You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

Winter is here

Things are going to get a lot worse before they get better.
Malusi Gigaba, South Africa's finance minister, speaks during a news conference before he presents his mid-term budget to parliament. South Africa forecast higher debt and wider fiscal deficits over the next three years, heightening the risk of further credit ratings downgrades as a fight for control of the ruling party limits policy choices. Picture: Dean Hutton/Bloomberg. Picture: Shutterstock

There is no more money, as Moneyweb managing editor Ryk van Niekerk succinctly summed it up after Wednesday’s Medium-Term Budget Policy Statement. There is not really any good news either (the ‘best’ news in Treasury’s 86-page document is that the decade-overdue mobile spectrum auction will finally happen, but only because the fiscus needs the revenue). Worse, there’s zero evidence that the situation is going to get any better.

Look around you. The cranes in Sandton are slowly reducing in number, as mega head office projects signed off five or more years ago are completed. House prices have gone backwards (after inflation) since the 2007/2008 peak, and the market has been almost exactly flat for three-plus years. Consumer spending is stuttering along. Panicked emigration sales flood neighbourhood groups on Facebook, but even those are starting to slow. Those who have had the means to leave, have left. 

And there’s nothing obvious that is going to change this picture. Economic growth has ‘decoupled’ from the rest of the world, both developed and emerging markets alike. Finance minister Malusi Gigaba could only vaguely refer to a global environment that “may be helpful, as growth is improving, despite persisting risks”.

Fracking in the Karoo, once heralded as the catalyst of all catalysts to kick-start growth and job creation, is all but dead. With all the dithering, we missed that boat too. Penny for the thoughts of some of the economic cluster ministers. Government’s (once?) world-leading renewable energy programme stumbles forward, from one hostage-taking acting Eskom CEO and energy minister to the next.

Where does the growth come from? (Hint: nowhere)

Add to this the toxic stew of almost guaranteed further cuts to our credit rating, rising borrowing costs and a mountain of sovereign debt (already R2.53 trillion, and climbing) and the picture deteriorates quickly. Debt-service costs will be R223.4 billion or 15% of revenue by 2020/21, a number that seems awfully low given the ‘straight-lining’ of the increase to around R20 billion a year in each of the next three years. I would bet my shirt on these numbers being dead wrong.

What confidence local and international investors (providers of capital) as well as the ratings agencies have in this medium-term budget framework remains to be seen. Pragmatic efforts at ‘fiscal consolidation’, which ratings agencies had mostly believed until musical chairs in the finance ministry, is out the window. Government debt-to-GDP will reach eye-watering levels of over 60% within the next five years. And that’s probably a best-case scenario if things continue the way they have been.

“But, that’s fine… look at any number of other countries around the world where debt-to-GDP is a lot higher,” some of the Twitterati cried on Wednesday afternoon. Sure, but those countries are growing… We’re not.

It is not clear how we get back to above 1% growth in the medium term, never mind 2% as the downwardly-revised, but still fairytale, forecasts yesterday suggest.

Deferring the “tough” calls – many of which have to be made in February – to yet another committee suggests that Gigaba doesn’t have the confidence – or political capital – or technical expertise – to make them himself. Most of this is not of Gigaba’s making, mind you.

The ‘involvement’ of the International Monetary Fund is already being floated/tested as a possibility by those in Treasury.

Beware of bankers bearing bailouts.

I cautioned in July this year that things were (very) bad out there. And, I suggested that one ought to prepare for the worst. Right now, sirens should be ringing loudly in your head. Be prepared, no matter how insulated you think you’ll be.

Most readers of this, however, will be fine. Those two million ‘affluent’ shoppers that every supermarket group is chasing – aggressively – will be fine. Sure, they’ll skimp on this and that and cut back on the overseas travel, but they’ll be ok (what the retailers won’t say is that this is the only part of the market that’s actually spending).

The upmarket restaurants in the northern suburbs – mostly “tapas-style” these days because it increases spend per head – will still be overflowing on weekends. A Breitling boutique and designer Paul Smith shop are opening in Sandton City soon. What must surely be one of the largest Michael Kors stores in the world is about to start trading at Mall of Africa. The sprawling Prada boutique in Sandton City’s ‘Diamond Walk’ will trade as if nothing’s happened. WineX will be full, like it was last night. Walking around the Sandton Convention Centre seemed a completely different universe to the one described by the minister earlier in the afternoon.

The real pain will be felt in the (firmly) middle and lower-middle class. Take a drive through parts of the West and East Rand and you’ll see exactly what I mean. There is ample evidence in the results of JSE-listed companies trading in that segment of the market that proves the point over and over and over. Small town (and city) South Africa will continue to face the inescapable onslaught of emigration (to the metros), soaring unemployment and (mostly) negative growth.

But… everything will be fine. Until it isn’t.

