· Following hot on the heels of a similar incident involving ENS, is another case in which intercepted emails resulted in an attorney held liable, because he paid R1.4m into a fraudster’s account.
· A high court order against the RAF Chief Executive, in which that individual and the RAF board, was held liable to pay legal costs from their own pockets, will be appealed against. The causa belli was the system put in place by the Fund after firing its panel of attorneys, without having a backup plan in place; this led to the fund attempting to settle on the date of trial which the judge found unacceptable.
· Whilst on the topic of the RAF, the unilateral decision by the Fund to stop paying the medical expenses of victims who belong to medical schemes was successfully challenged last year. The fund sought to appeal and leave to appeal was denied. One of the allegations made was quite concerning, i.e. that the Fund had six staff members assigned to process more than 1500 files..
· More on the RAF: an article on interim payments in road accident claims may be found at: https://www.macrobert.co.za/insights/posts/interim-payments-road-accident-claims
· An indemnity which did not comply with section 45 (6) of the Companies Act is void: https://www.fasken.com/en/knowledge/2023/01/navigating-indemnities-in-light-of-the-financial-assistance-provisions
· Fica imposed reporting obligations in respect of international fund transfers of R20k+: this should not affect our profession: if this interests you, ask me and I shall forward you an STBB email note.
· Regular readers might recall that I raised questions two weeks ago on whether courts are allowed to pronounce on the internal policies of a political party – in this case cadre deployment. The result of the current application by the DA will be interesting.
· The following case deals with the administration of deceased estates under the Black Administration Act and is probably somewhat arcane: http://www.saflii.org/za/cases/ZASCA/2022/148.pdf
· The right to the undisturbed use and enjoyment of own property is not unlimited. In this case reasonableness versus personal peculiarities is discussed: http://www.saflii.org.za/za/cases/ZASCA/2022/160.pdf
· The practice of distributing capital gains is common. Tax nerds might enjoy the dispute regarding the taxation of such gains that had been distributed: http://www.saflii.org/za/cases/ZASCA/2022/153.pdf
· Should shares, owned by a trust, enabling the holder to control a company, be sold to trustees and not a beneficiary? Fairness in treating beneficiaries is discussed. http://www.saflii.org/za/cases/ZASCA/2022/156.pdf
The Chief Registrar of Deeds has issued CRC1/2023, a secular dealing with the recent amendments of the Sectional Titles Act.
The IMF has raised its growth outlook for the world economy to a GDP of 2.9%. Slower than expected but still good news.
Predictions for the South African GDP are all over the place, but appears to be in the order of 1%, which is better than a recession but will still, given our population growth rate and population inflation, result in a poorer populace. The reasons for this are obvious – “challenges”!
The Big Mac Index compares purchasing power of countries, the current rating says that ours is good, for what we earn (its implied exchange rate is R9.31/US $). We are, on this index the most undervalued currency in the world. Depressingly, the difference between the “real value” of the Rand and what it is trading at, is attributable to market sentiment, which tells you how the world sees us.
Crypto pushers say that now is the time to buy! Last year’s scandals and drama resulted in a dramatic bear market for “investors”. This drop apparently created a significant opportunity to buy now – I wouldn’t though.
A relatively new – to me at least – publication is the Household Affordability Index which quaintly records figures for Johannesburg, Durban, Cape Town, Pietermaritzburg and Springbok, of all places. Do take a look, the statistics on page 1 are quite interesting: https://pmbejd.org.za/wp-content/uploads/2023/01/January-2023-Household-Affordability-Index-PMBEJD_25012023.pdf
General news is:
· One million+ students applied for NSFAS loans this year. The difficulty is that those who drink from this fountain are not repaying their debt and student debt has reached R16.5bn. Now our Minister (Nzimande) is talking an alternative funding model for tertiary education. An appropriate term is broke.
· A very interesting video on world gold production is available at: https://www.facebook.com/watch/?extid=CL-UNK-UNK-UNK-AN_GK0T-GK1C&mibextid=2Rb1fB&v=461136406216434
· Interesting statistics emerge from the link quoted below – whilst a criticism on the BIG intent, the side information is very interesting: https://codera.co.za/to-go-big-or-not/
· The SABC is desperate: it has started demanding that we pay licence fees for computer monitors – SABC demands for payment include a sentence stating that the definition of a TV set includes a TV monitor able to receive a broadcast signal by virtue of being connected to any television receiving equipment. Good luck with that!
Lastly, Eskom; news on the incredible reach of our self-induced financial “challenge” continues to flood in: much of it will not be addressed, ever, it would seem. Take for instance the Emfuleni municipality, which owes Eskom R5.7bn: the debt is immense and the widespread associated problems of non-payment by users of facilities, such as the Enoch Mgijima Local Municipality in the Eastern Cape, which buys electricity at R30m but only collects R14m therefor, owing to 60% of its electricity being lost because of tampering with meters and illegal connections, are such that the debt simply cannot be repaid.
The fact is that our ruling party chose against infrastructure development in favour of social benefits – hard to criticise but, at best, a short-term solution – do read my commentary below. In addition, the bizarre and byzantian politics of the ANC, choosing race over merit and feathering of own nests, has led to an economic downturn of gargantuan proportions.
What to do? Declare a state of disaster? The difficulty with this is that it opens the door to more corruption as it cuts into the mechanisms introduced to curb corruption. An easy, and I suspect, increasingly popular solution, might be to fire Minister Mantashe.
The machinations of our ruling party, desperately seeking legal reasons for the declaration of such a state of disaster is quite amusing. The problem is that, judging from the outside, the legal advice given to those who govern (assuming that they do act on such advice!) is often questionable.
