Depressing reading in today’s Business Report, which says the latest Corruption Watch perceptions index shows that ZA has slipped down the ranking to 72nd out of 177 – from 69th last year. On the face of it, this is bad, but we asked a few of our experts for their views….

Mike Schussler from economists.co.za:
At this moment in time almost all the indicators for South Africa are slipping. Corruption, transparency, doing business and global competiveness indices have all slipped in the last few years. I am concerned that all these indices are not getting the country to act as we still fight about silly things such as socialism and capitalism when the world has clearly moved on to capitalism. The corruption index slippage however is not unexpected as many powerful people have their hands in the till. Think presidents and ministers and mayors and even businessmen. Our criminals are getting away with murder and our police chiefs are at best incompetent or part of the underworld. It is actually surprising that we did not slip more places, say to outside the top 100. Sad, really sad, that crime and corruption can become ever-more the norm.

Ian Cruickshanks from the SAIRR:
I think that the Corruption Watch Index shows that the SA level is stabilizing, but at a very unsatisfactory level. This confirms the public view of a low level of accountability, particularly amongst politicians – with abuse of position. And we have business leaders apparently fearful of speaking out because of possible negative impacts on their business. Recent press reports on the possible abuse of public funds at Nkandla, and the Gupta family riding roughshod over domestic regulations, have led to a growing negative view by South Africans and foreign investors. I think this could be having a severe impact on foreign investment.

Azar Jammine from econometrix:
Even in 72nd place South Africa is still in the best half of corruption perceptions in the world. So it is not a total disaster by any stretch of imagination. What is of concern is the trend which has deteriorated significantly over the last few years. What is particularly concerning is that Africa as a whole is considered the most corrupt region of the world. South Africa is one of the least corrupt nations in Africa – but other African nations have become less corrupt while SA has been becoming more corrupt. Most places where you or I do business operate in a non-corrupt way, but clearly the perception is the more you have to do with public sector bodies, the more corruption is becoming endemic. This happened to coincide with the ascendency of Jacob Zuma to the leadership of the ANC. It has also been a period during which SA’s economic performance, related to other emerging nations, has deteriorated.

Neren Rau from SACCI:
It is not as much a surprise as a disappointment. Our members were becoming optimistic that, while we may be losing individual battles, SA was making some progress in the war against crime and corruption. The decline in the ranking unfortunately shows that any positive perceptions were more attributable to business being overwhelmed by other challenges as opposed to any gain in respect of the war against crime and corruption. A partnership between business and government is key to dealing with this challenge with, as a prerequisite, each partner willing to accept its own shortcomings in this regard on entering into the partnership. SACCI has had some success in partnering with the police services on specific challenges faced by our members.

Conclusion: Whether or not the scourge of corruption is growing, the perception is that it is getting worse in South Africa. And, sadly, we are not getting much of an example from our political leaders.

Tweets of the Day:
Gert V8 ™ (@gertmods): Bought a book on the history of flour the other day. Just sifting through it now.
Funny Tweets (@iQuoteComedy): What if soy milk is just regular milk introducing itself in Spanish?

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There have been suggestions that the Mail & Guardian was wrong to publish what it claims are extracts from the Public Protector’s report into Nkandla. It was a draft report and may change. However, the counter-argument is that if our President has indeed been siphoning off public cash for this private complex, and has been lying about this, then there is a compelling argument that this was a worthwhile exercise. We asked a few of our experts for their views….

Journalism Professor and former Editor of the M&G Anton Harber:
The saga of the Nkandla report has shown that attempts to suppress such information will only fire up those who are determined to get it out. Censorship was defeated in the process, as was a deceitful attempt to protect the president from public accountability. Would it be more fair under regular circumstances for such reports to be finalised before being released? It probably would be, but in this instance what took precedence was getting the information out in the face of attempts to suppress it. As long as the reports make it clear that the findings are not final, then publishing it serves the fundamental constitutional values of holding the powerful to account and enforcing open government.

Mario Pretorius of Telemasters:
The thoroughness of Ms Tuli Madonsela means that the Final Report on Nkandla may differ around the edges, but the core will remain: current President Jacob Zuma is called a liar and a thief. No efluxion of time will alter the finding, unless she is silenced to Tula Madonsela. Give that girl a Bells. As for the ruling party, nay kleptocratic kakistocracy, I hope with every fibre in my being that these charges will stick and bring down this sordid mess of dream poachers. Give that man a jail cell.

