Wine Tasting Podcast: De Grendel Viognier 2019

de grendel pic
A lovely Cape white

By John Fraser

Our grape-stomping tasting panel turned up for another session of sniffing and snorting, with the noble De Grendel Viognier 2019.

Michael Olivier introduced the wine to our tasters: brander Jeremy Sampson, economists Chris Hart and Chris Schussler, and analyst Chris Gilmour.

There was also a discussion about the frustration of not being able to find in SA all the niche cooking ingredients you sometimes need.

Click below to check out the fun:

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Ramaphosa dodges critical decisions, raising the question: is he a lame duck

South Africa’s President Cyril Ramaphosa delivers his State of the Nation address.
GCIS/Sumaya Hisham/Pool

Mcebisi Ndletyana, University of Johannesburg

Is it possible that South Africa’s Cyril Ramaphosa has become a “lame duck” president? This often happens towards the end of a leader’s term, especially when a successor has already been identified. But Ramaphosa is not even halfway through his first term.

That I even to ask the question suggests that I have doubts that Ramaphosa is making the necessary decisions. By that I mean catalytic decisions that will define the legacy of his presidency and the fate of the country.

Ramaphosa has the misfortune of being president at the most challenging time in the life of post-apartheid South Africa. Economic activity is at its lowest, with growth this year estimated at below 1%.

The country’s tax agency will collect R250bn below what was forecast in the 2019 budget over the next three years. And unemployment – at 29,1% – remains a grave concern, although perhaps not as immediate a danger as dwindling revenues. South Africa has a massive welfare safety net – from free education and health to monetary grants – which has cushioned the country’s poor against the ravages of unemployment.

But because the tax agency is collecting less – the result of companies closing and jobs being lost – the little that goes into public coffers should be spent prudently.

Is it being spent prudently?

The answer is a resounding no. Nor does the president’s State of the Nation address offer much comfort. It showed that he has a preference for less contentious matters that attract praise. And there were such easy wins in the speech. They included relaxing regulations for independent producers to generate energy and allowing municipalities to procure renewable energy. Students were promised more accommodation and aspiring business people should expect a state bank that will provide affordable loans to start a business.

These are all commendable measures, unlikely to attract any derision – at least not immediately. But the country’s problems will not be solved through safe decisions. This is a “decisive moment”, as the president himself acknowledged, that requires equally bold moves and vocal support for cabinet ministers carrying out his instructions.

The State of the Nation address showed, once again, Ramaphosa’s proclivity to avoid tackling contentious issues. Examples abound, but one of the most telling is his handling of the crisis at the national airline, South African Airways.

Bungling big decisions

South African Airways has been surviving on government bail-outs. After the previous CEO, Vuyo Jarana, quit in exasperation in June 2019, the government eventually conceded that the airline was unsustainable in its current form. Tito Mboweni, the finance minister, thought the airline should simply be shut down, or sold to a private owner. But the government figured that it could still be salvaged. Its preferred course of action was to put it through business rescue.

The understanding was that the rescue practitioners would do whatever was necessary to turn the national airline around.

But when it came to actually doing what was necessary to rescue the airline, the rescue practitioners soon began to realise that they didn’t have carte blanche. This became clear after they’d announced the cancellation of unprofitable routes, a step taken to reduce operational costs.

Khensani Kubayi-Ngubane, the minister of tourism, disagreed with the decision. Some of the cancelled flights, she protested, would harm the tourism industry. The minister’s protestation was understandable – she was protecting her own territory. What was bewildering was Ramaphosa agreeing with her.

As the president, he ought to have a broader appreciation that cutting costs would ease pressure on the airline’s finances. Moreover, the president should know that decisions like this hardly please everybody. A president who has to balance various interests against each other goes with the decision that guarantees the maximum results.

