Archive for year: 2019

2019 will go down as one of those years we would like to forget.

I’m always reminded as I say that that things could have been worse. A defeat of Ramaphosa in December 2017, just 2 years ago, would have made the last month of Eskom look like a kiddies’ sleepover in comparison. Eskom would have bankrupted within 6 months and Dudu would have flown SAA into the ground. Losing employment would not have been an option so more people and leadership would have been recruited to fix the mess and finally, the goodwill towards the country would have imploded.

As forecasted by RW Johnson, the SA government would not have agreed with the IMF and instead, would have printed more Rands “like America and Europe” in Quantity (sic) Easing, and wham-bang, we would have slid into Zimbabwe-like chaos. My humble opinion granted, it was that close.

I’m pleased I have no need to defend my argument as that never happened. But I read the latest whistle-blower’s report about Public Protector, Adv Mkhwebane, I’m reminded that the country was run by the SSA under the direct command of his lordship. It didn’t happen and that’s all we need to take out of the last two years right now.

There are many articles written about what HAS happened. I cannot remember all, but for me, noteworthy has been:

• President Cyril Ramaphosa won the ANC election and ousted ex-president Zuma.
• He has managed to assert many initiatives despite fierce white anting from his own party and so-called allies.
• He has established commissions of inquiry into SARS, the PIC [imagine millions of civil servants without pensions and their hard-saved cash squandered by Gupta advisors] and State Capture.
• The first one brought about the demise of Tom Moyane in an interim report and he has since been unable to overturn that decision. SARS, therefore, is on the path to recovery and I note from the matters upon which I serve, that cashflow has returned to SARS and they are no longer being accused of withholding reviewed taxes.
• The SARB is in safe hands for now.
• SAA is in business rescue. An absolute first for SOE’s, and an embarrassment to the ANC, it is now going to be fascinating to watch how the seasoned Les Mathusen manages his rescue plan. The unions, which forced the hand of the Presidency, one in shut-down and the other in a court application, have offered to work with the Business Rescue practitioner to prevent the liquidation of SAA. Watch this space as Mathusen unpacks the over-staffing, the over-charging, identifies the profitable businesses and routes, orders the sale of assets and retrenches thousands of employees in order to save the airline. He has endured no bigger stakes in his career, I’m sure.
• Eskom – Eish! = Eskom Is Shedding Hourly! Every time Eskom load sheds, we write about -1% of our GDP growth into history. Irrecoverable and tragic in its consequences. It would have been worse, and seeing Cyril and Pravin jump in and help, for all the cynicism, is still better than shots of our President visiting Egyptian pyramids. The stakes are higher than wet coal; in faraway walnut offices, our junk status is being debated.
• The NPA is being fixed and the Scorpions-by-another-name are coming into place. We will see prosecutions commence and some conclude in 2020. If our President really wanted to show intent, he could set up some fast-track courtrooms, resources and processes to prosecute low-hanging fruit cases, like that udder one called Estina Farm.
• Every day be grateful for Amabhunghane and Scorpio. Bravest of the brave men and women have exposed evidence of exceptional proportions pointing to large-scale corruption by the highest of leaders. If ever a fish rotted from the top, the stench has been reported in excruciating detail by these journalists. Freedom of the Press, a cherished ideal of democracies, is alive and well in SA.

So much is not ideal but so much is far better than we could have hoped for two years ago. I always remind myself of that in my darkest [Eskom and other] days. You and I have been recipients of one of those “miracles” in South Africa; you can use any term you like to describe what could have been, but now what is, happening. The property market has been as interesting as ever. Anecdotally, houses under R3m are selling and upmarket homes are only selling at very deep discounts.

Two almost-humourous comments I’m regularly hearing from estate agents are:

“Prices had to drop, you know” and “Bargains abound now.” Both are platitudes for a really quiet, really buyer-based market. If you take the noise of politics, both national and international, out of the data, the fact is that economically, we are heading for an upswing in prices. Predictable interest rates, falling house prices and banks willing to lend are sure-fire bets for an upturn.

You establish a blush of confidence and the market would rebound in months and set sail for easy blogs to be written ☺ [I really battle to write upbeat stories in this depressed market ☹]. Seriously, every downturn has felt like this; we’ve just had more to hang our hopes on politically speaking. October’s origination record may have felt like a flash in the pan, but what if it portends exciting things to come?