* Hilton Tarrant works at immedia. He can still be contacted at

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.



Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.


unfortunately spot on – however with the economy going nowhere – more unemployed – more crime – and just remember since 1994 there have 500,000 murders in the country (in aus its 25 per year on average)

Robert – sitting in his hovel in sydney – this is not the time for your sanctimonious opinion – or I told you so – or should have followed my example.

you decided to leave – you did – now stretch your budget and you may afford a small fillet steak this month – and stuff your mouth

sorry, Hilton, this should not detract from your excellent article – i agree 100% with you – only i have a serious problem with people who live in substandard conditions overseas seek daily justification for their decisions (that they regret)


I don’t regret leaving South Africa one minute. People who are bitter at those who have left are either jealous or have never traveled beyond their own border. Which one are you?

25? Australia was 238 in 2013-14 which was then the lowest on record. No need to fudge numbers to make your point.

After reading this I’ve just deposited another R50k to buy bitcoins. Hey come next year 1 BTC = R1M given albeit only 6000 USD!!!

Regrettably, the dire straits that this ANC government have pushed us into will result in many more job losses and disinvestment from abroad before it gets any better. Only the departure of the chief cookie jar raider, the President , and the handing over two someone new will result in a glimmer of hope for the country. Until then, expect serious reversals of fortunes and tightening of your belts. Crime and poverty and unemployment are directly connected too each other. With Xmas around the corner, statistics for crime levels too will peak thus strangling the badly beaten economy even more.

Brutal article. Very forward looking. This journalist understandunderstands and has clearly set out the domino effect of the mess here in SA. And things have to get worse. Weak rand then high fuel cost and higher food prices. More hunger and thus more crime. Blame on minorities. See the afrikaans kids kicked out of some course. Like the jews in Germany in 1933.

We need a new real leader to escape this mess…unless it’s too late and we are a Zimbabwe.

Pessimist,,,dropping Zimbabwe in your argument does it make you feel better? We have seen worse levels of the Rand to the dollar and the market corrected itself. The minister dropped some measure that we as a nation have to adopt to come out off this. Who blamed minorities for whatever is happening in RSA? You need to tone it down,

The NATS were rightly blamed for apartheid and its atrocities. The ANC should take the blame for where SA is today. And Mugabe/ZANU for where Zim is.

No way will I tone thingsdown . can’t you or don’t you want to see the facts? We are heading for a failed state. The zar is still supported by sky high interest rates…700 bps over us treasuries.

Read and understand what the financial experts have to say on this site.

Democracy and human rights at it’s finest. Excuse me, on my way to lock up my wooden spoon in the safe as well.

As the title of the article suggests, this season too shall pass.

Its’ really bad, but the good news is it won’t last forever. Nothing does.

Man up people ! your ancestors fought against Romans / Zulus / English / Boers / Vikings / Jehova Winesses 🙂 etc. depending on where you came from, and from time to time they got their behind handed to them on a plate.

You owe it to them to toughen up and ride out the bad !

It didnt take malusi, sifiso and tom very long to work their special brand of magic.

A Prayer for SA and our Government:

God, grant us the serenity to accept the things we cannot change,Courage to change the things we can,And the wisdom to know the difference.

Please give us clarity of thought and mind. To help where we can.
Please give our government the courage to do what is right. To put South Africa and her people first. To stop all the corruption and wasteful expenditure. To use our resources so that all citizens, but, especially the poor may benefit and improve their lives.
Help Corporate SA see that they too have a role to play in helping South Africa by investing and employing more people where possible.
Help us to work together.


The corrupt ANC cadres that always joke that it is ‘cold outside the ANC’ will soon realise how cold it is being left outside the bond markets.


“Most of this is not of Gigaba’s making, mind you.”

I disagree Hilton. The rot started back when he was Minister of Public Enterprises and the SOE’s were his remit.

Then look at the mess he made with tourist visas and unabridged birth certificates during his tenure as Minister of Home Affairs. When the world wanted to visit SA’s shores, he made things as stupidly difficult as possible for people to get here, and for foreign families, employers and employees to stay.

Spectemur agendo – let us be judged by our acts

Try getting a Schengen visa where you just want some discretionary time on the shores of Germany! Becuase you are from Africa they make it as difficult as possible.

Reciprocity is the only way.

So what are the chances of a German trying to dodge immigration to stay in SA vs the other way around? Who needs tourists more? Germany or SA?

Its the principle.

End of comments.


Insider GOLD
ONLY R63pm

Moneyweb's premium subscription is a membership service which will give you access to a number of tools to take charge of your investments.
Choose a yearly subscription at R630pa - SAVE R126

Get instant access to all our tools and content. Monthly subscription can be cancelled at any time.

Follow us:

Search Articles:Advanced Search
Click a Company: