Michael Olivier introduces a youthful and refreshing 2013 Durbanville Hills Sauvignon Blanc to Chris Gilmour, Jeremy Sampson, Malcolm MacDonald and John Fraser.

The panel also discusses the recent surge in ZA wine exports – a real achievement, or the bulk dumping of plonk?

One of our most respected economists Mike Schussler wrote an excellent piece on Moneyweb about the weak rand, pointing out – among other things – that it has not stimulated exports to the extent that might have been expected. Given that the ZA currency remains at weak levels, ZA Confidential asked some of our experts for their reactions to what Mike had to say….

John Cairns from RMB:
The rand is helping us. Exports will respond and so too will imports. This, though, will take time – and anyway in South Africa this price effect is quite small, meaning we have to see large rand moves to have any real economic impact (the price elasticity of mining exports in particularly is very low). The alternative anyway to rand weakness is too ghastly to contemplate: jacking up rates aggressively in order to attract more capital. Arguably, what we are seeing is the perfect adjustment – a slow steady decline in the rand and a corresponding slow adjustment in the economy. It would be far worse if this adjustment was forced to take place quickly, whether by rates hikes or a short, very sharp currency fall. 2014, of course, has started with sharp rand weakness; let’s hope this doesn’t become a run and force a rapid economic adjustment.

Russell Lamberti of ETM:
Mike Schussler hits the right notes. Logically and empirically a weak nominal exchange rate cannot help grow the economy or make it more productive – any more than diluting the quality of a car’s fuel can make it go faster. It was also nice to see Mike have a little dig at Jo Stiglitz, if only because it is painful to see how easily a foreign ‘heavyweight’ like Stiglitz, with an impaired understanding of monetary economics and practically zero understanding of South Africa, can influence the discourse. Mike has helped debunk some common myths in this article. It’s not just that a weak rand doesn’t help the economy; it actually hurts it. What can be done? It’s time for South Africa to have a “strong and stable” currency policy. SA needs to recognise that productivity and competitiveness are driven by capital accumulation. More capital means higher productivity, and more savings means more capital, and a strong and stable currency means more savings. The only sustainable way to achieve that is by reversing current excessively loose monetary and fiscal policies, balancing the budget (after interest payments on debt), keeping interest rates well above inflation, de-monopolising State Owned Enterprise-dominated sectors, reducing the size of the state, and slashing business and labour red tape. These reforms would rebalance the economy, re-emphasise production before consumption, and would give rise to a far stronger and more stable currency that fosters saving, capital accumulation, and competiveness.

Dawie Roodt from the Efficient Group:
Sadly……Mike is right. ‘Experts’ like Stiglitz and Cosatu prescribed a weaker currency as the answer to our anaemic growth because it is the easy option. A weaker rand (is supposed to) adjust our local costs structures by stealth (real rather than through more efficiency) but what happens in practice is that organised (and militant) labour can also make sums. They quickly learned that if the rand falls that they (and the rest of us) are all poorer. So, instead of accepting lower (rand adjusted) wages they intimidate and disrupt until their members’ wages are adjusted again (to the detriment of the unemployed and the newly unemployed). The only real answer is not a currency adjustment but good old fashion hard and efficient work – something we will eventually learn, I hope!

Ian Cruickshanks of the SAIRR:
The extent of the decline in the currency since 1994, and the decreasing competitiveness of our exports in global markets, is primarily due to the steep depreciation in the rand’s nominal effective exchange rate – that is the trade-weighted rand. It has fallen from an index level of 180 in 1994 to the current index level of around 60 index points. That means two thirds of the rand’s previous buying power has been lost over this period. This trend exacerbates the rocketing cost of mainly-imported capital equipment needed in the manufacturing sector, which overwhelms short term gains in current global price competitiveness from current rand weakness. Manufacturing has fallen from 20% of the economy to 10% over this period – a weak currency kills the sector.

