wednesday –  was rushed through, in parts, at a speed which defied logic.    Unless that is, you did not want too close an inspection of what was happening.  Surely not?

Not all of it was played at triple-speed.   The President delivered two speeches at a measured pace, filled with messages of confidence and reassurance to businesses.   He done well.

The recent Springbok win helped a lot, was the subject of much comment, with the MTN CEO even donning a Bok jersey.   The mood was uplifting.

However, the bulk of the day rattled along much slower.   Several panel sessions and breakaway sessions were over-stuffed with over-talkative participants.   There was no time for real debate or discussion.

The clock is ticking, you see.   What’s next?

Halve the number of these waffle sessions, prune at least a third of participants from each panel, and there could have been some real value, some debate, real interaction.  But common sense was an elusive virtue in the over-air-conditioned atmosphere of the Sandton Convention Centre.

As was efficiency.   You would be released for a tea break, and the tea wasn’t ready.  Even worse with the lunch break, where the wait was very long.     I am not sure whether the organisers were to blame for this shameful lapse in hospitality, or if it was the caterers.  Either way, it left a sour taste in the mouth.  (And the food itself was hardly impressive.  It may have been local, and it wasn’t as awful as one encounters at many such events,  but it wasn’t that lekker either).

If the panel sessions were long, waffly, rushed, and of limited benefit, the announcements of investments were made with all the skill and coordination of the England team being clobbered by the Bokke.

A conveyor-belt of delegates made their announcements and grinned for photos with a very patient Cyril – hence the resemblance to the Oscars. New business fora with Japan and the USA were launched, as were two industry masterplans.

And there was just enough time for a grumpy Frenchman to grumble about BEE.

Some company bosses were offered the mike and invited to give a brief overview of their investments.    However, too many announcements were speed-read by the competent, but gabbling and rushed, MC.

In batches of a dozen or so, names and numbers were flashed on a screen, while she revved up her vocal delivery.  ‘Just a Minute’ on speed.

What a mess.

At the end of the session, the President was able to announce the day’s total of pledges, amounting to R363 billion.   He added to this an extra R8bn worth of pending decisions – thus sowing confusion, and raising some doubts over the whole exercise.

Nonetheless, all credit to the President and his team.  They surpassed last year’s R300bn and are well on the way to their five-year target of R1.2 trillion.

One big, fundamental doubt has been expressed by some commentators.   Many announcements were made by development funding institutions and by state companies.

Sanral and Transnet are mandated to maintain and improve infrastructure.  It is unlikely they have announced their new projects as a result of Presidential pressure.  Why include them?

The same goes for the BRICS Bank, and the IDC.  Both are mandated to spend and would have spent anyway.  Is it right to scoop them up in this exercise to inflate the overall numbers?

One big off-stage benefit might have been the ability to showcase South Africa to hundreds of foreign delegates, who did have the chance to mingle and to network.  As so often at these events, the discreet corridor conversations will already have planted the seeds for some fruitful future projects.   One must hope so.

PR seems to have eclipsed practicality and common sense at this event, but at least it gave South Africa a chance to pump out another positive message, to underpin the rousing sentiment following the rugby victory.

However, if one were given a chance to watch the focused, triumphal and stimulating rugby, or to endure this lengthy and frustrating conference, I bet I know which one most people would have opted for.

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Podcast wine tasting. Survivor Pinotage 2016

Survivor Pinotage
South Africa’s lekker local cépage

ZA Confidential’s trendy tasters are back!    This time with the country’s own noble grape variety: pinotage.

Our tasting panel glugged down the Survivor Pinotage 2016.   On duty were Gumtree Auto’s Jeff Osborne, analyst and writer Chris Gilmour, economics superstar Mike Schussler, and the princely palate of resident guru Michael Olivier.

Click below to catch up with all the fun:

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How failing power utility is fuelling South Africa’s economic crisis

A main street of a poor neighbourhood in Cape Town during recent power cuts.
EPA/Nic Bothma

Mark Swilling, Stellenbosch University

South Africa’s state power utility Eskom is the biggest challenge facing the country. Mess up Eskom, and you mess up the country. And it looks as though key players are doing just that.

The past two weeks will be remembered as the start of a cataclysmic economic crisis caused by the failure of three powerful men to spend enough time in a room to find a comprehensive solution that would turn the current crisis facing the utility into a great opportunity for South Africa’s energy and economic future. And to finally break from the country’s past. By refusing to align their policies and strategies, the three ministers – from energy, finance and public enterprises – are responsible for triggering a crisis that will be resolved on the streets.

What we see in Chile, where public anger has spilt out onto the streets, is what can be expected to emerge as ordinary South Africans experience the true implications of this failure to decisively resolve the crisis.