Jeremy Sampson of Interbrand Sampson:
I would suggest the job of the government and of the President, who are all public servants, is to lead by example for the good of all South Africans. If it was not for the media, the South Africans voters would not know of the outrageous pilfering of State funds – that’s yours and mine, not theirs – the lying, the self-enrichment of a totally corrupt government. We are told daily of the criminality and lack of accountability. The forefathers of the ANC must be turning in their graves. Mr Mandela, if he is aware of what is going on, would be very saddened. It’s about time those few good men left in government stood up; otherwise they will be tarred with the same brush.

Journalist and Broadcaster Benedicta Dube:
At what point will the government under President Jacob Zuma respect the role of a free press and at what point will those who advise the president realise that the more you hide information, the more journalists will want to satisfy their own curiosity? Gagging the press on Nkandla will not dilute the stench that it represents. I wish those in charge could realise that South Africa has bigger problems than Nkandlagate, but unfortunately it happens to define exactly what is wrong with this country’s leadership.

Leon Louw from the Free Market Foundation:
The notion that there are security excuses for media muzzling is too manifestly absurd to be dignified by countervailing comment. All there is to see is readily visible in detail by way of three easy options: flying low over Nkandla as I have done, zooming in with Google Earth as I have done, and looking from a nearby hilltop (with binoculars, telephoto lens or telescope if you are visually challenged) which I haven’t bothered to do.

Conclusion: When we see the excellent job done by the M&G, we understand government’s intention to introduce new Secrecy legislation. Very worrying!

Tweet of the Day: Puns (@omgthatspunny): Velcro – what a rip off!

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Obviously the bunch at Sanral had gone undercover. I assume that is why environmental groups Earthlife Africa, groundWork and Greenpeace Africa have nominated Eskom as the worst corporation in the world, in an awards event to be held at the World Economic Forum in Davos in January. Now Eskom may not be loved, but is it really THAT bad? We asked a few of our experts….

Mike Schussler from economists.co.za:

I am not sure if Eskom is the worst company in the world but their effect on SA economic growth is currently negative. It’s unfair to say they are the worst but it is true that their actions at present are having negative effects on inflation, growth, energy supply and are creating negative views on SA. But the problem is that Eskom does make money, but perhaps not enough to help SA build new power stations on time – and therefore help SA Corp make money and thereby create growth.

Mario Pretorius from Telemasters:

Eskom is the living monument to the policies of the government. Revered as the world’s lowest-cost producer two decades ago, it is now a shambles of short-term profiteering and reflects the disastrous self-serving economic policies of the ANC. These policies of fast-tracking, affirmative action, preferential black suppliers, BEE management, black woman owners’ tender preferences, forced retirement of expertise, preference of social goals, political pussy footing around debtors and a vicious and toxic disregard for basic economic laws makes for an almost fatal crippling of this economic giant. It is not only sad, it is threatening the very survival of the ZA economy. The sudden rush to trillion Rand nuclear power, the meltdown of its ability to manage projects and its inability to deliver electricity reliably, albeit at astronomically inflated prices, shows the dearth of common sense and absence of understanding of the essentials of a proper economy. Eskom deserves this – and in a few years, it will probably achieve the Lifetime Award, if it still exists.

Frans Cronje from the SAIRR:

In many respects, yes. Such rankings are for the most part silly things that contribute very little to our understanding of how the world works. Over the past 20 years, 6 million households have been connected to electricity for the first time in South Africa. Eskom’s expansion plans were initially undermined by the government. It does remain a wasteful monopoly – but that is because this is the policy of the government. It would be more accurate to make the government the beneficiaries of this reward.

Dawie Roodt from the Efficient Group:

Any company that encourages its customers to use less of its products must be totally crazy. So Eskom is a “worthy” candidate for this title. But do not blame Eskom only. The reason why it behaves so irrationally is because its political masters are so fixated on their socialist illusions that Eskom is prevented from acting rationally. Cut Eskom into smaller pieces, privatise it and create a competitive environment and Eskom may well win the award as the best company in the world!