Conclusion:
It must be a concern if our exporting industries cannot reap the benefits of the weak rand, and it is of great concern that this weak currency is likely to stoke inflation, with all the ills that will bring. For the moment we will watch, wait and cut back on our purchases from Amazon.

Tweets of the Day:
Mark Twain (@MarkTwainQuote): Action speaks louder than words but not nearly as often.
Barry Hilton (@barry_hilton): I called a 24hr plumber with a plumbing emergency last night. He told me not to worry, he’d be around within the next 24 hrs. #Hermanus

In a few weeks from now, ZA Confidential will again go behind a firewall, and will be available in full only to those who subscribe. For a limited period there will be very generous discounts to those discerning folk and companies who take out a subscription for the whole of 2014. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

What is the outlook for Africa? ZA Confidential listened to three experts this morning at Frontier Advisory’s Africa Outlook Conference 2014 in Sandton, and here is brief summary of their thinking:

Frontier Advisory CEO Martyn Davies:
The golden decade of growth in Africa has passed. The China- driven commodity cycle is not what it was a few years ago. The growth model needs re-thinking – we need economic diversification. We need more companies. A country without companies is not a successful society. Is Africa the next Asia? Does the Africa nation state have a future? There are political and economic failures due to failure of leadership to create nation states. Companies that are first movers will be the winners. The most successful companies take advantage of less competitive environments, and create sustainable businesses. Examples include Naspers, Shoprite, SAB Miller.

Sim Tshabalala, joint CEO Standard Bank:
We at Standard Bank remain very bullish about the African Continent. SA should get back to 3% growth by end of this year. The NDP will provide greater policy certainty. Offshore gas will boost GDP. A 5 percent growth rate is not in the realms of the impossible by 2015. It is crucial South Africans guard against arrogance in dealings with the rest of the Continent. We have a lot to learn from our northern neighbours, and we need them more than they need us. It seems likely the era of steep commodity prices has come to an end. The trend is strongly upward in inter-regional trade. But there is far too much red tape and corruption. There is a great deal of money to be made in African banking. The IT revolution in Africa is all about mobile banking. It spurs economic activity. And we are still only at the start of the banking explosion. Retail banking will be transformed from branch-based banking to a (banking service) carried in your pocket. The new opportunity in
retail banking in Africa is due to what is happening with mobile. But there are 6 very significant challenges we need to tackle head on:
* European contagion: could drag Africa’s growth slower.
* Cyber-crime: is significant: banks lose as much of 5% of their revenue to cyber-crime. African banks are going to have to spend a great deal of money combatting this threat.
* Regulation and regulatory cost: most African banks hold more capital than global regulations require. Obliging African banks to de-risk further is perverse. This may create unfair advantages for banks headquartered in developed world.
* Diverse needs of a rapidly expanding continent: such as credit to micro enterprises and SMEs. The shift from cash-based to card based requires financial literacy and education.
* Political and social and economic rights: need to become more universal .A key element is zero tolerance for corruption. Corruption raises the costs of doing business. It is the very opposite of victimless crime – it hurts all of us.