Nothing beats a little R&R in the midst of the battle. Christmas is coming and the 13th [Friday nogal!], marked the beginning of builders’ holidays. Even the kids went off earlier this year – sorry, Moms. Com’on, let’s smile a little and enjoy the rest of the Season. I know “things could’ve been worse” doesn’t smack of motivation, but it is a damn side better than many more bitter facts.

Yours in Property.

@Christmas…

It was 6 weeks ago that a shoulder injury was operated on and set me back for what will be a few months. However, the benefit of being able to do nothing on the face of it is that you get to watch the RWC2019 without feeling guilty. As I watched England getting dumped in the scrums and out-jumped in the lineouts and injured in the process, I could not think of a better team to be beaten in a resounding victory. Having mauled the All Blacks, they were favourites to win 2019, but a cocky, potent and invincible Green and Gold force majeure proved unassailable as the onslaught became the through-slaught and finally the out-slaught. What a lovely way to finish the tournament!

Of course, not everyone enjoyed the victory. The EFF congratulated Siya and left it to Prince Harry to congratulate the rest. Frankly, for those of us who scream when a try is scored by a ball held by any colour hands, the insult fell on deaf ears and colour-blind eyes. I’m so glad that such childishness did not dampen the people-lined streets of every major city [sorry Bloem!] in the country. Shouting, hugging, crying, videoing crowds of old supporters and young want-to-be’s [not Wallabies – yah!!] pitched up to give praise where praise is due. From ORT to CT adoring fans kept up a crescendo of incredible recognition. Francois Pienaar, who deserves every bean he’s worth, humbly stood back from his own limelight and asserted that this win was bigger than 1995. Isn’t that an awesome spirit? Shame on any detractors!

Allied to this, aren’t you glad that SafAir is sponsoring the Bokke? I would hate to see the emblem on the side of a plane parked on the other side of Durban airport grounded by a union strike. Over-bloated like SAA, I watched one of our illustrious politicians state openly outside the MTBP speech that Eskom’s mandate is to employ workers. What a joke! Wouldn’t it be lovely if everybody had guaranteed employment? A kindof, birth them, grow them, educate them and let the government take over with jobs for all whilst guaranteeing inflation-plus increases for the rest of their lives. What pressure would this take off their parents!

The only thing you’d need to worry about is tax soaring through 65% to 80% so as to maintain the Fare of the Fiscus. Cloud bloody cuckoo land I would say. But back to SafAir, what a year to back the Bokke and bask in the marketing of transporting a Web Ellis-winning team. Wow, that’s serendipitous for our newest airline!

I bet by now some of you are saying: “I wonder when he’s going to have the other shoulder operated on?” I don’t mind, it’s a free country and all views are welcomed ☺ For the rest who are prepared to read on, here’s the serious stuff…

The SARB excelled again. 3-2 against a rate drop and the vote in the public domain so we can see how tight it was for another 0.25% down. Especially on the back of 3.8% inflation; how’s that for the lowest since whenever?! But, I agree with the MPC. We are faced with 0.5% GDP and a downgrade by leading Rating Agencies. It’s so important for the SARB to be seen to be independent in the face of the ANC’s politicking around its ownership. We need to doubt about that like a hole in our economic head. Firm and fair but consistent in policy – everything we need from government. Investors, especially those both local and foreign, in Bonds have to know with certainty what the SARB will do in the face of downgrades and beyond.

They now have complete clarity. The other vital point here is Governor Kganjago, who has made it plain to the government [read: the ANC] that growth lies with them, not with monetary policy. In a nation where the institutions are attacked from every angle, here is a solid institution agreeing with Mboweni de facto, and saying to the government:  “We are going to protect the Rand and you need to stimulate the economy so get on with it!”

So what? For the property market, we find ourselves the victim of the economy and its weakness. We cannot move beyond the obvious nor influence the required. But, as you know, it has not all been doom and gloom. Last month Origination had a record month since the doldrums of sub-Prime. A record, you must be joking? Good news, I’m not and we’re so blessed to have had the injection of industry confidence. In our next blog, we’ll probably unpack that more. But for now, a beautiful thought that comes from a poem uttered in 1939. Those of you watch The Crown [which has just launched its 3rd season], will have heard King George utter such sentiments to the desperate peoples of Britain. The good news is that he was proved right in the end.