Conclusion: Not sure I would give Eskom the award, but then, apart from Sanral, I am not sure who would beat them into first place……..

Tweet of the Day: Puns s(@omgthatspunny): I used to be a banker, but then I lost interest.

Awesome Todd (@Awesome_Todd): The worst part about being a giraffe is probably having other animals constantly asking you to get their kite out of a tree.

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Many of us feel instinctively that the official CPI inflation rate does not reflect our own experience. I seem to be spending much more on food now than 12 months ago – despite the 5.5% inflation rate. ETM Analytics is working on its own inflation indicator, and ZA Confidential asked Russell Lamberti what it is and what it shows….

ZAC. When did you start this, and what is the aim of the exercise?
RL. We conceived of the idea in early 2013 and started measuring the basket price in March 2013. The aim is to assess how closely an ‘everyday’ shopping basket cost tracks official CPI and retail inflation statistics. South Africans constantly complain that official CPI data doesn’t reflect their personal reality. We’ve investigated Stats SA’s methodologies and find that there are techniques in measuring the CPI that probably bias the measure downward over time. We’ve decided to measure a simple, representative shopping basket over time to see if the price inflation pressures on it validate or challenge the official picture.

ZAC. What is in the index?
RL. There are about 20 grocery items in the basket (things like bread, chicken, soap, toothpaste, coffee, rice, maize meal, milk and so on). There is a mix of basic necessities and less necessary goods like chocolate and coffee. We’ve chosen to always buy the same brands, and we’ve chosen the most popular brands. Popular brands are less prone to price volatility and are highly purchased, making the basket that much more representative.

ZAC. How reflective is your index of the average South African shopper? Is there a type you can identify who would match the index quite closely?
RL. We track a very standard shopping basket at PnP, Checkers, Spar and Woolies stores in Fourways. The stores typically price their products on a national basis, although store managers in some instances do have some discretion here. Fourways is a good choice because a) it is close to our offices:) and b) it is a confluence of the middle income suburbs of Fourways, the high-income Dainfern, and the low income Diepsloot. All these income groups shop in Fourways. So we think the basket is a good representation of simple ‘retail’ inflation that most shoppers experience. We’ve kept our basket simple and included items which, on the whole, rich and poor households all buy.

ZAC. What has been the movement so far?
RL. The index is up 9.2% from March to November 2013. So that is 8 months’ worth of data. If you had to annualise that, it would be an annual shopper’s inflation rate of 14.1%, which is more than double the current official rate of CPI inflation and also other official measures of retail inflation. There is potentially some seasonal caveats to this, so we reserve full judgement on the y/y figure until March 2014 when we have a complete full year picture. Nonetheless, the basket inflation is quite startling so far and I think far more in line with people’s intuitive sense of price escalation in their everyday expenses at the shop.

ZAC. Any big movers?
RL. Chicken has been a big mover. This is due to ‘ordinary’ inflation but also the result of tariffs on chicken imports. Coffee, olive oil and salt are also up strongly, but there has actually been a broad-based increase in prices in the basket. 12 of the 20 items increased by more than 6% in just 8 months, or over 9% annualised. Of these 12 items, 6 are up by over 15% annualised. 5 items of the 20 are the same or lower in price than they were 8 months ago.

ZAC. Why do you think your index seems to be rising much faster than the official CPI index?
RL. Not an easy question. Official CPI is a much broader basket, covering school fees, rent costs, transport costs, energy costs and so on. It’s possible that there is less cost escalation in these items than in grocery items – we still need to investigate this further. Additionally, Stats SA weights its basket heavily toward highest 20% of income earners who tend to spend a lower proportion of their incomes on groceries, but this is clearly not a broadly representative approach of most South Africans. Finally, we need to remember that the CPI inflation rate presently is a y/y measure, while the ETM basket only has 8 months’ worth of data – we’ll have a more accurate comparison in March 2014. But certainly if we see the ETM basket inflating in price much more than the official CPI for a prolonged period of time it would raise some red flags on the CPI methodology. The strength of the ETM basket methodology is its simplicity – it measures the cost of buying the same 20 broadly representative items at four nationally representative major retailers in a busy and demographically diverse retail precinct.