Jay Naidoo: Global Alliance for Improved Nutrition (GAIN):
How are South Africans seen on the Continent? People don’t like us. In our history we have been a part of Europe rather than part of Africa. We have tended to upset a lot of people. An example is how we put forward our candidate as leader of AU – in the past this post has tended to be (filled) from smaller countries. How much longer are we going to be the dominant economic power in Africa? Nigeria will overtake us. By 2050 one in four African is going to be Nigerian. In SA there is an obscene disparity in wealth, and in our Continent. We need growth to provide opportunities for people to leave poverty, or it will explode in our faces. We haven’t understood the impact of the technological revolution. We have had a revolution in the last few decades. There are now close to 800 m mobile phones in Africa. This demonstrates we can do something across the Continent that is revolutionary. Once you have a platform of ICT, people will use it to deliver other things. Like
mobile money. The pre-paid card enabled the revolution. What are the other assets in Africa? We are able even to skip over the PC age – from mobile phones to mobile broadband, with Africa being at the cutting edge of that. By 2050 there will be 2 bn people on this Continent – one quarter of working age population of the world. By the end of this century half of people of working age will be African. That is a democratic dividend. How do we leverage these assets? If we don’t get these people out of poverty, it will become a democratic nightmare. I see a lot of anger in the slums of Africa. One in 3 young people in sub-Saharan Africa lacks even the most basic skills. We have 60% of the remaining arable land in the world. Yet many children are malnourished. The cost of solving malnutrition is miniscule compared to the costs that society pays much more later in life. When you look at university graduates, only two % specialise in agriculture. (On
corruption) Bribing – why are we afraid to challenge this abuse of power? Mo Ibrahim built up a telecommunications network in Africa without paying a single bribe. Why can’t you all do that? It’s about transparency and governance. The gap between the poor and rich hasn’t improved. That’s a worry for us. If you live in a bad neighbourhood (as a country) you are going to have trouble. It matters to us what happens in Zimbabwe or Swaziland or Somalia or the DRC or Cote d’Ivoire. Some things are improving, but certain things are declining. Africa still has 54 separate economies and countries. That weakens our bargaining position. How do we leverage our assets and build our bargaining power? How do we build integration and infrastructure to facilitate economic development, or we will remain underdeveloped and very poor? It is worrying there are consistent attacks on institutions that are there to protect citizens. We need an independent media to uphold the rights of
citizens. We need an independent and robust civil society. We should reclaim the essence of what Mandela stood for. The essence of Mandela is about human rights, integrity, and service.

Tweets of the Day:
Awkward Posts (@awkwardposts): They say so many people die because of alcohol. They never realized how many of them are born because of it.
Tom O’Halloran (@TPO_Hisself): Did you hear? They took the word gullible out of the dictionary!
Funny Tweets (@iQuoteComedy): Neil Armstrong lands on the moon: 5 pictures. Girl goes to Starbucks: 47 pictures.

ZA Confidential will soon go behind a firewall, and will be available in full only to those who subscribe. For a limited period there will be very generous discounts to those discerning folk and companies who take out a subscription for the whole of 2014. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

Just as we were getting used to the BRICS, they appear to own yesterday’s acronym, with the emergence of a new emerging nation cluster – once again devised by Goldman Sach’s Jim O’Neill. The MINTs (Mexico, Indonesia, Nigeria and Turkey) are clearly not on the same scale as the BRICS (Brazil, Russia, India, China and South Africa) in terms of wealth or population, but O’Neill seems to think they have great expansion potential. Of course, if the MINTs become the new bloc on which to kid, that might have consequences for South Africa, as we in ZA are the ‘S’ in the BRICS – even though many don’t think we are a natural fit. Do our experts think the MINTs are meaningful?

Martyn Davies from Frontier Advisory:

Yet again, economic commentators seek to create acronyms that are intended to somehow guide investment in what remains a very complex and uncertain global economy. The BRICS was nothing more than an intended indicator of future consumer demand in emerging economies with sizeable populations; the MINTs appears now to be the B-Team of emerging markets. Once again South Africa has been excluded. I doubt that members of the MINTs will be motivated to create a political bloc like their forerunners in the BRICS have. I also doubt that they’ll be inviting South Africa to join, either!