What’s at stake is not just the short-term crisis and how the country keeps its lights on. At the core, the crisis is about finally transcending the powerful minerals-energy sector (coal mines plus Eskom), which is a major pillar of the South African economy – a sector that has survived the end of apartheid.

The ministers, with decisive leadership from President Cyril Ramaphosa, had a golden moment to take the first step by releasing South Africa from the stranglehold of a debt-laden Eskom in an unstoppable death spiral.

But three opportunities were missed. They were: a new energy plan led by the Minister of Minerals and Energy; a roadmap for the power utility led by the Minister of Public Enterprises; and the medium-term budget led by the Finance Minister.

They failed to combine their respective policies into an integrated framework for transitioning to renewables, transforming Eskom and managing the utility’s ballooning debt.

In the final instance, it is the President who needs to call his ministers to order. The open question is whether Cyril Ramaphosa can act decisively to coordinate them to clearly and unambiguously address the Eskom crisis.

This will require managing competing interests. The assumption in South Africa is that nothing can be done unless everyone is on board. But in a crisis of this magnitude, big decisions need to be made that will make vested interests equally unhappy so that the best can be done for the nation as a whole.

The breakdown

On October 18 Minister of Minerals and Energy Gwede Mantashe announced a new energy plan (the Integrated Resource Plan) for the country. This was an opportune moment to set the country on a new trajectory in terms of energy generation. But that’s not what happened. The lowest cost option – only renewables plus gas – was rejected. In addition to unlocking renewables and gas, the plan provides for 1500 MW of coal-fired power despite the fact that nearly all the biggest financial institutions in the world have said over the past 18 months they are divesting from coal.

On Tuesday, October 29 the Minister of Public Enterprises, Pravin Gordhan, announced a new Roadmap for Eskom. Here the focus was on unbundling. The mooted plan is to create a “transmission entity”. There was also reference to a “just transition” – without saying how it will be funded – to manage the consequences of decommissioning most coal-fired power stations.

Most importantly, there was no reference to how the utility’s R450 billion debt will be managed. Nevertheless, at least the Roadmap reinforced the notion of the lowest cost option, repeatedly.

Next up was the Minister of Finance, Tito Mboweni, who delivered his medium-term budget on October 30. The expectation was that he would set out how the National Treasury planned to manage the power utility’s debt. The matter is urgent given that a restructured entity is expected to handle, at most, R200 billion worth of debt. But the Eskom debt is north of R450 billion. That leaves R250 billion worth of unserviceable debt.

Without clarity on how the unserviceable debt will be managed, the Roadmap for the utility cannot be effectively implemented because of complex cross-guarantees and the burden of running a utility that cannot service its debt obligations.

Expectations among South Africans, investors, businesses threatened by power cuts and international funders were high that Mboweni would relieve Eskom of R250 billion worth of debt so that it could be freed up to restructure.

But he didn’t. Mboweni said he wants to see the restructuring plan implemented before he considers debt relief.

It needn’t have been this way. There were alternatives.

On the debt front, as recommended by the Eskom Sustainability Task Team appointed by the President, the R250 billion should have been ring-fenced into a special purpose vehicle with agreements on funding flows to ensure that it is “ratings neutral”. It was recommended that the funds for this would come from a number of sources, including the budget, revenues from the utility itself and carbon finance conditional on accelerated decommissioning.

This would have enabled Eskom to refinance itself. Without this kind of arrangement, Eskom is redirecting funds for maintenance and operations into servicing debt. If this continues it will face system collapse.

On restructuring, the Roadmap recommends a “Transmission Entity” that will be a subsidiary of Eskom Holdings. This is a good idea, but the unions will suspect it is the first step towards privatisation and will object.

On the energy plan, the lowest cost option to meet future energy needs should have been selected. The fact that it was rejected will cost South Africa an extra R100 billion just at the point when it needs the cheapest energy with maximum security of supply. This includes a rapid build programme which coal and nuclear cannot provide.

This means that – unlike most other countries which have accepted the inevitability of the energy transition – accessing climate finance (mainly grant funds, but also concessionary loans) to finance the transition becomes impossible. Again, this comes exactly when the country needs the cheapest possible finance.

Broken promises

The misalignment between the three ministers responsible for shaping the country’s response to the Eskom crisis has produced an outcome that is out of line with the statement that President Cyril Ramaphosa sent to the UN Climate Summit on September 23, 2019. In it, he made it clear that South Africa takes climate change seriously and that a just transition fund will be established. In his words:

In shifting to a low-carbon, inclusive, climate change resilient development path and embracing the global energy transition, we must ensure that we leave no-one behind.

Granted, the Roadmap echoes this by acknowledging that a global energy transition is underway and that the lowest cost option is preferred. And the energy plan does provide for 23,854 MW of additional renewables (wind and solar) by 2030.

But the failure of the medium-term budget to provide for a ring-fenced facility to manage the debt Eskom cannot handle effectively reinforces the stalemate.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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