ZAC. Are there lessons to be drawn from your findings?
RL. The most important lesson at this stage is that people’s intuitive concern about their daily shops rising in price much stronger than inflation seems to be correct. Over time we will be able to draw out more and more lessons. If indeed Stats SA does systematically underestimate the extent of inflation, this has profound implications for monetary policy and wage bargaining. The ETM basket does not purport to be the definitive answer to these questions, only to provide another interesting and objective measure of price inflation that can inform this debate. We have however done other, proprietary work for our clients which shows that broad-based inflation in South Africa is considerably higher than the official CPI data reports.

ZAC. Do you think policy makers should/will pay attention to what you are doing?
RL. Yes, over time I believe they will. We know that the ETM basket price index will take time to gain traction and credibility. We’d certainly like to run it for at least two years before we start placing greater confidence in it, so by March 2015 we think it will tell an interesting story and be a very useful cog in the inflation debate. ETM is well-respected by our clients and policy makers alike, and so this is certainly an area of research that I think policy makers will pay more and more attention to in the coming months and years.

ZAC. Is there a long-term strategy for this exercise?
RL. In a sense yes, but we’re also just letting the data emerge month by month for now. Let’s get to March 2015 and have two solid years of data under our belt and then we can assess things from there. Certainly as a broader concept of understanding the true loss of purchasing power of the currency, which is really what inflation data should be capturing, ETM is committed to feeding information to our clients that gives the most accurate picture possible. As they say, a huge part of investment success is exploiting the gap between perception and reality. To the extent that inflation reality is strongly divergent from inflation perceptions, there is an opportunity to be exploited for investors.

Conclusion: Bravo ETM. A useful, interesting and informative initiative. One to watch!

Tweet of the Day:
Puns (@omgthatspunny): Class trip to the Coca-Cola factory. I hope there’s no pop quiz.

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The economy is growing, but so slowly that it is not going to make much difference. The annualised third quarter growth figure has come in at 0.7%. We are worried, but what about our experts…..?

Dawie Roodt from the Efficient Group:

Average growth for the first three quarters now stands at 1.9% – probably the reason the SARB lowered its forecast for the year to 1.9%. That also means that if growth comes in at below 1.9% for the final quarter, then growth for the year will be below 1.9%. And as things stand, weak demand, strikes on the mines and the "normal" structural problems in the economy, mean growth in the 4th quarter is quietly likely going to be sub 1.9%. Under these circumstances, monetary policy is rather ineffective to support the economy any further. What we need is better labour relations, an efficient state, and clear macroeconomic policies – but for that we need solid political leadership…

Ian Cruickshanks from SAIRR:

This latest number of 0.7 percent quarter on quarter is very disappointing, when compared to Q2’s revised 3.2 percent. Manufacturing, which is 15 percent of the economy, was down . Strikes, particularly in the motoring industry, had an overall impact on manufacturing and on the economy as a whole. This could be expected to continue into Q4. I now fear we may not get to 1.9% GDP growth for the year as a whole. The stock market may be booming but it is difficult to consider allocating fresh funds to the market with the economy in this state.

Mohammed Nalla from Nedbank:

SA’s GDP printed at 1.8% y/y and 0.7% q/q, below consensus estimates of 2% and 1% respectively. We remained bearish on this data given the torrid Q3 which saw labour unrest impact the vehicle sector, as well as a failure of the mining sector to rebound from an already low base. Retail sales and manufacturing also posted negative surprises during the quarter and as such, it is not surprising to see this filter through to headline GDP.

George Glynos from ETM:

A key factor weighing on domestic output in the third quarter was a prolonged period of strike activity in vehicle production industry, while a weaker consumptive sector is expected to have made a less pronounced contribution to growth relative to previous quarters. The domestic economy is in the midst of a cyclical downswing as the initial support to growth stemming from SARB policy loosening wanes while the subsequent inflationary pressures erode purchasing power. Not only cyclical, but also structural issues continue to weigh on domestic production growth and unless reforms which generate a less hostile business and production environment are implemented, economic growth will struggle to gain meaningful traction. 2014 looks set to be a tough year. Why do I care? A softer than expected GDP number will raise further concern at the SARB as it suggests that the underlying economic weakness is even more pronounced than expected. While this may entice market players to increase calls for a deeper reduction in interest rates, with the ZAR still vulnerable and inflation still sticky the SARB is unlikely to take any policy action.

Peter Attard Montalto from Nomura:

Strike action was a partial bug bear affecting the end of the quarter in particular in the car industry (though that will really probably be felt in Q4 because of the peak of the strike in October). Overall the wage round has progressed with tight bursts of layoffs that have not been overly long lasting in sectors outside the headlines. As such the strike impact has been mainly felt in the very weak manufacturing number and not more widely. Broadly SA has followed much similar patterns to other emerging markets with a weak Q3 as global demand has ebbed and sentiment has taken a knock from the goings on around tapering and the shut down in the US. More broadly we can see the constraints the local economy is under not only the usual structural issues, but also on households’ indebtedness and the slower pace of credit growth. Manufacturing was really the dog of the quarter, though actually its performance wasn’t that different from Q1. The clearly significant volatility in seasonally adjusted output is down to strikes, but even accounting for this we are seeing underlying weakness thanks to slow domestic investment rates and slower export demand. Companies have also been running very low inventory levels (as a % of GDP), which we expect to have been repeated in Q3 when the expenditure breakdown is provided by the SARB soon. That may also be feeding into the volatility of output. We will most likely have to downgrade our 2013 growth forecast to 1.9% from 2.0% previously.

Conclusion: South Africa needs to boost job creation, but it ain’t going to do it at these levels of economic growth. The beloved country must be weeping…

Tweets of the Day:

Funny Tweets (@iQuoteComedy): Diet ideas: Eat whatever you want, and if anyone tries to lecture you about your weight, eat them too.

rob delaney (@robdelaney): Peter Jackson just found a postcard JRR Tolkien wrote his nephew in 1938. He’s turning it into 22 nine-hour films.

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Having done an impressive job of ensuring reliable power supply throughout the Winter, Eskom screwed up last week, declaring an emergency and instructing its best customers – the mines, smelters and so on – to cut back on their power consumption. Once again, we have a clear indication that our lack of generating capacity is a severe brake on the growth of this country, and the fruits of past under-investment are rotten, maggot-infested and cancerous for the SA economy. Should these big, job and wealth creating industries be in the front line when power generation capacity is inadequate? We asked some of our experts…..

Mario Pretorius from Telemasters:
Spreading pain in never easy, and to quote my friend Leon Hart: ‘"Genius has its limitations, but stupidity is boundless". So Eskom and NERSA have driven the cost of alternative energy down, limited the amount of purchases thereof and in general done coal BEE where coal is priced up to 40% dearer. They have shrugged off the damage done to the local roads by coal transporters – and Eskom has revamped its HQ by the billions of rand. Here is the order in which every load-shed must happen:
1. Eskom HQ and regional offices.
2. Government departments, starting with the DME.
3. Provincial departments.
4. National parliament, provincial and municipal offices.
5. All 249 SOE’s.
6. Any residential area with more than 10% in arrears.
7. Shopping malls, in decreasing size.
8. Power to neighbouring countries
9. Residential users – for no more than 60 minutes at a time
10. Any Gupta-owned enterprise. (Maybe this should come first and we’ll be safe for a while.)
In a real emergency, the E Toll gantries, Nkandla municipality, traffic departments, and all political party offices should be switched off. Permanently.

Mike Schussler from economists.co.za
It is easier for Eskom to cut the big users to create savings in demand. But it is certainly not fair, as they could argue that they are at present keeping all our lights on. Rolling black-outs may however have more economic damage – as value-add is often in the areas such as Sandton or the CBD in Metros. Perhaps a rolling blackout that is never longer than 2 hours per area, that rolls across the country on a schedule, might be best. The country does owe the big power users some relief from all the times they have taken the hits. Anyway, Eskom could just allow any industrial customers with extra capacity to supply power and free up the system now. This state monopoly has to think outside of their very narrow box now to help save the country.

