Financial Mail Newsmaker of 2016 by SundayTimesZA

JSE 2016: blood on the floor

How SA tourism missed the boat

TV turns 40 (as SABC burns)

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December 15 - December 21, 2016

NEWSMAKER of 2016 How Pravin Gordhan thwarted a downgrade and swa ed away the Hawks

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contents

financialmail.co.za December 15 - December 21, 2016

fox

features

money&investing

life

Why it won’t go Walmart

Small sliver of light

JSE: sharing in the pain . . .

Birth of the little bioscope

cover story

REGULARS 6 Editorials 7 Editor’s Note 8 Letters 10 Between the Chains 23 Boardroom Tails 55 In Good Faith 88 Backstory FM FOX 11 Massmart 12 Another Week 13 Trending 13 Dinner Party Intel 14 Diamonds & Dogs 14 Gimme 15 View from the Top 16 Retail 17 Pattern Recognition 18 Hot Property

20 21 22 23

Gauteng Gimme JSE Stocks in Numbers Numbers

FEATURES 26 Newsmakers of 2016 38 Economy 40 Tourism 46 Property 47 Fuel Cells 48 Competition 50 Energy 52 Zimbabwe 54 Media & Advertising MONEY & INVESTING 57 JSE 60 Property 61 Market Watch

61 62 65 66 68 68 69 70 71 72

NEWSMAKERS OF00 2016

Global Markets Construction Steinhoff Emerging Markets Shop Talk Checkout Counter Investor’s Notebook Analyse This Economic Indicators JSE Top Stocks

FM LIFE 75 Television 77 Whisky 78 Inbox 80 Holiday Gift Guide 83 Dog Hotel 84 Outbox 87 Food for Thought

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Cover: Vuyo Singiswa & Russell Roberts

@financialmail December 15 - December 21, 2016

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editorials HLAUDI’S POWER: THE MASK HAS SLIPPED

few years back, one SABC executive described how Hlaudi Motsoeneng, a man cut from the Idi Amin cloth, was essentially a useful thug. “He beats people up in the dark for a living, but he gets things done,” he said, approvingly. The message was clear: sure, he’s a Frankenstein’s monster, but he’s our monster. Perhaps more accurately, it appears he’s really been President Jacob Zuma’s monster all along. Until now, it hasn’t been totally clear how it was that Motsoeneng could remain untouchable despite having taken a sledgehammer to the SABC’s integrity, and despite furious opposition from ANC heavyweights like Jackson Mthembu. Finally, we have a lucid answer, emerging from the carnage described by the “SABC Eight”, the whistleblowers who told parliament this week, in gory detail, how Motsoeneng turned the broadcaster into a propaganda arm for the more unsavoury elements within Zuma’s ANC Vuyo Mvoko, an SABC editor, described how taxpayer money — your money — was effectively laundered through the public broadcaster to the Gupta family’s media company, TNA Media. “SABC executives . . . allowed SABC money to be used to build a rival channel, ANN7. Morning Live resources get diverted to pay for the production costs of (The New Age breakfast briefings). The money the owners of TNA make, none of it — not a cent — goes to the SABC,” he said. In other words, Zuma’s friends benefited from public funds, a funnel facilitated by the delinquent stewardship of Motsoeneng. Here then, is an eloquent answer to the baffling question of why Motsoeneng hasn’t been given the boot. As journalist Lukhanyo Calata put it: “It’s an open secret . . . our understanding is that Mr Motsoeneng has the support of the president.” These tales from the coalface were a step-bystep guide to throttling a public broadcaster. We heard how former CEO Jimi Matthews Editorial

financialmail.co.za

Editor: Rob Rose. Deputy editor: Sikonathi Mantshantsha. Managing editor: Kevin O’Grady. Writers: See bylines for writers. Assistant editors: Zeenat Moorad, Razina Munshi, Prakash Naidoo, Amarnath Singh. Sub-editors: Dave Landau (Chief),

December 15 - December 21, 2016

instructed staff to find “positive soundbites” of Zuma’s speeches; we heard how communications minister Faith Muthambi told SABC journalists which clips she didn’t want played; we heard how former SABC chair Ellen Tshabalala grilled economics editor Thandeka Gqubule-Mbeki for the impertinence of posing tough questions to (then Transnet CEO) Brian Molefe. Gqubule-Mbeki revealed how she was pressured to stifle reports on how Zuma had crashed the rand by axing finance minister Nhlanhla Nene. “Public service journalism is dying at the SABC. Every day, we — its journalists and editors — bear witness to a mandate betrayed,” she said. At the centre of all this sits Motsoeneng. Perhaps ex-SABC director Bongani Khumalo put it best: “There has been a kind of malevolent power [at the SABC].” Those who have enabled Motsoeneng to prosper have leapt to his defence. When asked about the SABC Eight, CEO James Aguma described them as merely “discontented journalists”. While it would be tempting to blame Motsoeneng, it seems futile. Can you blame Idi Amin for being a despot, can you blame Donald Trump for being a narcissist? No, it is those who enabled this who should carry the shame. As Krivani Pillay, SAfm current affairs producer, explained: “Parliament let us down, the board let us down, the minister let us down, our acting CEO at the time, Jimi Matthews, let us down. All these people sold out journalists.” For allowing this to flourish, history will pass harsh judgment on Muthambi, Tshabalala, Aguma and Mbulaheni Maguvhe. Had their loyalty been to the country, rather than to one venal man, their conscience would be clear. x Shirley de Villiers (Deputy), Dynette du Preez. Proofreader: Norman Baines. Art director: Debbie van Heerden. Contracted artists: Colleen Wilson, Vuyo Singiswa. Statistics: Shaun Uthum. Photographic assistant: Freddy Mavunda. Editorial assistant: Onica Buthelezi. Office assistant: Nelson Dhlamini.

SIBANYE TAKES A BIG BET

o-one could conceivably claim that Sibanye Gold’s CEO, Neal Froneman, isn’t an ambitious man. Last week, Sibanye announced a R30bn takeover of American platinum miner, Stillwater Mining — before it beds down any of its new platinum acquisitions, and just a month after it took control of Rustenburg Platinum Mines. For Froneman, the deal is a masterstroke on two counts. First, platinum prices have rebounded to US$930/oz from their recession-induced depression of $825/oz eight years ago. Secondly, the deal would provide Sibanye with a much-needed geographic diversification. Still, the risks of investing in the US are much larger too. Ask any number of companies which have battled to do so — including Discovery and life assurer Sage. In Stillwater, Sibanye is swallowing a company bigger than itself. It now risks juggling a daunting new venture in unknown territories. Froneman is also on the record as saying he is still on the prowl for coal assets. That’s a lot of balls to keep in the air. It is certainly admirable that Sibanye sees value in the current mining environment — but history is littered with the carcasses of ambitious companies and the careers of executives that spread themselves too thin away from their core competences. Fingers crossed Froneman has taken all this into account. x

Editor in chief: Peter Bruce. Editorial tel: Johannesburg (011) 280-5808/3000. Cape Town: (021) 488-1700. FM Projects Special projects editor: Brendan Peacock. Advertising GM sales: Trevor Ormerod. Deputy GM: Reardon Sanderson.

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editor’s note by Rob Rose

COKE SNORTS, IRR SQUIRMS The institute’s latest faux pas, this time failing to reveal its pro-sugar study was funded by Coke, raises even more awkward questions @robrose_za roser@fm.co.za

T When the IRR’s funding from Coke was exposed, it didn’t apologise — it attacked the journalists instead

here were uncomfortable echoes of the tobacco industry last week when it emerged that the Institute of Race Relations (IRR) had produced an antisugar-tax research paper with cash from the big kahuna of sugar, CocaCola — and kept this vital fact from the public. The IRR’s research, titled “A Stealth Tax, not a Health Tax”, lambasts government for its plan to levy a 20% tax on sugary drinks, arguing this is based on assumptions “unlikely to hold true in the real world”. Last week, Fin24 looked behind the façade and revealed that none other than Coca-Cola itself had funded the study. “The IRR used the Coke-funded paper to engage with treasury about the economic impact a sugary tax will have in SA,” it said. Disingenuously, when caught out, IRR COO Gwen Ngwenya said Fin24 was engaging in a “smear campaign to deflect attention from the IRR’s analysis”. It was an act of stunning chutzpah, illustrating the depths to which the IRR, an organisation with a proud 87-year history of defying the apartheid regime, has sunk. So here’s a tip of general application: when you’re caught secretly funding your pro-sugar research with grants from Coca-Cola, have the grace to admit you bungled your disclosure spectacularly. Some predictably tried to reframe this debate as being about “the right of public companies to fund research”. All but the most credulous will instantly see through this wafer-thin straw-man argument. This “right” was never in dispute. Rather, the problem is the crucial nondisclosure of a huge conflict of interest that, now exposed, taints the findings.

Every respectable researcher knows that when your funder has an incentive to pervert findings (as in the case of Coke), this conflict of interest should be disclosed. Columbia University’s course on the responsible conduct of research says an investigator’s “financial relations to the sponsor should be included in all written and oral presentations, publications and abstracts”. Having been caught out, Coke is now burying its head in the sand. Spokesman Zipporah Maubane refused to answer the Financial Mail’s questions, or even say how much Coke paid the IRR for the study. Ngwenya, however, has gamely tried to defend the IRR. She says the institute had already reached conclusions and “approached Coca-Cola because we needed to strengthen our findings” — though she claims this is not evidence of a pre-existing bias. She says the IRR approached Coke because the research “aligned with [its] business focus — we wouldn’t have gone to government for funding because [it] would be pro this sugar tax”. It’s a telling response, but Ngwenya argues that the IRR’s standards are different from those of an independent university study anyway. “Universities are meant to be ideologically neutral, but we already hold a position on tax as a classic liberal think-tank. Those [ethical] codes you speak about are based on a university-style research process,” she says. Still, if you’re starting from an ideological standpoint, you’d struggle to legitimately argue this is an “independent” study. So does a funder’s identity matter, you ask? Apparently so. A 2003 study by Dr Joel Lexchin, a former York University lecturer, found that “research sponsored by the drug industry was more likely to produce results favouring the product made by the company sponsoring the research than [otherwise]”. This saga has the same bitter aftertaste as that left after University of Geneva Prof Ragnar Rylander was found, in 2001, to have been “secretly employed by Philip Morris” to push out pro-tobacco research for 30 years. Nor was that the only instance of dubious research playing the tune its paymasters demanded. You may also be wondering what the IRR — formed in 1929 to do what its name suggests — is doing lobbying against a sugar tax. If so, you aren’t alone. Where was the IRR in January, when SA was consumed by the Penny Sparrow race war? Debating whether global warming is a myth and squabbling with fact-checking website Africa Check. It was, as the Financial Mail remarked, an odd policy detour for an organisation with such an esteemed history. Mercifully, Ngwenya admits there is now, at least, some introspection at the IRR. “We take the feedback seriously. No-one has questioned our funding sources in the past. But this has given us pause to reflect on our disclosure policy,” she says. Still, it’s a searing indictment that the IRR couldn’t see these glaring conflicts of interest in the first place, before playing Russian roulette with its reputation. x December 15 - December 21, 2016

financialmail.co.za

you said... Mmusi’s DA makeover

facebook

letters Mark Barnes, you have mail I would suggest that Post Office CEO Mark Barnes would be better served spending his time on jacking up the service of the post office’s core business in the rural areas — in other words, delivering and sending mail and serving customers rather than expanding into banking. We regularly receive our Financial Mail three weeks late — which means it’s basically outdated. A birthday card that was airmailed from the UK took three weeks to get to me, and I am still waiting for a share

certificate that was posted from Durban on October 31 (it is now the first week of December). Thank goodness it was only a copy and not the original! I cancelled my subscription to an overseas newspaper because it often just didn’t arrive. When I walk into our local post office there is only ever one person working (if you can call it that — I’d call it going slow), with another body assiduously picking up pieces of paper and putting them down.

Jo Moseley Stutterheim

Sharing is caring about the future The column by Sikonathi Mantshantsha “When the masses take over” (Between the Chains, November 24-30) struck a really uncomfortable chord. The Russian Revolution of 1917 must come to mind when we consider the inequality chasm in our country. Those of us who are prosperous need to curb our conspicuous consumerism and share some of the benefits flowing from a good education and stable homes. There are a myriad ways to do this. One example is “fit for purpose”

personal transport, instead of hugely expensive German leviathans and 4x4s. The measurable price difference saved could be given to finance a scholarship at university for someone who could not afford an education. The late Anton Rupert said we would not sleep soundly if our neighbours were hungry. How true. If we do not make meaningful attempts to rectify the unstable inequality situation, the gathering storm clouds of the population explosion will do it for us.

Alan Cook George The FM welcomes concise letters from readers. Letters must carry the name and address of the sender. They can be sent to The Editor, Financial Mail, PO Box 1744, Saxonwold 2132. Fax (011) 280-5800. E-mail fmmail@fm.co.za

The Financial Mail said: As the housing market comes under renewed pressure along with the rest of the economy, home buyers need to become far more discerning in their suburb selection. That is all very well if you have millions to invest, but the average Joe buys where he can afford to. We all know the property you live in is not necessarily an investment because you always need to replace it with something.

Behind SA’s ratings reprieve

THIS IS THE

R90m

Why Rupert is ‘sick of the King

www.financia lm

code’

il.co.za December 8 - December 14, 2016 SA / R27,50 inc Vat Zimbabwe: US$5

BARGAIN

YOU MISSED OUT ON!

SA’s top suburbs: where you shoul d, and should not, be buyin g

WITH FM THIS WEEK:

SA IN 2017

while the firm slashes jobs to save costs. There should be an international treaty accepted into law whereby no organisation is entitled to pay out bonuses to executives if jobs have been slashed in the past five years. That’s a bad management decision, isn’t it? Gary Bartholomew

Kim Shoobert Hogben

The Financial Mail asked: Is the Democratic Republic of Congo in danger of slipping back into civil war? The revolution in Africa means “dictator”. Lindsay Fredericks

The Financial Mail said: Johann Rupert offers some frank views on corporate governance, share repurchases and capital raising. His views seem to be losing him billions in the European market. So thanks, but no thanks. Lesego Thulare

The Financial Mail said: PetroSA’s bumbling executives get bonuses

I have a problem when some people attribute this to BEE and AA — it shows how little knowledge they have. Incompetence is incompetence, whether one is white or black. Thabiso Papaki Hoaeane

The Financial Mail said: Mercifully, everywhere you look nowadays, people of conscience seem to be popping up within the ANC. Very little, very late. One does not become ethical after a time. You are ethical or you are not. If you allow your party members to behave unethically, you are unethical. Speaking up later does not repair your name. Meyndert Borrie Bornman

December 15 - December 21, 2016

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between the chains by Sikonathi Mantshantsha NUCLEAR DISASTER LOOMING

ow that Eskom is forging ahead with its nuclear build programme, you can expect the parasites that illegally feed off the public wallet to get even richer next year while the general populace gets poorer. Just to be clear right up front: I am all for a wellthought-out, properly costed, corruption-free and progressive nuclear electricity investment. But Eskom is not the organisation to be trusted with such a costly exercise. Chairman Ben Ngubane, outgoing CEO Brian Molefe and acting CEO Matshela Koko are not to be trusted even with standing in for the spaza shop owner while he is out replenishing his meagre stock. Under their leadership, mismanagement and corruption have hit levels that make Mobutu Sese Seko and Robert Mugabe look like angels. Under their stewardship the arms deal corruption will look like a poor rehearsal. Go read the public protector’s “State of Capture” report; and consider the Westinghouse court case (which Eskom has lost many times) for the replacement of six steam generators at the Koeberg nuclear power station. Look at the parliamentary inquiry into the SABC; and the Dentons report (if you can find it) for clues as to their capacity to destroy value in strategic national entities. Now to the matter at hand. This week Eskom will publish a request for proposals to build SA’s newest fleet of nuclear electricity stations, a function it miraculously reckons it can execute after the energy department failed to push it through parliament. The sudden resurgence of confidence on the part of Eskom is mysterious on at least three counts. The first is that seven years ago it admitted it did not have the financial capacity to make this investment. Since then, things have rapidly worsened where it concerns the balance sheet, necessitating a R83bn

@SikonathiM mantshantshas@fm.co.za

Ngubane, Molefe and Koko are not to be trusted with standing in for the spaza shop owner while he is out

good week It was third time lucky for Ghana’s president-elect, Nana Akufo-Addo, after the electoral commission declared his New Patriotic Party had won 54% of the vote to 44% for John Mahama’s ruling National Democratic Congress. Akufo-Addo, scion of Ghanaian royalty and the political establishment, lost in 2008 and 2012. He tweeted: “A few minutes ago I received a call from President @JDMahama congratulating me on winning the 2016 presidential election. #ChangeHasCome.” All good for democracy. x 10

financialmail.co.za

December 15 - December 21, 2016

bailout last year in the form of a R60bn debt write-off and a R23bn cash injection by government. Despite this, debt has jumped to more than R360bn, which demands servicing costs of more than R30bn/year. Adequate electricity supply The second mystery is that government only a month ago updated its Integrated Resource Plan to say that no new nuclear capacity is necessary until at least 2037. The depressed economic growth, which will not hit even 0.6%/year for 2016, means the demand scenario is such that Eskom again has excess capacity to power more robust growth in the years to 2037. The additional 10,900 MW of capacity under construction at its three new plants means Eskom will be in a position to adequately supply electricity efficiently until at least 2040. This is even after it has decommissioned the approximately 4,000 MW of old coalfired power stations that will reach the end of their useful lives by 2023. The third mystery in Eskom’s rush for nuclear infrastructure is that for the next 20 years it will still not have a strong enough balance sheet to carry such a burden. Chief financial officer Anoj Singh admitted as much two months ago. He said government would have to fund the project. To put things in context: last month Vietnam’s parliament abandoned a 4,000 MW nuclear station it had planned in 2009 after it realised it would have to pay the equivalent of R255bn for it. Even Eskom’s tainted 4,600 MW Medupi coal project is costing R120bn. The scope for corruption is enormous. While they have not been found guilty of any corruption (yet), leaving Ngubane and Koko in charge of Eskom would be like letting the fox guard the chicken coop. Look at the tragic basket case that is the SABC, which Ngubane chaired and wrecked before moving on to Eskom.. x

bad week Only someone with presidential protection and the hide of a buffalo could have taken to the role of SABC dictator-in-chief with such alacrity. But the Hlaudi Motsoeneng wrecking ball may just have been checked. The Western Cape high court ruled that he was unlawfully made group executive of corporate affairs and ordered his suspension. Over at parliament, former colleagues ripped into his crude and ruthless management style at an inquiry into the crumbling SABC. What will his next ruse be to hang in there? x

Digging up unusual, interesting tidbits in and around the business scene

Martin Rhodes

MASSMART

Why it won’t go Walmart Its promise of greater expansion into Africa has not yet materialised, but its prospects for local growth look better than ever Adele Shevel shevela@sundaytimes.co.za

ý Massmart, which owns Game, Makro and Builders Warehouse, among others, won’t rebrand itself as Walmart anytime soon. In his first wide-ranging interview since taking over from Grant Pattison, CEO Guy Hayward says this option is now off the table. This appears to contradict expectations from analysts that Massmart will begin “Walmartising” to capitalise on its parent’s global brand recognition in Africa. “We did research, and Game and Builders Warehouse are better known than Walmart in most of Africa. The west of Africa with links to America — Ghana and Nigeria — has a slightly higher recognition of Walmart,” says Hayward. Six years ago, when Walmart swept into town and nabbed Massmart for R30bn, talk was rife that there would be a prompt rebranding, followed by lower prices for consumers, and a quick assault on the African retail market. But Walmart has found it much harder than it expected. Massmart’s stock has fallen to R131/share — down 11.4% from the R148/share that the US giant paid for control. And Massmart’s African expansion has been curiously low-key — something Hayward ascribes to refusing to “slug the Africa Kool-Aid. Massmart gets only 9% of its sales from outside SA, sharply less than Shoprite, which gets 17% of its turnover from outside the border. But its prospects at home have brightened in recent weeks, after Massmart won a hotly ➦

Guy Hayward: Fresh food allows us to make Game a more defensive, more frequently trafficked discounter

December 15 - December 21, 2016

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ANOTHER WEEK Gallo Images/AFP/Manan Vatsyayana

contested constitutional court fight against Pick n Pay, which gives it the right to operate as a fully fledged supermarket in the Cape Gate shopping centre, where it can now sell fresh foods. This may yet spark a fierce new retail war in major shopping centres. Large malls — the likes of Sandton City, Eastgate and others — often sign exclusive lease deals with big retailers that prevent rivals from opening stores. At Cape Gate, Massmart’s Game began selling fresh fruit in 2010, as part of an expansion into food. Pick n Pay complained, saying it had Game and been given the Builders “exclusive Warehouse rights” to do are better this. known than The Walmart in constitutional most of Africa court disagreed — Guy Hayward effectively ending the era of exclusivity leases. While the judges only spoke explicitly of Cape Gate, the ruling will be influential in any further discussion on this issue. Hayward argues that introducing food, and particularly fresh food, is crucial, as it “allows us to make Game a more defensive, more frequently trafficked discounter”. He says: “You’re not (just) going there two or three times a month for a car audio or a kid’s schoolbag — you’re going quite often to get food. And what we’ve seen through customer data is that one in every five visits is now food only.” About 20% of Game’s sales is food, but there is plenty of scope to grow. Of Game’s 139 stores across Africa, including SA, only 82 have food. The stakes are high: Massmart estimated last month that the total fresh food market is worth R84.7bn/year, with 10% annual growth forecast. The court ruling means it’ll become almost impossible for malls, or retailers, to justify keeping exclusivity deals. In the end, it’s a victory for consumers. x

’TIS THE SEASON . . . A diver wearing a Santa Claus costume swims inside a fish tank at the Aquaria KLCC in Kuala Lumpur. The scuba-diving Santa Claus and other Christmas-themed activities are some of the prime attractions for visitors to the underwater park.

BY THE

NUMBERS

Corporate tax: lower than ever

27.5% 23.6% was the average global corporate tax ten years ago,

90%

of the world’s biggest companies have a presence in at least one tax haven

$80bn

in profits were reported by US multinationals in Bermuda in 2012

1.1m

companies are registered in the US state of Delaware, which has a population of only 935,000 people. It has a business-friendly legal system and it does not impose a state tax on income relating to intangible assets

Bermuda, the Cayman Islands, Netherlands, Switzerland and Singapore are the world’s worst corporate tax havens

is the rate today

12.6%

16.2%

was the eﬀective tax rate for US corporations in 2010, even though the nominal corporate tax rate is

December 15 - December 21, 2016

35%

was Australia’s eﬀective tax rate in 2013, instead of the statutory corporate tax rate of Source: Oxfam

30%

DINNER PARTY INTEL...

“You must defend the organisation; no journalist is independent. The COO has final responsibility [for] news. If people do not adhere, we get rid of them. We cannot dare question management.”

The topics you have to be able to discuss this week

1. Breaking India’s love of gold

Former SA Broadcasting Corp COO Hlaudi Motsoeneng, as quoted by SAfm executive producer Krivani Pillay in parliament

The Indian government’s effort to crack down on undeclared income is affecting sales of one of its most-loved commodities, gold. Exports to India rose to their highest level this year in November as jewellers built up stocks in preparation for the wedding season. But so far this year shipments have slumped 43% from a year earlier, Bloomberg reports. The drive for greater transparency in the financial system and a tax on jewellery will push consumption down to its lowest level in seven years.

TRENDING

Not true, says Trump of CIA probe report Trump picks a fight with the CIA after it says Russian hackers meddled in the US presidential election

2. Trade wars beckon

ý The Washington Post broke the story with these words: “The CIA has concluded in a secret assessment that Russia intervened in the 2016 election to help Donald Trump win the presidency, rather than just to undermine confidence in the US electoral system.” The story quoted “a senior US official briefed on an intelligence presentation made to US senators” as saying: “It is the assessment of the intelligence community that Russia’s goal here was to [favour] one candidate over the other, to help Trump get elected.” Thus began scandal number 10,942 of presidentelect Trump — and his presidency gets under way only in January 2017. Tearing a strip off the CIA is usually left to journalist

Gallo Images/AFP/Robyn Beck

Ray Hartley hartleyr@timesmedia.co.za

John Pilger, with SA ministers such as Kebby Maphatsoe and Nathi Nhleko doing their bit to help. Supporting the CIA is usually the prerogative of the Republican establishment — think Ronald Reagan, George W Bush and their minions. This made Trump’s reaction to the story extraordinary. His transition team said: “These are the same people that said Saddam Hussein had weapons of mass destruction.” And this from the president-elect himself: “Can you imagine if the election

results were the opposite and we tried to play the Russia/CIA card. It would be called conspiracy theory!” Democrats and the New York liberal establishment, represented by its organ-inchief, The New Yorker, rose to defend the CIA report. Staff writer John Cassidy opined: “Never before has a president or president-elect spoken so dismissively of the CIA.” The last word belonged to Trump adviser Kellyanne Conway, who said: “Vladimir Putin didn’t tell Hillary Clinton to ignore Wisconsin and Michigan.” x

China’s hopes of being granted “market economy” status on the 15th anniversary of its membership of the World Trade Organisation (WTO) don’t look promising. That change in status would alter how countries determine antidumping duties levied on its imports. But the US and the EU are thwarting China’s plans, prompting it to lodge a dispute with the WTO. Expect this to escalate already-tense relations with the US.

3. Kenya plans ICC exit Will Kenya become the fourth African country to ditch the International Criminal Court? It has been the continent’s most vocal critic of the court, mostly because its leaders were called to account for their role in post-election violence in 2007. President Uhuru Kenyatta accused the court of “a lack of impartiality” this week and said he would give “serious thought” to retaining Kenya’s membership. Burundi, SA and Gambia have all announced their intentions to withdraw, and have the backing of the AU.

December 15 - December 21, 2016

financialmail.co.za

DIAMONDS & DOGS BY JAMIE CARR

GIMME A good run for your money

@jamiecarr

There are clearly sheikhs and sheikhs, but this sheikh has agreed to inject R12m into the company 14

financialmail.co.za

Steinhoff International

MEDR

Bedding down acquisitions

Trying to find some sparkle

Steinhoff has had a remarkably solid year, DIAMOND given the jelly-like tendency of many of the economies in which it operates. It has made a number of acquisitions that have transformed the company and paved the way for its future. While some companies dip a tentative toe into the unfamiliar waters of a new market, Steinhoff’s acquisition of Mattress Firm in the US is more like a well-executed bomb from a 10 m diving board. This is not a firm that believes in fiddling about. Mattress Firm has the largest footprint of any US mattress retailer, with more than 3,500 stores across 49 states. The acquisition will make Steinhoff the world’s leading multibrand mattress retail distribution network, and while we all know that size isn’t everything, it certainly offers plenty of opportunity. Meanwhile, in the UK, the company has bought Poundland, a discount retailer in which everything costs £1. This includes — to the alarm of certain commentators — an intimate personal massage device that may well top this year’s list of Christmas presents most likely to be smashed over the donor’s head within moments of appearing under the tree. Steinhoff has a global reach and a primary listing in Frankfurt, and yet its list of executive management looks like a Springbok team-sheet from the mid-1960s: Du Plessis, Erasmus and Ferreira up front, ably supported by a Grobler and a couple of Nels. It might not pass today’s Springbok selection criteria, but it seems to be working. This is a remarkably assured operation, with the potential to maintain its considerable momentum. x

Meanwhile, at the other end of the size DOG spectrum, we find a company that proves once and for all that mining isn’t all about corporate jets and lavish head offices in London. Down in the nether regions of the junior mining world, life is a hard slog that revolves around minimising expenses and raising capital before you even get to the fun stuff in the field with your pick and shovel. Middle East Diamond Resources (MEDR) is a perfect example of the sort of challenges that the sector throws up. The company has no income, it had total cash at the end of the six months to August 31 of R6,682, it lost R1.5m in the six months and has negative equity attributable to equity holders of R3.6m. It managed to cut its monthly expenses from R250,000 to R120,000, largely due to its CEO, industry veteran James Allan, foregoing his salary for five of the six months. On the positive side, it has some platinum prospecting rights and has acquired some dumps on a farm outside Kimberley that it will process for diamonds. And it also has a sheikh in chairman Abdulla Khalfan Humaid Nasser, who hails from the United Arab Emirates. There are clearly sheikhs and sheikhs, but this sheikh has agreed to inject R12m into the company, which will allow it to resume its listing and get its Kimberley dumps into production. The company is still living on the edge, and it’s never going to be for widows and orphans, but if it can prove its ability to produce before the loot runs out, it may still make it. x

December 15 - December 21, 2016

ý The Mi Band Pulse activity tracker wearable from Xiaomi is so budget friendly, it could be a Christmas stocking stuffer, as it sells for just R399. Xiaomi is a Chinese manufacturer and one of the top three wearables vendors in the world — Fitbit holds the top spot, while Apple and Xiaomi are vying for the runner-up position, depending on the data-set you consult. The Mi Band Pulse tracks steps and exercise (as well as distance, estimated calories and active minutes), communicating this information via Bluetooth to a simple, attractive Mi Fit app. It monitors sleep, and provides a vibrating wake-up call if you want it. The device itself is a small metallic component that fits into a plastic band. It’s light and comfortable enough to forget. The metallic bit pops out for charging — and you don’t need to do that very often either, with up to 30 days’ tracking on a single full charge. Finally, it’s water and dust resistant. This means it can survive a shallow dunking, but it’s best not to go swimming with it. The downside? There’s no real display; the metallic module has just a few basic LED backlit areas. The inclusion of a heart rate function is the real surprise at this price. A wearable device remains a niceto-have, but a price like this means it is suddenly much more accessible. x Kate Ferreira

Mi Band Pulse Cool factor ★★★ Usability ★★★★★ Value for money ★★★★★

VIEW FROM THE TOP Peter Mountford

CEO of JSE-listed transport firm Super Group

Spectacular journey is far from over

Stafford Thomas thomass@fm.co.za

ý Super Group CEO Peter Mountford is off to Monte Carlo in June 2017, but there will be no idyllic French Riviera summer holiday waiting for him. The managerial superstar will represent Southern Africa at the 31st EY world entrepreneur of the year award. Mountford has already bagged the EY Southern Africa world entrepreneur award for 2016 in the master category. If he walks off with the world award he will become the second head of an SA company to have done so, after the late Bill Lynch, who won in 2006. “EY approached me,” says Mountford. They had good reason to do so. As Super Group CEO since July 2009, Mountford has taken the company from the verge of bankruptcy and built it into a supply chain, fleet rental and motor dealership powerhouse earning 60% of its operating profit internationally. When Mountford inherited Super Group from its founder and former CEO, Larry Lipschitz, he was lumped with a giant can of worms. Lipschitz had diversified into Chinese truck assembly, hardware (Mica), insurance (Emerald) and auto spares (AutoZone) and his neglect of the core businesses had left Super Group hopelessly overborrowed and running up crippling losses. “Super Group made a loss of R1.35bn in its year to June 2009,” says Mountford. Debt stood at almost three times the shareholders’ rapidly falling funds. It demanded urgent action by

Mountford. His first move was to prop up the balance sheet through a R1.2bn rights issue, executed at a giveaway price of 45c/share. Super Group now trades at R40/share, while its market cap has rocketed from R350m to over R14bn. Mountford also acted swiftly to dispose of noncore assets and attack costs. “Generating cash was the prime objective,” he says. Three years into his tenure, Super Group had zero debt. It was time for Mountford to move off the back foot and apply what he had learnt from Lynch, the man he praises as one of his mentors. First was the acquisition of UK motor dealership Allen Ford, bought in late 2014, followed in July 2015 by a 75% stake in German specialist logistics firm IN tIME Express Logistik. With Mountford’s foot still hard on the acquisition pedal, Super Group launched its assault on the UK fleet management and hiring market in the second half of 2016, acquiring Fleet Hire and Motiva. Mountford has learnt well from Lynch. He had the opportunity to do so after being persuaded by Lynch in 2001 to leave Super Group, where he was then CEO of logistics, and join Imperial. Lynch was not the only business giant to influence Mountford. “Meyer Kahn was also a mentor,” says Mountford of the former SA Breweries (SAB) MD and executive chairman. Mountford spent many years with SAB, as group financial manager of Afcol, as Lion Match’s FD and as CEO of ancillary beverages. It adds up to an illustrious career but one that has far from run its course. Mountford leaves no doubt his sights are set on expanding aggressively in the UK and Europe. “The markets hold big opportunities,” he says. x

Robert Tshabalala

After transforming the fortunes of a company on the verge of bankruptcy, Mountford’s foot is still hard on the accelerator pedal as he searches for international acquisitions

December 15 - December 21, 2016

financialmail.co.za

It may be a while before Amazon Go comes to SA, but its launch will herald greater disruption in retail, which is good for the SA consumer Thabiso Mochiko mochikot@bdlive.co.za

ý Global online retailer Amazon has launched what could be any shopper’s dream. In our increasingly busy lives, the last thing one wants is to stand in a long queue at a retail store after a full day of work. With technology, shopping as we know it is being totally revolutionised. The e-tailer unveiled its Amazon Go grocery shop in Seattle in the US, which has no checkout points. Shoppers can walk into the store, take what they want and leave with their purchase immediately after. The system has completely removed the need to wait to pay for your goods. To do this, customers will have to download the Amazon Go app, and open an Amazon account for payment. Amazon Go explains that it uses technologies found in self-driving cars, such as computer vision, sensor fusion, and deep learning. Its “Just Walk Out” technology automatically detects when products are removed from or even returned to shelves and keeps track of them in a virtual cart. When you’re done shopping, you leave the store, and are charged electronically. The store is already in use by

RETAIL

iStock

Go shopping with less fuss

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Amazon staff members and will open to the public early 2017. Will this trend pick up in SA? In SA and abroad, most consumers still prefer to go to a store to do their shopping and physical sales still make up 90% of retail sales. Online stores are used by only a small percentage of the population. Online shopping is still largely limited to clothes, electronics and other household goods. But in stores, the pressure has fallen on retailers to make the experience easier and more convenient. Amazon’s move into the grocery space is no surprise, says US-based Forrester Research principal analyst Brendan Witcher. He says Amazon has done to retailers what NetFlix did to the TV industry and cinemas years ago. “They broke the mould, threw it in the garbage, and said: ‘How can

December 15 - December 21, 2016

we rethink this experience completely?’ ” he says. The retail industry is ripe for disruption, so more retail tech trends may be on the cards. “Retailers who sit on their hands and fall too far behind this potential game-changing way of shopping might never catch up,” says Witcher. A report released last week by Nielsen on mobile shopping, banking and payment says retail owners will need to recognise and cater to the needs of different shoppers, including those who use their mobile phones to transact. This may mean incorporating more mobile strategies. The report shows that one in three South Africans uses an app to make a purchase and more than one third of South Africans use their devices to look for deals. It

says 44% use phones to make better shopping decisions or make shopping trips quicker. Nielsen SA country head Bryan Sun says mobile commerce has enormous implications for the entire retail ecosystem. Mobile devices are not only bringing new consumers into the modern, connected economy, but are also enabling a more customised experience, as products and services can be more closely tailored to behaviour, needs and preferences, he says. To drive higher adoption, retailers will have to understand shopping habits and transacting in a digital world and use that information to design their strategies around customer habits and preferences. Though it’s still early days to determine whether Amazon Go will be a success and whether it

iStock

PATTERN RECOGNITION BY TOBY SHAPSHAK

Technically, an annus horribilis @shapshak

Good bye to 2016, a tumultuous time for the Internet; hello to signs of hope and progress for 2017

I will be rolled out in other countries, Amazon’s products have generally received a positive reception from consumers. “Many might be wondering why Amazon is experimenting with groceries, a low-margin, fully commoditised, crowded market. But for a company like Amazon, which thrives on efficiency and high-frequency purchases, it makes perfect sense as a strategy for building its brand in the physical space,” says Witcher. As more of the technical and operational aspects are revealed, retailers may get a better understanding of how this model for physical retail can play into their overall strategies. “The Amazon Go solution takes retail in the right direction: providing value and convenience for today’s mobile and digitally savvy shopper,” says Witcher. x

Google’s self-driving test car got a speeding ticket for going too slow

n a year of fake news, Russian hacking aimed at a US presidential election, exploding Samsung phones, selfdriving cars and mega tech acquisitions, Candace Payne was my Internet celebrity of 2016. “Chewbacca Mom”, as she’s been called for her unbridled joy at buying herself a mask of the Star Wars character Chewbacca and livestreaming it via Facebook, became an instant hit as her uproarious laughter was viewed 184m times. It was a rare moment of humour in what could easily be called an annus horribilis for tech firms. Apple fought court challenges against the FBI, which wanted to decrypt an iPhone used in a terror attack, while also dealing with its first decrease in iPhone sales in 13 years, troubles in China and a resultant plunge in market sentiment. The dropping of the headphone jack in this year’s iPhone 7 was a storm in a teacup, in retrospect. It wasn’t as bad as the troubles of its arch rival. Samsung’s Note7 began catching fire, was temporarily recalled, then returned to shelves, caught fire again, and was permanently recalled, setting Samsung’s share price into freefall and doing untold damage to its brand. Dell bought EMC for US$60bn, while US cellular network Verizon tried to reinvent itself by buying troubled Internet search engine Yahoo for $4.83bn and merging it with AOL, which it bought last year for $4.4bn. If eyebrows were raised at these deals, it was LinkedIn’s $26.2bn purchase by Microsoft that seemed the most, er, adventurous for the world’s

largest software company. Locally Telkom completed its R2,7bn acquisition of Business Connexion, and the fixed-line incumbent launched aggressive data-centric mobile packages. The most interesting merger, internationally, was between Tesla and SolarCity, two of Elon Musk’s big bets for green tech. It was a busy year for the former Pretoria schoolboy, whose SpaceX rocket exploded, destroying a Facebook satellite meant to give Internet connectivity to Africa. The launch was supposed to coincide with CEO Mark Zuckerberg’s first (surprise) trip to Africa, where he visited innovation hubs in Lagos and Nairobi. Musk also saw off criticism following the first fatality in a Tesla electric car, on self-driving mode. Uber tested its own car in Pittsburgh, Ford did the same in Detroit, and Google’s selfdriving tests in San Francisco were notable for the car getting a speeding ticket for going too slow. Driverless cars are one new tech from 2016 that we’ll see get better next year. Augmented reality received an unexpected fillip when Pokémon Go launched to millions of downloads and children were wandering the streets and fields in search of virtual characters. Virtual reality has taken longer to catch on. SnapScan’s new Snap smart glasses bucked the wearables trend (which led to early pioneer Pebble being bought this month by FitBit) and gives a glimpse of the user-generated social media landscape we’ll see more of next year. x Shapshak is editor-in-chief and publisher of Stuff magazine (stuff.co.za)

December 15 - December 21, 2016

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HOT PROPERTY WHERE: Robberg, Plettenberg Bay PRICE: R75m If you happen to be castle-hunting in the millionaires’ playground of Plettenberg Bay, look no further. The 66 ha Vygekraal Estate near the Robberg Nature Reserve close to the town comes complete with its own stone castle. It is perched high on a cliff top and has majestic ocean views. The Castle on the Cliff, as the property is known, is ideal for entertaining, with a catering-size kitchen, expansive living areas, a large filtered sea-water rock pool and its own private lake. The castle has five bedrooms, spacious staff accommodation and an estate manager’s cottage. The estate has historic significance as it was home to indigenous tribes thousands of years ago. It has a prehistoric cave, and various artefacts have been found on the site. These belong to the estate and are included in the sale.

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Hein Pretorius, broker principal of Lew Geffen Sotheby’s International Realty in Plettenberg Bay, says properties such as this are as rare as hens’ teeth. “It’s a stunning, unique home in an idyllic

December 15 - December 21, 2016

location that will attract a unique buyer — someone who treasures privacy and outstanding natural beauty,” he says. Joan Muller

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GAUTENG

Off to a rocky start Political spats have dominated relations between new DA municipalities and the Gauteng province Xolisa Phillip phillipx@businesslive.co.za

ý Gauteng premier David Makhura has warned his DA counterparts in the province’s metros that the time for election campaigning is over and their focus should shift to governance — or voters will punish them. In Jo’burg, mayor Herman Mashaba admitted to Makhura that his office released a statement about the Gauteng government’s outstanding municipal debt under pressure from the media. At the same time, over in Pretoria, City of Tshwane mayor Solly Msimanga allegedly failed to breathe a word about blue lights when he met the premier, though he vowed the blue lights would not be allowed to be used in his city. These and other political spats have dominated headlines in the first 100 days since the DA won the Johannesburg and Tshwane municipalities in the August local government election. Mashaba made the concession to Makhura during a one-on-one meeting. Makhura has also met 20

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Ekurhuleni mayor Mzwandile Masina and Gauteng’s two district municipality mayors to discuss governance in the province. “He [Mashaba] briefed me about the circumstances under which he released a statement,” Makhura told the Financial Mail. “He did say he was under pressure from the media. But I told him it does not take much to pick up the phone from either side, it’s called courtesy. You can’t go out there and create the impression that [the Gauteng government] does not want to pay [its municipal bill],” said Makhura. The premier insisted that both his sit-downs with Mashaba and Msimanga were “cordial”, and that his administration had set aside R800m in the current financial year to settle outstanding municipal accounts. This was part of Gauteng’s debt management

December 15 - December 21, 2016

strategy introduced in 2014, when Makhura assumed office. “It’s not campaign time, we are now governing. We don’t want the municipalities to fail as a way of settling political scores,” said Makhura. Asked about Msimanga’s goal to do away with blue lights in Tshwane, he said: “The mayor has not raised that issue with me. I have seen [it] . . . in the papers; he knows there are more important things. Before making announcements we will not be able to implement, let us look at what the law says. If we politicise policing, law enforcement and traffic management, we will be treading on a dangerous route.” Samkelo Mgobozi, Msimanga’s spokesman, said the Tshwane mayor and the premier discussed many issues during their meeting;

chief among them was the “illconceived call to put Tshwane under administration”. However, Mgobozi contradicted Makhura on the blue lights issue, saying: “Yes, the issue of blue lights was raised and we remain firm in our stance that blue lights are not necessary. We encouraged the premier to agree with us in this regard but no decision was taken in that regard.” Tony Taverna-Turisan, head of communication in Mashaba’s office, said: “The mayor and the premier agreed to work together in the best interests of residents. A letter was sent to premier Makhura on the day of the media release. “The mayor’s statement was in response to media queries raised in relation to outstanding accounts of provincial and national government departments.” x

GIMME

Have gadget, will travel

Zagg universal tablet keyboard

Travelling is easier when you have the right accessories. Whether you’re about to go on holiday or hop on a plane for a business trip, these travelimproving gadgets will help make your trip that much better Kate Ferreira

KnowRoaming ý The “global village” might be a remarkable place to do business or simply explore, but navigating the complexities of different network providers and roaming rates from country to country is much less fun. If you’re prepared to embrace roaming, you can stay connected, but at a hefty price tag. KnowRoaming seems to offer one of the best workarounds available, especially for multiregion or frequent travellers. Applied as a sticker on your own SIM card, KnowRoaming lurks inside your smartphone, staying inactive while you are on your local provider network. But head across the border, and it disables your cellular data and connects to a local network at a set fee. It offers connectivity in 200 countries and unlimited data packages in more

than 90, at a rate that starts at US$7.99/day. You manage your prepaid spend, and see rates and usage from a linked app. Granted, $8/day for unlimited data packages is not nothing, but it’s a lot better than the R100/MB or so you might be spending, depending on where you roam. Selling point: adds on to your existing SIM; managed spend from app Price: about R399

ý Usually, a slim and light tablet is a great device to travel with — it has more screen real estate than your phone and less heft than your laptop. And with device-responsive apps such as Word (with an Office 365 account) you can easily do your work on them too. But if that work involves a lot of typing and text editing, the average touch-screen keyboard experience leaves a lot to be desired.

The Zagg universal tablet keyboard does just what it promises. It connects to your tablet by means of Bluetooth, and provides a keyboard and stand (for tablets, and smartphones if you want, 12 inches or less). The cover gives a bit of extra protection without adding much bulk to the package. Selling point: connection via Bluetooth Price: R1,299

Duet from Protag ý Misplacing your keys or phone in your own home is a pain. Misplacing something abroad, or on a busy beach in Cape Town, for example, is another matter altogether. Manufacturers the world over are scrambling to tag and track all our stuff. One of the options on the local market is the Duet. This small plastic square can be connected to your keys, smartphone or laptop, or it can be dropped into your handbag or wallet. You can then pair up to 10 Duet tags with the app using Bluetooth. Once paired, the Duet lets you find something that’s genuinely misplaced, but it

also tracks things that grow legs, which occasionally happens in almost every urban centre on the planet. You can track tags from the app on any device, and the tag batteries last up to six months. x Selling point: compact tracker for your belongings Price: R399

December 15 - December 21, 2016

financialmail.co.za

JSE stocks:

1936 vs 2016

retailer, OK Bazaars, was listed on the JSE in 1936

£1.14m

net profit from Johannesburg Consolidated Investments in 1936 was the highest in the general mining sector and was followed by Rand Mines at £900,499 and Anglo American at £819,823

oil producing company, SA Torbanite Mining & Refining, was listed on the JSE in 1936. Torbanite, a form of oil shale, was mined in the Ermelo district and processed into petrol at a refinery in Boksburg

diamond mining groups were listed in 1936, including industry giant De Beers, which turned in a profit of £1.52m that year

296 companies were listed on the JSE 80 years ago

122

That has since grown by only

companies in what is today termed the general mining sector made up the second-highest number of JSE companies in 1936, and included Johannesburg Consolidated Investments, Rand Mines, Anglo American, Union Corp and General Mining

£3.26m

to the current

387

561,564

was the size of Johannesburg’s population in 1936, a mere 50 years a er George Harrison discovered gold on the Witwatersrand in February 1886

profit, reported by Rand Mines’ Crown Mines in 1936, was the highest in the gold sector and was generated from 4Mt of ore milled. Gold was at a fixed price of US$35/oz

52,300 t of gold has been mined in SA since 1886 with the highest annual production – 1,000t – achieved in 1970. In 2015 151 t of gold was produced

Source: 1936 JSE handbook, Chamber of Mines

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December 15 - December 21, 2016

listed gold mining companies in 1936 made up more than 40% of all companies on the JSE

listed gold mining companies make up a mere 2% of the market today

listed coal mines made up the second-highest number of mines on the JSE 80 years ago. Today there are 11 listed coal mining groups

BY THE

BOARDROOM TAILS BY ANN CROTTY

NUMBERS

Rooster idea is bad in many ways

Competition policy in SA

391

Syndrome leads to bizarre rankings and huge salaries @anncrotty

Hands up all those who think Clark didn’t have too much to do with the £79bn AB InBev paid

ast month a UK-based remuneration consultancy declared Alan Clark, the former CEO of SABMiller, to be the “bestvalue” boss on the FTSE 100. Pearl Meyer, which describes itself as “the leader in executive compensation consulting” worked out that for every pound paid to Clark in the past four years, shareholders have received £5,984 in return. Is it any wonder we’re all a little cynical about executive remuneration and the enormous industry that has grown up around it? In financial 2016, the last year of SABMiller’s existence, Clark’s total pay fell 17% to £5.9m. But he was in charge of the brewer when AnheuserBusch InBev forked out an eye-watering £79bn, equivalent to £45 a share, for it a few months ago. So Clark’s shareholders scored big time. Pearl Meyer acknowledges that the takeover did play a part in boosting the returns generated under Clark’s watch but doesn’t seem to think it was sufficient to rule him out of contention in their bizarre rankings. Hands up all those who think Clark didn’t have too much to do with the £79bn AB InBev paid for SABMiller. Of course he did play some role, but the same sort of role was played by about 100 of the top executives. I’m pretty sure not even Clark would want to claim sole credit. He seems to have got caught up in what is known as the “rooster syndrome”. Named after the rooster who believed the sun rose every morning because he crowed, this particular syndrome is regularly in evidence in

the remuneration industry. It is a tendency to assume that if two events or phenomena consistently occur at about the same time then one is the cause of the other. The remuneration industry has a tendency to assume that if a share price increases, the CEO is responsible. Remarkably, they would then persuade us, there is no symmetry in this relationship. So if a share price drops, the CEO is not responsible. When that happens, you must look further afield for the explanation: the general market is weak, the economy is weak, some specific company or industry headwinds have hit; in the short to medium term it is anyone’s fault but the CEO’s. When the share price falls it is inevitable that a plan is hatched to ensure the CEO doesn’t have to pay for options that are under water. The huge payout enjoyed recently by SABMiller shareholders wasn’t the result of recent years of herculean efforts by management. It was the result of excellent teamwork that started several decades ago and was propelled onto the global stage. To assume that one individual was responsible and achieved it in a few short years is as appalling as it is misleading. But it is a version of events that suits remuneration consultants and their captive clients in boardrooms across the globe. It helps to explain the cult of the CEO and why long-term is now defined as just three to five years. And it is, of course, also why we have such ridiculously overpaid executives. x

merger notifications were received by the competition commission in its 2015/2016 financial year

413 merger cases were finalised

were approved with conditions, such as restrictions on post-merger retrenchments

were prohibited 7 mergers

133

cartel investigations were initiated in the year

119

were in the automotive components sector

investigations were completed

were referred to the competition tribunal for prosecution

leniency applications were received

of which have been granted

Source: Competition commission

December 15 - December 21, 2016

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FEATURES An in-depth look at the hot button subjects of the day in SA and around the world

NEWSMAKERS OF 2016

FLIGHT OF SWALLOWS

SPOTLIGHT ON MERGERS

A NEVER-ENDING STORY

The Financial Mail chooses its newsmaker of the year, together with a list of the people who dominated the headlines and had the biggest impact on SA

Tourists who come from colder countries to SA for the summer could bring greater benefits to the country if they were allowed to stay longer

The focus is falling on finding a balance between corporate action that is against the interests of ordinary people and preventing heavy-handed state intervention

Robert Mugabeâ&#x20AC;&#x2122;s Zanu-PF has been battered by internal strife and a failing economy. But none of that will stop Mugabe from contesting elections in 2018

December 15 - December 21, 2016

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feature / newsmakers

NEWSMAKERS OF 2016

The people who rocked your world

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December 15 - December 21, 2016

OVERALL NEWSMAKER: Pravin Gordhan

COURAGE UNDER FIRE Pravin Gordhan was always seen as an excellent administrator but it wasn’t until the minister of finance was thrown into the ring with the controversial businessmen, the Gupta brothers, that South Africans discovered what steel the man was made of Claire Bisseker bissekerc@fm.co.za

I The Financial Mail chooses its newsmaker of the year, together with a list of the people who dominated the headlines and had the biggest impact on SA politics, business, civil society, sport, and arts & entertainment. We have also chosen, from a crowded field, the mampara of the year. And, because he broke the norms of politics to become president-elect of the most powerful country, we feature Donald Trump as our international newsmaker of the year

n a year in which he saw off blatant political harassment and intense ratings pressure, finance minister Pravin Gordhan has been a revelation. Adversity has turned him from a grey-suited bureaucrat into the nation’s foremost hero. Over the past year he has proved a master of fiscal management, public relations, political strategy and the building of stakeholder co-operation. Not only does he deserve the title of the Financial Mail’s Newsmaker of the Year, Gordhan should also get SA’s “Courage Under Fire Award”, suggests former finance minister Trevor Manuel. Manuel says Gordhan has succeeded in the most challenging of all cabinet positions without any of the usual support structures on which the position relies. Even in normal times the finance minister has to have the complete backing of the head of government to operate effectively. Without it, he is an extremely lonely figure. While Gordhan has manifestly lacked support from the very top, and the full cooperation of the tax authorities, he has also had to fight a rearguard action against seemingly compromised cabinet colleagues while simultaneously battling arrest on trumpedup fraud charges. “No human being in a position of authority should be expected to carry such a burden,” says Manuel. “Pravin Gordhan has borne it indomitably.” A key element of Gordhan’s success was his decision to take the public into his confidence right from the start. Throughout the year he has issued frequent media statements — cataloguing every step of his harassment by the Directorate for Priority

Crime Investigation (the Hawks), sharing correspondence and setting out in precise terms his rebuttal of their allegations. By playing open cards with the public and making an ally of the media, Gordhan blew the lid off the murky world of state capture and turned his running battle with the Hawks and the National Prosecuting Authority (NPA) into SA’s hottest news story, day after day. Unlike the president, who dismissed claims of state capture out of hand, Gordhan warned that “millions of people will pay the price (there will be less money to relieve poverty and support job creation programmes) if this subversion of democracy is left unrestrained and unchallenged”. He even revealed the emotional toll his battle with the Hawks was taking, yet was never the hapless victim. His dry sense of humour, professional rigour and ability to remain cool under pressure saw him receive standing ovations wherever he went, from book fairs to the national assembly. The outpouring of support he received from all corners of SA meant he was anything but a lonely figure. By late October, when the NPA buckled under public scrutiny and withdrew the fraud charges against him, Gordhan had become the country’s cause célèbre. A national civic movement, the Save SA campaign, coalesced around everything Gordhan had come to represent: the strength of one man standing up to the playground bullies in defence of what was right. Had a popularity vote been held on November 2, the date of his erstwhile court appearance, Gordhan would have walked it. “His stewardship and leadership in ➦

December 15 - December 21, 2016

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NEWSMAKER POLITICS: The Guptas

Bloomberg

OWNING NUMBER ONE

the public sector made, and continues to make, an immeasurable, positive impact for SA and its people,” says former finance minister Nhlanhla Nene. “His integrity is beyond question and he is an inspiration to many, including me.” One of Gordhan’s first acts on being appointed to replace Nene in December last year was to assemble a working group of senior chief executives, from SA’s top listed companies, to craft joint plans to re-ignite growth. Together they feted investors on road shows to London and New York, selling the idea that under the united banner of “Team SA” the country had got its act together. The Team SA initiative has helped to shore up fraying investor confidence, and stave off a sovereign credit downgrade to junk this year, by demonstrating that business, government and labour are able to work together for the common good. But the main reason SA has managed to hang onto its investment-grade credit rating is because of the credibility national treasury has retained under Gordhan. “Ultimately, Gordhan has acted as a defensive wall around national treasury and its staff through this year, keeping the swamp and the war out and allowing the excellent people there to get on with their jobs,” says Nomura strategist Peter Attard Montalto. Gordhan has kept a tight rein on SA’s public finances, ensuring that the slippage caused by slowing growth remained manageable and that confidence in SA’s fiscal 28

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management remained intact. But he did more than this. “He shone a spotlight into dark places in the public sector and parastatals,” says Attard Montalto, “highlighting patronage and rent extraction.” Nor has he been afraid to up the ante when required, like when he called out Eskom for lying about co-operating with treasury’s investigation into its coal contracts with Gupta-owned Tegeta Resources; or when he deftly used his own court application to reveal billions of rand in suspicious banking transactions by Gupta companies; or when he stood his ground and refused to present himself to the Hawks for a warning statement. In all these ways Gordhan has won our admiration. “Many South Africans, including minister Pravin Gordhan and his team at national treasury, have shown a great deal of courage and strength in their efforts to improve the country’s growth outlook,” says Jabu Mabuza, the head of Business Unity and Business Leadership SA and co-chair of the government/business working group with Gordhan. “These individuals’ continued commitment to the long-term sustainability of the country’s economy — even if this meant taking difficult decisions — should serve as an example to all.” For his fortitude and the personal sacrifices he has made in putting the constitution, the economy and the people of SA first, the nation owes Gordhan a great debt of gratitude. x

December 15 - December 21, 2016

Like instalments of a national soap opera, the news flow about the Guptas’ influence over the president and public corporations held the country agog. But signs are the Zupta chapter is coming to an end Peter Bruce brucep@timesmedia.co.za

oor Atul Gupta. He’s the ingratiating one of the three Gupta brothers. The good cop. He was the guy who had to do all the apologising to the nation after the Guptas had, with President Jacob Zuma’s covert approval, landed a party of wedding guests at an SA Air Force base, Waterkloof, near Pretoria in 2013. On Sunday, the Sunday Times published its annual “rich list” which this year showed that Atul is the richest black man in SA. It is the last thing he needs right now, what with him and his family accused of looting the state, with Zuma’s active assistance. To make it worse, it is almost certainly not true. The Rich List merely calculates the value of shares that individuals own on the JSE and the listed Gupta company, Oakbay, is probably worth only a fraction of its official market capitalisation. It is barely traded and the share price is artificially maintained. The brothers — Ajay, Atul and Rajesh “Tony” Gupta – may have their reasons for holding the Oakbay price at around R20, but it isn’t clear (nothing about them is clear). But it could not possibly have been part of the plan to win the Sunday Times’s front-pagelead space at the weekend. The Guptas are in enough trouble already. That is why the Financial Mail has selected them as winners in the politics category of its Newsmakers of the Year for 2016. It couldn’t happen to a nicer bunch of people. Basically, the Gupta story is well known. Atul arrived in SA at the dawn of our democ-

racy. The myth is that he started small and, with his family, built up a business empire. The reality is that the Guptas very quickly spotted the ease with which ANC leaders, newly in power but always short of cash, could be flattered and manipulated.