International Relations consultant John Mare:

I think it is not unexpected that the MINTs have now come into the spotlight as epitomising the cutting edge of rapidly expanding economies/markets in the world and that Jim O’Neill should have again coined (or minted ?) the word “MINT” for the group. As with the BRICS, in which SA membership has generally been accepted – as being the best developed anchor economy for accessing the economies of Sub-Saharan Africa (SSA) – the MINTs are rapidly growing economies with varying combinations of larger than usual land area, populations and (especially as regards I and N) vast resources along with strongly developing sophisticated economies. As with BRICS they occupy important geo-strategic locations. Nevertheless, while the economies of the BRICS have seemingly suffered in recent months those of the MINTs have not suffered as much. In addition the MINTs are not global heavyweights like the members of the BRICS in many politico-economic-strategic dimensions – which made them the obvious choices to lead the new wave of so-called emerging economies to challenge the “North” – the traditionally developed world – for domination in the global community. Remember that the BRICS contain (i) two long-standing global super-powers (China and Russia) offering long standing challenges to the “West” and (ii) the most populous country on earth second to China, ie India, which has tried to be a prime leader of the “Third World” and “Non-Aligned Movement” against the “West” since the Bandung conference. The MINTs do not have the traditional political baggage to slow them down in any way, nor the enormous sizes of the original BRIC members – which come with their own logistical challenges. Nor do they have the apparent ongoing fractured and troubled nature of key aspects of SA – despite it inheriting a wonderful platform to lead SSA into the 21st century in 1994. As such, the MINTs have flexibility on many fronts to use their favourable locations/populations/resources and so on for further strategic growth nationally, regionally and in the global dimension. Given the above I see greater success for and in the MINTs in the coming decade, on all fronts. To give some detail: Nigeria is increasing its position as an alternative to SA as the “prime” platform to access the SSA economy, especially re Western Africa and the EU/North Atlantic community . One day Kenya, in the more integrated Eastern African region now rising, will be a logical third “hub” for business in SSA – especially vis-à-vis the Middle East/Asia. Naturally there are other potential exceptional BRICS, MINTs and hubs/anchors, as things now stand. Some such as Ukraine are on the brink of making it, while others such as the DRC may wait for decades.

Craig Pheiffer from Absa Investments:

It seems the latest sport is working out acronyms for developing market groupings. We’ve had the BRICS and the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) and Jim O’ Neill’s “Next Eleven” and now the MINT countries. Mostly these acronyms reflect groupings of emerging market countries that are expected to show strong economic growth over the coming decades. That’s how BRIC and more recently BRICS came about. Economists and Heads of State frequently argue over inclusion or exclusion from these theoretical groupings. The one difference with the BRICS, though, is that the five countries have formed an organisation, the BRICS Forum, to actively promote trade among themselves and improve co-operation between the five states at various levels. At the recent BRICS Summit in SA the organisation also set in motion the process of creating a BRICS Bank. The BRICS countries will continue their annual get-togethers with their sixth annual summit in Brazil this year. This active collaboration is what currently differentiates the BRICS from other groupings sprouting forth from research articles and economic journals.

Duane Newman from Cova Advisory:

I am a bit sceptical of this new acronym – MINTs. I am struggling to understand the need for such a new, small grouping. The linkages between these countries are tenuous at best, and their growth potential is subject to so many factors.

Conclusion:

The BRICS have accepted the role suggested for them as leaders of the Emerging Nations. The MINTs are still in mint condition, in terms of this degree of political will and economic momentum. The concept of the MINTS may need to be sucked on for a while before we discern its true flavour.

Tweet of the Day:

Jonathan Jansen (@JJ_UFS): If you had 10 children in grade 1 and only 4 made it to grade 12, would you be celebrating?

In a few weeks from now, ZA Confidential will again go behind a firewall, and will be available in full only to those who subscribe. For a limited period there will be very generous discounts to those discerning folk and companies who take out a subscription for the whole of 2014. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