Read more:
Public approval is Ramaphosa’s only defence against his enemies in the ANC

The president didn’t even provide a viable alternative plan. In his State of the Nation address, he said only that the “business rescue practitioners are expected to unveil their plans for restructuring the airline in the next few weeks”. It’s not clear from this whether the plan will be formulated entirely by the practitioners.

Government’s discomfort over the reduction of routes suggests that it wants to determine what the plan should be. This shows its reluctance to allow the practitioners to do what is necessary, however unpleasant, to make the airline commercially viable.

But finding funds to bail it out once more looks increasingly unsustainable. The latest injection – a R3.6bn loan from the Development Bank of Southern Africa – can’t be repeated. And any decision to take additional money out of government coffers will negatively affect other things.

As it is, the minister of finance has the unenviable task of finding money for all the things the president has promised. But Mboweni won’t be able to source money for students and aspirant entrepreneurs without denying others. And he’s likely to have to deal with an even more crippled national power utility as Eskom loses income when consumers –- especially companies and municipalities – opt for independent producers of energy.

And assuming Mboweni does find the money somewhere, will the president come to his defence when he’s attacked?

Formidable foes

It is difficult to sustain a fight against formidable foes all alone without support. Mboweni appears to be showing signs of resilience against severe criticism from the left-wing of the party. But Pravin Gordhan, minister of public enterprises, doesn’t seem to be doing as well. Since taking over this portfolio, Gordhan has exposed widespread maladministration and corruption in state-owned enterprises and led the call for prosecutions.

Yet, after repeatedly supporting the restructuring of the airline, he also backtracked when business rescuers cut down on routes. This suggests he is taking a lot of strain and may be capitulating. It’s not surprising as his detractors even include the country’s deputy president, David Mabuza.

Mabuza is unhappy that Gordhan has bypassed the governing party’s deployment committee when making appointments to boards of parastatals. The committee was partly responsible for appointing unscrupulous individuals that looted parastatals and its current head, Mabuza, is not known for propriety. But Ramaphosa has not been vocal in his public support for Gordhan.

Ramaphosa appears not to have realised that routine decisions are akin to inaction, no different from being a lame duck. Lack of support will alienate allies, which will leave him vulnerable to detractors. Without ardent supporters, Ramaphosa may not even conclude his first term. He has formidable enemies.The Conversation

Mcebisi Ndletyana, Associate Professor of Political Science, University of Johannesburg

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

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Brace yourselves for Tito’s tax tornado

Let’s use a tax that clobbers everyone!

By John Fraser

As a ubiquitous tax, VAT has many critics.

Whereas income tax or corporate tax have thresholds below which your earnings are not plundered,  VAT applies to all purchasers of goods and services.  There are a few ‘zero-rated’ exemptions for sanitary pads, bread flour, cake flour and a limited list of other necessities.

(Bizarrely, my own necessities of whisky, red wine and foie gras do not receive the same humane treatment.)

Rich or poor, black or white, male or female – paying VAT on most stuff is as inevitable as death.   It is unfair but is seen to be a necessary instrument for topping up the government coffers.

Which is why Tito Mboweni’s looming budget – due to be inflicted on us all on the 26th of this month – is going to be a tough one.

Accountancy firm PwC believes that even with some spending cuts, and taking into account tax rises which are already in the pipeline, around R25bn more will have to be raised.

Some of this from VAT.

The only question is whether the Finance Minister Tito Mboweni will take VAT up from the current 15% to 15.5% or to 16%.

“There will be no option but to pull the VAT lever,” warned PwC tax supremo Kyle Mandy.

And his economist colleague Lullu Krugel agreed there are tough times ahead: “This is the toughest budget since 1994,” she argued.

These are not lone voices, crying in the wilderness.  No one seriously believes that we can have a soothing, pain-free budget on the 26th.

Given the plague-like indiscrimination of VAT, this tax-hike which is so widely expected will hit customers in shabeens and in the plushest of restaurants, shoppers in Spaza stores and in Woolworths.

Like government corruption, it will be impossible to escape.

That’s VAT.

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Why won’t the banks come to the solar party?

Let’s all join the panel game

By John Fraser

With South Africans facing daily misery due to rolling power cuts, and power utility Eskom in the deepest financial doo-doo, it would be nice to think that our banks would be riding to the rescue.

Solar panels are one of the cleanest and greenest ways of energy generation – but where are the aggressive ads, the phone campaigns, the prompts every time you log-on to internet banking to see how broke you are?

The economic case for solar installation/conversion is increasingly compelling.

As the cost of Eskom-generated electricity shoots up in multiples of the inflation rate, the cost of solar installations is steadily falling.

Yes, there is a high initial outlay, but the business case for reducing your dependence on the grid is strong.

Add the bonus that home-generation reduces both consumption from, and reliance on, Eskom – and you have a winner.

In time we will be moving to more and more ownership of electric vehicles. These need charging, and what wonder if you can do this from the sun, instead of relying on the unreliable, and costly, Eskom.

Add a few storage batteries to your kit, and you can keep the lights burning and the TV blaring throughout the period in which Eskom decrees that you should sit in the dark.

But back to the financing…..

Banks and related institutions are falling over one another to offer (the solvent) loans to buy houses and cars.

These can be structured so that there are manageable monthly payments, and once the loan is paid off, the customer owns the asset.

But where are the finance packages for converting your home to solar?

They may exist, but they are bloody well-hidden.

What I want to see is a crusade by the banks to pour funds into lending cash for solar conversions – not just in homes, but for commercial buildings as well.

Just as you are steered towards financing when you buy a car, so there should be an oven-ready, simple and affordable finance deal on offer to every eligible home-owner with solar aspirations.

Solar is the future.

If only the banks would stop living in the past!

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Cynical South Africans are unlikely to be moved by Ramaphosa’s next big speech

South African President Cyril Ramaphosa has to inspire confidence amid growing scepticism. GCIS

Susan Booysen, University of the Witwatersrand

The spotlight will be firmly on South African President Cyril Ramaphosa as he runs the gauntlet of delivering the annual state of the nation address on behalf of the governing party, the African National Congress (ANC), and his government on Thursday.

This year’s speech is light-years removed from the promise of a new beginning he offered in his first state of the nation address in February 2018. This was delivered soon after he took over from Jacob Zuma. The hope then was that constructive new policy initiatives and definitive repair of damaged state institutions would emerge.

In contrast, all indications are that South Africa’s political and financial landscape is parched. Yet it is Ramaphosa’s job in the state of the nation address to highlight the silver linings. It is, after all, a pre-election year. South Africans go to the polls to elect a new local government in 2021.

Ramaphosa will undermine his own prospects as well as those of the ANC if he and the governing party cannot create reasons for voters to keep on believing that the ANC is able to bring change.

This won’t be easy given the odds are stacked against the government having what it takes to fix South Africa’s problems. There is growing cynicism among citizens – and a good reason for the despondency.

Many of the country’s problems have become intractable: political and economic conditions in the country remain stark. And the areas of action and hope identified last year have not responded favourably to the promises that were made and plans that were announced.

In fact, there has been a regression.

Despite this, the president needs to present new approaches and put a fresh spin on the ANC’s stabs at stubborn problems. He needs to offer assurances that the core problems are being addressed on a scale that will make an actual difference.

The list

The set of interrelated issues that beg to be addressed definitively in this year’s speech, Ramaphosa’s fourth, include:

  • poor economic growth that is draining jobs instead of creating new opportunities,
  • a handful of state-owned enterprises that continue to bleed the fiscus and sabotage the economy,
  • Unacceptably high levels of crime, femicide and general lawlessness,
  • An expansive civil service that eats up at least 35% of the national budget,
  • an energy crisis that’s demoralising the citizenry and sapping business confidence, and
  • concerns that land reform proceeds haphazardly, torn between possible lapses in constitutionalism and an executive that wants to score political points – while many citizens remain deprived.