Sunday Times

And it was former president Thabo Mbeki’s friend and gatekeeper, Essop Pahad, who first drew them into close contact with the ANC leadership. The Guptas were later to buy Pahad a house and started a monthly magazine for him to edit for his trouble. They were quick to spot Zuma as a business asset and, to be fair to them, they backed him after Mbeki fired him as deputy president in 2005. They put their aircraft and their pilots at Zuma’s disposal so he could get around the country easily and discreetly. They would have played a big part in the Zuma campaign to wrest the leadership of the ANC from Mbeki in Polokwane in 2007. They put their arms around Zuma and have never really let go. They employed two of his children and one of his wives. They started a national newspaper explicitly to support the ANC and Zuma and then did the same again with a TV channel. On one nowinfamous state visit Zuma paid to India, the Guptas literally ran the show, ushering Zuma away from official functions to meet Gupta associates and potential business partners. They own Jacob Zuma to this day and it is a significant political achievement. Obviously it must be costing them money but we don’t know how much or how it is paid. However, as Zuma and the Guptas are put under pressure, details of their business and political web have begun to emerge. They have used their political leverage in two ways. One is direct — they make acquisitions using funds made available to them by state-owned institutions. Both the Industrial Development Corp and Eskom have advanced the Guptas money to buy

Atul Gupta

mining assets. The second method is more subtle. Directly through their ownership of Zuma, they are able to influence — in fact, to dictate — the composition of the boards of directors of major state firms. Eskom is one. Transnet, Denel and Broadband Infraco are others. What happens is that the ministers of public enterprises are instructed, either directly by the Guptas or by Zuma, to make certain appointments, and they have done this. Most often, their nominees are involved in the board subcommittees of procurement. This way they are either able to sell laptop computers to, say, Eskom, and, as investigative journalists have recently revealed, are also able to “secure” contracts for certain suppliers to, in one case, Transnet, for a handsome commission which is dressed up and laundered through the Gupta companies before making its way out of SA. It is a disgrace but the good news is that the Gupta/Zuma years are coming to an end. It is impossible to say how much money the family has made in SA and impossible to know what they have done with it. A new R400m home in Dubai is one clue. But a net is closing around them that they will not easily escape, even if they now spend a lot of time outside SA. Money laundering is under pressure from the world’s major governments and any ill-gotten gains here will be found and frozen. In addition, they have seriously damaged Zuma, their prize possession, by crassly trying to make cabinet appointments themselves. Some, like mineral resources minister Mosebenzi Zwane and co-operative governance & traditional affairs minister David Des van Rooyen, have agreed, but others, like deputy finance minister Mcebisi Jonas, have blown the whistle on them. The Guptas are impervious to public scorn but Zuma isn’t. He will have to take

responsibility for what he has done, but it is clear the Guptas have tricked him into trusting them. Zuma genuinely thinks they are legitimate businessmen. Part of the net is straight compliance. The big SA banks have closed Gupta accounts and instead of taking them to court, the Guptas are trying to get Zuma to do their dirty work for them. So Zuma is threatening a public inquiry. Unless the “inquiry” is to be somehow fixed in advance, the Guptas and their associates could not withstand any genuine examination of their years in SA. National treasury, the object of serious Gupta attention, has released a list of reportable Gupta transactions worth more than R6bn. They may all be legitimate and the fact that they were reported does not make them illegal, but the last thing the Zuptas want is any more digging. The former public protector, Thuli Madonsela, in her final weeks in office turned in a report on this state capture by the Guptas. Focusing on the way Zuma had, at the Guptas’ behest, marshalled his minerals minister to harass the owner of a big Eskom-linked coal mine off the property so the Guptas (in partnership with Zuma’s son) could buy it, and then the way Eskom bent over backwards to ensure the Guptas could raise the funds to secure a change of control in the final hours, Madonsela claimed the scalp of Eskom CEO Brian Molefe. She reported a long chain of phone calls between Molefe and Ajay Gupta. The Eskom board is anyway packed with Gupta proxies but the depth of the Molefe link was shocking. Molefe resigned soon after the report was published. As Zuma enters his final year as ANC president, the true source of his political clout, the Zupta chain of command and the web of influence and graft it supports, will quickly fray: 2017 will be about who succeeds him at the December party elective conference in Kimberley. There are only three candidates with a real chance: Zuma’s choice, Nkosazana Dlamini-Zuma (his exwife); deputy president Cyril Ramaphosa; and ANC treasurer-general Zweli Mkhize. None has anything to offer the Guptas. There may have to be deals struck with local rent-seekers but any association with the Guptas would be fatal. So the Guptas will be gone soon, to Dubai. Of course, if the opposition wrestle the ANC down to below 50% of the national vote in 2019, things could change dramatically. The Guptas might even be back but that would be because a new SA government had successfully extradited them and would be putting them on trial. x

December 15 - December 21, 2016

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NEWSMAKER BUSINESS: Carlos Brito

BREWING UP A STORM Dealing with all the demands attendant on a deal the size of ‘Megabrew’ — and one involving an SA icon — meant that Carlos Brito and his transaction were rarely off the front pages during 2016 Ann Crotty crottya@bdfm.co.za

able delays that dogged Walmart’s acquisition of Massmart in 2011. Adding to the frisson of the beer deal were reports that a phalanx of advisers and senior executives were set to score multimillion-dollar bonuses if the deal was completed ahead of the August dividend payment date. The deadline was missed by six weeks. Brito approached the challenges with the sort of clinical precision that has ensured his status as 3G Capital’s most favoured lieutenant. In his only public appearance in SA, the Brazilian-born media-shy executive participated in the traditional JSE listing ceremony in early January 2016. Just a month after President Jacob Zuma had dropped the “Nenegate” bomb on investors, Brito was telling the world how delighted AB InBev was to be listing in SA. He seemed untroubled by the elephant in the room, referring to his Brazilian roots helping him to understand emerging-market volatility. Brito made the most of his brief visit, meeting every entity that could influence the outcome of the offer. The irony of Brito being recipient of a newsmaker award is that little is actually known about the man outside his workaholic life as 3G Capital’s frontman for beer deals. We do, of course, know he eschews the trappings of the executive class — private jets, fancy hotels and large offices. And we know his favoured look is faux-casual, with chinos and open-necked shirt rather than suit. Dig a little deeper and you’re likely to discover little more than that he is married with four children. The determination to avoid having a public persona may be part of the 3G culture and may have much to do with the 1999 attempted kidnapping of co-founder Jorge Paulo Lemann’s three young children.

Bloomberg

arlos Brito became a 2016 newsmaker of the year contender as far back as November 10 2015. That was the day the CEO of the largest beer company in the world formally announced a bid for the second largest. Anheuser-Busch InBev’s £79bn offer for SABMiller broke all sorts of records: it was the largest-ever merger in the global consumer industry; the largest-ever transaction involving a JSE-listed company; and the merged entity was set to dominate the global beer industry, accounting for about 27% of worldwide sales and almost 50% of global industry profit. But perhaps what clinched the title for Brito as Financial Mail’s business newsmaker was that this mega-deal involved one of SA’s corporate icons. SAB’s 17-year development into the SABMiller organisation acquired by AB InBev was one of the few SA stories of a local hero making good on the global stage. Inevitably, every step between

AB InBev’s offer and shareholders’ acceptance was going to be watched very closely by the media. The 50% premium on the pre-offer share price seemed to ensure success. While there were some complaints that £44 (and ultimately £45) did not adequately reflect the long-term profit trajectory on SABMiller’s emerging-market horizon, most analysts and shareholders reckoned it was more than enough. But the generosity wasn’t sufficient to seal a deal of this size and consequence. It wasn’t just shareholders who were making demands; there were employees, regulators, competitors and suppliers across the globe needing to be placated. Dealing with all these demands meant Brito and his transaction were rarely off the front pages during 2016. From proposals to shed operations that generated more than 50% of SABMiller’s volumes to appearances before a US congressional committee, Brito was there making news. The most precarious (and therefore the most newsworthy) nonshareholder challenge was without doubt that of the SA competition authorities or, perhaps more precisely, of minister of economic development Ebrahim Patel. The competition authorities and Patel presented two types of challenges. The one potentially fatal challenge was that they would find good reason to prohibit the merger. Brito had demonstrated how huge chunks of SABMiller could be sold off without damaging the deal’s emergingmarket imperative, but without SA (and its access to Africa) the transaction would have been fundamentally flawed. The second type was the competition authorities’ ability to delay the deal. Brito, who evidently believes time is money, was determined to complete the deal as quickly as possible. Not for him the sort of intermin-

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December 15 - December 21, 2016

In a business newsmaker list dominated by compulsive dealmakers, Shoprite CEO Whitey Basson stands out. His claim to fame is based on the development of a small Western Cape-based food retailer into the largest one in Africa. It helped to have done two major deals along the way — the acquisition of Checkers, followed by that of OK — but Shoprite’s success depended on management rather than acquisitions. The dramatic (hardly unexpected, given his age) announcement at the group’s October 31 AGM that he is retiring made Basson a late contender for the title. Christo Wiese, SA’s richest man, seems destined always to be among the contenders for top newsmaker. He is the country’s consummate dealmaker — and if he’s not doing deals he is skirting close to some or other controversy. This year was certain to be a big one for Wiese following his decision to list Steinhoff in Frankfurt. The listing triggered an acquisition spree across Europe and North America. The year ended with speculation that Shoprite would soon be folded into Steinhoff and the enlarged group then split into African and non-African operations. Inevitably as CEO of Steinhoff, the much lower-profiled Markus Jooste also made it onto the list of contenders. x

Thuli Dlamini

“Brito and his 3G colleagues have worked so hard to develop an image of unassuming, down-to-earth individuals that you almost forget they are the cheerleaders of a killer form of turbocharged capitalism,” said one 3G watcher, who added that Lemann or former SABMiller CEO Graham Mackay may have been more worthy recipients of the title given the more crucial role they played in ensuring the “Megabrew” deal happened. After dominating the news pages for much of the year it may take some time to get used to hearing considerably less of SAB now that it is part of the powerful, mediashy AB InBev empire. Asked for comment from Brito, AB InBev sent the following statement, ostensibly from him: “We are proud of SAB’s history and presence in SA. They were key reasons to combine our companies. We look forward to continue brewing the country’s best beers, to invest locally, to partner with thousands of local business owners and farmers, and make a positive contribution to communities. “While we are proud of the great products we produce and the joy they bring to people’s [lives], we are equally committed to working with others to tackle the harmful use of alcohol. We are as passionate about ensuring our beers are enjoyed responsibly as we are about brewing them.”

NEWSMAKER CIVIL SOCIETY: Thuli Madonsela

PROTECTOR EXTRAORDINAIRE Thuli Madonsela was seldom out of the news with her fearless efforts to check the powerful and fight for justice. She has been a symbol of hope in a turbulent and distressing year for SA Hanna Ziady ziadyh@bdlive.co.za

utside government and business, SA has a rich seam of civil society organisations dedicated to strengthening democracy and safeguarding citizens’ rights and interests. A number of such organisations made headlines in 2016. Chief among them were: Freedom Under Law through its chairman Johann Kriegler (a former constitutional court judge); Helen Suzman Foundation director Francis Antonie; the Council for the Advancement of the SA Constitution (Casac) and its executive secretary Lawson Naidoo; and, latterly, the Save SA campaign, notably through the outspoken calls by one of its founders, Sipho Pityana, for President Jacob Zuma to step down for failing to uphold the constitution. ANC stalwart Pityana is the chairman of AngloGold Ashanti and of Casac and a former DG of labour and of foreign affairs.

But the person who dominated this sphere and had the biggest impact was Thuli Madonsela. The former public protector is the Financial Mail’s civil society newsmaker of the year. We chose Madonsela even though the public protector’s office is perhaps not strictly a civil society body. But its mandate — as one of institutions created under chapter nine of the constitution to safeguard SA’s constitutional democracy — is similar. And especially in her last year in office, Madonsela, a media darling, was seldom out of the news with her fearless efforts to check the powerful and fight for justice. She has been a symbol of hope in an otherwise turbulent and often distressing year for SA. Born the daughter of informal traders in Soweto in 1962, Madonsela was recruited to the ANC at the funeral of Neil Aggett, the doctor and union organiser who died in ➦

December 15 - December 21, 2016

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Though the party remains her political home, she says that justice, not politics, is her calling. And justice is what she has delivered to thousands of ordinary South Africans, while holding public officials and civil servants to account. Among those whose lives have been changed by the intervention of her office is Frans Nkome, a North West pensioner. When the department of public works built a road through Nkome’s village, what was an otherwise welcome development turned into a nightmare for him and his family. Their home was so badly damaged that the family feared the structure might collapse on them at any moment. The road’s stormwater drainage system also led to the flooding of their yard, trapping their cattle in mud. After the department ignored Nkome’s SA’s number one request to be protector of the poor relocated, as and vulnerable has other shaped the way residents had South Africans will been, he forever think about approached the public protector the public protector. The office successfully intervened and the department accepted liability, awarding him R200,000 for the damages to his home, which enabled him to move his family to safety. This is one of the many stories, which seldom make national headlines, demonstrating how Madonsela daily served the most vulnerable in our society. Her influence extends from the poor to the highest office in the land. Who could forget the magnificent judgment, delivered by Chief Justice Mogoeng Mogoeng in March, which upheld Madonsela’s Nkandla report? It was her report, directing Zuma to pay back a portion of the R246m in taxpayers’ money used to pay for “security upgrades” to his private residence, which led the highest court in the land to pronounce on the president. 32

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Specifically, it found that Zuma had failed to uphold the constitution and that Madonsela’s remedial action, treated by a defiant ANC as recommendations, was binding. It ordered Zuma to pay some of the money back to national treasury (later set by the finance ministry at R7.8m), two years after Madonsela first issued her Nkandla report, “Secure in Comfort”. In a second blow to Number One, Madonsela’s “State of Capture” report, her swan song before handing leadership of the office to Busisiwe Mkhwebane, prudently deals with the issue of alleged “state capture” by the Gupta family. The carefully pieced together evidence contains damning revelations regarding the improper influence of the Guptas in the appointment of cabinet ministers and executives at state-owned enterprises. The information suggests that Zuma allowed the Guptas, who appeared to have scored preferential treatment on government tenders and trading licences, to wield this influence. His actions may have breached the executive ethics code. Madonsela recommended that the president set up a commission of inquiry into state capture – advice that has, unsurprisingly, been taken on review by Zuma. It is now up to her successor, Mkhwebane, to keep the spotlight on state capture. After seven heroic years in office, which have shaped the way South Africans will forever think about the public protector, Madonsela recently told the Financial Mail she plans to go on “a course for has-beens” at Harvard next year before taking up a teaching post at Oxford. In 2018, Madonsela, who graduated with an LLB from Wits in 1990, will become social justice chair at Stellenbosch University’s law faculty. She will remain involved in civil society initiatives, while engaging in teaching and research. Madonsela will be missed as SA’s number one defender of the downtrodden. x

December 15 - December 21, 2016

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detention in 1982.

NEWSMAKER SPORTS: Wade van Niekerk

WAYDE, THE LITTLE GIANT

In a country with a rich history of sporting excellence, no other athlete has come close to what the diffident Bloemfonteiner has achieved: despite being a relatively slight man, he bestrides his chosen sport like a colossus Archie Henderson archieh@mweb.co.za

f track and field had grand slams, Wayde van Niekerk would hold one and the great Usain Bolt another. Van Niekerk is a world and Olympic champion, and a world record-holder over 400 m; the charismatic Jamaican owns all three of those titles in the 100 m and 200 m. Such achievements are as rare as holding all four of golf’s major titles or winning all four grand slam events in tennis. Van Niekerk has been unbeatable over 400 m for the past two years. In purely parochial terms he is the SA sportsperson of the year, prevailing against some stiff competition: Caster Semenya also won Olympic gold, in the women’s 800 m; Brad Binder is world champion in motorcycling’s MotoGP3; and Hank McGregor has dominated kayaking across the world. In a country with a rich history of sporting excellence, no other athlete has come close to what the diffident Bloemfonteiner has achieved: even though he’s a relatively slight man, he bestrides his chosen sport like a colossus. With the quickly shifting fortunes of sport, Van Niekerk could soon be where Bolt is now: unchallenged on the world stage. When Bolt dashed up into the Rio stands after winning the Olympic 100 m to embrace Van Niekerk who, a few minutes earlier had won the 400 m, it was like a departing hero anointing an emerging one. But though Bolt is now 30, he has not quite gone and since that moment in the stands there has been talk of a Bolt-Van Niekerk clash over 200 m, which is the closest crossing of their paths. Even though Bolt is still clearly the faster (his world record stands at 19.19 sec), age is slowing him down. Van Niekerk’s best time for the distance is 19.94sec but the South African, at 24, has youth and versatility on his side: he is the only man to have run the 100 m in under 10 sec, the 200 m in under ➦

December 15 - December 21, 2016

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20 sec and the 400 m faster than 44 sec. This week Van Niekerk held out the possibility of a meeting in the 200 m at the world championships in London in August. In an interview with the Financial Mail, Van Niekerk said he was considering adding the 200 m to the 400 m at the championships. “I would love to do a few short sprint races (100 m and 200 m), but I still have to get past my coach, though,” he said. “I might double up in the 200 m and the 400 m at the world championships in London.” The caveat about his coach must be taken seriously. Anna Sofia Botha, a 75-year-old greatgrandmother, is a benevolent martinet. Better known as Tant Ans, Van Niekerk’s coach calls the shots. She persuaded Van Niekerk to switch from his favourite event, the 200 m. Both events can be hard on the body When Bolt dashed up into but she felt he could handle the the Rio stands 400 m better. Not after winning that the one-lap the Olympic sprint is a stroll. 100 m to Van Niekerk told embrace Van France’s Le Figaro Niekerk who, a that he hated the few minutes earlier had won 400 m “because I know what it the 400 m, it does to my body, was like a but I love it for departing hero what it does for anointing an my life”. emerging one After winning the world championship 400 m last year in Beijing, he collapsed and had to be carried off the track. Whether Tant Ans will allow him to have his way in London is not known and Van Niekerk’s plans for the year are not yet specific. “First I need to get into my training routine in order to properly prepare for the challenges and goals for the season,” he said. “My aim is to stay fit and healthy.” Fitness and freedom from injury are always concerns, but where Van Niekerk is unlikely to 34

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suffer is in his mind. His strong mental state was never more evident than during the Olympic 400 m final. He had drawn the worst of starting places, lane eight on the outside. With a staggered start, he was quite alone, his rivals unsighted behind him; he would need to run the race on his own. No-one had ever won a major title from that position. “There was no strategy,” he said after his Olympic victory. “I just went out as hard as I could. I kept thinking someone was going to catch me because I felt so alone.” So much for loneliness being the preserve of only the longdistance runner. There was pain, too. The 400 m, more than any other sprint because it lasts for a good 43 seconds the way Van Niekerk runs it, puts an athlete through agony that strikes when the body’s lactic system is overwhelmed, on the final straight. “That’s when you feel you have no control over your limbs,” says Marcello Fiasconaro, a former world record-holder in the 800 m who lost a national 400 m title in 1971 after drawing the outside lane. Van Niekerk recalls “just driving for the line” over the last 100 m of the Olympic final. Then the man who is a devout Christian fell to his knees “to thank God and to give thanks for the chance to compete against such great athletes”. Among the great athletes he beat that day were Kirani James and LaShawn Merritt. Both are former Olympic and world champions yet they could not live with the South African in the Rio final. His victory came in 43.03 sec, breaking Michael Johnson’s 1999 world record by 0.15 sec. James was second in 43.76 sec and Merritt third in 43.85 sec. Van Niekerk was fated to win: a few hours before he had watched his favourite football team, Liverpool, beat Arsenal 4-3 and winning was on his mind. x

December 15 - December 21, 2016

NEWSMAKER ARTS: Esther Mahlangu

GLOBALISING TRIBAL ART For her efforts in making SA cultural identity sing and take flight on the global stage while staying true to her roots, Esther Mahlangu is our arts newsmaker for 2016 Christina Kennedy

he likes of Pablo Picasso and Henri Matisse were inspired by African indigenous art, but seldom have we seen artists from the continent really taking flight while staying faithful to the traditions that birthed their motifs. That’s changing, thanks to Esther Mahlangu, a canny octogenarian with a magic chicken-feather paintbrush. This sprightly 81-year-old Mpumalanga artist has placed Ndebele art and design emphatically on the international map over the past 25 years, with her striking geometric patterns gracing galleries, museums and collections all over the globe — not to mention leading brands, including luxury and youth products. But this year was a particularly memorable and rewarding one for her. She has pimped rides and kicks, blinged up alcohol bottles and raked in accolades and acclaim as if they were autumn leaves outside her traditional homestead This sprightly 81-year-old decorated with her signature Mpumalanga artist has Ndebele motifs. placed Ndebele art and Earlier this month Mahlangu design on the won a lifetime achievement international map, with award at the Mbokodo Awards, her striking geometric which celebrate women in the patterns gracing arts, and in October she received collections all over the the Minister’s Award from globe — not to mention tourism minister Derek Hanekom leading brands at the Lilizela Tourism Awards for being “a national treasure and an outstanding ambassador for SA’s rich cultural offerings”. Just months earlier, she was rubbing shoulders with R&B star John Legend as the two teamed up for Belvedere vodka’s Red campaign, which raises funds for the fight against HIV/Aids in Africa. He contributed a song to the campaign; she designed the limited-edition bottle.

But arguably one of the highest-profile projects Mahlangu has been involved in this year is designing patterns for the wooden interior trims of a 2016 BMW Individual 7 Series car, which was auctioned in October to benefit UK charity The Art Room (the reserve price was £120,000). It’s a natural succession to the partnership with the German car maker that put her art on the map 25 years ago. Her 1991 BMW Art Car, with its entire exterior covered in colourful Ndebele patterns, made waves as a dynamic work of art created to celebrate the end of apartheid. The car can be seen in the exhibition SA: The Art of a Nation at the British Museum in London until February 26 2017. Brands seem to be attracted to Mahlangu like bees to honey, resulting in partnerships that are as unexpected as they are delightful. She has designed a pair of sneakers for Swedish brand Eytys, for example, and her art has been used by Fiat and on the tails of British Airways planes. But where does this unlikely global art star hail from? Born in the small Mpumalanga town of Middelburg, Mahlangu was taught how to paint by her mother and grandmother. Ndebele artistic technique and patterning know-how is passed down through the maternal line, with women painting the walls of their mud huts with murals consisting of distinctive black outlines filled with colourful symbols and motifs. The Ndebele are also known for their elaborate beadwork and affection for heavy metal hoops and rings. It is said that Ndebele wall art went beyond the decorative to become a defiant symbol of solidarity and cultural resistance against the colonial and apartheid oppressors, with motifs often used as a type of code. The style appears deceptively simple, but much concentration and effort go into creating and painting the symmetrical, proportionate designs — usually done freehand (no rulers!) and with a chicken feather. The traditional use of natural

pigment — and earthier colours — has gradually been replaced by the ease and versatility of acrylic paint, with bold colours like pink making for a zesty juxtaposition of the traditional and the contemporary. When Mahlangu began to attract local renown she transposed her paintings to canvas, embracing the economics of the art world instead of shunning them. In the late 1980s, French researchers noticed her work and asked her to exhibit her paintings overseas — and there began an incredible globe-trotting odyssey that continues to this day, earning her the presidential Order of Ikhamanga in 2006 along the way. Some critics have commented on how, by bringing it into the mainstream, Ndebele culture has been cheapened and commodified. But it’s hard to deny the influence artists such as Mahlangu have had — not just in raising the profile of indigenous African design, but in getting younger Ndebele women excited about the possibilities their art holds for economic upliftment. She said in a recent interview: “To paint is in my heart and it’s in my blood. The way I

paint was taught to me by my mother and my grandmother. The images and colours have changed and I have painted on many different surfaces and objects, but I still love to paint.” For her efforts in making SA cultural identity sing and take flight on the global stage while staying true to her roots, Esther Mahlangu is our arts newsmaker for 2016. Honourable mentions go to comedian Trevor Noah (host of the Daily Show in the US), DJ and producer Black Coffee (recipient of multiple international awards, including Best Deep House DJ in Ibiza), multiple Grammy-winning isicathamiya group Ladysmith Black Mambazo (which has just received its umpteenth Grammy nomination for Best World Music Album), SA actresses Terry Pheto and Pearl Thusi (who are making major inroads in American film and television productions), and artist William Kentridge and composer Philip Miller, who staged the contemporary artwork Triumphs and Laments, a large-scale 500 m-long frieze along Rome’s Tiber River waterfront, accompanied by a live theatrical event with shadow play and processional bands. x

December 15 - December 21, 2016

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MAMPARA OF THE YEAR: Shaun Abrahams

CAP-IN-HAND CLOWN

Shaun Abrahams, without batting an eyelid, pulled off gigantic feats of mamparadom to take the 2016 crown ahead of stiff competition ranging from Penny Sparrow to the everlasting Hlaudi Motsoeneng Ray Hartley hartleyr@timesmedia.co.za

t was going to take an extraordinary feat of mamparadom to emerge as the 2016 mampara of the year. Applications for this position came in thick and fast from benighted, beleaguered and be-buggered persons all year long. Penny Sparrow set the tone for a year of idiocy with her racist remarks about black people on what were once her dear little whites-only beaches. While she remains the unsurpassable spiritual winner of this award, she was soon overwhelmed by others who should have known better. Hlaudi Motsoeneng’s declaration that he was a messiah sent from the heavens to bring magic to broadcasting was extraordinary. By December, he was still in the mamparadom running, as parliament heard testimony about how he constructed an empire of self-promotion and dodgy dealings. Brian Molefe cried himself out of a job after the extent of Eskom’s dealings with the Guptas were laid bare by the previous public protector. Drinks all round at the Saxonwold shebeen for a supreme effort to win this prize. But it failed against a true titan of mamparadom. The winner of this year’s award is none other than Shaun Abrahams, the national director of public prosecutions. He laid the groundwork for this achievement in April when the high court ruled that the decision to set aside charges of corruption against President Jacob Zuma had been “irrational”. He immediately applied to the constitutional court to appeal against the decision. Being a man of unwavering principle, he made it clear he was challenging the decision because it raised questions about the ability of the National Prosecuting Authority (NPA) to make its decisions independently. The appeal had absolutely nothing to do with the fact that he had been elevated to his high position by the man he would now have to charge — Zuma. The constitutional court told him to go away, as he could not appeal. But then an odd thing occurred. Acting without care, circumspection, hesitation or rationality, Abrahams stunned the nation and the world by announcing that he would summons finance minister Pravin