There have been two announcements this week about the ZA manufacturing sector, which should give us pause for thought. The first was the Manufacturing Circle’s Outlook for 2014. This sees some economic recovery in 2014: GDP growth is estimated at 2.3%, following a forecast 1.9% last year. This is far too low to have much impact on employment, and therefore must be of deep concern. Furthermore, the Circle’s own Q3 2013 survey of manufacturing business conditions revealed that 29% of employers expected to shed jobs over the next 12 months – with 7% predicting a workforce cut of more than 15% “indicating that mechanisation may now be part of the competitiveness planning of an increased number of manufacturers.” We saw a lot of strike action last year, notably in the automotive sector. One result seems to be further replacement of people by robots. A big worry.
Secondly, the Automotive Manufacturers’ grouping Naamsa, which provides impressive and timely data, announced that vehicle sales declined in December from the November level – and in the fourth quarter of 2013, total sales were down 2.6% compared with the same quarter in 2012. Nedbank’s Economic Unit had this to say: “Sales growth in early 2014 is expected to remain modest as subdued consumer confidence, which has dropped to its lowest level in almost 10 years, will weigh on volumes of passenger vehicles sold. The poor economic outlook, the weak job market, high debt levels as well as likely price increases due to the rand’s weakness are also likely to dampen demand. Sales of commercial vehicles will continue to depend on trends in private sector investment growth, which remains modest. Exports should benefit from improving global economic conditions, particularly in the Eurozone, barring any domestic supply disruptions.” So the weak rand may help exports, even with a
sluggish global economy. Hopefully some of the sales problems in the last quarter were due to supply constraints in the wake of serious and prolonged industrial action. However, the automotive sector is a flagship sector in ZA, winning massive government support. If it is in trouble, that bodes ill for the greater economy.

Tweets of the day:
Funny Tweets (@iQuoteComedy): could you please put your crying kid on vibrate
Roman Cabanac (@RomanCabanac): Has Al Gore frozen to death yet?

In a few weeks from now, ZA Confidential will again go behind a firewall, and will be available in full only to those who subscribe. For a limited period there will be very generous discounts to those discerning folk and companies who take out a subscription for the whole of 2014. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

Surely the most stupid and irresponsible five-word anthem in pop music came from Pink Floyd (even if there was a tinge of parody about it) in that song from The Wall: “We don’t need no education.” Because we does. We really does. If we can’t get education right, we are in trouble. And there is justifiable alarm that after 20 years of ANC government, millions of young South Africans are passing through the education system without being armed with the necessary knowledge and skills to cope with the world of work. One of the most respected South Africans is UFS Professor Jonathan Jansen who made a very simple point in a Sunday Times article. That a 30% or 40% pass rate is wrong, and that the lowering of standards in this way does our youth no favours. He called for a 50% pass rate, and we asked some of our experts for their reactions to this

Business leader Brand Pretorius:
I support Prof Jansen’s call for a 50% pass rate fully. Should we want to become world competitive as a nation, then it is imperative that our secondary schools should deliver learners who have the requisite ability and knowledge, to tertiary institutions and the workplace. Currently we compare very poorly to international benchmarks.

BUSA’s Professor Raymond Parsons:
Whatever the latest figures on the national matrix pass rate, the fact remains that the SA economy has a serious structural problem in school education which a snapshot picture cannot disguise. The quality of education for black learners is simply far too poor. The economy continues to face a huge skills deficit, with many socio-economic consequences, which recent programmes like the National Development Plan (NDP) have put high on their list of priorities of things to be fixed if SA is to have any hope of a reaching a much higher job-rich growth path in the years ahead. Indeed, the NDP ranks the educational challenge as second only to the unemployment one in SA. The solution is multi-faceted, and goes beyond raising the pass rate in government schools to 50% as suggested by Professor Jansen, as useful as such a proposal might be. We might look to the recent experience in Mexico, where reforms to boost economic growth have included performance tests for teachers and
institutions to get better outputs from schools and other learning centres. While nothing much must be expected in SA on this side of the 2014 elections, once they are over, and implementation of the NDP is supposed to begin in earnest, the whole question of appropriate sanctions and incentives to get a better government schools system needs urgent attention – if necessary with the help of the private sector.