Society’s reaction to the Eskom disaster is that it imported, over the past five years, the equivalent of 2.5 Koeberg generators in renewable energy generation (R10.7bn attributable to just inverters). The prediction is that by the end of this year some 14% of electricity demand in South Africa will be catered for by private generation: all lost to Eskom.
Business indicators that relate to poor political management:
· PwC forecasts significantly lower number of new jobs that will be created this year, which will push up our unemployment rate. In conjunction, salary increments, compared to inflation, will negatively impact the purchasing power of employees.
· Coal exports via Richards Bay has dropped to its worst performance since 1993, owing to the non-availability of locomotives, cable theft and disruptions, resulting in a lost opportunity cost of R30bn.
Random interesting news:
· Our banks appear to be very profitable by global standards: https://www.linkedin.com/posts/daan-steenkamp-48a42520_bank-profitability-and-equity-prices-activity-7023144902590967808-B4AZ/
· Eskom will be giving performance-based incentives to “a majority of Eskom employees that are great people that are doing exceptional work”… You have to love the statement by an Eskom board member: “As the board, we have never really had any pressure from other people or from government to change our plans.”
· The following contains a roadmap showing (some) SA road conditions: https://topauto.co.za/features/66299/south-african-authorities-know-next-to-nothing-about-their-own-roads/
· The N2/Wild Coast project will go ahead, given a R7bn road construction award by SANRAL.
· The UIF receives some 50,000 claims per month and makes some 200,000 payments. Its Commissioner says that the delay in payments are attributed to fraud and want of compliance in claiming.
· Vodacom will discontinue its uncapped 4 G and 5 G products.
Business information worth knowing:
· Salary deductions:
o May you dock salaries after an unlawful strike? https://www.golegal.co.za/salary-deductions-strike/
o May you dock salaries owing to loadshedding? No. http://www.phinc.co.za/OurInsights/ArticleDetail.aspx
· Be wary of limited duration employee contracts: https://www.lexinfo.co.za/post/limited-duration-contracts-can-backfire
· Read the following for general information on capital gains tax exemptions on selling your business: https://www.moneyweb.co.za/mymoney/moneyweb-tax/capital-gains-tax-relief-when-selling-a-small-business/
· The office market remains challenging and decentralised grade-A space rentals increased by 3% yoy (the figures are for November last year). The national average is still 5.3% below the 2019 level. In real terms, rentals have fallen by 7% after deducting building-cost inflation. Industrial property for space of 500 m²+ has risen by 5. 7 %. House prices stood at 3.6% and continues to slow down.
· Commercial property markets are expected to be weaker this year than last year.
· Sapoa set the national vacancy rate for offices at 16.1% (Q4 2022).
· Redefine says that its total retail turnover is now in excess of pre-Covid levels with foot-count levels still below pre-Covid levels.
· The self-storage market is set to expand, primarily driven by e-commerce sales.
· With Eskom and service delivery failure, the demand for green homes is growing.
· Reits have taken a beating over the past three years but appear to be set for a return.
· Cape Town has been ranked fifth by Savill on its World Cities Prime Residential Index.
· The fastest growing suburbs in Gauteng and the Western Cape have been listed by Businesstech: https://businesstech.co.za/news/property/660969/these-are-the-fastest-growing-suburbs-in-joburg-and-cape-town/
· Lastly, UJ (Yes, Cde Nzimande was in on the action) demonstrated a house printing machine – these alternative and cheaper technologies have been around for some time but could not be used as those-without-houses want only brick and mortar.
An interesting case presented itself recently in which the legality of a rule in the constitution of a voluntary association, which controlled common property made a rule that, where a member defaulted in its payments, access to its property within the communal area could be denied, was tested. Take a look: http://www.saflii.org.za/za/cases/ZAWCHC/2023/10.html (ex West)
Failure to provide services by municipalities is the order of the day. One simply cannot sustainably run a country if the following occurs:
The Attorney-General warned the eThekwini municipality over the loss of 56.2% of the water in its piping system being lost owing to leaks.
In the same breath is a report from uMgungundlovu that the municipality collects less than 50% of the revenue owed to it.
Our electricity woes have taken centre stage but, it’s not just electricity: our third-tier governance has all but collapsed and most municipalities teeter on the verge of financial collapse, policing, rail, roads, health and virtually anything, touched by our national government, is not functioning properly. The fact is that the ANC chose social above infrastructural development and tainted what it did do with incompetence and corruption born of self-interest. Whilst a goal of social investment is laudable in isolation, the effect of the political decisions, taken in the past, is now felt by every South African. A cacophony of solutions is offered by all and sundry, but the fact is that those who lead us most likely do not have either the drive nor the capacity to implement any workable solution. At best, it will take another generation of politicians to turn South Africa around but, looking at the candidates available, one is left with little hope. Perhaps one should start with small victories: fire Minister Mantashe!
South Africa is widely regarded as one of the most unequal societies our world. We are not faring much better than we were some years back and, one of the reasons for this is that our government does little to address the underlying issues: who in our cabinet do you think understands economics?
Recently the Daily Investor ran a refrain article on rich taxpayers flooding out of South Africa. Why would they leave? Take the UK as example, its NHS is a disaster and life there is certainly not what it was some years back. The answer to this is that, whilst our government embraces its Bricks allies, most South Africans prefer to work and educate their children in Western countries. Why?
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world, …
Yeats, The Second Coming
Politicos are not generally funny, as what they do can have quite unpleasant results but, looking at this video of Mr Malema, his inability (as would be leader) to understand that the exercise of his rights will impact on those of others, is black humour at its best: https://www.youtube.com/watch?v=jxRzrWS0hK8
Politicians are the same all over. They promise to build bridges even when there are no rivers.
If God had wanted us to vote, he would have given us candidates.
Vote early and vote often.