Duane Newman from Cova Advisory:
It does not seem fair that industrial users are the target of Eskom, as this impacts their financial viability in the medium term. I do understand it is easier for Eskom to negotiate with large business than municipalities. It is clear that Eskom has negotiated some favourable buy-back deals to make it financially worth it for business in the short term, but it is harming their medium to long term outlooks when Eskom supply becomes unreliable. I do understand that business is starting to have a sense of humour failure on this issue, and it is important that Eskom do come up with alternative plans. Many municipalities are marking up power to consumers and businesses, which is also not sustainable. With Eskom’s IDM programme running out of funding, it is likely that business and households will not be investing in energy-savings devices. It is time that Eskom, the Department of Energy and the Department of Trade & Industry push harder for business to develop Co-Generation projects to develop base-load capacity that can be used by large energy users – and any excess can be sold back to the grid. For this to happen, we need a lucrative incentive programme to stimulate this investment. I have been dealing with foreign investors who would like to invest in South Africa – and the deal breaker is not high levels of crime, poor education, excessive strike action, nor lack of incentives – but is the lack of electricity from Eskom and lack of gas from gas suppliers like Sasol.

Peter Attard Montalto from Nomura:
I think it’s a big challenge to decide who gets cut and who not.
Arguably the best way, economically – to ensure investment and job creation etc, would be to cut households and allow SMEs and big business to be able to still produce. However that’s practically impossible to separate SMEs from households and is also politically impossible to target households. That really only leaves bigger industry to take the strain as most practical alternative. We are talking about a handful of users here where there can be real time Eskom monitoring of usage to prevent shirking. The trouble with asking households to cut is that there is no household by household monitoring or ability technical to cut their usage by say 10% – they can only be asked, implored – and then there is a beggar thy neighbour problem that there is little incentive for any particular household to cut if they assume a neighbour will do it instead. These issues, and the push back by larger users is why when the system is very tight for a prolonged period the chances of deterioration into load shedding (ie from normal through level 1 to level 3 emergency) is actually quite likely. The saving grace last week was that the specific problem was quite easy to fix and short lived. In the new year we may not be as lucky.

Chris Gilmour from Absa Investments:
Not an easy one, and one that changes over time. Had this situation occurred 20 or so years ago, cutting residential consumers would have made very little difference, as their collective usage was much lower than it is today. However, with the accelerated rollout of electricity supply to a far greater residential base in the past couple of decades, coupled with virtually no growth in the installed capacity of Eskom, this has meant that collective residential usage as a percentage of total electric capacity is now significantly higher than it was then. So, residential customers should now bear the brunt of power cuts? Logically, probably, yes – but politically this would likely hit a very raw nerve indeed. We only need to cast our minds back to the dark days of early 2008, when Eskom was literally hours away from collapse. Random power cuts affected everyone and the impact on national morale was truly awful. Having said that, when rotational, scheduled power cuts were introduced, people accepted them and in fact began to get used to them. So, if a thoughtfully-invoked rotational schedule were to be enacted, it might just work with the minimum of consumer resistance. Trouble is, this is happening in the run-up to a general election, where the proportion of undecided voters is extremely large. If scheduled power cuts were to be introduced for a few months before April next year, it could play a meaningful role in determining how people vote. Another factor to bear in mind is that our municipal electrical distribution system (mainly residential sub-stations) is so clapped-out that regular power cuts would play havoc with it, as they did in 2008. This could wreak havoc with sub-stations and exacerbate an already parlous situation.

Prof Raymond Parsons, Special Policy Adviser, Business Unity South Africa
Busa does not believe it was appropriate to place the burden of the emergency measures on a few firms – and expect them to take the hit for everyone. It is the household sector, and not industry, that has the high peaks in the morning and the evening that place a big strain on the network. Other methods should be explored to smooth these peaks. Fortunately, Eskom has now lifted the state of emergency under pressure from the companies affected, but that is not the end of the story. We need to look down the road as to what other contingency measures may be needed to keep the lights on in a continuing tight supply situation. Busa considers that the longer-problems that arise from the latest Eskom experience are twofold. Firstly, the uncertain power supply is clearly unable to accommodate planned new investment, a serious bottleneck which has broader economic implications and, secondly, there has been a serious delay in dealing with the ISMO bill in Parliament, which is meant to develop independent power producers. It nonetheless remains a paradox that SA should be experiencing a power emergency at a time when the economy is at a low ebb of only 2% growth this year. We are obviously still facing a vulnerable situation in which to avoid further disruption before new capacity is assured late next year. Conclusion: Industry drives the economy, and I am uncomfortable with Eskom’s current strategy. Not least because it partly conceals the true scale of this country’s energy crisis.