Frans Cronje from the SAIRR:
Well of course he is right. South Africa is an increasingly high skilled economy and we can see that in the shifting structure of our GDP. The current education system might have met the requirements of the 1950 economy where the majority of South Africa’s people were told to aspire to the most menial of jobs and usually to manual labour on a farm or down a mine. But that is completely inappropriate for our current economy and reflects what I must sadly call a ‘Bantu education mentality’ within the cabinet and the department of basic education. It is also completely at odds with the view that the State is seeking to empower people through policies of the government. You can make empowerment laws but you contradict their provisions when you run a sub-standard education system. In fact, for quite a number of years we have been advising groups who consult us on South Africa to ignore the matric pass rate as an indicator of quality in the education system. Rather we devise measures such as the number of good maths passes to help companies and foreign governments, and even at times the South African government, understand what the skills base of the South African economy really looks like. In practice we estimate that one South African child in ten is educated to a reasonable standard of literacy and numeracy.

Chris Hart from Investment Solutions:
A properly functioning modern economy has certain basic minimum requirements such as electricity, transport network and telecommunications. This means that a modern economy also needs the related skills to and ability to build, maintain and function within this economy. This is where education systems are critical to prepare children to enter the economy. Modern economies are increasingly technology-dependent. Primary economic entry requirements consequently need communication, science and math skills and the ability to resolve problems. It is in these areas that the South African education system is failing. The World Economic Forum competitiveness rankings place South Africa virtually at the bottom of the list when it comes to maths and science education in particular. A 30% pass mark is also not helpful. After 12 years of education, school leavers are not regarded as properly prepared to enter the work place. This is a global problem as education systems have become disconnected from economies – with irrelevant teaching. Tertiary education also is reflecting these traits. Youth unemployment is a rising problem around the globe. But all these problems are accentuated in South Africa with huge numbers of people being regarded as unemployable. South Africa is a case in point where the country would be doing so much better if the education system could just achieve mediocrity – an indictment on a system that is underachieving despite the resources thrown at it. Yet there are pockets of excellence. Led by private schools with so-called model C schools, these schools would probably rank within the first quartile of the World Economic Forum’s education ranking. The former model C schools are better described as community-supported schools, and this should be expanded. The top-down imposed system is where some of the ineffectiveness and inefficiencies are introduced into the education system. This is common across even the developed world where centrally controlled education systems are battling to produce competitive outcomes despite massive resources devoted to education. Education diversity also must be nurtured. The equality concept may well be the most regressive idea imposed on the education system. Essentially this imposes a one-size-fits-all curriculum and learning requirements on all participants. Yet each child is a unique human being, with their own unique interests and abilities. The huge drop-out rate is testimony to the irrelevance of the education system to all its learners. Greater choice needs to be nurtured and supported so that alternatives become a natural choice.

Mario Pretorius from Telemasters:
Prof Jansen’s call is laudable, but still completely inadequate. It misses two important points, which the good Prof will call for next. First is that dropping standards nullifies any raise in the pass hurdle. Standards should be independently and objectively set for long, long periods, say 20 years and kept there. Secondly is that a 50% pass still means that half of the subject is unknown. We live in a 100% pass rate world. Imagine if the 50-percenter starts his work career, doing 50% correct, arriving on time half the time, doing one half of what is expected, hitting half the cars on on the road on his way home – which he finds half the time – half-shaven and half-dressed after half a day’s work. So 50% is not enough, maybe 80% is getting closer to real life. Some courses demand this ratio of retrievable knowledge, and still the doctor will mistake 20% of the patient’s woes. The correct call should be – what do we want instead of pass marks of short term memory testings on subjects that are not life-relevant or user-urgent? Does any matriculant know how to open a bank account? Interview for a job? Know what an employer expects? Negotiate the lease for an apartment? Is it not time to shift to real, relevant skills and ask the likes of the good Prof WHAT he expects his matriculants to know instead of showing a 12 year cumulative endurance test outcome?

Duane Newman from Cova Advisory:
The education system is of great concern to me as a businessman as the people coming out of school with a matric can barely write or do maths – which are key to many entry level jobs. I don’t think upping the pass mark will make a difference as the politicians just wont accept a reduction in the overall matric pass percentage. It is clear that the scholars who wont pass matric are getting weeded out of the system between grade 10 and grade 12 anyway, so the increase in the matric results is an illusion. Dynamo, would be proud. We need to set global measurable benchmarks and get SA off the bottom of the world science and maths rankings. We must set these targets rather than kid ourselves that the quality of our matric is getting better as the overall matric pass rate is improving. All we are currently doing to winning the race to the bottom. The solution lies in getting government and wider community to have role models to show that a good education is the key to success. Currently, our president and many other successful tenderpreneurs are poorly educated which tells the youth that a good education is not important to success. In addition, the teachers need to have a calling to be educators, rather than just a job which then allows strikes which undermines the education system. There is a still a lot of work that needs to be done to improve SA’s education system. I hope the government actually wants it to improve rather than what a conspiracy theorist friend of mine said “it is in ruling party’s interest to keep the masses of people uneducated as they are then easier to manipulate to keep themselves in power”.

Chris Gilmour from Absa Investments:
Frankly I am astonished that 30% can be considered as a “pass” for anything. In simple terms, if one achieves 30% of the correct answers to a test/exam, by deduction 70% were incorrect. I am not sure what is being achieved by the education authorities in doing this, as employers and further education institutions alike will just tend to ignore results below 50% anyway. I fully endorse Professor Jansen’s views.

Conclusion:
The biggest exam cheats are those who lower the bar, raising expectations while lowering the employability of young people. No government should allow this deception to continue. A fifty percent pass rate is surely the bare minimum – it means you have got half of the answers wrong! So well done to Professor Jansen. 10 out of 10, Sir.

Tweets of the day:
Lord Skip Licker VC (@Skip_Licker): Becoming a vegetarian is a huge missed steak.
Jonathan Jansen (@JJ_UFS): Journalists calling at 5am; née man
Funny Tweets (@iQuoteComedy): Teacher: “Imagine you’re in a world with dinosaurs and a dinosaur was going to eat you. What would you do?” Boy: “Easy, stop imagining.”
Jonathan Sloan (@MrBigFists): I always knew that I could never be a lawyer because of my inability to pass a bar.

In a few weeks from now, ZA Confidential will again go behind a firewall, and will be available in full only to those who subscribe. For a limited period there will be very generous discounts to those discerning folk and companies who take out a subscription for the whole of 2014. For details on subscription rates, please contact: zaconfidential@gmail.com. Media releases, invitations to presentations, and feedback on ZA Confidential can also be sent to the same address. Add some gravitas to your conference or event by hiring ZA Confidential Editor John Fraser as a speaker or MC. Follow us on twitter: @ZAConfidential and/or John on @clasfras1

The end of a year, and the arrival of another, is a good time to take stock. 2013 saw many changes in South Africa. It saw the death of Mandela and the birth of ZA Confidential. It saw Jacob Zuma in trouble, but Oscar Pistorius in much deeper trouble. And it saw many of our concerns about the economy intensify. So here – in no particular order – are ZA Confidential’s twelve fears for 2014:

Inflation, and especially food inflation:

The official CPI inflation number is around 6%. But as we have reported more than once this year, this number masks a much steeper level of food inflation, which threatens to rise even higher with further protection against imported chicken, frozen potato chips and a very weak rand affecting many imports. Shopping over this festive period I have for the first time in my privileged life put goods back on the shelf because of their price. While many experts are predicting inflation will remain fairly muted in 2014, I fear further large hikes in food prices, which on top of higher motoring costs (see below) will mean that we have less to spend unless we have generous employers or some other way of boosting our incomes. The knock-on effects on restaurants, coffee shops, book and CD stores, and so on, may well lead to some casualties. It would be time for more belt tightening – if only we could afford the belt.