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December 15 - December 21, 2016

Gordhan to appear in court on charges related to the early retirement of Ivan Pillay, his deputy when he was at Sars. All the facts had been considered and he had no choice but to go ahead with the charges, Abrahams said in a strange, robotic staccato which made some of those near him check his back to see if there was a winding mechanism. The announcement amounted to the single largest seismic event on SA’s 2016 political calendar. The rand, already punchdrunk from the David Des van Rooyen lefthook in December 2015, hit the canvas once more. It was a dead certainty that SA would be downgraded by ratings agencies if the farcical court case went ahead. It was then reported that, on the day before the Monday announcement of the charges, Abrahams had made a pilgrimage to the ANC’s Luthuli House, where he had met behind closed doors with Zuma and other luminaries. Abrahams was hurt by the suggestion that the charges against Gordhan had been discussed at the meeting. It had been about lawlessness at universities and other lesser matters, he pointed out. He was wearing one hat on Sunday (capin-hand) and another on Monday (clown’s hat). The entire nation immediately believed him and made their support for his honesty known on Twitter. As political shenanigans worthy of mamparadom went, the charging of Gordhan

ranked very high. Not only was it damaging, ill-informed and idiotic, but it spawned a political counter-movement which rendered Abrahams politically weaker. At this point, as you stitched your US dollars into your mattress and Googled “Canada immigration”, you probably thought Abrahams had this prestigious annual award sewn up. But there was one more gigantic act of mamparadom to come. Without batting an eyelid, Abrahams called another press conference at which he denounced his own decision to charge Gordhan, saying: “They did not have the requisite intention to act unlawfully. I have decided to overrule the decision to prosecute Mr Magashule, Mr Pillay and Mr Gordhan. I direct the summonses to be withdrawn with immediate effect.” It was a virtuoso performance. He even managed to convey an air of disappointment at the sloppiness of the Hawks investigators. For the hullabaloo on the markets over the charges against Gordhan, Abrahams had this one-liner: “Does the economy depend on one man?” Did he owe the nation an apology? “I certainly do not owe anybody an apology. I certainly do not.” Abrahams said his decision to reverse charges, so to speak, was “what I call transparency”. There you have it. The 2016 mampara of the year is awarded, gold class, to the greatest of them all: Shaun Abrahams. x

NEWSMAKER INTERNATIONAL: Donald Trump

SHATTERED NORMS

While some of his key appointments suggest Donald Trump’s administration will be pro-business, those who believe his election will lead to job creation and economic growth will be disappointed

Bloomberg

Millard Arnold

hile there has been almost unbridled optimism among many in the corporate sector, the feeling of others teeters on the brink of a horror story waiting to unfold. Such are the passions unleashed by Donald Trump’s stunning and epoch-making election as the 45th US president. Though it is more than a month before he assumes office, Trump already is the most divisive president in recent memory, rivalling the animosity generated by Lyndon Johnson and Richard Nixon. No US president’s election has been greeted with the protests and demonstrations seen across the country in the wake of Trump’s triumph. It is no surprise that in selecting him as “Person of the Year”, Time magazine referred to him as “President of the Divided States of America”. It is perhaps too early to judge what a Trump presidency will mean. For the business community, the anticipation of deregulation, tax cuts and more favourable government policies has the Dow soaring, with talk of corporate revival. Indeed, the critical appointments of established corporate and finance executives suggest that, not surprisingly, Trump’s administration will be probusiness. However desirable that may be, what is clear is that those who believe

Trump’s election will lead to job creation and economic growth will inevitably be disappointed. Regrettably, his appointments are an indication that “trickle-down economics” is all he has in store for the American people. What is perhaps more concerning is the indifference, if not arrogant disdain, which Trump displays towards the bureaucracy and government institutions. It seems to suggest the US is in for a radical transformation in the way in which government will function. A heavy-handed, top-down approach dictated from the White House — driven by idiosyncrasies more than ideology — will shape Trump’s approach to governing. With all branches of government under Republican control, the media will prove the only counterbalance and effective opposition, resulting in Trump subverting the media by taking his message to the streets, effectively continuing his election campaign. Ironically, based on his personality cult, the messenger will be more important than the message. Richard Quest of CNN has noted that Trump’s appointments are “millionaires and military men”, which perhaps signals the direction his administration will take. The notion of “crony capitalism” is hardly new. Warren Harding was the first to employ the approach, with disastrous results; he is con-

sidered one of the US’s worst presidents. The military element is novel only given the personality and nature of those selected to serve Trump. This could prove of some significance, given Trump’s stated views on international relations, which seemingly dismantles the security framework which has governed global affairs for the past half century. If that is the case, then within six months of his presidency he is likely to face not just one, but several incidences where military options will need to be carefully considered. How these instances are managed will have critical implications globally. What is also clear is that social unrest in the US will grow exponentially, as the “Black Lives Matter” campaign and the election protests have already indicated. As the erosion of America’s social fibre takes place and reactionary forces respond, polarisation will lead to far more violent outbreaks and greater oppression by the authorities. Trump’s election is perhaps the most defining moment in American history given the platform on which he campaigned, the appointments he has made thus far and his seeming commitment to undo domestic and international architecture. The parameters that governed past elections have been shattered. The notions of truth, honesty and so-called “American values” have gone the way of Catholicism and marijuana (they no longer matter). Having restructured how US elections will be waged in the future, Trump now seeks to alter how government will be administered under what appears to be an imperial presidency. Trump has proven to be remarkably shrewd, insightful and intuitive in his understanding of commercial and political issues. Those attributes will serve him well in his presidency if he augments them with astute advice and guidance from trusted advisers on whom he can rely. Such an approach is vital if his presidency is to be successful. And like it or not, a successful American presidency is vital to us all. x Arnold is senior adviser, Bowmans, and former US minister counsellor for commercial affairs in SA

December 15 - December 21, 2016

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feature / economy

SMALL SLIVER OF LIGHT The only good thing that can be said about 2016 is that it probably marks the low point in the economy’s steady downward slide. If the political backdrop does not worsen, 2017 could bring a mild recovery Claire Bisseker bissekerc@fm.co.za

What it means: The economy is cyclically adjusting, but until there’s political reform the economy will struggle 38

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December 15 - December 21, 2016

iStock

here is no way to gild it — 2016 was a terrible year for the SA economy. Cyclical shocks, the drought and the country’s self-destructive politics all brought growth to a standstill. The Reuters consensus is that growth will come in at just 0,4% this year while employment growth and per capita GDP growth are both expected to be negative for the year as a whole. Consumers have suffered in a year in which inflation reached 7%, interest rates were hiked by a further 75 basis points and the tax burden continued to climb. Job losses have mounted, with unemployment spiking above 27%, and consumer confidence has nosedived to near record lows. Adding to the self-inflicted damage — typified by the Hawks’ relentless pursuit of finance minister Pravin Gordhan and the bogus fraud charges brought against him by SA’s bungling national prosecutor, Shaun Abrahams — was the intense drought. Over the past two years, real agricultural output contracted by double digits while food price inflation trebled, from around 4% in mid-2015 to 12% today. Low-income consumers have borne the brunt of this onslaught, made worse by the banks having

A lack of policy coherence and an increasingly uncertain political environment continue to weigh on both the willingness and ability of domestic corporates to invest meaningfully

tightened their lending criteria. While many retailers have been hurt by the slowdown in consumer spending, those selling discretionary products (furniture, electrical appliances, cars) have been hit the Jeffrey Schultz. hardest over the past year. Official data shows that the rate of contraction in new passenger car sales intensified from -12.8% year-on-year in the second quarter to -16% in the third quarter, while the rate of decline in the sales volumes of retailers in furniture and household appliances escalated from -3.1% to -5.8% over the same period. Amplifying the economic downswing, which started in 2014, was a further slowdown in capital expenditure. After four con-

secutive quarters of contraction, gross fixed capital formation (fixed investment) remains deep in recession. “Battling against the headwinds of a deteriorating economic [and political] environment, companies became even more defensive and tortoise-like behaviour ruled,” says Rand Merchant Bank (RMB) chief economist Ettienne le Roux. Rather than increasing new capacity, investment has been limited to maintenance and job-replacing strategies. Even infrastructure investment by public corporations stalled. This meant manufacturing wasn’t spared. Steel and engineering firms had a terrible year. The Bureau for Economic Research’s (BER) political constraint indicator shows that manufacturers’ perception of political risk is now higher than at any time since 1993, when 80% of respondents cited the political climate as being a constraint on their business (see graph). This indicator enjoys an almost one-on-

BLAME THE POLITICS

political backdrop — a big “if” — the coming year is likely to bring a mild cyclical economic recovery to around 1.1% real GDP growth. To achieve the faster, more sustainable growth required to cement SA’s investmentgrade credit rating, create jobs and raise per capita incomes, SA will need to undertake deeper structural reform. This, in turn, will require deeper political reform, which could be some time coming. Until then, the economy is fated to underperform, and is unlikely to grow above 2%. x

Constraints to investing domestically Political climate

100

Insuﬃcient demand 80 60 40 20

Hetty Zantman

0 15

Source: BER, Momentum Investments, data up to third quarter of 2016

one correlation with SA’s quarterly, annualised economic growth rate and is also closely correlated with gross fixed capital formation. “A lack of policy coherence and an increasingly uncertain political environment continue to weigh on both the willingness and the ability of domestic corporates to invest meaningfully in the economy,” says BNP Paribas Securities economist Jeffrey Schultz. “This remains one of the largest inhibitors to raising the country’s potential growth rate and needs much closer attention if the economy is to avoid further ratings downgrades in 2017.” Business confidence is also deeply depressed. The RMB/BER business confidence index has been broadly tracking lower since hitting a peak of 55 index points six years ago. Since then it has been in net negative terrain for most of the time. Le Roux is hopeful that the index bottomed out in the second quarter of the year at 32 index points. It leapt up 10 points in the third quarter before dipping back slightly to 38 in the final quarter of the year. But in no way does Le Roux interpret the slight uptick in business confidence of late to suggest that a notable economic recovery is imminent. “Simply put, without a notable improvement in sentiment, the economy will remain stuck in first gear,” he says. “More needs to be done.” The good news is that 2016 probably marks the low point in the economy’s steady downward slide. There is a sense among economists that the business cycle is bottoming out and that SA will enjoy relatively better growth next year. Old Mutual Investments chief economist

Rian le Roux cautions against adopting an unduly pessimistic view of the economy. “Importantly, the economy is cyclically adjusting, with inflation and interest rates peaking and the current account deficit narrowing; a widely feared debilitating wave of labour disruptions has not materialised; and the economy to date has managed to avoid a full-blown recession,” he says. Also encouraging is that SA’s leading economic indicator has risen convincingly in three out of the past four months; most commodity prices have recovered from their lows and the drought appears to have broken. Consumers appear to have caught the scent of improving prospects on the wind. In the third-quarter FNB/BER Consumer Confidence Index released last week, consumer sentiment lifted from -11 to -3 index points, the highest score in two years. According to FNB senior economic analyst Jason Muscat, this is due to a marked increase in the two forward-looking indicators, namely the expected performance of the SA economy in 12 months’ time and the financial prospects of households then. This points to an improved willingness of consumers to spend from near record lows, says Muscat, even if their ability to spend, as measured by their household income and access to credit, remains under considerable pressure. But perhaps the most significant development is that, despite experiencing the worst year on record since the global recession of 2009, SA has managed to hang onto its investment-grade credit rating with all three major credit rating agencies — and Gordhan has managed to hang onto his job. Provided there is no worsening of the

Ettienne le Roux: More needs to be done

December 15 - December 21, 2016

financialmail.co.za

feature / tourism

THE DISMAL TRUTH Tourism could make a significantly greater contribution to the economy given the political will, savvier marketing, a more holistic approach and a bigger budget Luke Alfred, Tristan Holme, Colleen Goko

he SA tourism industry is an indolent, slow-to-rise giant, hamstrung by lack of common purpose and an inadequate marketing budget. That’s the assessment of the palpably frustrated CE of the Southern Africa Tourism Services Association, David Frost, who believes passionately that with more “synergies” and a greater collective effort, it could be so different. “All this pain [over the visa debacle and the poor press SA attracts] is self-inflicted,” he says. “We’ve gone backwards. Our brand now is not just smelly, it’s toxic. “You have stories of people being turned away at airports [because of visa problems]. Parents start shouting and children start crying. It’s an entire gedoente. Passengers waiting to be served start to take notice, heads turn. What you have, in effect, is a public relations disaster.” Frost compares the SA tourist sector to Australia’s, which is significantly bigger, better-resourced and more internationally competitive. But there are several compelling

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December 15 - December 21, 2016

similarities. Both industries find themselves in economies where mining was formerly the grootbaas. Both are long-haul destinations (it takes seven hours to fly from Singapore to Melbourne) where the land’s natural beauty and the outdoor life play an important part in everyday culture. Both destinations have cachet and a certain exotic appeal. Tourism is now the largest sector of the Aussie economy with the waning of mining and manufacturing. Frost sees no reason why this can’t be the same here. Tourism puts food on the table for one in seven South Africans and accounts for 9% of GDP. There were 2.1m overseas arrivals in SA last year, up 11% year-on-year, though this needs to be seen in the context of a currency which fell sharply against the euro and the dollar. “There [in Australia] they treat [tourism] as an export sector. We just don’t market it that way. The Aussies do. People just bring money to you in exchange for an experience. You’re exporting Australia,” Frost says.

What it means: A lack of vision and a limited budget mean that tourism isn’t contributing as much as it could While the Aussies have a more streamlined approach to marketing a more homogenous entity, SA seems hamstrung by a lack of shared purpose. Frost likens it to a babble of languages. Such dissonance — between, say, the promise of a fabulous SA holiday and home affairs unable to process paperwork in time — means tourists go elsewhere. Some will never return. “The interesting thing about tourism is that no-one gets it right on their own, so there’s a real model of co-operation buried in there and there’s a public-good element, too. What happens in all of this to the Soweto guesthouse? Tsogo Sun has the budget to advertise and promote itself, but who takes care of the guesthouse?” The Indian market provides the perfect illustration of how intrinsic factors have stymied tourism’s huge growth potential. In

Coastal beauty: Tourism adds 9% to SA’s GDP iStock

2008, SA received 50,000 Indian arrivals; four years later the figure had jumped to 106,000; by 2015, however, the number had dropped to 78,000 for a combination of reasons: visa processing inefficiency, Ebola virus fears, and lack of sensitivity to the uniqueness of the Indian market — for instance, that 65% of Indians visit SA in winter and tend to decide to travel unusually quickly. This is unlike, say, Germans, who plan trips here months in advance to escape the European winter, meaning they travel to SA at the height of our summer. Johan Groenewald, MD of Royal African Discoveries, says the tour operator brings about 4,000 Indians per year to SA. Groenewald, who has been working in this market for 15 years, says the SA consulate in Mumbai and high commission in Delhi are never prepared for the annual upsurge in visa applications in high season. “There’s a total lack of planning. We warn them about it every year and they keep on doing it. This year, after the minister of tourism intervened, they finally got additional staff flown across to help with the processing, but the numbers could have been a lot better.” Processing time is still an issue, according to Groenewald. At the beginning of peak season, visas that were supposed to come out in five days took a month. This can put tourists off for life. “Also, this is a market that decides to travel at the last minute. If

they decide to go on holiday in two weeks’ time, we have to make them aware of the visa situation and often they’ll divert to another destination.” Groenewald confirms the statistics — that the Indian market did pick up last year — but there are still industry frustrations. Initially, for example, visa restrictions meant people had to apply in person, which would have killed the market entirely (“A lot of tour operators stopped selling SA completely,” says Groenewald), but that was then relaxed after the interministerial committee. Still, there doesn’t seem to be sufficient urgency by all the roleplayers. “Only now are we beginning to regain lost ground,” says Frost. “We’ve got Jonty Rhodes, a great team at SA Tourism and a devaluating currency against the rupee. “What more can you ask for?” While the Indians are crazy about the Garden Route, the market is still besotted with SA’s wildlife and game, with 85% of tourists citing game parks and wildlife as their prime reasons for visiting. Such fascination brings local communities onto centre stage, groups that have been traditionally neglected by the industry. Colin Bell, who co-founded Wilderness Safaris in 1983, points to Botswana as an example of what could be done. There the government reversed its tourism policy in the early 1990s by moving away from mass, largely self-drive, camping tourism. Instead it created reserves and a host of superb safari

camps that employed large numbers of local people. Now 60% of everyone who lives around the Okavango Delta and 45% of the population in the north of the country rely on tourism. This has increased travel in that direction and reduced We’ve gone migration to the cities, backwards. Our and is partly why Botswana has no informal brand now is not just smelly, it’s toxic settlements. Which comes back to David Frost Frost’s point that no-one gets tourism right on their own. Poor communities should be a key component of a more holistic, collaborative approach. Bell notes that irate locals not long ago barricaded the entrance to Kruger National Park at the Paul Kruger gate. The SA tourism sector too often simply ignores the poor communities. Communities have invaded sections of some of the country's reserves and grow maize because they have not been integrated into the mainstream of the sector. Bell points out that Botswana ploughs 6% of tourism revenue back into community structures, creating a blend of government, private sector and communities working hand in hand. In SA, by contrast, communities generally benefit little (aside from the occasional job) from the wildlife attractions on their doorstep, which is partly why we have a poaching problem. Bell proposes that a reasonable levy on entry fees to national parks and game reserves goes to the ➦ December 15 - December 21, 2016

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feature / tourism local community. This would engender goodwill, trust and willingness to co-operate. There are two ways that tourists come to SA, says Bell: direct and through tour operators. For years, SA Tourism simply threw money into advertising on CNN and National Geographic, using random slogans and concepts like “inspiring new ways”, and a blind man who experienced SA through the senses. “But that doesn’t bring in the Chinese or the Brits or anybody,” says Bell. “We let our good taste overrule the market’s bad tastes.” But it is not all doom and gloom. SA Tourism’s new marketing campaign looks promising and could be the catalyst of good things to come. But Bell also senses a disconnect between local tourism’s R1.2bn budget and the rewards in terms of tourist numbers. If the budget were doubled, he says, better marketing could easily double the number of tourists. “If you think of the diversity we’ve got [compared to Australia], with Europe in the same time zone and everything going for us, we could comfortably go from 2m to 4m tourists — it’s not a pipe dream.” What’s needed is a more strategic approach to both the direct visitor and those who book or travel with tour operators. With the latter, the easiest way to grow market share is joint marketing initiatives, says Bell. “You tell an overseas company: ‘Put R1m into marketing SA and we’ll match it.’ This all needs to be monitored, but generally companies are not going to throw that money down the toilet — they’ll use it to effectively market SA,” says Bell. Ngawethu Dlabantu, owner of Backpackers On New in the Eastern Cape and a former tour operator, says the tourism sector is mostly made up of small players, which makes it difficult to forge links with foreign players. “What we do need is perhaps more partnerships with government. A lot of what they do either helps us grow or hurts us. I know that some municipalities try to punt local B&Bs and small operators on their websites, but this is not enough. From municipal to national level there needs to be a concentrated effort to advertise us. We all will benefit.” Dlabantu says the sector has improved a great deal since the visa rules were relaxed. “For most tourism-related businesses, the weakness in the economy has actually been good. We have seen a spike in the number of overseas travellers coming through our doors,” she says. Meisie Nkosi, MD at Bella Bonni guesthouse in eMalahleni, says that apart 42

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from marketing, government could help with equipping small businesses in the sector with knowledge. “There are black entrepreneurs in this space, like me. We need more knowledge to be able to thrive in this industry as there is so much to learn. We were born hospitable, but we need to learn how to make business out of our excellent hospitality.” Nkosi, who has 10 years of experience in the sector, says there is a need for exposure to the formal way of doing business, as there are a lot of guidelines on how to properly provide service to people. Nkosi got such exposure through Tsogo Sun’s entrepreneur programme, which provides coaching and mentorship. Aside from the need for increased marketing budgets — Frost says he can’t understand why the department of arts & culture has a budget of R4.2bn compared with only a quarter of that for tourism — is the need to address the challenges of “geographic spread” and “seasonality”. For example, while Indians and Italians tend to come here in winter, other tourists generally come to SA in the summer. They also tend to follow the same routes, avoiding Johannesburg, going to the Kruger, swanning down the Garden Route and ending up drinking wine and sampling the delights of the Western Cape. Frost points out that while repeater rates are good, average length of stay is declining — maybe because SA’s beauty and diversity

December 15 - December 21, 2016

just isn’t being promoted effectively enough. Too much that is beautiful and exciting in the country — the Drakensberg, Cederberg, Southern Cape, the Karoo, Limpopo — tends to get overlooked or neglected. Parts of SA, such as KwaZulu Natal, have fewer tourists because of inadequate marketing and lack of awareness of SA’s splendid diversity. The industry is also bedevilled by what some might call the intangibles. There is a pervasive but reluctantly expressed feeling among power brokers and budget allocators in government that tourism is a white enclave designed to Tourism has the perpetuate white potential to build privilege and economic power. Such this country in a perceptions will not be way that few other sectors can addressed until a macro-body or an individual — perhaps a minister — gets everyone around a table. Besides, if the industry grows, it’s a winwin game for more people; the current alternative, where the industry grows at rates that benefit only the major market players, is not viable in the long term. Tourism in SA, particularly in relation to a leaky economy, has the potential to build this country in a way that few other sectors are able to do. But it needs political will, leadership, a holistic approach and a bigger budget. Only then will it be able to put food on the table for many more than just one in seven South Africans. x

Big attraction: The Kruger National Park iStock

feature / tourism

FLIGHT OF SWALLOWS Tourists who come from colder countries to SA for the summer could bring greater benefits to the country if they were allowed to stay longer Tristan Holme

or as long as there has been swift enough transport to make the journey worthwhile, well-heeled Britons have been escaping the bleak winters of the North to become seasonal expats in the Cape. Known as “swallows”, they now number more than 30,000, according to tourism industry estimates, and are bolstered by thousands of Germans, Swiss and other Europeans. Yet aside from Capetonians’ idle complaints about the foreigners clogging up their roads, it is rare to hear a conversation about the effects of the phenomenon. Debate about the economic impact, and whether some policy shifts might unlock further potential, has been nonexistent. Like all visitors to SA, swallows are granted 90-day stays on arrival. Yet David Frost, the chief executive of the SA Tourism Services Organisation, says most would stay longer if permitted. While many do exploit a loophole by visiting a neighbouring country before re-entering SA for another 90 days, Frost argues that loosening the regulations could be beneficial. It is difficult to argue. Which country would not want tens of thousands of foreigners bringing in money to spend on goods, services and travel? The majority of swallows own property in the Cape and have considerable funds. Many are retired. The prospect of them taking up jobs, presumably the main fear behind the imposition of the short-term visa, is slim. They are far more likely to create jobs. Furthermore, because they spend several months in SA, they tend to travel widely. While short-term visitors frequent the biggest attractions — the Kruger National Park, the Garden Route and the Western Cape — swallows visit the far-flung corners of the country and thereby make a vital contribution to the tourism trade. Granting them longer visas could give the economy a handy boost — just the Vat on their extra expen-

Camps Bay, Cape Town iStock

diture could be considerable — though thorough research is needed not only to confirm this, but also to firm up some statistics. While the figure of 30,000 Brits is generally accepted in the tourism industry, nobody knows how many swallows there are in total and there has been no attempt to measure how they affect the economy, largely because there is no official acknowledgement of their being any different from a standard tourist. Only once this is put in place can the potential benefits of granting them longer stays be evaluated. “We need a proper study to decide what we want to achieve,” says a tourism industry official who does not want to be named. “We need to stop operating in silos in government and rather work together. If, for example, we want to pay our university fees, one bit of legislation might be able to do that.” One argument might be to grant longer visas to foreigners with property in SA — a subgroup that is already swelling. According to a report in the Financial Times, sales to foreigners in the Cape Peninsular rose 28% over the November and

December 2015 holiday season compared with the year before. With the rand on the slide, this trend looks set to continue as the value of SA’s housing market poses an ever greater appeal to the overseas market. Such foreign investment is generally welcomed with open arms, but there is also a drawback. According to a report in the Daily Maverick, Cape Town has the third-highest house price inflation, behind Vancouver and Shanghai. This puts property beyond the reach of even the white middle class at a time when civil society organisations are calling for affordable housing to be made available to poorer families closer to the city centre. Encouraging more foreigners to buy Cape property that they will inhabit only for a limited period each year might not have a positive social effect. Some holistic context is necessary, then, to determine the best way forward. But it seems prudent to look at ways of harnessing the swallows’ enthusiasm for SA’s shores, rather than ignoring the migration altogether. x

December 15 - December 21, 2016

financialmail.co.za

feature / tourism

HOW TECHNOLOGY MAPS THE WAY WE TRAVEL The budget traveller doesn’t need to lug a guidebook around anymore. They can get recommendations on where to go through their smartphone, which offers access to their wider network on Facebook and Twitter, Pinterest and Instagram Tristan Holme

n 1972, married couple Maureen and Tony Wheeler spent six months travelling overland through Europe and Asia, a trip from which they produced a 94-page travel guide titled Across Asia on the Cheap. The stapled booklet drew on other travellers’ experiences and offered tips on everything from places to stay and eat, to the wisdom of taking one’s last puff of marijuana before arriving at the Iranian border, and institutions offering a good price for blood to broke backpackers seeking a quick financial hit. The booklets sold out, and the Lonely Planet guidebook series was off and running. In 2010, after selling more than 100m guidebooks, the Wheelers sold their company to BBC Worldwide for more than £100m. The rise of Lonely Planet — and competitors such as Rough Guides — tracked the expansion of the tourism market as the cost of long-distance travel became ever more affordable. For the adventurous type who didn’t have the money for a travel agent-generated itinerary — or particularly want it — the dog-eared guidebook provided a reassuring companion. Yet in 2013, the BBC moved Lonely Planet on for a considerable loss, accepting an offer of just £51.5m from American billionaire Brad Kelley. While the dramatic decline was in part due to the global recession and the disappointing performance of the company’s fledgling digital arm, the main disruptor was clear: technology. The budget traveller no longer had reason to carry a weighty tome when the information could be accessed through the smart-

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December 15 - December 21, 2016

phone in their pocket. Over the past five years, with social media coming to the fore, the smartphone revolution has cranked through several phases as millennials took over. “Social media has had a huge impact on how young people travel — they get their inspiration for destinations and experiences from Pinterest and Instagram, and they get recommendations of where to go and what to do from their wider network on Facebook and Twitter,” says travel writer Sarah Duff. “Social services like Airbnb provide accommodation, rather than hotels, and people use TripAdvisor and Yelp to find accommodation and restaurants. So they’re looking at peer reviews rather than guidebook reviews to make their choices.” For more than three decades, the badge of honour for backpackers’ hostels and budget eateries from Durban to Delhi was the sticker on the door saying: “As featured in Lonely Planet.” Now it is a five-star user rating on TripAdvisor or many thousands of “Likes” on Facebook. This is a boon for the consumer, because smart businesses have recognised an opportunity: rather than needing to impress the guidebook author when they came for a stay every couple of years, now every customer is a potential reviewer. “In terms of marketing, the savvy establishments have tapped into digital trends by doing things like offering discounts to people if they check in on Facebook, or giving free nights to people with more than a certain amount of followers on Instagram,” says Duff.