[Per Dr James Gray, our minister, this poem was made famous by King George V1 who used it back in 1939 when the world was teetering on the brink of war.] 

I said to the man who stood at the gate of the year: 

“Give me a light that I may tread safely into the unknown.” 

And he replied: “Step out into the darkness and put your hand into the hand of God.

That shall be to you better than light;

And safer than a known way.”

It may be a little early, but we’re only 1 month and 2 days from Christmas. For what’s left of 2019, HLJ hopes you sell well and enjoy the time left to excel in all that you do.

Yours in Property.

As you could read, my previous blog just sprung on me as I sat down to write this one. However, as raw as it was, Hope still needs to be our mantra. In the recent Nedbank Private Wealth Client Newsletter, JP Landman similarly wrote of the cry from the beloved country, to reference Alan Paton’s famous book. 

 

JP wrote the following in his “Act 1” entitled, Reclaim the State:

“Just do something” is the cry now rising from all over South Africa – a plea to the president and government in general to take some action to break the logjam in which the country finds itself. Confidence is low, growth sluggish, and emigration high. It is useful to replay what has been done.

 

The Ramaphosa administration has set itself two tasks: to rebuild the ethical foundations of the state and to revitalise the economy. The two topics are too much to cover in one note, so I will discuss ethical renewal in this note (Act 1) and assess economic renewal in the next one (Act 2).

• Part of Ramaphoria was the belief that the bad guys would lose. That is certainly happening.
• People who were once untouchable have fallen from grace for all to see. Some have even been convicted already. The impunity of the Zuma years is slowly being reversed.
• The process is not over, with the Zondo Commission still in session and almost weekly revelations of appalling behaviour.
• Getting convictions in court is very different from revealing things at a commission. Despite this, many people have already fallen on their swords.
• Civil society organisations have helped in this clean-up and this speaks volumes for South Africa’s democratic activism.

Why I like JP Landman is that he was the first person to really introduce me to the concept of “noise” and the damage it can cause to me. If you read his article and juxtapose it to the Maverick editorial, you will read the same thing. But the former, whilst assertive, lacks the anger of the latter. That not-so-subtle difference in writing style is also “noise” in our heads and hearts. This point about one of many of Hope’s facets is essential. Now let’s consider the following article by the son of Alan Knott-Craig (Snr) who, though I’m open to correction, was the “founder” CEO of Vodacom. As such, I would guess the Knott-Craigs have “something to lose” if South Africa goes belly up. And yet his progeny, Alan (Jnr), chairman of Herotel, decides to come back and be part of the solution. Somehow, he manages to see through the “noise” [the last time I’ll use the inverted commas] and urge us to be positive.

GETTING YOUR MIND AROUND WHY IT’S POSSIBLE TO BE OPTIMISTIC ABOUT SA
Alan Knott-Craig

23rd August 2019 by alec@biznews.com 

[Preface by Alec Hogg: Every now and again I ask my pal Alan Knott-Craig to apply his fertile mind to reasons why fellow SA-optimists shouldn’t be sent to the booby-hatch. He responded today with some practical reasons why those of us in this tiny camp should be committed, in a positive way of course. And as he has done before, this young father of three girls, a CA who returned home from New York in 2003 to follow his entrepreneurial path, has delivered a piece guaranteed to uplift even the most cynical of his fellows. Have a read and smile. And if you’d like to read more content like this, subscribe to my Daily Insider newsletter]   

South Africa’s vibes are pretty negative at the moment. 

Eskom (still). ANC factions. Zondo Commission. Baddies not in jail. Army in Cape Flats. Crime. Everyone seems to know someone who’s leaving Joburg for Sydney, without passing Cape Town or Durban. Depressing stuff. Makes you think whether it’s time to consider Plan B’s. Maybe it’s time to leave the country. There are plenty of good reasons to throw in the towel. Crime. Crooks. Corruption. There are also plenty of good reasons to eat anchovies. At the end of the day, what you do is up to you. But before packing your bags, you need to find reasons to NOT panic. You need rational arguments for why SA is not heading for economic (and social) chaos. Unfortunately, there are no rational arguments. All the evidence points towards doom. The only hope we can cling to is that we’ve been in the same situation on several previous occasions, and the country somehow confounded the doomsayers. But hope is not a strategy.

Neither is a non-SA passport. It’s nice to think you can hop on a plane if things get really real, but in truth, most of us are economic prisoners. We can’t leave SA because we can’t afford to live anywhere else and have the same quality of life. London, Tel Aviv, Singapore and Tokyo are awesome. Absolutely stunning cities, great food, trains on time. A beer costs R100. A house costs $5m. Nairobi is a lot cheaper. Beer costs R35, but it takes 90min to travel 10km through gridlocked traffic, all day every day. The trouble is South Africa is the only country in the world where we can be happy. We can’t braai in England (it’s illegal to burn wood), or visit family in Australia (no family in Oz), or live in a decent house in New Zealand (too expensive), or drive to work in Hong Kong (permanent traffic jams), or breathe in Beijing (permanent smog), or be proud of your president in America (imagine having The Donald as your chief ambassador?)

It is possible to live elsewhere. It’s just not possible to be as happy elsewhere. Only South Africa has our families, our culture, or boerewors, our humour, our weather, our chutney. Only South Africa has the Karoo AND the Transkei AND Golf Reef City. Only South Africa lets you see the stars at night AND buy a decent cappuccino. Only South Africa gives you opportunities to help other people, to pay their school fees, to give them a job, to give you purpose. In South Africa, you can make a difference in other people’s lives. The trick is to realise there is no happy alternative.

Once you’ve come to terms with not having a Plan B, it’s a lot easier to commit. And that’s what we all need to do: Commit. Because if we don’t commit, we’ll definitely be unhappy, and we’ll probably fail. The next few years in SA will not be easy. Which is great news. Good times are not really useful for getting ahead. As Petyr Baelish said in Game of Thrones (a few hours before having his throat slit), “Chaos is a ladder”. True opportunity only arises when everyone is heading for the exits. Right now, everyone is heading for the exits. Which means there’s never been a better time to be optimistic.

We’re South Africans. We’re used to tough times. Zuma has trained us well. You can’t do anything about Zondo, you can’t put Markus in jail, you can’t change interest rates, you can’t leave the country. As long as you’re not leaving, you’re staying. If you’re staying, you may as well commit. To commit 100%, there’s no room for doubt and pessimism. You need optimism in the front seat.

Here are four tips for being optimistic:

1. Travel internationally. It’s only when you see the other side that you appreciate that the grass isn’t greener.
2. Invest in Rand hedge shares on the JSE: ABI, BAT, Richemont, Naspers, Anglo, Glencore. That way if the Rand crashes, your investments will go up. If the Rand strengthens, great news for you because you’re living and earning in Rands.
3. Don’t read the newspapers. Firstly, they’re biased towards bad news because bad news sells. Secondly, you can’t influence 99.9% of the stuff you read about. If you can’t influence it, ignore it. It’s just wasted energy. Save all your attention for stuff you can influence.
4. Make sure you have a purpose other than just making bucks. Orphans, or cancer patients, or rhinos, or whatever. Unlike Switzerland, South Africa is a country with lots of injustice. Lots of opportunities to make a difference and have purpose in life.

Think of it this way: If SA’s future is bad, it doesn’t matter what you do, you’re screwed. If SA’s future is great, and you spent ten years worrying about the future, then you’ll be kicking yourself ten years from now for having needlessly spent all that time stressing and worrying. Everything will be ok in the end. If it’s not ok, it’s not the end. You must be saying by now, “Jack, what the hell are you saying?” On the one hand the Maverick article imploring the SA Government to take over properly and do something. That call is then reinforced by JP Landman. Many of us resonate with both. But Alan confounds us further. “Hope is not a strategy”, he writes. Why would I then write about it?

Let me cover a few points about Hope. Make no mistake, I have an agenda. I want you to be Hope-full. I want you to be so Hope-full that you impact other people with the power of Hope. Without it we are not just Hope-less, we are Hope-NOT. You can’t be wishy-washy Hope-full; you have Hope or you don’t. Like a car, you have one or you don’t; nothing less cuts it. Let’s start right there. You see, you can get transport in many places – the bus, Uber, a lift – but you will never have experienced the sense of ownership if you have not bought and owned a car. Let’s face it, that’s why we buy houses. Very few of us rent our whole lives. Hope is like that. It is personal to you. In it, you find your sense of ownership, individually and uniquely. Hope is a head matter, the ability to read the messages of the last three articles, clear out the noise and take from them what you can apply to your heart so as to enjoy and exercise your Hope. I read a mixture of articles but the reason is to make up my own mind. The fact then, as I see it, is that we are in a crisis of huge proportions, but my response to that fact [as I personally and rationally understand it] is my responsibility.

Hope is a force, not a state.

 

Alan is right to say, “But hope is not a strategy”. You can’t “live in hope” and sit on a park bench every day and “hope” alles sal regkom. Hope is not static. Hope projects – Alan effectively says, Hope “commits”.

 

So what then has your and my Hope committed to? What are we doing to calm our nerves and try to make a difference? A friendly greeting, assistance to your neighbour, coaching and mentoring, attending the #EnoughisEnough protest? Or, something bigger – an animal shelter, building a homeless shelter, sponsoring bursaries? Or, to the business people – employing people at a fair wage, paying all your taxes that are due? I’ve said it before; Africa is a place where you cannot sit on the fence any more. You have to commit to something to have any sense of purpose and meaning in the national daily chaos. And boy, are there myriad opportunities to make a difference! I cannot say it better than Alan’s point 4 above. Hope longs, and in that, Hope acts.

Hope has a facet called Humour. Pieter-Dirk Uys made us laugh at ourselves; Trevor Noah does the same. Taking the Mickey out of our daily lives and times enables us to laugh and gain a fresh perspective. Yes, of course, It may just be during the show but often, to feel your belly wobble with laughter is just good medicine. Far from the Madding Crowd, as the book title goes. I’ve bought a Fitbit to replace my TomTom watch and this little bracelet [that’s all it is really] has a cool gimmick, a 2-minute deep breathing button. So you push it and it tells you to relax….so you do. Then it tells you to breathe in and breathe out and on the screen circular dots display out and then in again. What a gimmick, but to be honest, what a lovely [though cheesy] break from the day. Get one, try it ☺

Hope encourages others. Some of you may be reading this and wondering why you waste your time. “The ol’ man is losing it”, I can hear you say, “What drivel’. That’s fine by me. But then big guy, what about spreading some of your optimism and Hope around? Or do you also join “the manne” at the braai and while 4kg of meat is braaiing and the ice-cold Castle is condensing over your fingers in the hot Spring sun, you join the “bitch” about South Africa? That night you go home and dream of the “lekker” day you’ve had. Been there, done that, if you think I’m a paragon of virtue. But really, what help did that do? You solved every phobia in the book – Xenophobia, Homophobia, Guptaphobia, VBSpobia – but really, what help did that do? Last night after a church meeting a guy who I’d met on Saturday morning came up to me and asked for a lift to the taxi. He wanted to go to Stanford at 7:15pm at night. In our town, there are no taxis at night so he was about to sleep on the side of the road. So I told him to jump in and I took him to Stanford. We talked. He came to Stellenbosch university from Angola to enrol to study a Mining degree next year. Speaking poor English, he explained that he was assaulted in Cape Town and came out here to see if he could get a job.

Once again, he was threatened in Zwelihle and has now found a place in Stanford [our next little town] where he can sleep in safety. We then arrived at our destination and he showed me down the roads and we stopped for him to get out. “But this is the Police Station!” I said. “Yes”, he replied, “See you on Sunday [at church]”, he confirmed. With that he disembarked with a rucksack, I guess with all his possessions. As I drove away, I couldn’t help but think that an aspirant Mining engineer has risked everything to come study in our country because and all we could dish up to this foreigner is one assault that left him hospitalised, and one threatening situation and now he has to sleep, perhaps for months, in a small-town Police station. How grateful and how blessed am I in comparison!? Probably, so are you if you’re still reading this.

Spread Hope – the longing yet active kind – the one that hustles while it waits. And in the end, if you leave, don’t kill South Africa with your mouth, because people still live here.

What has all this got to do with Property? Confidence, not money, buys property. So you and I can bad mouth the country and her government, but for every negative seed we sow, R1000 disappears off the value of the very house you’re trying to sell, or mortgage, or convey. We don’t have to be puritan, God knows I’m not, but next time you’re at the braai [Braai Day’s coming up], think about tossing in just one morsel of Hope to the conversation. Who knows that you may not be the estate agent or originator they call to sell that house.

Be real. Be positive. Be Hope-full.

Yours in Property.

We have a crisis. There is no other term to describe it. 9 milion people unemployed is actually too big to blog about, too indescribable for words and could simply be imagined as a sea of despair.

You and I get out of bed every morning with work to attend to. For stay-at-home moms, it’s getting kids nourished and ready for school. For businessmen, it’s off to work and the stress of the day. Whatever it is, it lends meaning to life and creates the routine so many of us need to live and be ourselves.

What of those who do not enjoy employment? I would put to you, they:

• Have no or little money.
• Have little that it is required to be bought, starting with food.
• Have no or little dignity.

The first “have not’s” are so obvious that they need no describing and frankly, I’m not in a position to even try; the Afrikaans word “ellende” comes to mind, that sense of utter desperation. But as regards dignity, let me try a little to give flesh to its absence. I can remember when the homeloan business was shut down in Nedbank and the sales force found itself being retrenched. Every time I met one of my team, my message was: “Don’t let anyone take away your dignity; it belongs to you and only you can give it away.” It truly was the lasting thought on my mind as I too departed from the company that had employed me for 20 years; that retrenchment programme was anathema to me and not being retrenched myself, I resigned to pursue my own origination business. The rest is history, so they say.

It seems to me that the first thing unemployment depletes is dignity. How do you explain to your family that tonight there is no food on the table? With whom and how do you share what little you may have? How do you pay your debts as little as they may be in the scheme of things? The mind boggles at the reality and those of you reading this who have experienced the chilling wind of unemployment, you would be able to best describe the desperation into which you plunge. It must be incredibly difficult to avoid the indignity of your circumstances. Statistically, over 9m (and growing) people face this debilitation every day. I’ll never forget getting to know my people in the meat business – the first time I had worked with who we term as “labour”. I learnt they were wonderful people with hopes and dreams just like mine – a brighter future, a home, education for their kids. No airs and graces just an exceptional work ethic every day under trying circumstances. I tried many times to enable some of them to lift their circumstances and become entrepreneurs. In the meat business that’s fairly easy, all kinds of offal, stewing bones, offcuts and over-stock exists and the market for its sale was right where they lived. Very few ever saw the vision of beginning small and possibly growing a significant business though some went off into Legal work and the Metro police so good for them. We talked about it and encouraged it, but little seemed to bear significant fruit. One thing I think I learned then is that poverty constricts the poor and their inner belief of potential is strangled by constant negative feedback – I battle for the right words, but knowing some people come out of poverty in rags-to-riches stories, my sense is that we know them because they are so exceptional. On the other hand, the masses of poverty-stricken individuals and families have not enough dignity to rise beyond simply struggling to stay alive themselves every day. I often say “I have never been poor” implying that I just have no idea what it’s like. Life was never rich and everything our family had and now has, has been worked hard for and I’m sure most of you identify with that upbringing. But in it was the power of dignity that knew it could reach for a dream and have a probability of success, whatever that means to each of us.

As I drive past Atterigeville and to Cape Town from time to time, I am aware of the shattered dreams of many of our people. The government has not provided the promise and the land grabs have managed only to give 3X3 square meters shelter with not even a cabbage able to be grown in the yard. Abject poverty is a blight and disgrace upon our land and, indeed, the “struggle” which fought for so much more than this, has really failed them. And demagogues and populists only continue to crash the economy into its base elements along socialist lines and towards a possible failed state. I’ve just read Fighting for the Dream by RW Johnson and have started People’s War by Anthea Jeffery – both books speak to the black hole of National Democratic Revolution philosophy. Radical change is needed for radical unemployment; the NDR is not that kind of change.

This is not a rant but just a record of the position we all know we’re in coupled with some personal insights with which you’re welcome to disagree. But on the other hand, for all I seem to see in even my few travels, there is obviously a huge informal sector that I simply don’t know. Every day men and women are raising themselves from abject poverty with the guts and determination to eke out a living for themselves and their families. As economist and banker, I was dumbfounded by an article by GG Alcock about the Informal sector of our economy. What also struck me is that we think about people earning R30 per day just to stay alive but he knows “Vetkoek” ladies making R6000 per day literally on the streets. It is not taxable income I’m sure but she feeds another 5 people and their families and no doubt does well for herself. What’s also impressive here is the incredibly hard work of this kitchen and sales force; I couldn’t make 12 koeksisters a day never mind 6000 vetkoeks. Strength to your arm Lady, whoever you are, you make us in the formal sector proud!

Enjoy the article… and then an optimistic closing comment.

 

SHATTERING THE MYTH OF HIGH UNEMPLOYMENT RATE: WHY 29% CLOSER TO 12%

19th August 2019 by Jackie Cameron

High unemployment is often quoted as the reason for emigration from South Africa. But, look beneath the official statistics and you will see a vibrant economy built by tens of thousands of small business operators and entrepreneurs. This is the message that GG Alcock, who calls himself a white Zulu after being brought up in a rural community, is bringing home to economists. His number-crunching makes for fascinating reading. Looking at the details of the street vendors and small-time landlords, the incomes being generated are fairly impressive – and certainly not just subsistence living. GG Alcock reckons it is time to take a fresh look at the South African economy and realise that the statistics being bandied about cannot be true. – Jackie Cameron

 

ANGINAM’SEBENZI, NGIYASEBENZA. I DON’T HAVE A JOB, I WORK!

By GG Alcock*

In the crescendo of shock and horror about unemployment of 29% I must disagree with these numbers.

These numbers should be prefaced by the word “formal” unemployment.

GG Alcock pictured centre. (Source: Facebook) 

I have written about the huge scale of informal businesses at some length in my books Kasinomics and Kasinomic Revolution. There are a multitude of informal and kasi businesses – some small, some pretty large – which are not measured in unemployment stats.

This is for a few reasons why they are not considered:

1. They are not measured by formal research;
2. They are considered survivalist or subsistence business people who would at the drop of a hat accept a formal job if they could have one (which is total bull);
3. They do not consider themselves employed as they do not have a payslip or work for a boss which defines what a job is, they say “anginamsebenzi, ngiyasebenza”;
4. They operate in an informal and largely invisible economy, well invisible to the formal world. The former Minister of Small Business even said “we need to create more entrepreneurs in the township”. Astounding there are tens of thousands of entrepreneurs and micro businesses out there in the informal and kasi sectors. 

In a recent Kyknet show on the informal economy and youth unemployment the programme asked me to assist them to interview some young entrepreneurs. One I connected them with was a lady from Limpopo who sells vetkoek in downtown Joburg. This young 24-year-old sells 6,000 vetkoek a day for R1 each and employs 5 staff, one her brother. She turned to vetkoek selling because she could not find a formal job. She definitely was not measured as employed in the stats nor were her 5 staff.

What about income generating activities, are these viewed as jobs? I wrote in Kasinomic Revolution about a gogo who earns around R1,600 a month in old age pension. Yet she rents out a shisanyama and a hair salon in front of her little house for R1,500 each and three backrooms for R1,200, R900 and R900. So, she earns an additional R6,000 a month from rental. Let’s briefly look at the kasi rental sector. The immigrant spaza sector rent their stores from South Africans, paying between R2,500 to R25,000 for the store rental depending on the size. I estimated the rental income to South Africans is in the vicinity of R30bn a year. That’s a lot of good money being earned. Pity this is not featured in xenophobic rants about immigrants taking jobs.

And backroom rental? Practically every single township home has a back room, a garage-sized room rented or occupied by extended family and often a mix of both. I estimated that over and above the rental of spazas, backroom residential rental brings in another R20bn a year.

So are the more than 20,000 hair salon owners employed or are their stylists who in kasi style rent stations from the salon owner in a gig economy type arrangement. They are not employed but each stylist who rents a station in the salon is self-employed making anything from R5,000 to R15,000 a month in styling, nails, extensions etc.

What about the fast food sector in the townships, what I call kasi kos with 50,000 outlets selling kotas, amaplati, inhloko, isibindi, isishebo, burgers, chicken dust, mogodu. A sector employing 200,000 odd staff “informally” and turning over in excess of R85bn a year. Are they all unemployed?

Or the muti sector, inyangas and sangomas dispensing herbal plant based concoctions estimated in 2004 to be worth R3bn a year and employing 150,000 plus herbalists.

What about the school mamas, the school tuckshops of the townships, I wrote in Kasinomic Revolution of a lady in Thembisa who has been selling food and snacks at the same school for 26 years, earning R6,000 a month in profits. She has put her two kids through university and her husband has been unemployed the whole time. There are 12,000 odd township schools each with 5-8 school mamas, if each only earn R3,000 a month (the minimum wage for domestics) then that is a sector worth easily R2bn a year in incomes. But these school mamas are unemployed, aren’t they?

I am not even going to mention the auto sector with its kasi mechanics, panel beating, car washes etc.; nor the tavern sector; nor the township building and support sectors such as electricians, plumbers, builders, tilers; nor the internet cafes or goat farmers; I can go on.

We are NEVER going to create a million jobs in the formal sector no matter how many electoral manifestos or government promises are made in this regard. Initiatives like the YES programme are designed to encourage mentorship, internship and job learnership opportunities in the formal sector which is shedding jobs. Why would you get a job shadowing or intern opportunity at Standard Bank while they are closing branches and retrenching staff as an example.

The informal sector is remarkably similar to the gig economy. While governments and municipalities are trying to regulate or limit AirBnB, Uber etc these are the economies of the future which should be supported (and taxed) as the future employers and economies.

The informal sector is where the opportunity is, we need to bring the informal economy into the formal economy, not by formalising but by creating fostering and growth environments.

My simple starting point and three steps to addressing formal unemployment is about growing and giving security to the informal sector so that it can grow, so that it can formalise, so that the participants have security and thus invest more into their businesses, and so that there is an incentive for this economic sector to pay rent, tax, PAYE etc:

1. Give security of tenure through a PTO (permission to occupy) type mechanic, to informal traders and in exchange charge rental. An astonishing example of this is the Warwick Street Market in Durban with work done by the Asiye Etafuleni organisationin cooperation with the municipality.
2. Venture capital type credit for small businesses allowing them to expand; get stock and grow. Utilising different means to measure credit worthiness and profitability to existing models. As an example, the vetkoek seller I described purchases 50 x 12.5kg bags of flour a week from a local wholesaler. It is very easy to measure these input costs and do a simple extrapolation to calculate margins and as such valuate these businesses for credit.
3. BEE type model for immigrant traders. These traders are going nowhere, let’s bring them into the economy and let them add value. This simple mechanic would offer, business licences, residency etc in exchange for the outlet following a BEE type code earning points for e.g. pay VAT and Tax, pay rental to a South African at a set rental rate, employ x amount of South African staff,  procure security, transport services etc from a South African small business. 

I reckon real unemployment i.e. where the person has no income generating opportunity or income for any form of permanent work, is probably closer to 12%. Prove me wrong if you can?

Instead of banging our heads against the formal sector wall doing the same thing over and over expecting a different result why don’t we look for solutions which assist the largely informal Kasinomic sector? The economy does not belong only to the formal sector. Prepare for a Kasinomic Revolution.

*GG Alcock has been at times a shebeen owner, political activist, community worker and African adventurer, and more recently the founder of Minanawe Marketing, a leading marketing agency in the mass market

If you don’t know this man as I’m embarrassed to admit myself, he is a breath of crystal-fresh air; the kind of almost-unique man who has taken the trouble, like Johnny Clegg, to live with and understand the majority of our population. Imagine [a word I use often], an education system to have given these brilliant entrepreneurs a head start in life. Imagine mentors taking these businesses to great heights starting with a dream of what could be and then teaching what is necessary to finance and build a business out of its seams. But even while we allow our imagination to run, what these people do not need to do is steal for a living; they have self-induced motivation and dignity pouring out of them. They are part of the future of this State and not a product of it corruption and social torture. How do you know that maybe they’re the homeowners of the future or, at least, that they’re growing an educated and driven population of kids who could be.

The question then remains, “What about me [and you]?” As I often say, “Any idiot can tell me the problem! I need people who can tell me the solution!” Look at my first few passages to this blog. Were you nodding your head and agreeing with me as we slipped into depression and “I told you so” together? Or, are you part of the solution? Finding answers, employing people for the best salary you can pay, talking to them courteously and meaningfully to lift their spirits into dignity and possibility thinking. Or, are you or I just miserable. I have a dear friend who is determined to sell his house and move to Scotland to be close to his kids who have moved offshore. But instead of bitching constantly about the country, he employed Alex and then helped fund him to get to and start a subsistence farm back in Malawi. Now he has employed Sam and I bet he’ll help him along the way as well. Who knows what my friend’s “hustle while you wait” positive attitude may mean to these two men who are fighting to lift themselves from economic refugee status to something better?

Hope you and I “get my drift” and do as much as we moan while we’re blessed with health and life to be ourselves and so much more.

Yours in Property.