Ever since economists devised a
method for measuring the pulse and temperature of a country the fellows in
charge have promised that they know how to make it even healthier. The mere
fact that every nation experiences ups and downs in this parameter (usually
termed the GDP) glaringly demonstrates that this promise is impossible to fulfill and must be ignored for the bluster it really is. Largely oblivious and
indifferent to the government’s hand waving and finger pointing, economies
lumber on as the gross effect of every citizen’s private effort to improve
their own circumstances. There are many shocking results in the detailed report
of how our nation’s GDP declined by 1.2% in the first three months of the year
but perhaps the most frightening is the admission that “General government
services grew by 1.1% due to an increase in employment reported for central
government.” Unsurprisingly all these extra tax eaters utterly failed to
impress the wealth creators and so the second alarming figure in the report is
that the country is using less power and water than before. The picture of our
minister for public enterprises releasing a flock of white doves to mark the
launch of an Eskom project shows just how clueless politicians are about what
really has to be done.
Mind you, confusion is not
restricted to the public services. The Lesotho Institute of Accountants has
bought a pricy advertisement in the SA papers calling for expressions of
interest in their programme for the “Operationalisation of Lesotho(‘s)
Professional Accountancy”. Just what this might mean is unknown but there are
warning signs that bureaucrats night be at work when it is revealed that this
“programme” forms part of Phase II of the European Development Fund Poverty
Reduction Budget Support (sic). Businesses interested in this task must submit
a fewer than 15-page document electronically as well as six hard-copies, with
both submissions to arrive on the same day in Maseru. Undoubtedly this will
reduce the Institute’s paper and printer ink bill but it does raise questions
about the understanding the accountants have about this modern interwebs
thingy.
After all the anxiety followed by
public expressions of relief that another ratings agency has deferred their
decision about downgrading South Africa, it is worth recalling what this is all
about. The key point is that like most counties SA borrows money in foreign
currencies – principally the US dollar. The “rating” published by these outfits
is just their (frequently wrong) judgement of the borrowing country’s intention
and ability to service that loan. This means it must earn enough foreign
currency from its trade with other nations to cover the interest and principal
payments at the appropriate times. While this is a rather obviously binary
process (pay / don’t pay) the ratings agencies, to their benefit, have drawn it
out into a lengthy scale from triple A down to Cs and Ds with an alphabet soup
in between. At some arbitrary point on this scale a line is drawn and ratings
below that line are termed “junk status”. The sole impact of any rating on a
borrower is that it provides a guide to what level of interest a lender will
demand. The painful irony is that high risk borrowers are asked to pay higher
rates which only exacerbates their situation. But clearly if a payment is
skipped, it matters not a jot what the borrower’s rating was. The lender is
left whistling for his money and darting dirty looks at the ratings
agency. Those who remember our infamous
“debt standstill” appreciate that South Africa has form in the “don’t pay”
arena and our rehabilitation from then shows it is possible to regain the
lenders’ trust.
Did AB Inbev have a chat with
Walmart about their Massmart deal in South Africa before making a play for SAB?
This latest mega merger is also wading into crocodile infested swamps over
employees’ demands. South African labour laws and worker expectations are not
for the faint hearted foreigner and undoubtedly battalions of document-toting
lawyers are racking up substantial chargeable hours and air miles.
At least the Newlands test
tomorrow against Ireland will not be played with a pink ball although it looks
as if the Proteas might be about to meet the Aussies in Adelaide with one. It’s
all so difficult for us traditionalists. Formula 1 racing under lights is also
horrible.
James
Greener
Friday 10th
June 2016
I saw a
leprechaun in Griquastad!