What it means: Social media has had a huge impact on how young people travel “They’ll also run things like hashtag competitions, getting people to post a picture of themselves in the hotel or restaurant with a hashtag for prizes.” For successful SA examples, travel blogger and journalist Ishay Govender-Ypma cites a Cape Town Tourism campaign in 2013 that put up posters around the city encouraging people to take a selfie with Table Mountain and post it on their Facebook page. The campaign won numerous awards. Of course, the digital world is ever shifting as the various social media go in and out of fashion. “A few years ago local restaurants used the popularity of Twitter when it was actually used as a tool for creating a community — for example, La Mouette held ‘Twitterati’ parties to ‘reward’ loyal Twitter customers,” says Govender-Ypma. “Things have died down on Twitter in the past two years and the dynamics of the medium have changed. Now I’d look out for who’s using Snapchat locally to engage with guests and potential customers. Video engagement has been extremely effective in the past few years. “For example, I booked a trip to Iceland earlier this year, in part motivated by the stream of compelling winter wonderland Vine videos created by Iceland Travel, an Icelandic travel agency. And I actually booked their service for one part of the trip, a week’s journey, because locals I know warned against hiring a car and driving in the height of winter with no driving experience in that kind of harsh weather. It was expensive but worth it.” The integration of travel agencies into this digital world has been a natural step. But while many are simply using social media to grab attention, there are also innovative

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companies using technology to build specialised itineraries. One such company is Rhino Africa, which focuses on putting together bespoke safari packages but also offers destinations such as the Garden Route, Namibia and the Eastern Cape. Launched in January 2005 by David We positioned ourselves as being the Ryan with the help of two consultants, it has OUTsurance of travel grown to 170 permanent in an African context staff and had 70% comDavid Ryan pounded growth yearon-year for the first decade it was in business. It now creates personalised itineraries for over 15,000 guests annually. “We launched at the time that the Internet was coming to the fore — the airlines were starting to cut out agent commissions and were forcing people online to book, Google was just starting to enter performance-based marketing — so it seemed like a good time to set up online,” says Ryan. “The core behind the business was how could we build something that would be disruptive to the travel model at that time. We positioned ourselves as being the OUTsurance of travel in an African context, link-

ing guests directly to products without having to go to two or three wholesalers, and therefore being able to offer them a better price point. Our value-add was being African destination experts.” Rhino Africa has been named Africa’s leading safari operator by the World Travel Awards for the past four years. A big part of that success has been keeping ahead of a curve that is always moving. “If you look at 2004 to 2010, I think the disruption was becoming an Internet conduit to connect guests to service providers and create an itinerary,” Ryan says. “I think a lot of people have caught up on that, and I think the next disruption we’re working on is how do you let technology advancements aid that growth. We’re now a travel business that does technology or a technology business that does travel.” The company has also led the way with its social media presence, and has tens of thousands of followers on Twitter, Facebook and Instagram. In July it launched a series of slick videos that were intended to inspire travellers to visit featured destinations and inform them on the best way to go about it. Crucially, they were branded.

“The trend has been for travel companies to spend a lot of money on marketing destinations or products — marketing Londolozi, for example — rather than spending time marketing their own brand,” says Ryan. Another SA service using technology effectively is Tastemakers, a chic app that links travellers with the sort of establishments and services that locals frequent but foreigners might miss. The offering for Cape Town includes sunset trips to Signal Hill (transport, sparkling wine and a meal for two included), as well as cooking classes, nightclubs and bike tours. The app can also set up full-day itineraries, and facilitates experiences in Johannesburg, Nairobi, Marrakech, Lagos, Kigali, Dakar and Accra that fall outside the stereotypical African offerings. With Silicon Valley’s tech companies knocking on the door — the new Apple Maps will allow taxi or hotel bookings to be done inside the app, while Airbnb is expected to expand its offering beyond accommodation — some sort of unique value-add is all the more important for SA travel businesses in an increasingly technological world. x

December 15 - December 21, 2016

financialmail.co.za

feature / property

LEVELLING THE FIELD The department of public works is looking to speed up transformation in the property sector by restructuring its property empowerment policy

Important changes are on the way in the property environment

he department of public works is rejigging its property empowerment policy with a view to giving black business more action in the department’s multibillion-rand property portfolio. Paul Serote, head of the department’s property management trading entity, says the review will be complete by end-March. The department, once a laggard among its peers, with rampant corruption in its lease agreements and widespread irregular expenditure, has finally completed its asset register — 15 years after first undertaking the exercise. It shows the department is the custodian of 31,310 land parcels and 92,593 buildings dotted across nine provinces and collectively valued at R112bn. The trading entity is in charge of managing the department’s properties. Serote says public works will spend R4bn procuring private leases from landlords in 2016/2017. Enter the SA Institute of Black Property Practitioners, which has been lobbying the department to ensure its members benefit from public works’ procurement spend. The department has long co-operated with the institute, says Serote, who confirms that it is in talks about how state programmes and tools can contribute to transforming the property sector. “Public works minister Thulas Nxesi has also been in discussions with the SA Property Owners Association and financial institutions with a view to rapid and holistic transformation, including the transformation of lending practices and instruments which

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December 15 - December 21, 2016

support the transformation programmes of the department,” says Serote. For its part, public works’ property empowerment policy review will focus on strengthening enforcement, monitoring and evaluation. In addition, the department will place greater emphasis on small business support, empowerment, market access and skills development. The department will also assist new players through maintaining its properties over their life cycle, says Serote. Public works’ primary procurement areas are in general goods and services, construction, and property and facilities management. “Black business can benefit from opportunities in these areas of procurement,” says Serote. “The draft preferential procurement regulations of 2016 seek to address inadequacies in the current procurement regulations by introducing an increase in the threshold value of tenders subjected to the preference points-scoring system wherein price and black economic empowerment status are scored.” The current regulations provide that, for all tenders up to R1m, scoring must be 80 points for price and 20 points for BEE. Tenders greater than R1m are subjected to a 90/10 scoring system. “It is evident that, with this allocation of What it means: Department expects a review of its property empowerment policy will be completed by March

points scoring, tenderers who quote a cheaper price can score maximum points,” says Serote. “This does not favour small businesses when [they are] competing with well-established enterprises. To address this challenge, the new regulations . . . allow for the 80/20 principle to apply for all tenders up to R100m and tenders greater than R100m are subject to the 90/10 principle.” The draft regulations also make it mandatory for state organs to set prequalifying tender criteria, which include subcontracting 30% of the value of the contract to emerging micro enterprises and qualifying small enterprises owned by black people. To develop small, medium and micro enterprises in the built environment, the department has advertised for an “expression of interest” with a view to establishing a panel of service providers who will participate in a contractor incubator programme. “The targeting of specific categories of persons and enterprises will enable black businesses to compete for procurement opportunities,” he says. Vuyiswa Mutshekwane, CEO of the SA Institute of Black Property Practitioners, says pushing for black business inclusion involves knowing what assets are in play. She is optimistic, now that public works has completed its asset register. The institute initiated talks with the department in a bid “to do away with the notion that black business is synonymous with small and medium enterprises [the institute’s core constituency]”, she explains. The institute no longer wants to see small businesses doing the “small things” — “they also need to do the major work, from architecture to construction, that is where the big money is spent”. Mutshekwane warns that SA does not have another 22 years to redress its economic imbalances. x

Gallo Images / AFP / Gianluigi Guercia

Xolisa Phillip phillipx@bdfm.co.za

Business Day

feature / fuel cells

WE DON’T HAVE LIFTOFF Development of a local fuel-cell industry requires more funding, government support and lifting of regulatory barriers if it is ever going to grow enough to make a difference to platinum demand Charlotte Mathews mathewsc@fm.co.za

espite being a pillar of SA’s industrial strategy, the growth of a local fuel-cell sector has been painfully slow. Eight years after establishing a dedicated agency, Hydrogen SA (HySA), the country still imports the fuel cells being showcased by platinum companies and government departments (though it is now building its first local prototype). Hydrogen fuel cells use platinum as a catalyst to turn hydrogen and oxygen into energy. It is hoped they will develop a substantial new market for platinum, possibly as much as 1m oz/year, as demand from other sectors like auto catalysts, jewellery and investment has stalled in the past decade. Current global offtake of platinum for fuel cells is a mere 40,000 oz a year. Though many countries, including the US, Korea and Australia, see it as promising technology, there are only about 30 commercial fuel-cell companies in the world. In SA, government and platinum companies’ ability to fund research is limited. HySA, part of the department of science & technology, works with universities and research institutions to develop and commercialise prototypes. Several fuel-cell pilot projects have been showcased. Impala Platinum (Implats) has been using fuel cells to power a forklift and is making a major investment in a 22 MW fuel cell to power its Springs refinery. Anglo Platinum has used fuel cells at Naledi Trust village to power 34 households and a mine locomotive. Last week, at a panel discussion on the sidelines of the CSIR’s Science Forum, speakers from platinum companies, fuel-cell specialists and government raised some of the factors that needed to be addressed to assist commercialisation. Tshepiso Kadiaka of the department of trade & industry (DTI) admitted there was policy uncertainty and said the DTI would address it. She said government, provincial and local municipalities

were developing a fuelcell industrial hub next to Implats’ Springs refinery, which would have guaranteed access to platinum and special economic zone incentives. Cosmas Chiteme from the department of science & technology said HySA was in the second of three five-year phases in its 15-year programme. It was addressing market development by showChamber of Mines 100 kW platinum fuel cell casing prototypes with platinum companies as well as the SA Post African markets. Doosan is supplying the Office (where fuel cells are being tested as fuel cells at Implats’s Springs refinery. range-extenders for scooters). In the next Monique Mathys-Graaff, Public phase, from 2019 to 2023, HySA would Investment Corp head of investment projects focus on commercialising fuel-cell products. development, said the PIC was willing to continue investing in fuel cells though it had A member of the audience questioned some questions. Fuel-cell developers needed whether government should use taxpayers’ funding but to get it they had to have money to subsidise technology benefiting business plans to attract venture capitalists. mining companies. He said fuel cells might Globally, listed fuel-cell companies have be more viable if government stopped been disappointing investments, Mathyssubsidising the fossil-fuel industry. Speakers Graaff said. The sector has shrunk to oneinsisted fuel cells can make money without twelfth of its previous size. subsidies but they need the same kind of Kerry-Ann Adamson, founder of 4th initial government backing that was given to Energy Wave, consultants to the fuel-cell solar-power providers 10 years ago. industry, said it was possible to make money Eric Strayer, vice-president of sales at out of this industry but many issues still Doosan Fuel Cell America, said both the US need to be addressed, ranging from and Korean governments provided initial technology to supply chains and insurance, support through research grants and tax before there was widespread adoption. Fuel breaks so that the market for fuel cells could cells had application in many industries, grow. If the SA market for fuel cells were big from transport to telecommunications, but enough, Doosan could establish a each region has specific requirements. manufacturing hub to supply local and other She said having platinum did not give SA any competitive edge and added that it was far behind many others in its policies. Barriers, preventing commercialisation of What it means: products that had been developed in There must be certainty in government academic institutions, had to be removed. x policy for commercialisation to take place December 15 - December 21, 2016

financialmail.co.za

feature / competition The focus is falling on finding a balance between corporate action that is against the interests of ordinary people and preventing government intervention that is too heavy-handed Mark Allix allixm@bdfm.co.za

all been heavily penalised for collusive behaviour perfected under apartheid’s pyramid structures of monopoly ownership. Not long ago, big companies in the construction sector held meetings to allocate tenders and monitor each other’s behaviour through a forum called The Party, attended by high-level executives. But the legal ground is shifting as government seeks greater inclusiveness in the economy. In other words, “The Party” is over. Patel says there has been a public back-

SPOTLIGHT ON MERGERS

There is broad agreement that public interest is a legitimate part of competition policy Ebrahim Patel 48

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December 15 - December 21, 2016

lash against globalisation. While this has lifted millions out of poverty, he says it has also created greater inequalities between rich and poor. “Inclusion [in the economy] or lack thereof has become a central issue of our time,” Patel says. And the public distrust of institutions has led to a “dangerous shift towards the politics of resentment and fear”. To this end, Patel says the Competition Act balances competition goals and issues of public interest. This means giant mergers,

Economic development minister Ebrahim Patel: threw down the gauntlet

Business Day

A’s competition law underwent a health check at a recent seminar hosted by law firm Bowmans in Sandton. Participants debated the extent to which public interest should be weighed against pure economic gain in mergers and acquisitions. The result: the verdict is still out. Lawyers and economic development minister Ebrahim Patel, whose department oversees the country’s competition authorities, met head to head during the panel discussions. Patel says competition law is one of the fastest-growing areas of the SA economy. Derek Lötter, head of Bowmans’ competition practice, says the minister is well known for using mergers and acquisitions for public policy purposes — especially regarding social inequality and the interests of workers. Patel threw down the gauntlet to the legal profession, saying that while competition policy is traditionally used to strengthen competition in economies, he has heard it described as a way for the legal fraternity to boost billable hours. Recent multibillion-rand penalties against steelmaker ArcelorMittal SA for price-fixing, and a collective of JSE-listed construction companies for collusion, has shown the way government is thinking. SA has just introduced criminal sanctions for cartel behaviour, in line with the US, Germany, UK and Australia, though these have rarely been applied outside of the US. This will send further shudders into the foundations of related industries such as construction, steel and cement, which have

The SA steel market has collapsed in recent times, mainly due to cheap Chinese imports. Evraz Highveld Steel & Vanadium — once the country’s second-largest steel producer — has gone out of business. Patel says ArcelorMittal SA is a company that has “predation in its DNA. We needed to find a way to deal with anti-competitive behaviour of upstream dominance . . . in a way that did not destroy the company. “Our remit has to be wide. I think we found a fair balance,” he says, by retaining the group’s industrial capacity. This “fair balance” has come with a R1.5bn competition commission penalty for pricefixing and a long-delayed broad-based black economic empowerment deal worth more

What it means: SA has introduced criminal sanctions for cartel behaviour; giant mergers have to come with strict social conditions

The minister is well known for using mergers and acquisitions for public policy purposes, especially regarding social inequality and the interests of workers. Derek Lötter

than R2.2bn. It also comes with a promise to invest R4.6bn in upgrading plant and equipment. “There is deep public concern about the levels of concentration in our economy,” says Patel. This has led to the criminalisation of cartels from May 2016. Rob Legh, chairman and senior partner at Bowmans, says SA is not unique in criminalising cartel behaviour. He says there is a worldwide trend towards a “political-social policy-based approach to competition law”. “It is about the massive concentration of power in quite a few hands. We are moving away from pure economic effect-based regulation,” he says. Derek Lötter, head of Bowmans’ competition practice But he says SA has struggled for consistency when it comes to applying by any parties to a deal. the law. Norman Manoim, chairman of SA’s This has led to what he calls uneven competition tribunal, says the pendulum is precedents. These include reaching swinging towards the idea that mergers do settlement before the cases are tested in law trigger public interest. But, he asks, who by the competition tribunal. should decide this issue? David Unterhalter, an advocate and This has pertinence in a globalised world. specialist in competition law, says SA and The US House of Representatives has, in the the world are more complicated than they past, voted on national security grounds were when the Competition Act was first against the management of six major implemented. The idea was to bring seaports by a company owned by Dubai’s competition law in SA into line with systems government. in developed countries. John Davies, partner at London law firm This, he says, would address the rigid Freshfields Bruckhaus Deringer, says the UK conditions under which the economy had has abandoned the general public interest existed under apartheid, bringing a more test on mergers and acquisitions in favour of open economy and the benefits thereof. three pivotal considerations: national But Unterhalter warns of government security, media diversity and economic social overreach in mergers and acquisitions, stability as it relates to events such as the especially when it comes to really big ones global financial crisis. such as that of Walmart and Massmart. Manoim says in SA authority in “It’s a no-no to make a merger about competition law is mixed — in terms of there public interest and residually about being a “judicialised” process. competition interest,” he says. Patel says parliament needs to make the This means focusing on what is clearly call as to whether a merger is in the public and specifically related to a merger, and interest. properly respecting these boundaries. He says even if the issues are not Unterhalter also says mergers are highly codified, this is better than “arbitrariness”. time-sensitive, and warns against “gaming” Unterhalter agrees with him. x Jeremy Glyn

including between Massmart and Walmart, and SABMiller and AB InBev, have come with strict social conditions. These take into account greater employment and the promotion of small businesses — especially through the inclusion of black South Africans — to align competition with broader industrial policies. “[The department] does not take a view that there can be no job losses in any merger,” Patel says. But he says if a company’s philosophy is underpinned by such job losses, then the application of competition law has to consider this. Some competition law practitioners argue that the notion of public interest has no legitimate role in the formulation of competition policy, or that it plays too big a part. But Patel says the act provides for ministerial involvement: “There is broad agreement that public interest is a legitimate part of competition policy.” He says parliament wants the law rewritten to allow executive veto of mergers and acquisitions, as is the case in other jurisdictions. “But as government we have to have careful balance. If we are too involved there is investment risk,” Patel says. “So government rather looks into the act and sees what it can do better, rather than rewrite the law. “This includes limiting retrenchments and promoting small and medium businesses within industry supply chains. “A sharp distinction between public interest and competition is not so sharp in practice.”

December 15 - December 21, 2016

financialmail.co.za

feature / energy

POWER PARLEY

Weekend Post

ciation said the draft IRP does not mention co-generation though it is highly efficient, saves fuel, and reduces greenhouse gas emissions and transmission losses. Others questioned the exclusion of rapidly developing technologies, in particular Numerous suggestions on how to improve the draft Integrated energy storage (other than lithium-ion batteries) and electric vehicles. This, they said, Resource Plan were made at the first round of public consultations. will have repercussions for electricity and Most of them were heavily in favour of more renewables liquid fuel demand. The IRP base case was criticised for placCharlotte Mathews mathewsc@fm.co.za ing artificial limits on the amount of renewable energy that can be added to the grid each year. This appears to be largely based on Eskom’s inability to upgrade infrastructure to allow new projects to be connected. Tobias Bischof-Niemz, who heads the energy centre at the Council for Scientific & Industrial Research (CSIR), said there was no technical justification for this constraint. He also objected to the prices used in OVEROPTIMISTIC the levellised cost of energy comEnergy demand forecast parisons. They are reflected as similar for solar photovoltaic (PV), wind 000 GWH IRP* 2010 forecast and coal, whereas wind and solar 550 High (less energy intense): IRP base case PV are about 40% cheaper than coal. 500 Removing these limitations, the Low 450 CSIR remodelled the optimal energy Wind turbines between Jeffreys Bay and Humansdorp 400 mix. This showed SA should generate 12% of its electricity from coal 350 and nuclear energy by 2050, rather peakers at the department of ener300 than the 40% mentioned in the IRP. gy’s public hearings in Johannes250 With more renewable energy the burg on its recently released draft annual costs of generation will fall to 200 energy plans have taken issue with R490bn from R580bn in the IRP, the exclusion of certain technologies from 2015 2020 2025 2030 2035 2040 2045 2050 Bischof-Niemz said. the plan. In particular they point to the *IRP= Integrated Resource Plan Source: SA department of energy Aphane said the department is exclusion of solar power (CSP) and co-genopen to changing the constraints. eration and suspiciously short timelines for The latest prices from the expedited bid consultation. There were also some pungent Department of energy deputy directorcriticisms of Eskom after the utility’s refusal general Ompi Aphane said there was nothing round for renewable projects had not been used because they had not yet been made to sign new power-purchase agreements for sinister about starting public consultations public. renewable energy, as it says the power is not just before the holiday break as there are no “I am half sold on changing our starting available when it is needed. legal deadlines to be met. He said he would The draft updated Integrated Resource ask his principals to extend the timelines and point. We don’t want to give the impression that this process has been captured,” he said. Plan (IRP), sketching a proposed energy mix allow for another round of public consultaInitial reports suggested the draft IRP had to 2050, was published on November 22 tions before the final plan is adopted. been “captured” by the nuclear lobby. with an updated Integrated Energy Plan (IEP) Speakers from CSP providers Abengoa, Mike Levington, a member of the Minisfocusing on electricity, gas and liquid fuels. SolarReserve and BrightSource criticised the terial Advisory Council on Energy (Mace), The updated plans have taken into account IRP for excluding CSP from the base case said concerns raised by the Mace working carbon-emissions constraints and job crescenario. They said the input costs of ation potential. R2.30/kWh used in the study are higher than group formed to consider the IRP had been ignored. It had recommended removing all The public hearings being held around the the actual prices awarded in the latest expeconstraints on adding renewable energy, country are intended to invite criticisms and dited bid round. They also said the study which would make the IRP base case further suggestions, leading to a scenario ignores the rapid learning rate for CSP, 7,500 MW of new coal and no new nuclear analysis and a final plan. The first session which brings down costs. They argued that energy in 2050, rather than 15,000 MW of was attended by about 200 people. CSP, which stores solar energy for release new coal and 20,000 MW of new nuclear. Jarredine Morris, presenting for the during peak demand periods, provides Ntombifuthi Ntuli, presenting for the SA Energy Intensive User Group, representing essential flexibility to the grid. SA’s biggest electricity consumers, said the A similar complaint about the exclusion of Renewable Energy Council, said the nuclear cost assumptions in the IRP were “dangershort timelines did not constitute proper co-generation, or byproduct energy from ously unrealistic”, adding that Eskom should consultation. The group asked for an extenindustrial processes, was raised by the Paper not be both player and decision-maker. x sion to March 31. Manufacturers Association of SA. The asso-

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feature / zimbabwe economy Zanu-PF, headed by Robert Mugabe — who will be 93 soon — has been battered by internal strife and a failing economy. But none of that will stop Mugabe from contesting elections in 2018

A NEVERENDING STORY Ray Ndlovu

aviour Kasukuwere, the Zanu-PF national commissar, expects little to change at the ruling party’s annual people’s conference in Masvingo this week. “It’s a normal conference. ZanuPF is a mature party and doesn’t go to these conferences holding expectations of chaos and mayhem,” he told the Financial Mail in an interview. For watchers of the weekend-long ZanuPF retreat, the big, but unlikely surprise would be if Robert Mugabe were to lose the support of delegates to lead the party, or if a successor to his rule emerged. Mugabe, a shrewd man with a lifetime of experience in politics, has expertly cast himself as irreplaceable in Zanu-PF. The script is likely to be the same at this week’s Masvingo showpiece as in preceding years; party slogans will be chanted, the opposition will be denounced and Westernimposed sanctions will be blamed for the country’s economic meltdown. This conference will ultimately set the stage for the official endorsement of Mugabe as Zanu-PF’s presidential candidate, ahead of the 2018 elections. In those polls Mugabe will face long-time rival Morgan Tsvangirai of the Movement for Democratic Change (MDC) and his former deputy in government and in the ruling party, Joice Mujuru, now leader of Zimbabwe People First. Mugabe, who turns 93 in February, has made it clear he wants another term in office. Under Zimbabwe’s constitution, adopted after a referendum vote three years ago, the incumbent is eligible for two terms in office. 52

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December 15 - December 21, 2016

Should he win the next elections, he would be 99 at the end of his second term in 2023. Cumulatively, Mugabe would have held eight consecutive terms since independence from Britain in 1980. Yet this is unlikely to bother party delegates gathered in Masvingo, who instead are likely to fall over each other in praise of Mugabe. In the past, bootlicking of the veteran ruler has taken a comical twist. He has been described as a coffee creamer (“Cremora”) to being an “angel” (Gabriel is his middle name) by the party faithful, which have all but urged him to rule as long as he wants. But beneath the veneer of “normal” which Kasukuwere talks up, all is not well within the party. Mugabe’s endorsement ahead of the 2018 polls is a sign that the party is still nowhere near resolving its succession dilemma. It raises the question of whether Zanu-PF can imagine a future without Mugabe at the helm. Shepherd Mpofu, a research fellow at the University of Johannesburg, says it is “tragic” that Mugabe will yet again be put up as the face and leader of Zanu-PF. The party continues to “keep an old man in power . . . because he serves their factional agenda”, he says. Rashweat Mukundu, chair of the Zimbabwe Democracy Institute, a Harare-based think-tank, says it is too early to expect blood on the floor from this conference. “Factionalism will be tackled, but Mugabe will likely be making calls for unity,” he says. Mugabe has not made it easy for those who dare to talk up succession while he is alive. Often he has angrily told them to “shut up”. In December 2014, he took the unusual

Ban the bond: Protesters during a march against the introduction of new bond notes

step of kicking Mujuru — and more than 200 party officials aligned to her — out of the party for fanning factionalism. Two years on, those expulsions have failed to prevent infighting. Kasukuwere, however, says it is not true that there are rifts in Zanu-PF. “The party is united and strong. Three-quarters of these claims are fiction and it may be what people want to see happening, but it is detached from the political realities,” he says. Kasukuwere himself is reportedly linked to a faction called “G-40”, made up of youthful party loyalists pitted against a faction led by Emmerson Mnangagwa, the vice-president. The G-40 camp is cheering for Mugabe to stay on, despite growing concerns over his health. It has popularised the slogan “one centre of power” in support of Mugabe. “Just like every other political party we have our own challenges, but we will focus on the main issues; we will discuss the economy and the state of the party,” Kasukuwere says. Discussion over the economic implosion appears to be too little, too late. Zanu-PF has been found deeply wanting in fulfilling its 2013 election promises on the economy. One such promise was the empowerment of locals under the 51% indigenisation programme, which was spearheaded by Kasukuwere, a former indigenisation minister. Kasukuwere, whose nickname is “Tyson”, is known for bullying foreign-owned companies. He has issued ultimatums and threats against their operations for

says the party still has a lot to celebrate. “We have our footprint right across the country now, in places such as Bulawayo where we are on par with the MDC and have six seats there.” Kasukuwere makes no secret of the fact that in the new year, his attention will shift to the 2018 election, where all eyes will be on him as party commissar to come up with winning strategies for Zanu-PF. “The most important thing is for us to win elections. To expect that the sickly and fractured opposition will fight against ZanuPF and win is like waiting for a dream that will never come true,” he says. Zanu-PF may be battered and bruised, but the one-time liberation movement still has some fight left in it. x

Getty Images / AFP / Wilfred Kajese

Bond notes: Will not be sufficient to trigger the collapse of the Mugabe regime in 2017

noncompliance with the indigenisation law. SA firms such as Pick n Pay, Tongaat Hulett and Zimplats (a unit of Impala Platinum) clashed with him over the indigenisation law. Kasukuwere’s successor, Patrick Zhuwao, who is Mugabe’s nephew, also did his fair share of harm. In April this year, he threatened to shut down firms for noncompliance, a move economists said led to capital flight and a run on the banks. Economic growth has fallen to 0.6% this year, from peak growth rates of 11% in 2011. The stagnation of the economy is compounded by an annual budget which has been static at about $4bn for three years. Last week, finance minister Patrick Chinamasa again unveiled a $4.1bn budget to parliament for next year. Government has been struggling to keep up with salary payments for its public workers. Cash shortages have worsened and bond notes introduced last month have failed to stave off the cash crunch. The ruling party has also all but gone quiet over its promise to create 2.2m jobs under its flagship economic programme, the Zimbabwe Agenda for Sustainable SocioEconomic Transformation (Zim Asset). Stern Zvorwadza, chairman of the Zimbabwe National Vendors Union, says an informal economy has mushroomed as the formal economy shrinks. “We have about 5.7m informal-sector workers and this keeps growing,” he says. The Zim Asset economic blueprint has faced funding hurdles. It needs $27bn to take off. Traditional financier China is sceptical of extending any more loans to Mugabe. Beijing is not only wary of the political risk and uncertainty posed by infighting in Zanu-PF, but also by Harare’s poor track record of loan repayments. BMI Research, a unit of the Fitch Group, said in its latest report on Zimbabwe that despite the economic meltdown, the end was not yet in sight for Mugabe.