Tweets of the Day:
Ellen DeGeneres (@TheEllenShow): Excited to make fun plans for this weekend. Last weekend, I spent 8 hours organizing my spice rack. Where does the thyme go?
Fake Dispatch (@Fake_Dispatch): Five Habits of Annoying People: 1. Not finishing what they started. 2.
Funny Tweets (@iQuoteComedy): later is the best time to do anything

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On December the Third, the cost of motoring in Gauteng will shoot up with the activation of new eTolls. The authorities want us all to buy and use new eTags, which will enable them to rake in the cash in real time. But will we oblige? ZA Confidential asked some of our experts what they plan to do….

OUTA chairman Wayne Duvenage:
I will not get an eTag and I will not pay for eTolls. I will defy this unjust policy, along with thousands, if not hundred of thousands, to render this unjust policy unworkable.

Mario Pretorius from Telemasters:

Two phrases spring to mind here. ‘You are not my master but my servant’ defines the principle of democracy. Clearly the tin ears in blue light brigades have lost all sense of reason and responsibility, and eTolls are their latest do-what-I-want stunt. The second phrase is ‘any fool can make a rule and most fools keep to it’. Tolling passageways are ancient sources of friction and war. This one has every odious element possible and I will not support it and hope that every citizen will join in making a stand against wrongheadedness. And I lay a R10 wager that it will not operate on 3 Dec.

Company Director Brand Pretorius:
Although I am still very firmly of the view that an increase in the fuel levy would have been a much more effective way of financing the toll roads, I intend getting an eTag – as I am a law abiding citizen. I also accept the reality that if we want a world class roads infrastructure, we need to be willing to contribute financially.

Jeff Osborne from Gumtree:
I shall not be acquiring an eTag as a matter of principle, and support continued passive resistance. The scheme was ill-considered, is devoid of rationale, and was not transparent. Other obvious collection methods would have fully recovered the cost of the freeway upgrade by now. Never since the apartheid era has there been such unanimous and overwhelming public outrage over an issue. We should not just capitulate because the government has bullied its way forward. This might be a lost battle, but the cause certainly is not. We must continue our united opposition to this undemocratic imposition.

George Glynos from ETM:
I am fortunate enough not to have to use the highway to Pretoria very often so I am not affected much. That said, I will not be buying an e-tag in what will be my small protest at the way in which this has been handled, the inefficient money collection method, the fact that there were alternatives that could have been used to reduce the overall cost, and the arrogant stance of government to push ahead with it despite the public outcry. If the public consultation had been conducted effectively as the government would suggest, then why is the public discontent as acute as it is? This will be a huge test on the government’s ability to manage the process on a very reluctant and potentially uncooperative public.

Duane Newman from Cova Advisory:
While I am not keen to pay eTolls, Government needs to be commended for taking an unpopular decision before the elections. I believe that it is a signal that the government can govern and will stop trying to keep everyone happy through the many consultation processes. I want to thank Wayne Duvenage and Outa for all their efforts in making sure that the eTolls are more affordable. Ultimately we need to pay for our great highways in Gauteng. I suppose I have to go and buy my eTag.

Mario Pretorius from Telemasters:
Two phrases spring to mind here. ‘You are not my master but my servant’ defines the principle of democracy. Clearly the tin ears in blue light brigades have lost all sense of reason and responsibility and etolls is their latest do-what-I-want stunt. The second phrase is ‘any fool can make a rule and most fools keep to it’. Tolling passageways are ancient sources of friction and war. This one has every odious element possible and I will not support it and hope that every citizen will join in making a stand against wrongheadedness. And I lay a R10 wager that it will not operate on 3
Dec.

Ian Cruickshanks fromSAIRR:
I will be buying an eTag. I agree with the user-pays principle, and despite the system’s extortionate cost, the likelihood of fines for non-payment is really not worth considering. I feel I have been bludgeoned into submission. This is typical of our government’s modus operandi.

Mike Schussler from economists.co.za:
I will get an eTag as it will make life easier having one than not having one. I do not agree with a system that finances just one road and is expensive, but I am not going to want to pay more than I have to. Also, I think that the system is easy to evade for people who have no address – while those of us with one are going to get caught in the law’s sights. It will end up making honest tax payers into criminals, while they will struggle to charge those who already do not pay much.

