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Exciting headlines

Lately, we are seeing many things that make us optimistic for the future – as investors, as South Africans and as humans. 

Good news may be harder to find, but it is out there!

A few weeks ago, we highlighted some scary headlines that had us all stressed out at the time. There are so many of them and it is easy to feel like it is all hopeless. The positive things happening all around us don’t get quite the same amount of airtime, but lately, we are seeing many things that make us optimistic for the future – as investors, as South Africans and as humans.

Let’s cover the two big ones first. Two weeks ago President Cyril Ramaphosa lifted the requirement for Nersa licenses from 1MW to 100MW and one day later Public Enterprises Minister Pravin Gordhan announced that private investors will inject roughly R3 billion into struggling SAA, to bring its private shareholding to 51%. Both headlines were met with a sigh of relief from taxpayers who are sick of seeing their contribution to the country disappearing into the abyss.

Many sceptics proclaim that it is not enough. Maybe it isn’t, but it had to start somewhere. These decisions are concrete evidence that our government has finally realised that this country can only heal if there is a collaboration between the public and private sector. It’s something they have been saying for a long time and it is great to see it in action rather than hear it in speeches.

In the 2020 financial year, the NPA convicted 233 private citizens and 183 government officials on corruption charges. In the following year, that number increased to 220. That is 403 corrupt government officials that were brought to book in the last two years. Yes, the big ones (private and public servants) are still out there, but anyone with a newsfeed can “feel” that something is coming. You just have to read all the articles, not only the sensational ones, to realise that the noose is tightening. It is like that line in Ernest Hemingway’s The Sun Also Rises when Bill asked Mike: “How did you go bankrupt?”, to which he responded: “Gradually, then suddenly”.  There is a definite sense that the slow, painstaking processes of the last few years are suddenly starting to pay off.

Something is happening at Sars as well. Over the last year or so, there has been a definite change in the way they do things. No, unfortunately, your customer service experience when you have to call or email them has not improved yet, but if their main job is to collect taxes, you have to give them full marks for effort. They are using every tool they have to make sure that the emperor gets his dues. And not in a your-VAT-return-will-be-audited-every-two-damn-months way, in a we-are-going-after-the-real-crooks way.

A few months back Edward Kieswetter mentioned in a radio interview that they are not concentrating all their efforts to squeeze the last cent out of already diligent taxpayers, but rather aiming to catch up with those people that are avoiding tax completely. Quite a novel approach to not treat actual taxpayers like public enemy #1!

South African investors are seeing the strongest stock market returns they have seen in several years. After going sideways for a good few years, the local All Share Index finally stretched beyond the levels previously achieved in 2017, to keep growing to its highest levels ever in recent months. This is good news especially for investors in retirement fund products who do not have the freedom to take more of their funds offshore due to Regulation 28.

The outlook for the SA economy and markets is also much stronger than one would expect:

  • The RMB/BER business confidence index rose to 50 in the second half of 2021. While this is as close as you can be to a negative reading without actually being negative, it is the first time that the reading is at least neutral in seven years. Why is this important? Because the last thing that a negative business owner wants to do is to invest in a new venture or spend money on expansion. Perhaps that neutral CEO can be convinced to take a risk and “go for it” in their business. Whatever “going for it” may mean, it may lead to activity and activity leads to more energy and more optimism. Positive would have been much better, but at least all hope is not lost in neutral.
  • South Africa’s GDP grew by an encouraging 4.6% in the first quarter of 2021, well above the expected 3.2%.
  • The overall agriculture sector grew by 13% year-on-year in 2020, with citrus exports performing especially well. The Agricultural Business Chamber reports sentiment increasing to record highs. The sector employs 7% of the working population in SA.
  • SA reported a cumulative trade surplus of circa R148 billion during the first four months of 2021, compared to a deficit of just over R4bn during the same period last year. Lead by soaring demand for commodities, this has supported the rand of late, creating opportunities for investors looking to expand their portfolios offshore.

Yes, we know that almost all the great news in this article is very fragile and that the rug can be pulled from under our feet at any minute, but we didn’t have most of this a year ago, so we’ll take it!

And if you are tired of waiting for things to improve, take some lessons from Colin Mkosi, 23, and Sive Cabuko, 22, from Langa in Cape Town. A year ago, they were students. Now their business, Cloudy Deliveries, employs 15 staff members who use bicycles to deliver shopping from local businesses to the residents of Langa. They provide an invaluable service to the elderly who have no way of reaching the shops themselves and cannot stand in long queues. Their business goals for the next year is to obtain larger premises and upgrade from bicycles to scooters.

The ones who are crazy enough to think that they can change the world, are the ones who do. – Steve Jobs

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Michael Haldane

Global & Local Investment Advisors

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COMMENTS   1

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The government’s propaganda has convinced the author to continue being fleeced. I’m almost jealous of the naivety and misplaced optimism.

End of comments.

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