“The introduction of bond notes will not be sufficient to trigger the collapse of the Mugabe regime in 2017 without some form of substantial economic blunder from government. However, all risks lie to the downside and tensions between government and the wider population will continue to boil over into occasional violence,” it said. But Kasukuwere, the man in charge of marshalling Zanu-PF ahead of the 2018 polls,

Zimbabwe's economy in numbers

0.6% is its estimated economic growth in 2016

1.5%

is government's inflation estimate for 2016

US$3.7bn

is projected revenue in 2017

$4.1bn

is estimated expenditure, leaving a financing gap of $400m

$3bn

is the size of the government's wage bill

Domestic debt % 30

Debt

4,500

D/GDP

4,000

$520m

(3.6% of GDP) is its capital expenditure bill

3,500

2,500

2,000 1,500

1,000

500

0 2009 2010

2011

2012

2013

2014

Source: Ministry of finance & economic development

2015

Oct 2016

$1.98bn

is its estimated trade deficit for 2016

December 15 - December 21, 2016

financialmail.co.za

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feature / media & advertising

STILL TUNED IN

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December 15 - December 21, 2016

Latest radio listenership figures should shore up advertisers’ commitment to the medium, despite new research methodology 15-plus, BRC’s data shows that 35m people listen to the radio every week (92% reach) while 28.6m listen on an average weekday (75%). Listenership penetration across the provinces is widespread, with the Northern Cape indicating the lowest penetration (80%) and KwaZulu Natal the highest (96%). The average time spent listening to radio on a daily basis across the sample is four hours and six minutes, with longer listening in the rural areas and less in urban and city areas. SA’s most listened-to radio station remains Ukhozi FM, with just over 5.3m daily listeners. The rest of the top five are Umhlobo Wenene FM; Lesedi FM; Metro FM and Thobela FM. Says Rothschild: “There are no dramatic shifts in the listenership figures of these stations, with Metro FM’s decline in numbers

being a cause for slight concern.” He wonders if Metro’s decline could be an effect of the SABC’s 90% local music content policy implemented in May. Of the top 10 stations, Ukhozi FM has the most loyal listeners: 59% listen exclusively to the station, while only 27% of Gagasi and Metro listeners listen exclusively to these stations. With just under 300,000 listeners, Jozi FM is the most listened-to community station, way ahead of the Eastern Capebased Unitra FM and Radio Tygerberg in the Western Cape. Says Rothschild: “The community radio sector is often overlooked by advertisers, yet it attracts in excess of a quarter of all radio listenership.” He says the absence of substantial shifts in listenership trends is not unexpected and the general consensus across the industry is that at least four surveys are required before the data can be seen to be stable and trends can be identified. x

KEY RADIO STATION MEASURES Commercial and PBS Average daily cumulative (Mon-sun) (000)

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lmost 40% of South Africans are listening to the radio on mobile devices — more than those listening in their cars. New figures from the Broadcast Research Council of SA (BRC) show the device of choice remains the portable radio (76%). Just 8% are listening via the DStv audio bouquet and 2% on computers. The trends have remained stable, with 87% listening at home; 33% in a vehicle; 11% at work/university and 6% in a public space. Lance Rothschild, CEO of the Liberty Radio Awards, says: “The new data is not to be compared with the old radio audience measurement survey, which was compiled by SA Advertising Research Foundation, as the new figures are based on a substantially different sampling methodology and with more granularity in the detail gathered from the sample audience across 53,396 diaries.” The new figures should shore up advertisers’ commitment to radio, says one media planner, as there was some concern a changeover in research methodology might have “skewed the numbers down” and made the medium less attractive to brands. Another media strategist says brands should use the new numbers “to embrace the sustainability of radio” but should also be using the medium in conjunction with online exposure, where most radio platforms have a strong presence; as well as experimenting with audio offerings like sponsored podcasts. Rothschild says the BRC data, which covers the period from January to September, provides estimated listenership across 39 commercial and public broadcasting service radio stations and 266 community stations. “Because it’s the second set of data released by the BRC, it is still too early to make an assessment of significant trends and shifts in audience data at this stage,” he says. “However what is significant to the marketplace is the stability of the data.” Across a population of 38.3m aged

Jeremy Maggs jmaggs@iafrica.com

One week cumulative (000)

Jan-Jun 16

Jan-Sep 16

Jan-Jun 16

Ukhozi

5,406

5,390

7,294

Umhlobo Wenene

3,964

3,985

5,171

5,208

Lesedi FM

2,433

2,415

3,429

3,440

Metro FM

2,273

2,198

4,159

3,968

Thobela FM

1,997

1,994

2,860

2,819

Motsweding FM

1,754

1,758

2,668

2,640

RSG

1,488

Jan-Sep 16 7,297

1,014

1,064

1,424

Ikwekwezi

913

888

1,335

1,294

Gagasi

798

833

1,366

1,408

Jacaranda FM

777

784

1,329

1,325

Source: BRC RAM Jan-Jun 16 (National: n=36,447) and Jan-Sep 16 (National: n=53,396)

IN GOOD FAITH BY CARMEL RICKARD

THE PROMISED LAND An inept, uncaring government department is standing in the way of labour tenants realising their constitutional rights to property

n the debate about the appropriate role of courts in SA, consider this: almost 11,000 poor and vulnerable people claiming rights as labour tenants have been hung out to dry by an inept, uncaring government service that has done virtually nothing to realise their rights over 15 years. Their constitutional right to land now depends on the courts and whether the judiciary can craft an alternative path through the malign

@carmelrickard

Judges of the constitutional court had been waiting for more cases dealing with socioeconomic rights such as land and housing 55

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administrative chaos prevailing in the department of rural development & land reform. Labour tenants are people — or the descendants of people — who worked on a farm without being paid wages, in exchange for the right to live on, and work, a part of the farm for themselves. Though the system was made illegal in the 1960s, it continues in some forms. Now the law promises that labour tenants, or their children or grandchildren, once officially designated as such by the land claims court, may be given

December 15 - December 21, 2016

ownership of the small portion of land they occupied or, in some cases, alternative land. But the department has shown itself incapable of overseeing the system on which everything depends, and claims have not been channelled to the court. People seeking ownership of the land on which they lived and worked had to apply for recognition as labour tenants by March 31 2001. An estimated 19,000 did so, but 15 years later the applications of nearly 11,000 are still in limbo. For example, the department says files are lost, creating a catch-22 situation, as labour tenants can’t reapply since the deadline has passed. A multitude of other problems, most not denied by the department, have resulted in a stalemate for these most vulnerable workers and the possibility they may lose their constitutional rights to land. During protracted litigation, finalised last week, the land claims court agreed to an innovative strategy suggested by the Legal Resources Centre (LRC) and the Association for Rural Advancement (Afra). They have been involved in a class action to ensure that labour tenants’ rights can no longer be ignored by government. Conventional legal mechanisms seemed to have no effect, as the department simply ignored agreed court deadlines for action. Instead of pushing for contempt orders against the relevant officials, Afra and the LRC put up a well-moti-

vated case for the court to break new ground and appoint a “special master”, responsible to the court, to handle labour tenant cases. This the court agreed to do, citing extensive research by Afra and the LRC showing where a “special master” has been appointed in other parts of the world — and that our own highest courts have foreshadowed the possibility of such appointments. An appeal on the cards Now the department has indicated it will appeal, claiming the order for appointment of a special master is “premature”. That must be good news for the labour tenants: it is difficult to imagine either the supreme court of appeal or the constitutional court being sympathetic to the blatant neglect shown by the department. They won’t take kindly to the department repeatedly ignoring court orders either. At a symposium held in his honour last week, newly retired deputy chief justice Dikgang Moseneke said that judges of the constitutional court had been waiting for more cases dealing with socioeconomic rights such as land and housing. But then the “floodgates” opened and the court was deluged with cases relating to bad government instead. The labour tenants matter neatly straddles both these issues: the essential, but compromised, right to land of thousands of labour tenants on the one hand; and, on the other, yet another example of bad government. It’s exactly what the judges have been waiting for. Think of the department’s decision to appeal as a Christmas present to the court. x

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money& investing Analysis and coverage of SA's top companies and investments - the guide to where your money should be JSE

Sharing in the pain . . . It was a mostly torrid year for the markets, with some bluechip stalwarts reaching unexpected lows

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Marc Hasenfuss hasenfussm@fm.co.za

ý What a horrible year on the JSE. The chart depicting the all share index might at first glance not look too tragic, with the line holding comfortably above the 50,000 points level. But in truth, investors probably can’t wait for 2016 to be over — especially those who have followed the philosophy of “buy blue-chip shares and hold them for the long term”. They would have endured a wretched 2016 in terms of returns. Sweet spots such as the vibrant consumer-driven sectors and traditional rand hedges turned sour, and rotating into better-performing sectors was not easy. And many of the reliable “default” stock picks for retail investors performed disappointingly in the year to date. At the time of writing, Naspers was down 1.94%, while PSG fell 4%, Remgro 8%, British American Tobacco 8%, Steinhoff 2%, Richemont 17%, Aspen 7%, Sasol 7% and AnheuserBusch InBev 27%. ➦

December 15 - December 21, 2016

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money&investing

Then there were the popular UK-aligned stocks that were smashed by the surprise Brexit decision — most notably Brait, Capital & Counties and Intu (all down more than 40%). The popular consumer sector was not the usual cinch either. While Massmart (after a

WINNERS ANGLO AMERICAN Share price (c) – daily 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 J

F M A M J J A S O N D 2016

Source: Iress

BARLOWORLD Share price (c) – daily 11,600 10,800 10,000 9,200 8,400 7,600 6,800 6,000 5,200 J

F M A M J J 2016

A S O N D

Source: Iress

Dividend

WESCOAL Share price (c) – daily 280 240 200 160 120 80 J

F M A M J J 2016

Source: Iress 58

financialmail.co.za

S O

N D

Dividend

December 15 - December 21, 2016

prolonged period of underperformance) and Shoprite (courtesy mainly of rumours of corporate action involving Steinhoff) both saw their shares up more than 35%, other supermarket shares, including Pick n Pay and Spar, were far more pedestrian. Grocery and fashion hybrid Woolworths, a popular stock pick, was down more than 30%. Fashion retailers had a shabby time with Truworths down 10% and Mr Price down more than 20%. The Foschini Group (TFG) was the exception, with a smart 38% gain. The investors who will have fond memories of 2016 are those who bravely delved where most feared to tread. Those who backed a recovery in construction giant Aveng, where sentiment had been ground to dust, were rewarded with a 252% return. Industrial giants Barloworld (up 93% since the start of the year), Imperial Holdings (61%) and Invicta Holdings (68%) also provided enviable returns, even if prospects for the local economy sometimes appeared dangerously brittle. Though there were rich recovery pickings in certain construction and industrial stocks, there were other counters — such as PPC (down 64%), Torre (-52%) and Distribution & Warehousing Network (-60%) — that would have seriously demolished portfolios. Other shares racking up notable returns in 2016 included telecoms specialists Blue Label Telecoms (up 60%) and Huge Group (82%), with both involved in game-changing corporate action. The performance by Blue Label and Huge shares is in stark contrast to cellular services giants MTN and Vodacom, whose shares were down 8% and 4%. Other standout share-growth performances would include recently listed asset manager Sygnia (43%), a recovering Coronation Fund Managers (34%) and niche packaging enterprise Transpaco (40%), as well as chemicals groups Omnia (41%) and Rolfes (35%). One noteworthy performance would be investment company RECM & Calibre, a deepvalue investment vehicle. The value of its preference shares surged 55% after value was unlocked in key investments (including the sale of Dis-Chem shares ahead of the listing of this retail company on the JSE).

In essence, successful investors would have needed to rely on stock-picking rather than backing a sector for excellent returns. Still, if there was a JSE sector to back in the past year it would have been banking, coming off a low base after being smashed by “Nenegate” at the end of 2015. The “big five” banks and upstart Capitec all managed strong returns. Standard Bank was the best, with share-price growth of close to 40%, and FirstRand and Nedbank managing better An investment of R100,000 than 30%. spread equally Niche financier between the Transaction Capital was three mining up more than 20% since heavyweights the start of 2016. would have The food sector provided some sumptuous garnered a returns — also after a fairly snappy return of R243,000 lean spell following a without prolonged drought in counting back many parts of SA. Tiger dividends Brands (up 34%), Tongaat Hulett (46%) and AVI (20%) were the pick of the bunch, with Pioneer Foods and RCL Foods lagging somewhat. Poultry producers had their profits plucked when a combination of higher feed costs and cheaper imports hit operating margins. But JSE “big bird“ Astral Foods and niche player Sovereign Food Investments were both up 8% for the year to date. Interestingly, both these chicken stocks beat fishing group Oceana, which was up only 6% despite an impressive profit catch in the financial year to end-September. Resources were another bright spot, with platinum producers shining. Punters would have secured extraordinary returns by looking past volatile commodity prices and an oscillating currency to simply buy the big three resource counters — Anglo American (up 229%), Glencore (163%) and BHP Billiton (39%). Put another way, an investment of R100,000 spread equally between the three mining heavyweights would have garnered a snappy return of R243,000 without counting back dividends. The performance from gold miners, coal miners and some base-metal producers was mixed. But certain junior miners showed their mettle — particularly platinum counters Tharisa (up 328%), Wesizwe (85%) and coal

Bloomberg

LOSERS BRAIT Share price (c) – daily 17,000 16,000 15,000 14,000 13,000 12,000 11,000 10,000 9,000 J F M A M J J 2016 Source: Iress

A S O N D Dividend

PPC Share price (c) – daily 1,550 1,400 1,250 1,100 950 800 650 500 J Source: Iress

F M A M J J A S O N D 2016 Dividend

CAPITAL & COUNTIES PROPERTIES Share price (c) – daily 10,000 9,200 8,400 7,600 6,800 6,000 5,200 3,400 J Source: Iress

F M A M J J A S O N D 2016 Dividend

If there was a merchant and miner JSE sector to Wescoal (128%). back in the past Though they did not year it would “shoot the lights out” in have been 2016, it is perhaps banking, coming encouraging to see fastoff a low base growing second-line after being companies — health-care smashed by conglomerate Ascendis ‘Nenegate’ at (up 17%), local bourse the end of 2015 operator JSE Limited (27%), private-education group AdvTech (19%), empowerment investment company Hosken Consolidated Investments (18%) and acquisitive food brands group Rhodes (12%) — still attracting positive sentiment. Of course, there were a few nasty blowouts during the year. Empowerment group Labat reversed its logistics acquisitions, then saw its shares lose 80% of their value. Some former market darlings also took beatings, including

electronics group Ellies (down 68%), cement maker Sephaku (-43%) and financial services group Finbond (-39.5%). Consistent profit performers in the small-cap space were also not rewarded for their efforts. Logistics group Santova was down 20%, investment counter Trematon Capital fell 20% and Consolidated Infrastructure was down 31%. Alternative gaming group Phumelela was up only 2%, albeit up more than 30% since midDecember 2015. Recently listed counters also felt pain, with Botswana-based retailer Choppies down 55% and offshore investment company Astoria shedding more than 40%. Shares in investment companies EPE Capital Partners and Universal Partners were down 8% and 6%, with fledgling fast-food brands business Gold Brands Investments down 20%. x December 15 - December 21, 2016

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money&investing PROPERTY

Listings just keep growing

Sandton City: landmark mall still in demand

Investor appetite has not diminished despite the large number of property counters and more expected in future Joan Muller mullerj@fm.co.za

ý The successful debut this month of Liberty group’s R10bn shopping centre fund and Transcend Residential Property Fund brings the JSE’s tally of new real estate listings since April to seven. That’s on top of at least 10 new property listings in the prior 12-month period. And additional property listings are potentially in the offing, including a student housing fund and a few secondary listings from European-focused funds. Keillen Ndlovu, head of listed property funds at Stanlib, says, however, that new listings will have to become more compelling in their investment offering if they want to lure capital away from existing counters. “Listed property investors now have so much choice – 52 property stocks in total, including A and B units – that there’s not much room for new generic funds or similar themes in future.” Both Liberty Two Degrees and Transcend met their pre-listing capital-raising targets of R3.8bn and R51.8m respectively. Latest Stanlib figures show that this brought the total amount of new equity raised through initial public offerings, book builds, rights issues and dividend reinvestments by the sector in the year to date to R32bn (R36bn in 2015). The still-strong investor appetite for listed 60

financialmail.co.za

December 15 - December 21, 2016

property comes as somewhat of a surprise, Meago Asset Managers director Anas Madhi given ongoing share price volatility and a echoes the sentiment. “Our concern is with general sense that “new listings fatigue” may be respect to the costs associated with the external starting to set in. management company, as well as the evergreen Liberty Two Degrees recorded a share price put option in place with Liberty,” he says. gain in the first week after listing. The stock has The agreement entitles Liberty to sell its clearly piqued the interest of investors looking shares of at least R200m in co-owned for exposure to the landmark malls in which it properties every six months to Liberty Two owns stakes, including Sandton City and Degrees. “Though a formula has been created to Eastgate in Johannesburg. manage the pricing of such an agreement, we However, some believe Liberty Two Degrees are concerned about any process wherein a has listed at too high a premium. listed company is a forced buyer of “The company is characterised by an BUSY YEAR any assets in perpetuity.” iconic portfolio, but has also listed at New equity raised AltX-listed Transcend, only the an iconic price,” says Catalyst Fund second dedicated rental housing fund Year Amount on the JSE, was brought to the Managers investment manager Paul raised Duncan. market by private equity player 2011 R16bn International Housing Solutions (IHS) Liberty brought its fund to the market on December 6 at a forward 2012 R11bn with a small portfolio of 2,472 one-, yield of around 6.5% (based on a R10 2013 R18bn two- and three-bedroom units. listings price). This is against the Though Transcend hasn’t yet 2014 R40bn market’s average 7.5% and fellow 2015 R36bn lured support from larger, retail-focused Hyprop Investments’ 2016 so far R32bn institutional investors due to its 6.6% forward yield. The market view limited size and liquidity — it still has Total R153bn is that Hyprop and Liberty Two a market cap of below R500m — Source: Stanlib Research Degrees have assets of similar investors will no doubt keep a close quality. watch on the counter, given that it Though the Liberty Two Degrees portfolio is has access to IHS’s R2.5bn pipeline of affordable undoubtedly of good quality, Duncan says housing units. These are typically valued at Catalyst does not believe the returns the fund is between R400,000 and R700,000 and fetch expected to deliver are attractive on a riskrentals of R3,000-R7,000/month, which adjusted basis. He says Catalyst also does not Transcend CEO Rob Wesselo says is the “sweet like the company’s corporate structure — the spot” for SA’s growing urban middle class. fact that it has an external management Wesselo hopes to add at least 2,000 housing company, and the perpetual put option it has units to Transcend’s portfolio over the next 12 granted to Liberty. months. x

market watch by Marc Hasenfuss

Ceding control

If PremFish raises more than R600m in fresh capital on its listing in February, might an abalone farm be on its shopping list?

Bumper profit harvest Shares in unlisted farmers’ retailer Kaap Agri, which trades on an over-thecounter (OTC) platform, touched a record high of R36 after releasing solid numbers for the year to end-September. Revenue was up 8% to R7.6bn, the after-tax margin close to 4% and headline earnings up 15% to 298.5c/share. This is a surprisingly good performance, considering lingering drought conditions, and testimony to Kaap Agri’s management team, led by no-nonsense MD Sean Walsh. With the success of broadening the retail offering away from the core Agrimark stores — into convenience and liquor-store formats (among others) — one wonders how long it will be before Kaap Agri opts for a listing on the JSE. A Kaap Agri listing would intrigue me far more than the recent Dis-Chem listing, considering the OTC shares are trading at a rating that is markedly more modest than those of its listed peers (some of which are less profitable). The feeling I sometimes get — and I may be wrong — is that there seems to be some tension between Kaap Agri management and its major shareholder, PSGcontrolled agribusiness Zeder, around future strategy. I imagine Zeder would relish the chance to pick up more Kaap Agri shares — even at the current price. However, Kaap Agri might prefer not to be under the sway of a controlling shareholder. Standalone abalone? I was fortunate enough to hitch a ride on a helicopter to Premier Fishing’s abalone plant in Gansbaai. While I struggled to hold down the previous evening’s chenin blanc as we were buffeted by strong winds, I did notice from above two other abalone farms in close proximity to PremFish’s venture. One is the large Abgold facility — built, I believe, on the capital of mainly private investors — and the other is AVI frozenhake subsidiary I&J’s plant. If PremFish manages to raise the more than R600m in fresh capital on its listing in February, might one of these abalone farms be on its shopping list? Or will expanding the existing farm suffice for the ambitious PremFish? x

Glencore, Qatar commit $3bn in equity Glencore and Qatar’s sovereign wealth fund are using €2.8bn ($3bn) in equity and $7.8bn in financing from a bank consortium led by Italian lender Intesa Sanpaolo SpA to buy their stake in Russian oil company Rosneft PJSC. The financing from the Intesa-led group would be backed by the two companies’ shares in the oil group, Rosneft said in a statement. Bloomberg Bloomberg

@marchasenfuss

umbering technology conglomerate Altron, which is controlled by the Venter family, has gone further than Pick n Pay, controlled by the Ackerman family, in democratising its artificial control structure. Despite collapsing the antiquated Pikwik pyramid, the Ackermans have still determinedly clung to control of Pick n Pay. The Venters, on the other hand, have commendably offered to give up outright control — though, on closer examination, there might still be a few worries for investors. Last week Altron proposed collapsing the control structure that affords the Venter family voting control over the company with only a minority stake. This will be done by introducing a new strategic equity partner in the form of Antony Ball and Sam Sithole’s Value Capital Partners (VCP), which will invest R400m in fresh capital. Tagged to this investment is the key rider that voting rights of company founder Bill Venter and the Venter family will dilute 57% to 25.1% after the low-voting N-shares structure is dismantled. It might irk shareholder activists who are easily offended by artificial control mechanisms that, despite diluting the Venter family stake to what might be termed a significant minority level, the family will still speak for 25.1% of the votes. Perhaps more prickly is the fact that the transformation of low-voting N-shares into full voting shares will be undertaken on a ratio of 90 voting shares for every 100 N-shares. This might be construed as prejudicing many long-suffering Altron shareholders in ensuring a premium on the Venter family’s voting shares. It’s not as though the Venter family can be credited with huge successes in building shareholder wealth over the medium term, with Altron’s shares down more than 60% over the past five years. Of course, if VCP can flick the growth switch at Altron, such little niggles will quickly be forgotten.

GLOBAL MARKETS

IVAN GLASENBERG The trader and miner is recovering from a downturn in commodities. This month, Glencore, led by Glasenberg, completed an asset sale programme to lower debt and resume its dividend

Saudis signal deeper cuts after deal with non-Opec countries Saudi Arabia signalled it’s ready to cut oil production more than expected, a surprise announcement made minutes after Russia and several other non-Opec countries pledged to curb output next year. Taken together, Opec’s first deal with its rivals since 2001 and the Saudi comments represent a forceful effort by producers to wrest back control of the global oil market, depressed by persistent oversupply and record inventories. Bloomberg

December 15 - December 21, 2016

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money&investing CONSTRUCTION

Hostage to poor planning The many factors conspiring against infrastructure spending do not bode well for SA’s listed construction players Mark Allix allixm@bdlive.co.za

ý Murray & Roberts’s decision to exit SA infrastructure and building markets has shown up large cracks in the economy. It comes despite government plans to spend R4 trillion on 18 categories of strategic infrastructure projects over 15 years, of which hundreds of billions have already been spent. The exit excludes the company’s shareholding in Gautrain operating companies that, according to Murray & Roberts CEO Henry Laas, are still in “fierce” litigation with the Gauteng provincial government. It also excludes projects being wound up in the Middle East, where no new business will be pursued. The decision by one of SA’s top construction and engineering groups may provide a significant opportunity for black economic empowerment. But what it really shows is that civil infrastructure development, such as in the mining and steel industries, is being held hostage by poor government industrial policy design and implementation, amid the fury and chaos of national politics. The infrastructure and building segment of the construction industry undertakes large civil engineering and earthworks projects — constructing power plants, dams, major roads, bridges, pipelines and large buildings, and also facilities such as the City of Tshwane’s Zeekoegat waste water treatment plant. “In SA, the civil engineering and construction market is not strong and has not returned to the levels it should be at,” Laas says. There has been no fulfilment of government undertakings for big civil engineering projects, though he says the SA National Roads Agency (Sanral) has come to the party. Murray & Roberts says its “new strategic future” lies in three multinational business platforms providing services to selected oil and 62

financialmail.co.za

December 15 - December 21, 2016

gas, metals and minerals, and power and water markets. The domestic civils industry has languished since the end of the 2010 Soccer World Cup. Megaprojects such as the Gautrain and Sanral’s Gauteng freeway improvement projects, along with soccer stadiums, have not been replicated. But now that a major JSE-listed SA construction and engineering group is in the process of selling up a There remains core business, it is worth a seemingly looking at what this insurmountable means. gulf between One hint comes from government’s Buildmax, a much smaller desire for a listed group that casts ‘developmental itself as a leading state’ and empowered opencast private-sector mining contractor, and drivers of the one of SA’s biggest in the economy coal-mining niche. The company also provides bulk earthworks and construction materials to the mining and construction industries. It says trading conditions in these sectors are dismal. But apart from slowing growth in China and poor demand in Europe for mining commodities, it says Eskom’s poor management of coal off-take, coupled with the utility’s pressure on mines and service providers to be 50% plus one share black owned, have stymied capital projects. “The market for opencast mining services has diminished, triggering an oversupply of

services, increased competition, lower prices, cautious lenders, bearish investors, labour and community unrest, and a general liquidity crunch in the sector,” Buildmax says. The same could be said of the general construction and engineering industries for the past six years. The lousy trading environment has been made worse by a global surplus of second-hand plant and a substantial drop in second-hand values. Combined with a weaker rand, there has been a huge increase in the cost of new plant, which constrains companies from replacing and financing equipment. This in turn has deeply hurt JSE-listed companies such as Eqstra, which provides earth-moving machinery. On the positive side, there has been evidence of public-sector spending on much smaller-scale projects, including for human settlements and associated infrastructure. This includes the building of schools, clinics, hospitals, and also the roads, water, electricity and sewerage systems that serve them. Much of this is in rural areas. This has benefited smaller JSE-listed building and materials groups, and thousands of “bakkie and spade brigade” outfits. But it remains to be seen if there are costly comebacks in future, similar to widespread quality concerns over low-income housing developments that resulted in remedial actions costing billions of rand a few years ago. Parliament was told in reports from the

iStock

National Home Builders Registration Council, the Construction Industry Development Board, and the public protector that flawed procurement processes and corruption were major causes of shoddy work in the construction of reconstruction & development programme houses for the poor. Now, amid allegations of the capture of stateowned entities, and with memories of the Marikana massacre of mineworkers by police still fresh, SA’s economy is hurting. Mining is in crisis, along with SA’s steel sector, and parastatals ranging from SA Airways to PetroSA have lost many billions of rand. Projects such as Eskom’s Medupi and Kusile power stations are plagued by cost overruns due to often violent labour unrest and long technical delays. The ANC has also been seen to have unduly benefited from its past relations with Japanese contractor Hitachi on such projects, to the tune of billions of rand. Meanwhile, the intrigues encompassing the Passenger Rail Agency of SA (Prasa) and state arms manufacturer Denel are a long way from the austere public interest that is mandated for the running of state enterprises. Bad blood between government and the construction industry spilt over at the end of the 2010 Soccer World Cup. The state felt it was being ripped off by collusion among contractors — including cement and steel producers — over its plans for infrastructure development. This eventually resulted in about 15 large and

lesser-known construction and engineering groups agreeing to pay a collective R1.5bn in penalties to the competition authorities. Some of these groups continue to deny some charges. Subsequently, SA’s largest steel producer, ArcelorMittal SA, also agreed to pay a R1.5bn fine for monopoly pricing. Infrastructure takes up about 50% of steel production in SA. In simple terms, it is made up of construction and building segments, where confidence has been low in recent years. At the same time ArcelorMittal SA has been pressured into a long-delayed black economic empowerment transaction. The deal comes after many years of state pressure on the group over mineral rights and the pricing of flat steel products used in infrastructure development. A previous Gupta-related empowerment deal for 26% of the steelmaker resulted in criminal charges being laid, until it was ultimately nixed in the constitutional court. Such is the construction industry’s decline since then that the value of the proposed deal was worth nearly the same as ArcelorMittal SA’s total market capitalisation now — about R10bn. The ill feeling between the state and the construction sector is continuing in the form of potentially costly civil litigation by provinces, cities and other parties. These include the Construction Industry Development Board and black business organisations that want a much larger slice of the lucrative state infrastructure pie. There are still outstanding claims and counter-claims from the 2010 Soccer World Cup over the Gautrain project and for Sanral’s roads networks. These run to more than R1.2bn.

