Death of the rainbow nation – Part 2

Why Jacob Zuma is laughing at us and what some investors are doing.

The scenes of our dear leader Jacob Zuma almost rolling in the aisles with laughter at precisely the time that the horde of ‘White Shirts’ marched into Parliament to remove the EFF members from the chambers during the State of the Nation (Sona) will forever, as far as I’m concerned, typify the leadership of Zuma and his bunch of ANC cronies.

As they crudely would have said, years ago when many of us had to do military service: “Hy voel f*k*l….”

He is so drunk with power, so assured that he has taken over virtually every lever of power, even the hallowed halls of Parliament, that his only emotional response to the dramatic scene that was playing out in front of us was one of amusement.    

So many laws, protocols and conventions were broken by the ANC-cabal, all at the same time. First the cell phone and Internet signals were being jammed, then the removal of the EFF, all of them – not only the three offending members who kept on asking the same questions – by security forces, some of them SAP members.

Then there were the arrests of some DA members who were protesting outside Parliament. Reportedly, even members of the public who were wearing opposition t-shirts were threatened with arrest by members of the security forces.

Be afraid #2

So many millions of words have been written about these events since then, that I cannot improve on them. But when the Financial Mail (FM) this week has a front-page lead article with the heading “Be Afraid” you have to sit back and ask ‘Exactly what do we need to be afraid of?’

So here is my take. This interpretation needs to be read in conjunction with several of the speeches made by Zuma during 2014 and in particular his speech at the party’s 103rd birthday bash in Cape Town on January 12 this year.

In the speech he made direct references to the Freedom Charter and how all the land belongs to the people of SA…blah blah, not something new and something we are all aware of.

But he also underlined the ANC’s commitment to a radical transformation of the economy…his underlining, not mine.

First the foreigners …

So first in line are the foreigners who might own land in SA. This despite his pronouncements less than a month ago when he told delegates at the World Economic Forum in Davos, Switzerland that SA is a ”great place for foreign investment”.

For almost four days the debate raged around residential property and how unworkable this would be. Then the Presidency announced on Monday this week that the legislation was only aimed at foreigners becoming owners of farming land. The main reason given by his official spokesperson Mac Maharaj: food security.

It seems government is very concerned that foreigners will come in and buy our (very expensive) agricultural land and then not farm it. Foreigners who have the means to buy and own land in this country are not stupid.

Then it was the turn of the farmers. If there is one of the few pockets of excellence still left relatively untouched by the ANC-government, then it is the farming community – the estimated 36 000 commercial farmers help feed our population of 55 million plus.

The idea of limiting farm owners to an arbitrary 12 000 hectares of land is not only unworkable but will be a great threat to food security, the exact thing government says it is trying to protect.

Super farmers

It is said that there is a group of only about 1 000 so-called ‘super-farmers’ who produce about 80% of the foodstuffs we fill our trolleys with at supermarkets. These are the farmers who over many generations have built up massive agricultural factories in our major producing areas, using their combined experience, farming skills, finance and business know-how to become super-farmers.

Very little is known about these farmers in the gentrified cities most of us live in, but without these farmers, I’m told, our weekly shopping expeditions to Woolies/Spar/Pick n Pay would be a totally different experience.

To limit these farmers to a mere 12 000 ha will be devastating to them personally and catastrophic for food production for the country. If this plan is pushed through, then it’s time to start getting very afraid.

Is residential property at risk?

Why would such an arbitrary dispossession of assets stop at only foreigners owning land or limiting indigenous farmers to owning a farm of a certain size? Many commentators have obliquely referred to residential housing as the next target. Using the same political logic, who says there cannot be a limit placed of say two houses per home-owner, the rest to be distributed to the homeless?

After all, isn’t that what the Freedom Charter says?

There are many investors who own multiple properties as part of their investment portfolios. Like the super-farmers, you will find certain super-property investors who individually own properties worth billions of rands, like Jonathan Bear from Durban (Zenprop) or the Georgiou family from Bloemfontein.

Most high-end investors, in my experience, have in the last two decades bought more than one rental property as part of their portfolio.

What about a domestic worker who has been employed by a family for say 20 or 30 years – not uncommon – who then might have a claim on the property’s ownership? This is the same principle of the suggestion that workers on a farm [get land].

Is this what the FM is trying to warn about but not prepared to say outright? 

Investors looking elsewhere for safe havens

I have, in my original article on the Death of the Rainbow Nation in November last year, expressed my views on what investors should be doing with at least a great deal of their money.

Ever since then I and most other financial advisors in the country have been flooded with people wanting to remit local money offshore, all with the intention of starting a nest-egg away from the control of the ANC government.

I met this week with someone who is selling property in Cyprus which will qualify the buyers for residency in Cyprus and ultimately European citizenship over time. After the Russians and the Chinese, South Africans are now the third-largest buyers of these properties, I am told.

Cyprus, I am told, has become popular because of the quality of the universities on the island and wealthy parents are buying flats for their children in order for them to study at one of these universities.

The SA Reserve Bank is not willing to disclose the amounts of money leaving SA right now via the dual allowance system, but from personal experience as well as anecdotal comments from some of the largest investment companies in SA, the initial little stream of money leaving the country has turned into a raging torrent.

It’s hard to believe that the choices made by the ruling party at the Polokwane elective conference in 2007 could have, in such a short space of time, had such an enormous impact on almost every key institution in this country.

I would love to describe Zuma as a “one-man wrecking ball” but that description, I am afraid, has forever in time been reserved by fellow columnist Max du Preez.

All I can add to that is the following: you’ve seen what the wrecking ball has done to Parliament. Don’t let him do it to you.

*Magnus Heystek is the investment strategist at Brenthurst Wealth. He can be reached at for ideas and suggestions.


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