Dawie Roodt from the Efficient Group:
As an economist, I understand the benefits of “the user pay” principle. However, in SA there are a few other variables that must be considered – apart from questions about collections, who has benefitted from the toll-road contracts and the like. Our tax burden has increased quite dramatically in recent years. In the past my taxes were used to pay for infrastructure. But for the past few years politicians “forgot” to spend sufficiently on infrastructure – but increased spending on social/current expenditure. Today we realise that we have neglected infrastructure and need to spend vast amounts of money to maintain our crumbling infrastructure and to provide much needed new infrastructure – unfortunately the money needed for this has already been committed to vote-friendly social/current expenditure. The tolls, therefore, are nothing but a “privatisation” of new taxes. And the opposition to the tolls is nothing but a tax revolt! I will be part of the problem…

Conclusion: It will cost more to use the highways for those without an eTag, and that may be the reason many will sign up. However, there is talk of mass defiance, and one wonders whether there is the capacity to administer the system – if very few use the tags, and payments are slow and reluctant. It will be an interesting launch period!

Tweets of the Day:
Moose Allain (@MooseAllain): I must be ill – I thought I saw a sausage fly past my window, but it was actually a seabird. I think I’ve taken a tern for the wurst.
Puns (@omgthatspunny): I didn’t like my beard at first. Then it grew on me.

ZA Confidential is e-mailed to subscribers. 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.

Given the importance of telecommunications, it would be nice to think that our largest fixed-line provider Telkom would be in good shape, but the news flow has not been all positive, and yesterday’s results announcement was a worry for a few reasons.

1) It may well be that ZA Confidential’s invitation to the Telkom interim results presentation went astray, and I did receive a news release when the results were published. However, a query to the Telkom media office requesting details of the presentation went unanswered, so it is difficult to know what to make of it all. Certainly, I have always believed that it is wise to engage with the media and to be open and available to all. My absence from the presentation is an irritant, but will not stop ZA Confidential from commenting on Telkom.

2) The CFO of a large listed company is a key player in ensuring that the finances are prudently handled and that all the rules of good governance are respected. So what do we make of the latest revelation that Telkom lent R6m to buy shares to its CFO Jacques Schindehütte – while he was being investigated for (as-yet unexplained) misconduct. A former CEO of former Absa, Schindehütte had been seen as a safe pair of hands at Telkom, where management and Boards have been at one another’s throats, the dominate shareholder has been perceived to interfere unnecessarily, and the turnover of CEOs has been precipitous. The sooner this issue is resolved, hopefully with the CFO being exonerated, the better. The current suspicions and speculation are doing Telkom no good, even though it is a healthy sign that this issue has come to light at all.

3) Finally, I worry about Telkom Mobile, which at its launch was called 8ta, and then was bizarrely re-branded. Telkom owned a stake in an established cell phone operator Vodacom, which it sold, before launching 8ta into a fiercely competitive market, with a lot of talented and experienced rivals. A puzzling strategy. Now we see that Telkom is looking at “de-risking” its mobile division, whatever that means. Not the behaviour of a loving and happy parent.

Conclusion:
With Vodacom planning to link up with Neotel, Telkom will be facing a far nimbler and even more dangerous rival – with an offering that would include fixed-line services. As the world moves towards the Netflix model of receiving TV and other data services on the ground and not from satellites, a communications revolution is underway in SA, and a lot will change if we can ever get affordable and speedy broadband to more people. Telkom has such massive assets, and does some things very well, so it will not disappear overnight, and we must all hope that the current cost-cutting and strategising of a very impressive CEO, and sound guidance from an experienced and business-savvy Chairman, will help it to define its true direction, and to learn from many recent mistakes. We will be watching.

Tweets of the Day:
Marl le bean (@Marlebean): I may not be the brightest crayon in the tool shed but at least I’m great at analogies.
Puns (@omgthatspunny): How does Moses make his tea ? Hebrews it.
comedybot (@comedybot): Women like silent men, they think they’re listening. -George Carlin ☺

ZA Confidential is e-mailed to subscribers. For details on subscription rates, please contact zaconfidential@gmail.com

Media material and invitations to presentations can be sent to the same address.