This is normal for large and complex construction and engineering projects. But when mixed with politics they can become far more potent. State spending on infrastructure comprises about 70% of the total value of the construction and building industries in SA. Between the private sector and government this is worth about R460bn a year. Construction companies have experienced some punishing losses in recent years, many of which come from divisions involved in infrastructure work. Both Murray & Roberts and Aveng have also been trying to dispose of their steel manufacturing and services businesses, classifying some as discontinued operations. Despite recent evidence of some renewed state tender activity, many of the biggest JSElisted construction groups now derive the bulk of their profits from Australasian and European operations. Along with infrastructure-related steel and cement companies in SA, many have also flirted with becoming penny stocks. Meanwhile, Evraz Highveld Steel & Vanadium, once SA’s second-largest steel producer that made structural steel for infrastructure that no-one else could make, is in liquidation. Group Five CEO Eric Vemer says the engineering and construction markets are “very challenging”. The group’s engineering and construction cluster contributed 85% of group revenue in the year to June, but saw an operating loss of R237m. This was before a R365m provision made for a “problematic debtor” in the civil engineering segment, which itself made an operating loss of R381m. The day was saved by a R917m ➦

PUBLIC SECTOR INFRASTRUCTURE SPENDING Rbn

% of GDP 9

300

250

200

6 5

150

4 100

3 2

1 0

9 19

0 20

State-owned companies National departments Total as a share of GDP (right axis)

0 20

Provincial departments Public entities

Local government Public-private partnerships Source: National treasury

December 15 - December 21, 2016

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money&investing PUBLIC-SECTOR INFRASTRUCTURE EXPENDITURE AND ESTIMATES 2012/13 Rbn Energy Water and sanitation Transport and logistics Other economic services Health Education Human se lements1 Other social services Administration services2 Total National departments Provincial departments Local government Public entities3 Public-private partnerships State-owned companies3 Total

75.2 22.5 69.5 9.4 9.7 11.3 15.6 13.7 6.3 233.3 11.4 50.3 41.7 16.1 2.6 111.3 233.3

2013/14 2014/15 Outcomes 69.6 67.8 25.8 29.5 76.4 90.9 13.5 13.0 10.0 7.8 13.7 15.4 17.0 17.1 12.9 13.1 5.0 5.2 243.9 259.9 11.9 13.5 55.2 56.4 47.1 53.2 15.4 19.2 3.0 1.8 111.2 115.8 243.9 259.9

2015/16 69.7 35.2 99.5 16.6 9.2 17.4 18.3 16.6 8.0 290.4 17.3 62.7 56.6 28.7 1.7 123.4 290.4

2016/17 2017/18 Estimates 50.8 49.9 43.1 43.1 96.2 105.3 17.2 14.4 8.8 9.4 17.7 17.8 18.3 21.1 16.0 16.2 6.6 7.6 274.8 284.9 19.6 16.4 63.6 69.8 58.2 57.5 26.2 29.4 1.9 2.0 105.2 109.7 274.8 284.9

2018/19 79.9 45.9 90.0 14.5 9.8 18.4 22.3 17.0 7.8 305.8 18.3 72.9 59.9 30.4 2.1 122.2 305.8

MTEF Total 180.7 132.1 291.6 46.2 28.1 53.9 61.6 49.2 22.0 865.4 54.3 206.3 175.6 86.0 6.1 337.0 865.4

1. Human se lements includes public housing to households and bulk infrastructure amounting to R61.6 billion over the medium term energy framework period 2. Administration services include infrastructure spending by the Department of International Relations, the Department of Home Affairs, the Department of Public Works, Statistics South Africa and their entities 3. Public entities are financed by capital transfers from the fiscus and state-owned companies are financed from a combination of own revenue, borrowings and private funding Source: National treasury

operating profit from the group’s largely overseas-based investments and concessions business, helped by a weak rand. This state of affairs has hollowed out such companies. They have been geared up for state infrastructure spend on 18 strategic integrated projects, and hundreds of subprojects, which are supposed to have started, over a period of 15 years. These projects include human settlements, coalfield railways, and proposed economic and industrial zones such as the Ekurhuleni OR Tambo In SA, the civil Aerotropolis in Gauteng. engineering and The Presidential construction Infrastructure market is not Coordinating Commission strong and has (PICC) says priority not returned to projects include mining the levels it towns, rapidly growing should be at urban areas and Henry Laas municipalities in distress. But instead of spending money on large infrastructure projects such as railways and mass water supply and treatment facilities, government has focused on manufacturing locomotives and coaches, and on finishing Eskom’s long-delayed power stations. Amid the crunch in financing, progress on such projects remains slow. Cabinet ministers have been tasked by the PICC, which resides in the economic development department, to unlock everything from green energy to rural and agricultural infrastructure, water and sanitation, public transport, development corridors, mineral belts, 64

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December 15 - December 21, 2016

and also the MeerKAT and Square Kilometre Array telescopes. The state says that, given its limited finances, private-sector funding will be needed for some of these investments. This has taken place in SA’s renewable energy sector, to international acclaim. But there has been precious little private-sector participation across the spectrum of national infrastructure development, from planning to implementation. Eskom CEO Brian Molefe, before his resignation, threatened to compromise R200bn of investments in renewable energy projects, most of it from the private sector. He said electricity supply from renewable energy is too erratic and too costly. Policy uncertainty of this sort comes amid a lack of transparency over a potentially huge nuclear build in SA, and enormous uncertainty over the future of mining in the country. Most recently, this has led to private-sector funding being withheld from state-owned enterprises, amid a frenzy of media speculation that SA’s sovereign credit rating would be downgraded by international ratings agencies. While government has tightened regulation around the construction industry to get more bang for its buck, its stated desire to further stimulate market competition and promote affordable access to quality services has, in many ways, backfired. The slow process of creating capacity in government departments and regulatory institutions has been made worse by the state not inviting the private sector to be involved in

infrastructure development from the get-go. Despite some contact between business and government — and also labour — there remains a seemingly insurmountable gulf between government’s desire for a “developmental state” and private-sector drivers of the economy. Major state enterprises are on the verge of bankruptcy as large and politically controversial construction projects remain on the drawing board, including PetroSA’s proposed Mthombo refining facility at the Coega industrial zone in the Eastern Cape and Durban’s proposed digout port project. With proposed costs collectively running into hundreds of billions of rand, infrastructure projects on such a scale need to be publicly scrutinised in the full glare of parliament. This is not happening. Some major construction groups, such as WBHO, have benefited from state and private infrastructure spending on human settlements and new offices being built in Sandton and elsewhere in Johannesburg. But 60% of group turnover and about one-third of profits now come from Australia, says CEO Louwtjie Nel. Revenue in the group’s civils business is down 40% in the year to June, while the roads and earthworks segment is down 18%. Other major construction groups, including Aveng, Murray & Roberts and Group Five, are much more geared for heavy engineering work. This includes projects in water, ports, railways and mining. However, individual state infrastructure contracts have rarely exceeded amounts of R400m over many years. Large construction and engineering companies want projects worth billions. With

an increasing focus on rural development, many big players have been left out in the cold, with major infrastructure development languishing. The 2016 budget review indicates that public-sector spending on infrastructure has risen from nearly R50bn/year in 1998/1999 to R260bn in 2014/2015, an average annual increase of 7.5%, discounting inflation. State-owned companies such as Eskom, Transnet, the Central Energy Fund, Sanral and Prasa have been the biggest contributors to spending. National treasury says provincial departments and municipalities have also significantly increased infrastructure spending to construct schools, hospitals, clinics and communityrelated infrastructure. It says economic infrastructure accounts for 75% of total public-sector infrastructure spending, mainly by state-owned companies. The funds are used to expand powergeneration capacity, upgrade and expand transport networks, and improve sanitation and water services. Meanwhile, social services infrastructure accounts for 22% of total publicsector infrastructure spend, including for communications technology, with education and health spending accounting for 6% and 3%. Industry group Consulting Engineers SA says at least 30% of all funds spent on infrastructure needs to be spent on maintenance. But it is difficult to see this happening, especially in dysfunctional municipalities. x What it means: Civil infrastructure development is being held hostage by poor policy design and implementation

STEINHOFF

Never a dull moment Steinhoff is scaling even greater heights in competitive markets such as Europe and the US with a slew of buyouts Stafford Thomas thomass@fm.co.za

ý Five years ago, Steinhoff was small fry. Its revenue of €3.8bn was not even enough to place it among the world’s 250 biggest retailers. Now in the mega-retailer league, the group in its year to September 2017 is on track to generate revenue of at least €20.5bn, a level that would have ranked it 48th in Deloitte’s 2016 “Global Powers of Retail” survey. It is an amazing growth story that speaks of Steinhoff CEO Markus Jooste’s unswerving goal of building scale in a global retail market where that is the name of the game. But for the group — which now has a footprint of more than 11,000 stores in 32 countries — it has been a growth story punctuated by recurring bouts of scepticism from the market. In the most recent, between March and November 2016, Steinhoff’s share price was hammered over a third lower and its rating reduced to an unflatteringly low p:e of 12.5. The first bout of scepticism followed Jooste firing the first salvo in his quest for megaretailer status by acquiring French furniture retailer Conforama in January 2011 for €1.2bn. “Jooste has taken on more than Steinhoff can handle,” was the general tone of market comment. Steinhoff’s rating had slumped to a bargain basement 7.7 p:e by June 2011. The next big bout of market shock came in March 2015, when Steinhoff made its move on Pepkor, acquiring it for R62.8bn (then €4.8bn) from Christo Wiese and his listed holding company, Brait. By valuing Pepkor on a heady 37.4 p:e, Jooste had overpaid, went up the cry. But to get scale, paying up can be the right strategy. For Steinhoff, Pepkor was the means to gain instant entry into the discount clothing and general merchandise sectors through a footprint now spanning more than 4,750 stores in 18

countries. Steinhoff also gained a company that has just produced its 17th consecutive year of double-digit profit growth. The trashing of Steinhoff’s share price in 2016 was in one way related to Pepkor. When results for the 12 months to June were released, the market was shaken by a sharp fall in Pepkor’s growth in its key SA market in the second six months. Investors had again overreacted. In the three months to September (Steinhoff has changed its year-end to September), Pepkor’s SA sales roared upwards to produce a like-for-like store sales increase of 7.9% in a market in which its competitors were reporting negative trends. “It was a fantastic showing,” says Rob Forsyth of Investec Asset Management. Performance was also exceptional across the full Pepkor operation, with the September quarter reflecting constant currency sales growth of 26.3% year-on-year compared with 19.5% in the year to June. In Eastern Europe, another pivotal region for Pepkor, like-for-like sales grew 20% in the September quarter. Market jitters weighing Steinhoff down in 2016 were not confined to Pepkor’s SA operation. It was also a year of frenetic corporate activity, not all of it to the market’s liking at the time deals were struck. But 2016 was going to be the year Steinhoff moved for the first time since the Pepkor deal to pursue its strategy of scaling up aggressively. Jooste’s really Not all its moves were big surprise successful, though. came in August, In March, Steinhoff when Steinhoff abandoned its £1.4bn bid made its entry for UK group Home Retail into the US in the face of competition through the from Sainsbury’s. It also acquisition of walked away from a Mattress Firm bidding war for Frenchfor US$2.4bn based electronic goods and appliance retailer Darty, conceding defeat to rival Groupe Fnac. But Steinhoff made no slip-ups with UK single-price retailer Poundland, bagging it in September for £587m. Poundland adds annual revenue of about £1.3bn, but not much by way of profit after a 94% slump in net income in its year to March. What Poundland does offer Steinhoff is a footprint of 874 stores in the UK and Ireland. For Pepkor, which has opened only 54 stores under its Pep&Co and GHM brands since entering the UK in 2014, Poundland brings scale. Moves are already being made to alter Poundland’s single-price format, which may in turn herald a mass rebranding of its stores. “We have introduced apparel and footwear into 10 of ➦ December 15 - December 21, 2016

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money&investing Poundland’s bigger stores,” Jooste noted at a results presentation. “The test has gone exceptionally well.” Jooste’s really big surprise for the market came in August, when Steinhoff made its entry into the US through the acquisition of specialist mattress retailer Mattress Firm for US$2.4bn. It was another move that delivered instant scale. The US’s biggest mattress retailer, Mattress Firm, has an impressive footprint of more than 3,500 stores in 49 states, and with

BIGGER PLANS AHEAD Steinhoﬀ share price (c) – weekly 9,600 9,000 8,400 7,800 7,200 6,600 6,000 2015

2016 Dividend

Bloomberg

Source: Iress

than twice its prebid level. The market’s argument was that it was too much to pay for a company whose gross operating margin had fallen from 40% in 2014 to 31.7%. Seemingly ignored was that Mattress Firm itself has been through a period of rapid acquisitive growth. First came two medium-size deals in 2014. These were followed in January 2016 by a major deal in which 1,065 stores and sales of $1.13bn were added through the acquisition of Sleepy’s. Jooste acted to allay concerns in his letter to shareholders in Steinhoff’s 2016 annual report. Once the integration and rebranding of Sleepy’s is completed in 2017, focus will swing to driving supply chain efficiency, market share and margins, he stressed. The market has liked what it’s being told and has seen in the September-quarter results. It has again turned pro-Steinhoff, ramping its share price 18% higher in the first half of December. It has also lifted the group’s rating to a 14.8 p:e, an undemanding level that allows for further strong upward movement of its share price. For now the market is also unlikely to have to digest any more acquisition news, believes Forsyth. “It will take a year to 18 months to integrate recent acquisitions,” he says. Or perhaps not. Another potential mega-deal could be brewing: Steinhoff’s acquisition of Shoprite, a move suggested by none other than the two groups’ biggest shareholder, Wiese. It would be a “natural development”, Wiese has told news agency Reuters. Given Steinhoff’s decentralised management approach, integrating the €7.8bn annual sales Shoprite into the group will not present a major obstacle. It will also complete a circle that began with Pepkor’s acquisition of the eight-store Shoprite in 1979 for R1m. Indeed, the new year could well be one of more surprises from Steinhoff. x

annual sales of $3.85bn, a 28% share of the fragmented $14bn speciality mattress market. Mattress Firm also has the makings of the start of far bigger things for Steinhoff in the US. Beyond its national footprint, Mattress Firm also brings with it a network of 75 distribution centres. These could well provide the foundation for Steinhoff’s entry into the US’s $95bn annual sales furniture market, in which no retailer has a share of more than 3%. Jooste is not saying anything beyond: “I am very excited about our future in America.” But again, the market was concerned that Steinhoff had overpaid for Mattress Firm. The $2.4bn price tag represented a 29 p:e — more 66

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December 15 - December 21, 2016

What it means: Steinhoff has shrugged off market scepticism, growing its footprint to 11,00 stores in 32 countries

EMERGING MARKETS

They seem to be a good bet Investors still have to know what they are doing but EM portfolios are now more accessible than ever before Stephen Cranston cranstons@fm.co.za

ý It is the perennial dilemma. Does investing in emerging markets (EM) actually diversify risk, particularly if you are living in one of the leading emerging markets already? Emerging market portfolios are more readily accessible than ever: in fact, the three EM funds available in rand, Coronation (29.8% in US dollars), Old Mutual (33.3%) and Sanlam Investment Management (26.4%) have been in the top 10 of the 180 EM funds available in the international market. The popular Templeton Emerging Markets Fund, more renowned for marketing than investment performance, had a respectable year, with a 21.1% return putting it firmly in the top quartile. Feroz Basa, co-head of the Old Mutual Emerging Markets business, says EM equities still trade at a 30% discount to developed markets, and many EM currencies look oversold. There have been bumps in the road: over three years, Coronation Global Emerging Markets is still almost 3% behind the benchmark MSCI emerging markets index. It stuck its neck out with a 17% weighting to Brazil, which hurt badly in 2015. But over the 12 months to September, five of the top 10 contributors were Brazilian shares which accounted for 9.2% of the fund’s 13,7% outperformance of the MSCI emerging markets index. In spite of poor economic conditions there was nothing to stop the Brazilian privateeducation shares Kroton and Estácio, which more than doubled. Other appropriate places to fish included Indian banks, a cheaper way to reach the Indian consumer than consumer-goods shares such as the pricey Hindustan Unilever. In Coronation’s portfolio Axis Bank is up 50%, Yes Bank has

Hetty Zantman

Suhail Suleman: Plenty of potential Shoprites and Mr Prices in Russia

almost doubled and HDFC is up 35%. Siboniso Nxumalo, co-head of the Old Mutual Emerging Markets business, poses the question: if investors have benefited from businesses going global, how could a fund full of great international companies not benefit SA investors? Many people still think of EM funds as a series of single-country investments, a country’s supermarket chain or its telecom business. But Old Mutual invested in businesses which are domiciled in emerging markets yet look more like developed-market businesses, under the wrapper. One is India’s Tata Motors, which owns Jaguar Land Rover; the other is South Korea’s Samsung, which is fighting Apple to the death for the smartphone market. Neither depends on the fundamentals of its home economy, any more than Nestlé relies on Switzerland. Coronation also includes multinationals, which benefit from a range of emerging markets such as Yum! Brands of the US, owners of KFC, and Dutch brewer Heineken. Coronation GEM co-fund manager Suhail Suleman says there was an argument to avoid EMs when the offshore allowances were quite small — originally they stood at 5% of a pension fund’s assets, but allowances are effectively unlimited for individuals and a generous 25%

Otherwise Smith’s fund is dominated by Chinese Internet businesses such as Vipshop, Alibaba, NetEase as well as China Mobile, the world’s largest mobile phone business. One of Smith’s favourites from inception has been Sands China, one of the big players in the enormous Macau casino market. The short term looks tricky: Richard Turnill, global chief investment strategist at BlackRock — the world’s largest asset manager — says risks to EM equities and bonds have increased since the US election, as Donald Trump’s policies on trade remain uncertain. But EMs will benefit from possible increased infrastructure spending, which could boost global growth. A possible accelerated fall in China’s yuan is a short-term risk. Smith says none of these factors dislodges the investment case for EMs, as valuation is on its side and the structural drivers, such as population growth, are intact. “It is not as if Europe is risk-free these days and who knows what will come from the elections in France, Germany and the Netherlands?” Templeton’s Mark Mobius, the pioneer of emerging markets, believes there are opportunities to buy SA and some other African corporations as the valuation is attractive. Because many SA companies have expanded globally, an investment in these shares will get exposure to other parts of Africa and the rest of the world. Recent political developments, he says, have not had a great impact on many SA companies (just as they don’t seem to have affected many companies in Brazil or Russia). Mobius’s large JSE holdings include Naspers and AB InBev (which replaced SABMiller), and SA makes up an overweight 8% of the Templeton Emerging Markets Fund. x

for institutions. “SA investors should probably have the majority of their offshore allocations in developed markets (for example North America, Western Europe and Japan) but a reasonable portion in EMs through the cycle also makes sense.” He says the return profiles and investment opportunities of other EMs are different from SA’s. SA is already a far more mature and consolidated economy. The largest food retailers in Russia have nowhere near the market share of Shoprite here, or even Pick n Pay or Spar. Magnit, which makes up 3.6%. of the Coronation GEM fund, has only a 7% national market share in Russia. “So there are plenty of potential Shoprites and Mr Prices out there.” Neal Smith, who manages the SIM Global Emerging Markets Fund, says the giant Asian economies — including China, India, Indonesia and the Philippines — look the most promising as they have become the centre of global manufacturing. Yet the only manufacturers in SIM’s top 10 are Brilliance China Auto (which makes BMWs and a local brand of minivans) and technology giant Samsung Electronics.

CORONATION GLOBAL EMERGING MARKETS FUND Magnit Ojsc-Spon

Heineken

3.58%

3.35% Netherlands

Yum Brands

3.08%

Belgium

5.22%

Russian Federation

1.63%

9.36%

China

2.79% Kroton Educacional

Brilliance China Auto

11.19% 1.71%

16.77% Estacio Participacoes

2.77%

Baidu Indonesia

Brazil

Eﬀective geographical exposure

3.10%

India

4.86%

Chile

4.86%

19.57%

Tata Motors

1.52%

JD.com Inc-Adr

7.40%

5.10%

Naspers SA

16.30%

7.06% Other

8.46%

Top 10 holdings (% of fund)

December 15 - December 21, 2016

Source: Coronation

financialmail.co.za

shop talk by Zeenat Moorad

@zeenatmoorad

Windows to the soul

arry Gordon Selfridge was the first shopkeeper to use store window displays to tell visual stories. The founder of the eponymous department chain had what can best be described as a revolutionary understanding of advertising, publicity and the theatre of retail. In 1906, when he started his London store (it opened only in 1909), retail style was mostly “pile-’em-high, sell-’em-cheap”. Interestingly, it was Selfridge who also first promoted Christmas sales with the phrase: “Only XXX Shopping Days Until Christmas”. He was a pioneer of the rather radical notion of shopping for pleasure rather than necessity. Now, I Iove the shops. And more so during Christmas. There’s something about curated merchandise and resplendent displays that fosters a curious appreciation for consumption. In the big shopping capitals of the world — Paris, London and New York — there is an age-old tradition among (mostly) department stores. Each year they try to outdo each other with their festive store windows — the scale ranging from the ornate (chinchilla leather gloves) to the simply outlandish (real, as in live, golden geese). This is a far cry from the more self-effacing and staid “baubles, trees and snowmen” found at most southern hemisphere shops during the festive period. The overall cost of putting together these . . . extravaganzas, if you 68

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will, that involve the work of creative teams and countless hours . . . is hardly ever revealed. I do, however, have stats from Selfridge’s 2015 Christmas windows across their London, Manchester and Birmingham stores. Brace yourself, here are just some of the facts: 500 cans of spray paint and 850 bags of glitter were used, as were 90,000 Christmas baubles and 6,000 m of LED lights. It took a total of 178 hours to install the window displays. Around 100 people worked on them continuously for 24 hours a day over eight days in a rotation of shifts. The narrative, or theme, was “Journey to the Stars”. Those working on the projects actually took astronomy courses at the Royal Observatory, Greenwich. Retail nerds rejoice For those not travelling this year, Google is delivering New York’s iconic festive windows to the masses with Window Wonderland. It’s a virtual reality (VR) experience, more like a tour, that allows consumers to use a smartphone or PC to see the window displays of 18 stores including Bergdorf Goodman, Tiffany & Co, Barneys and Saks. You can listen to audio guides from creative directors describing the planning (and painstaking detail) that goes into the holiday displays, and you can zoom in to see finer details. What they did was take hundreds of highresolution photos of each window and stitch them together with a technique that creates a life-like panorama. The tech giant, if I may digress for a moment, has been going big into VR not only through hardware (things like headsets) but with software and on the platform side as well. The idea is that while entertainment and gaming are the most obvious uses of the technology, the content capabilities of the medium can also have a role to play in science and education fields. Predictably, Google’s microsite has a link to a shopping window, which features buyable products from most of the brands featured in the walking tour. Harry Gordon Selfridge is said to have also coined another phrase: “Business as usual”. x

December 15 - December 21, 2016

CHECKOUT COUNTER

Slam dunk Michael Jordan can (finally) have his name back. Ending a four-year legal battle for the basketball hall-of-famer, China’s top court has revoked the rights of sportswear-maker Qiaodan Sports Company to use Jordan’s last name written in Chinese characters. Qiaodan Sports registered its trademark more than a decade ago. Jordan first sued the company in 2012, arguing that it had damaged his legal rights to his name.

Shake-up at Coca-Cola Coca-Cola CEO Muhtar Kent is to step down next year. Operating chief James Quincey will become CEO in May and Kent (64) will remain chairman. The world’s biggest beverage company has been diversifying into bottled water and other beverages as an increasing number of governments around the world implement taxes on sugary drinks to tackle obesity and diabetes.

Richemont group scales back job cuts Richemont has reached an agreement with employees on a new round of job cuts, the company confirmed this week. Swiss labour union Unia said cuts planned at the luxury goods group have been greatly reduced as renegotiated severance packages help support voluntary departures. In November reports surfaced that Richemont was planning to cut between 200 and 250 additional positions from its Swiss manufacturing divisions.

Lululemon beats estimates Shares in Lululemon Athletica rose more than 16% as the yogawear-maker’s earnings beat market forecasts. It said revenue rose 13% to US$544.4m in its third quarter and that same-store sales were up 7%. Profit in the quarter was 47c/share, excluding some items.

investor’s notebook by Stephen Cranston

No even spread

I @scranston

Though there has been significant interest in passive funds, this hasn’t yet translated to significant demand

t was said back in 2009 that commercial umbrella funds needed to grow to the magic number of 1.6m members. At this level they would be able to spread their fixed costs and investment infrastructure, and charges should start coming down. That level was reached this year. Old Mutual’s SuperFund is the largest umbrella fund in SA, adding a few giant employers such as Anglo Platinum, which give it more than 372,000 members and assets of R91bn. Another big player is the R62bn Alexander Forbes fund, with 277,000 members. In fact almost all of the 1.6m are in five funds, with Momentum, Liberty and Sanlam making up the balance. These groups have business interests well beyond employee benefits. They can pool many infrastructure and IT costs groupwide and pass these on to clients. I see that David Gluckman, who reads speeches on behalf of Sanlam, had one of the most eagerly awaited papers at the recent Actuarial Society convention. This at a time when the elephant in the room is Sygnia head Magda Wierzycka, who is cutting prices like a demented Dion Friedland, of the early Dion Discount Stores. I understand from her fact-sheet for the Sygnia Skeleton 70 Fund that the promise of a 0.4% all-in fee is a little misleading. The total investment charge (with no initial or advice fees) is 1.26%, including 0.5% for hedge fund manager fees, 0.15% in other performance fees and 0.17% in transaction costs. And there is 10X’s Steven Nathan preaching the message of low cost through indexation. He introduced comedian Nik Rabinowitz to give the message on radio, if anybody hadn’t heard it yet. One of 10X’s more zany catch phrases is: “Forty years is a long time for a rabbit not to appear.” Gluckman’s paper makes a passing

RESULTS

reference to these two businesses but is almost entirely addressed to the umbrella fund establishment. In this grouping, the reduction in yield (RIY) — which has similarities with, but is not the same as, a total expense ratio — fell from 1.9% to 1.66% over seven years. This disproportionately hit the lower paid (those on R3,000/month or less), who saw their capital eroded 2.1%, while those on R10,000/month or more had a 1.4% RIY. Employers with fewer employees had a higher RIY, almost 2.5% for those with 10 or fewer employees, compared with less than 1.5% for those with more than 250 employees. Eroding value I always thought the attraction of an umbrella fund is that it can spread costs off a wide base, enabling it to charge the same for members across the employer spectrum. But Gluckman notes that the investment fee component has increased. There is still a perception that higher fees mean more skill is being deployed to run the portfolio. But high fees erode huge value over time, while performance can be ephemeral. As I suspected, while there has been significant interest in passive solutions, this has not yet translated to significant demand. There has also been a move away from portfolios with guarantees such as smoothed bonus policies — my pet hate. I was disappointed to read that this will change when these smoothies, which are anything but free on Vitality or anywhere else, will be allowed as default portfolios for umbrella funds when compulsory defaults are introduced. Those who are ill-equipped to make a choice will be herded into very high-fee, high-margin smoothies. It is an immoral way to behave. There are far cheaper ways to introduce capital protection into a portfolio if it is really necessary. x

Huge Group ALTERNATIVE CARRIERS Price: R7.45 Mkt cap: R826m P:e: 38.88

HOLD

6m Aug

T/O (Rm)

EBT (Rm)

HEPS (c)

DPS (c)

2016

116.01

12.739

10.05

—

2015

106.999

11.777

9.4

—

+8.4%

+8.2%

+6.9%

—

▲▼

The group, which offers fixed cellular routing solutions, had a solid halfyear. Its shares are fairly illiquid though. Huge’s R275m purchase of Connectnet Broadband Wireless is on track. Zeenat Moorad

Gold Brands RESTAURANTS Price: 78c Mkt cap: R85m P:e: 8.71

SELL

6m Aug

T/O (Rm)

EBT (Rm)

HEPS (c)

2016

100.6

4.848

3.18

—

2015

116.6

4.523

3.48

—

(13.7%)

+7.2%

(8.6%)

—

▲▼

DPS (c)

Gold Brands is the laggard of the food service space. Of course it is dwarfed by larger rivals Spur Corp and Famous Brands; legal drama and poor brand visibility have caused it to fall out of favour with investors. Zeenat Moorad

ECHO POLSKA PROPERTIES / CONCLUDED AN AGREEMENT TO BUY ZAKOPIANKA SHOPPING CENTRE IN POLAND December 15 - December 21, 2016

financialmail.co.za

money&investing ANALYSE THIS...