This set of problems, at a minimum, need definitive announcements that will show that the ANC government is capable of extracting South Africa from the quagmire.

Ramaphosa and his government need to reallocate funds to make the necessary interventions work and ensure improved state efficiency and effectiveness.

It is a tall order.

But who is in charge?

The challenge to deliver a persuasive speech comes firstly in the context of intense doubts as to whether Ramaphosa is truly in charge of the ANC. Or who else is, if he’s not.

ANC secretary-general Ace Magashule and his faction, acting as the actual political opposition, has only got a fraction of the popular support that Ramaphosa has. Despite agitation against Ramaphosa within the ANC, he remains the pull factor that brings the party more popular support than it would have without him. He helps the ANC retain its dominance.

Read more: Public approval is Ramaphosa’s only defence against his enemies in the ANC

But this may not last. His acrimonious legal fight with the country’s Public Protector Busisiwe Mkhwebane could very well dent this.

The ANC’s factionally-indulgent policy wars, whether on land reform or stake-holding and mandate of the SA Reserve Bank, also advance the perceptions of ANC weakness and leadership indecisiveness.

Major surprises during the state of the nation address have also been minimised by the fact that the ANC has been through a thorough internal process to identify key policy areas, and what it wants to focus on.

This process started on January 8 when Ramaphosa delivered the ANC’s annual anniversary statement. It highlighted the priorities of the ANC-in-government for 2020.

This was followed by a meeting of the ANC’s national executive committee, the party’s highest decision-making body in between its five-yearly national conferences. Speaking on the outcome Ramaphosa assured South Africa that the party deliberations had

forged a clear and concrete programme to address the challenges the nation faces.

He admitted that the ANC had “fallen short” in implementing its policies and had “devised realistic measures to address these”.

The next step in the process was the adoption of a set of proposals by the ANC’s national executive lekgotla. This annual gathering precedes the cabinet lekgotla and informs the agenda of the government for the year ahead.

The plans that emerged were recognisable from previous plans. These included the proposal to rationalise state-owned enterprises. For example, the unbundling of Eskom, the troubled power utility, seemed to gain momentum from the national executive committee and lekgotla deliberations.

What exactly the outcome will be remains unclear, however, as the labour federation Cosatu, has tabled its own plan. This is against unbundling Eskom. Cosatu is the ANC’s governing alliance partner, along with the South African Communist Party. Its proposal for the power utility appears to be gaining momentum.

Further signs that the ANC is still not singing from one hymnbook came days earlier when Gwede Mantashe, the Minister of Minerals and Energy and in the top leadership of the ANC, floated the idea broadly of establishing a new government-owned electricity company and permitting businesses to generate power.

All this points to the fact that energy can be expected to be one of the state of the nation address pivots.

Limited options

Ramaphosa’s state of the nation address options are limited. Shrinking numbers of South Africans believe the ANC has solutions that would justify trust in the government.

A small way out for the ANC in 2020 going into 2021 will be to ensure that civil servants remain in their jobs. That will go a long way to ensuring that Cosatu remains a loyal governing alliance partner.

Another way out for governing party is to make sure that the social grant system, which benefits 17 million South Africans, remains lubricated and that Eskom keeps the lights on.

But given the enormity of what needs to be done, and what Ramaphosa can actually achieve, the state of the nation address is unlikely to confound the cynics.

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Wine tasting podcast: Painted Wolf – The Pack, Roussanne 2018

Painted Wolf Roussanne 2018 Full size
Far nicer than watching paint dry

By John Fraser

The podcast pack is back.  Sampling a wine which honours the wild dog.  It is a 2018 Roussanne from Painted Wolf – The Pack.

Guest tasters are economist Ian Cruickshanks, brander Jeremy Sampson, consultant Duane Newman, and IT superstar Malcolm MacDonald.

There is also an animated discussion of government support (hardly any) for the SA wine industry and some reflections on the too-slow transformation of the industry.

Click here to enjoy the fun:

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