Jobs:

There are too many unemployed people at the end of 2013. I don’t see how much will have changed at the end of 2014. Government has a responsibility to create the right conditions for job creation, but in some areas, such as labour legislation, it is doing more harm than good. And the economic illiteracy of some of our more populist politicians will not do much to help.

Economic Growth:

This is linked to job creation, and is equally worrying. The ZA economy is limping along and there is not much prospect of any significant uptick in 2014. High food inflation could trigger more labour unrest – and we saw what that did to the economy this year.

Eskom:

Our power utility has lost its most senior executives at a time when there is a desperate need for more generating capacity to be brought on stream, and government is still dithering over a new nuclear build. The politicians and bureaucrats plunged us into darkness in 2007/8. I fear we may see serious problems again in 2014, even if these may be masked from view by quiet arrangements to shut down factories and mines. Industry has an important role to play by keeping the spotlight trained on the frailties of Eskom.

Labour unrest:

We referred to this earlier. Militant labour stokes inflation, slows economic growth and scares off investors. Look out for another hat trick in 2014.

Investment:

We need foreign investors, and BMW clearly sounded the warning bells when it walked away from a major expansion in SA. Many more similar decisions are being taken away from the public gaze. Destructive actions and declarations by some of those politicians with the most influence over these matters can do great harm, but we have some very left-leaning people in strategic Cabinet positions. And that may not change much after the next election.

Corruption:

South Africa is not alone in facing this problem. However, things do not appear to be getting much better here, and the lack of conscience or responsibility of some of our political leaders is shameful. This is an underlying cancer affecting both the economy and the wider society, and the likely re-election of the same bunch does not bode well.

Education:

This is the foundation of our future, and far too many of our young people are not being properly educated. There is little sign of the necessary leadership to tackle this fundamental challenge, and it is certainly an area where business should have a louder voice and a more constructive role. We have entrusted this to the politicians and generations of South Africans will forever bear the scars.

Health Care:

With rising medical inflation and often squalid and inadequate state healthcare facilities, this really scares me. There are bold plans for a universal upgrade, but how is this to be funded? Too many questions remain.

The rand:

In some respects the weakness of our currency reflects an underlying economic malaise. The wobbly rand should be helping our exporters, but there is not massive evidence of this, perhaps because of the recent labour problems in the auto sector.

The cost of motoring:

Petrol prices rise again at midnight. This unhappy New Year development comes alongside the recent incomprehensive introduction of eTolls, Interest rates are likely to begin rising again this year, insurance charges are overtaking the inflation rate. And yet there is no safe, efficient public transport alternative for most South African motorists. I am not sure what the automotive sector can or should be doing about all this, but one does not hear enough from its leaders.

The State:

eTolls are just one example of the State getting things wrong. New secrecy laws are another, as is the desire to clamp down on alcohol sales and advertising. The Blue Label bureaucrats like bossing us around but do little to inspire our confidence. The fake sign interpreter at Mandela’s memorial was just another sign of what can go wrong when we put trust in people with poor skills and judgement.

Conclusion:

There is a lot to worry us as we enter a New Year. However, there are developments in areas such as IT and telecommunications which could bring hope and progress. ZA Confidential thanks all those Experts who have given us their views and thoughts in our launch year. We wish all of them and all our readers and subscribers a healthy, happy, safe and fulfilling 2014. And God Bless South Africa, watch over its people, and give wisdom to its leaders.

Tweets of the Day:

Latie (@latie_jonker): A survey shows that 20% of men kiss their wife goodbye when they leave the house and 80% kiss their house goodbye when they leave the wife.

Latie (@latie_jonker): I was in the pub when a guy called me a cheapskate. So I threw his drink in his face.

The QI Elves (@qikipedia): Some mornings, it’s just not worth chewing through the leather straps. – EMO PHILIPS.

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