Fatima Vawda Founder and MD of 27Four Investment Managers

If someone came to you tomorrow with R100m to invest in just one company, which would it be? Tesla. Which talent would you most like to have? I have always wanted to be able to program. What was your first job? I was a lecturer in applied mathematics at Wits University (1995). What’s your biggest regret? A small regret is not completing my PhD. What was your worst investment mistake? Being underweight in SA government debt in 2016. What’s the best investment you’ve ever made? Establishing 27four Investment Managers. If you found a lottery ticket tomorrow that had won US$100m, what would you do? Kickstart 100 entrepreneurial ventures. Apple or Samsung (or Nokia)? Apple. What’s your favourite song? “Once in a Lifetime” by Talking Heads. On what occasions do you lie? Never! However I am guilty of exaggeration on occasion. Your greatest extravagance? Travel. Name a place you’ve been to that lived up to the hype. Santorini. If you could fix one thing in SA today, what would it be? Unemployment. x

financialmail.co.za

December 15 - December 21, 2016

economic indicators AFRICA TOP STOCKS (EXCL SA) Company

Maroc Telecom Dangote Cement Attijariwafa Safaricom Banque Centrale

Price Total Return Ytd

Morocco

12,162.02

139.00

30.94

Nigeria

8,648.63

160.00

-1.20

Consumer price index

Oct

6.4

6.1

Prime

10.50

9.75

Morocco

8,021.82

396.00

20.96

Producer price index

Oct

6.6

NCD*

7.40

7.38

6.60

Repo

7.00

6.25

Jibar*

7.36

6.52

Safex†

6,97

6,99

6,21

18.85

24.69

Credit Aggregates (% change y/y)

249.00

18.84

Claims on the domestic pvte sector

Oct

6.3

7.2

Egypt

4,281.31

68.29

82.59

Total loans and advances

Oct

5.9

6.7

Morocco

3,966.26

222.05

6.30

Total domestic credit extension

Oct

7.6

9.1

New passenger car sales

Nov

-13.8

-9.5

New commercial vehicle sales

Nov

-2.0

-11.5

Retail sales

Sep

1.4

0.0

Wholesale sales

Sep

9.6

11.0

Manufacturing production

Oct

-2.7

0.2

Mining production

Oct

-2.9

4.7

3,647.01

145.00

11.31

2,178.98

23.34

43.24

Wafa Assurance Zenith Bank Cosumar Douja Prom Addoh

Dec 9

7,405.70

Nigeria Nigeria

2,036.64

810.00

-3.15

Morocco

1,839.13

1,280.00

30.75

Kenya

1,829.99

236.00

-9.60

Morocco

1,450.21

4,163.00

32.97

Nigeria

1,444.09

14.50

19.21

Morocco

1188.63

284.95

77.25

Mineral sales

Sep

16.6

10.6

Trade (Rbn)

Morocco

1,188.18

37.01

65.96

1,145.30

0.92

40.26

Equity Group Holdings

Kenya

1,110.12

30.00

-21.23

Telecom Egypt

Egypt

1,031.38

11.12

89.43

Gold & Forex Reserves (US$bn)

TMG Holding

Egypt

9,79.93

8.74

38.03

Gold reserves

Nov

4.77

5.13

Vodafone Egypt

Egypt

919.71

70.53

98.40

SDR holdings

Nov

2.42

2.46 40.26

8.140

8.015

8.215

8.205

8.380

9.385

9.380

Trade balance

Oct

-4.41

6.95

Nov

39.85 47.04

47.85

Banque Marocaine

Morocco

793.01

600.00

-1.71

Net reserves

Nov

41.01

41.78

COMMODITY PRICES

EXCHANGE RATES

12-mth low 12-mth high

Dec 9

Month ago

Year ago

12-mth low 12-mth high

Developed Markets — Rand per foreign currency unit

1,160

1,177

1,073

1,051

1,366

US dollar

13.80

13.48

14.59

13.28

16.92

916

930

858

818

1,176

Euro

14.57

14.75

16.06

14.48

18.44

731

744

551

471

771

16.87

16.74

14.16

13.68

20.63

Base Metals (US$/t) 1,715

1,488

1,449

1,780

Copper

5,822

5,758

4,583

4,328

5,945

Nickel

11,422

11,405

8,640

7,562

11,590

2,309

2,256

1,696

1,599

2,514

21,065

21,255

14,541

13,295

21,965

Zinc

2,694

2,651

1,515

1,455

2,886

Iron Ore

81.53

79.67

39.00

37.50

81.53

Energy

UK pound

17.35

16.74

22.14

16.46

24.64

Japan yen (100)

11.97

12.79

12.02

11.91

15.15

Canada dollar

10.47

10.05

10.73

9.96

12.21

Switzerland franc

13.57

13.72

14.82

13.43

16.93

Australia dollar

10.28

10.30

10.51

10.13

11.88

Emerging Markets — Foreign currency unit per rand Brazil real

0.24

0.26

0.22

0.27

China yuan

0.50

0.44

0.39

0.51

India rupee

4.90

4.93

4.58

3.95

5.04

Russia ruble

4.53

4.74

4.77

4.14

5.08 0.32

Brent ($/bbl)

53.59

53.87

39.68

26.39

55.85

Malaysia ringit

0.32

0.29

0.26

Coal (US$/t)

78.50

83.50

48.60

47.75

100.25

Thailand baht

2.59

2.60

2.46

2.14

2.63

Botswana pula

0.77

0.79

0.72

0.69

0.79

Agriculture (R/t) White maize

3,977

4,186

3,735

3,428

5,296

Yellow maize

3,206

3,245

3,430

3,003

4,010

Wheat

3,925

3,900

4,569

3,808

5,226

Sunflower

5,831

5,950

7,072

5,636

8,100

Economist: Global Markets Research,

Soya

6,520

6,570

6,270

5,687

8,010

Rand Merchant Bank (tel) +27 11 282-4716 or e-mail: isaah.mhlanga@rmb.co.za.

SHAREHOLDER MEETINGS Company

7.555

R207

8.305

Nov

Tin

8.820

9.500

Gross reserves

Lead

7.625

R209

Forex reserves

1,755

8.790

7.680

R208

35.38

Aluminium

8.880

R203

99.16

-32.74

Silver

R186

92.21

28.00

Palladium

Year ago

88.19

909.00

Platinum

Month ago

92.60

841.83

Gold

Dec 9

Oct

828.61

Precious metals (US$/oz)

Bond yields (%)

Oct

Kenya

Year ago

† Overnight rate

Exports

Morocco

Week ago

* 3 months

Imports

Managem

Dec 9

Year ago

05/17/2015

KCB Group

Month ago

Industry (% change y/y)

Zimbabwe

Delta Corp

Short-term interest rates (%)

Inflation (% change y/y)

4,516.82

Nigeria

East African Breweries

Month ago

Kenya

Guaranty Trust

Ciments du Maroc

Latest

Morocco

Nigerian Breweries

Nestlé Nigeria

INTEREST RATES

Market Cap (Us$000s)

Commercial Intl Banque Marocaine

ECONOMIC INDICATORS

Country

Date

Type

Place

THINK CORPORATE BANKING. THINK RMB.

The information in the commodities column is provided by Isaah Mhlanga,

Company

Date

Type

Place

Gooderson Leisure Corp

Dec 22

Tradehold

Dec 22

Durban Cape Town

Huge Group

Dec 20

Woodmead

Visual International

Dec 22

AGM

Cape Town

Putprop

Dec 20

Sandton

Tawana Resources

Dec 23

Australia

Go to www.rmb.co.za/webank.asp Rand Merchant Bank is an Authorised Financial Services Provider

December 15 - December 21, 2016

financialmail.co.za

jse top stocks COMPANY

CLOSING PRICE (MONDAY) (C)

ANHEUSER-BUSCH INBEV BRIT AMER TOBACCO BHP BILLITON PLC NASPERS LTD-N GLENCORE PLC RICHEMONT-DR STEINHOFF INT NV FIRSTRAND LTD ANGLO AMER PLC SASOL LTD STANDARD BANK GROUP MTN GROUP LTD VODACOM GROUP OLD MUTUAL PLC SOUTH32,LTD BARCLAYS AFRICA SANLAM LTD MONDI PLC MONDI LTD REMGRO LTD ASPEN PHARMACARE NEDBANK GROUP SHOPRITE HLDGS MEDICLINIC INTL PLC RMB HOLDINGS LTD INVESTEC PLC BID CORP LTD CAPITEC BANK HOLD TIGER BRANDS LTD ANGLO AMERICAN PLATINUM DISCOVERY LTD GROWTHPOINT PROP WOOLWORTHS HLDGS ANGLOGOLD ASHANTI BIDVEST GROUP RAND MERCHANT INVEST HOLD REDEFINE PROPERTIES KUMBA IRON ORE FORTRESS-INC-A FORTRESS-INC-B REINET INVEST-DR NEW EUROPE PROP SAPPI LTD NETCARE LTD RESILIENT REIT MR PRICE GROUP TELKOM SA SOC LT SPAR GRP LTD/THE MMI HOLDINGS LTD IMPERIAL HLDGS PIONEER FOOD GROUP THE FOSCHINI GROUP TRUWORTHS INTL LIFE HEALTHCARE ASSORE LTD GOLD FIELDS LTD PICK N PAY STORES AVI LTD EXXARO RESOURCES LIBERTY HLDGS IMPALA PLATINUM TSOGO SUN HOLDINGS MASSMART HLDGS HYPROP INVEST-UT CLICKS GROUP LTD SANTAM LTD BARLOWORLD LTD

financialmail.co.za

142,164 75,306 24,326 196,167 5,158 8,975 7,395 5,287 21,231 39,934 15,275 12,279 14,221 3,340 2,984 16,736 6,198 27,023 26,907 21,771 26,881 23,372 19,000 12,668 6,548 9,300 24,731 66,752 40,123 27,610 11,421 2,512 6,687 14,553 17,471 3,920 1,042 16,426 1,629 3,236 2,591 15,228 8,640 3,127 11,010 15,591 7,150 19,239 2,331 18,124 15,525 15,979 7,880 3,210 23,500 3,976 6,517 9,070 8,770 10,920 4,200 2,841 13,173 11,400 11,479 23,499 11,486

MARKET CAP (RM)

SHARE PRICE RETURN YTD (%)

2,870,635 1,403,983 1,376,503 861,114 742,481 515,344 314,550 296,574 273,867 260,126 247,214 235,865 211,602 164,657 158,861 141,880 134,278 130,874 130,874 122,946 122,694 115,894 109,146 93,394 92,438 88,431 82,949 77,183 77,064 74,459 73,943 71,093 70,037 59,640 58,598 58,239 53,271 52,906 52,776 52,776 50,768 48,956 48,065 45,726 43,669 41,884 37,677 37,055 36,704 36,304 36,094 35,076 34,834 33,955 32,808 32,664 31,832 31,789 31,406 31,253 30,861 29,807 28,603 28,322 28,254 27,055 24,430

NA -10.56 43.18 -7.27 147.86 -17.18 -3.22 31.03 207.74 -1.09 41.95 0.39 -1.79 -15.6 148.06 24.81 6.2 -9.5 -9.52 -7.7 -12.43 31.36 35.97 NA 23.85 -11.72 NA 26.18 30.94 48.97 -12.74 16.47 -30.6 36.96 75.98 4.27 16.32 298.69 9.96 -3.12 -18.08 -11.39 32.39 -4.98 -0.76 -19.21 18.16 8.14 13.26 59.85 0.08 38.36 -8.8 -6.61 297.05 -4.87 2.46 22.07 103.62 0.19 67.73 20.34 33.7 16.07 32.58 33.35 96.5

December 15 - December 21, 2016

TRAILING EST. EPS (*) FORWARD EPS (*)

2.37 2.32 -1.2 2.15 -0.34 2.94 NA 4.02 -2.65 21.65 13.26 1.54 8.66 0.13 -0.3 17.22 4.42 1.38 1.38 10.23 9.42 22.39 9.01 0.29 5.36 0.39 NA 30.11 19.91 -52.12 5.69 1.89 4.53 0.27 NA 2 1.01 2.92 -5.79 -5.79 2.34 0.44 0.59 1.21 10.27 9.49 6.67 9.71 1.36 15.51 8.47 10.51 6.66 1.55 14.91 -0.17 2.29 4.55 1.15 13.71 -0.08 1.92 5.4 11.32 4.37 18.3 8.88

4.8 2.8 0.98 5.43 0.2 0.25 0.35 4.52 1.61 40.56 15.34 8.88 10.13 0.18 0.17 18.99 5.01 1.44 1.44 18.38 17.47 24.86 10.42 0.44 5.98 0.49 11.86 38.28 24.03 17.01 7.89 1.8 4.99 1.32 12.27 2.68 0.95 13.03 4.97 3.67 1.37 0.44 0.59 2.18 5.88 10.41 6.25 11.58 2.07 16.06 9.73 12.08 6.94 2.06 24.06 0.37 3.12 5.32 11.25 14.89 3.15 2.22 7.02 7.29 5.18 17.86 9.61

DIVIDEND FORWARD YIELD (%) DIVIDEND YIELD (%)

3.6 3.57 1.69 NA NA NA NA 4.27 0 3.71 4.65 8.8 5.59 4.68 0.46 6.03 NA 3.04 3.04 2.07 1.73 4.88 2.38 0.72 4.51 4.03 NA 1.69 2.65 0 1.53 7.32 4.68 0 NA 3.01 8.25 0 7.93 7.93 NA 3.58 0 3.04 4.44 4.15 5.61 3.46 6.74 4.39 2.35 4.41 5.74 5.14 2.98 1.68 2.38 4.08 2 6.53 0 3.56 2.52 5.44 2.37 3.57 3

3.69 4.13 3.38 0.38 2.18 2.8 2.9 4.76 NA 3.77 5.12 6.19 6.48 3.71 3.1 6.31 4.64 3.18 3.08 2.45 1.19 5.36 2.77 1.4 5.05 4.56 1.95 2.37 3.02 NA 1.86 8 5.15 2.58 3.12 3.57 9.08 4.94 8.52 5.31 5.28 4.2 2.04 3.45 5.31 4.37 5.02 4.2 7.1 4.48 3.02 4.84 5.85 5.34 3.12 3.96 3.22 4.67 3.12 6.91 2.18 3.85 2.64 6.35 2.71 4.07 3.15

3-YEAR FORWARD AVERAGE ROE (%) ROE (%)

15.72 66.56 3.46 14.04 -1.61 12.86 NA 24.39 -14.42 13.83 14.75 17.74 58.14 7.91 NA 16.53 20.77 19.75 19.75 10.24 15.7 15.48 23.23 NA 21.44 8.5 NA 24.95 17.36 -9.34 20.1 11 33.25 -4.15 NA 19.36 13.1 35.34 10.89 10.89 11.12 10.86 18.41 22.79 NA 52.6 11.58 42.85 11.22 17.25 18.44 24.16 35.65 42.45 13.98 -5.35 31.14 33.69 4.62 20.91 -2.42 23.41 22.47 NA 53.7 26.58 10.84

16.24 85.72 8.41 15.76 6.71 9.3 10.66 22.81 11.61 11.21 15.07 11.58 57.25 12.27 7.88 16.42 15.54 19.73 19.73 8.79 16.27 14.67 23.08 8.28 19.89 12.58 14.95 26.44 23.31 10.89 16.28 7.96 23.05 21.03 19.89 19.83 9.67 16 19.34 13.96 NA 8.03 21.44 24.46 10.06 40.7 11.98 36.21 14.25 14.87 22.15 23.26 29.73 35.83 13.71 9.96 33.29 35.39 10.98 14.74 4.56 22.12 22.95 9.32 46.84 27.46 9.97

P:E FORWARD P:E

43.08 18.79 NA 78.62 NA 33.56 NA 13.24 NA 9.65 10.77 NA 16.11 14.6 NA 9.58 14.06 13.4 13.41 19.39 30.24 10.2 21.01 24.63 12.32 13.23 NA 22.01 18.83 NA 19.93 17.87 14.68 NA NA 19.51 13.51 12.28 4.49 4.49 7.46 29.11 11.52 26.28 12.66 15.71 15.36 18.86 16.94 12.74 17.17 15.21 11.8 16.68 13.91 26.51 27.17 19.54 17.65 7.51 350 15.1 24.38 9.83 24.82 14.78 13.7

21.81 15.58 18.18 27.27 19.37 25.01 14.44 11.71 9.68 9.9 9.96 14.16 14.07 10.48 13.48 8.81 12.38 12.96 12.91 11.91 15.5 9.4 18.29 16.89 10.96 11.03 20.93 17.55 16.73 16.68 14.55 14 13.44 8.1 14.3 14.68 11 12.75 3.31 8.88 1.69 23.94 10.7 14.37 18.82 15.02 11.43 16.64 11.27 11.35 16.01 13.28 11.37 15.61 10.53 7.79 20.98 17.11 7.8 7.34 16.82 12.82 18.79 15.66 22.22 13.17 12.01

TOTAL SELL

TOTAL HOLD

TOTAL BUY

2 1 6 0 5 1 0 0 7 3 8 5 3 3 8 1 0 1 0 0 1 2 6 1 0 0 0 6 1 4 2 2 1 1 3 2 0 14 2 2 1 2 1 1 3 3 3 3 1 4 3 0 7 0 3 3 4 2 2 1 4 0 5 2 7 1 3

12 8 17 0 10 2 5 7 15 5 3 7 10 5 10 9 3 5 4 3 4 9 6 6 2 3 4 2 4 9 2 5 7 8 4 2 4 1 2 0 1 2 2 5 2 9 8 9 3 3 6 5 4 9 5 7 10 7 2 3 8 1 8 3 6 1 4

23 14 7 17 9 1 12 6 8 7 2 7 6 3 8 3 2 8 1 3 8 2 4 8 2 6 4 4 6 5 1 0 8 9 5 1 2 2 1 3 2 1 3 8 2 3 6 3 0 3 2 10 4 5 0 6 2 3 8 1 4 3 1 1 1 3 3

jse top stocks COMPANY

CORONATION AFRICAN RAINBOW SIBANYE GOLD LTD NORTHAM PLATINUM KAP INDUSTRIAL TONGAAT HULETT OCEANA GROUP LTD SUPER GROUP LTD SA CORPORATE REAL EST VUKILE PROPERTY FUND HARMONY GOLD MNG NAMPAK LTD RCL FOODS LTD/SO GRINDROD LTD WILSON BAYLY HOLMES SUN INTERNATIONAL PPC LTD ADCOCK INGRAM HOLD EMIRA PROPERTY FUND ROYAL BAFOKENG PLAT LONMIN PLC RHODES FOOD GROUP THARISA PLC CITY LODGE HOTELS REBOSIS PROPERTY PAN AFRICAN RESOURCES ASTRAL FOODS LTD MURRAY & ROBERTS MPACT LTD RAUBEX GROUP LTD LEWIS GROUP LTD CHOPPIES ENTERPRISES

CLOSING PRICE (MONDAY) (C)

MARKET CAP (RM)

SHARE PRICE RETURN YTD (%)

24,136 22,513 22,275 20,391 18,634 17,666 16,103 14,029 13,441 12,943 12,072 11,459 11,217 10,767 9,163 9,026 9,017 7,935 7,240 6,970 6,857 6,150 6,039 6,035 5,942 5,305 5,219 5,070 5,017 4,542 3,726 3,552

39.19 143.97 9.16 51.57 12.41 44.12 5.14 2.98 31.13 16.46 77.69 -30.08 -15.37 25.77 32.33 -8.8 -44.65 -7.56 -3.24 33.55 32.68 8.07 370 -4.39 23.33 64.07 15.05 48.36 -34.86 54.65 -22.79 -56.65

6,900 10,301 2,411 4,000 756 13,075 11,882 3,907 556 1,874 2,745 1,664 1,200 1,412 14,501 8,274 555 4,515 1,418 3,559 2,428 2,500 2,350 13,871 1,090 273 12,201 1,140 2,978 2,499 3,800 275

TRAILING EST. EPS (*) FORWARD EPS (*)

4.5 -2.56 0.94 -1.45 0.46 6.56 7.16 2.92 0.76 2.55 -8.89 2.54 0.25 -3.79 13.22 -4.21 0.59 1.01 1.25 -15.89 -1.22 1.25 0.05 8.63 3.68 0.01 9.63 1.85 3.24 2.59 9.34 0.08

Market Cap — Global market capitalisation. YTD — year to date EPS — Earnings per share Trailing EPS — EPS at the time of the most recent annual results presentation Est. forward EPS — EPS as estimated by analysts at the time of the next annual results presentation * — SA companies quoted in rand, otherwise in reporting currency Div Yield — Dividend yield as at most recent annual results

4.99 10.89 4.2 1.53 0.57 10.82 7.46 3.68 0.47 1.76 4.69 2.07 1.04 0.77 14.69 8.84 0.41 3.12 1.47 0.69 0.09 1.59 0.31 9.92 1.29 0.03 11.1 1.47 3.51 2.9 4.32 0.15

DIVIDEND FORWARD YIELD (%) DIVIDEND YIELD (%)

6.48 2.18 7.26 0 2.38 1.22 3.95 0 7.44 8.05 0 0 2.5 0.42 3.09 2.72 0 2.3 10.3 0 0 0.99 0 3.73 10.92 0 4.02 3.95 3.69 3.48 10.58 2.15

7.1 3.63 8.04 NA 2.8 2.8 4.38 NA 8.4 8.78 2.76 4.45 3.48 1.67 3.37 4.22 2.1 3.05 10.32 NA NA 2.14 1.81 4.29 11.5 6.58 4.79 3.32 3.89 3.49 7.15 1.91

3-YEAR FORWARD AVERAGE ROE (%) ROE (%)

84.46 3.69 10.65 -5.21 12.49 8.21 27.4 17.22 14.63 13.69 -10.64 15.41 2.42 -1.04 12.08 21.4 NA NA 15.96 -6.22 -31.58 29.34 NA 48.16 12.67 13.63 23.59 14.89 15.5 13.88 15.31 15.34

85.48 9.7 22.52 2.69 15.47 8.6 22.68 15.32 16.81 11.39 8.36 13.12 8.22 3.41 14.02 33.79 11.94 15.33 15.56 1.21 0.74 24.11 22.74 36.41 8.36 24.21 16.45 7.86 15.31 12.17 8.43 13.27

P:E FORWARD P:E

15.42 20.85 13.54 NA 15.84 20.43 16.89 13.35 8.78 10.17 NA 15.46 18.24 NA 10.8 NA 11.27 19.97 8.61 NA NA 18.97 34.47 15.98 3.02 11.32 12.64 7.22 9.13 1.74 7.69 26.77

TOTAL SELL

TOTAL HOLD

TOTAL BUY

2 3 1 5 0 0 0 1 0 1 2 3 2 0 3 0 1 0 1 1 16 2 0 0 1 2 0 3 0 0 4 1

2 5 7 2 3 1 3 2 1 1 7 5 3 1 2 0 2 4 6 7 2 0 0 4 1 1 4 2 2 2 2 3

2 4 4 6 2 4 2 4 4 2 2 1 0 3 2 4 4 2 0 3 4 3 4 0 3 4 1 1 3 2 1 0

13.86 9.91 5.76 26.28 13.27 12.47 15.95 10.66 11.92 10.65 5.99 8.06 12.17 18.43 9.89 9.49 13.93 14.63 9.64 51.95 24.48 15.79 5.63 14.05 8.47 5.23 11.24 7.76 8.52 8.63 8.8 14.13

Forward Div Yield — Dividend yield as at next annual results Three-year average RoE — three year average return on equity Forward RoE — Return on equity as at next annual results P:e — Price:earnings ratio as at recent annual results Forward P:e — Price:earnings ratio at next annual results Tot Sell/Hold/Buy — number of buy, hold, and sell recommendations. Sum of sells, holds and buys — number of analysts following company

FM/LBGS/203/E

All information provided by Bloomberg and Bloomberg sources. The FM undertakes to transmit the information as accurately as possible and is confident it is correct, but is not able to warrant its accuracy. Companies not being tracked by analysts will not appear in the above listing, market capitalisation not withstanding.

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life

SUICIDE SQUAD ý With five Grammy nominations, this Platinum album is the first film soundtrack to debut at number one. A great Christmas stocking filler.

A look at how to spend your downtime — from music, to sport, books, the theatre and the screen TELEVISION

BIRTH OF THE LITTLE BIOSCOPE Television came to SA 40 years ago, and since then much has changed

Dallas, the doings of the Ewings: Larry Hagman and Victoria Principal

Luke Alfred

Heinrich Marnitz: Welcomed viewers to SABC TV’s opening night

ý The SABC is a figure of fun in the contemporary media pantomime, but how many of us remember that the public broadcaster has been mired in controversy for almost all of its 40 years? Shortly after the service began (on New Year’s Day in 1976), the SABC aired a locally produced series about a bookshop-owning family called the Dingleys, causing much unhappiness across the length and breadth of suburbia. Under the heading “The Dingleys are dreadful”, a reader — one of several who were critical about the series — complained to the Rand Daily Mail: “If The Dingleys is supposed to show typical family life, we must be a nation of morons.” An early episode of the programme – which was shot in the main in a Jo’burg studio, though the Dingleys were portrayed as living in Pietermaritzburg – featured a visit to the town by rock group Rabbitt, the country’s then hottest act, leading to suspicions of nepotism. Rabbitt’s frontman, Duncan Faure, was the brother of the series’ producer, Bill Faure, and letter writers found this narrative twist both egregious and implausible. They sharpened the tips of their pens

about other things. There were continuity lapses: The milk served at the Dingleys’ breakfast table came in Jo’burg bottles and the newspapers were from there too; the dialogue was as soggy as milkdrenched breakfast cereal and the acting was so wooden it might as well have been done by pot plants. The bookshop angle was clearly illconceived, because there was never any discussion about books or authors, let alone about whether the latest Neville Shute or Dick Francis novel was scuttling off the bookshop shelves. Only the theme song was decent, perhaps because it was taken from Rabbitt’s latest album at the time, A Croak and a Grunt in the Night. As the series developed, some pointed out that it was unacceptable that its only black actress, Celia Motsie, who played the role of a servant, had to be written out of the action because she was forbidden to share a table at the SABC canteen with other members of the cast during downtime. Some, however, found the depiction of middle-class, white SA life realistic, though detractors bemoaned the fact that life in the last outpost was excruciatingly small-town. Richard West, writing in The Spectator in April 1977, captured the prevailing Zeitgeist perfectly when he ➦

December 15 - December 21, 2016

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wrote: “The Soweto riots, the Russian threat and the Even the verligte wing of the party had its concerns, economic recession have all during the last year stirred the though these tended to revolve around issues of language. emotions of white South Africans, but perhaps none has It was felt that the importation of English and American caused more controversy than The Dingleys.” series like Bonanza; Rich Man, Poor Man, and The World at For all the complaints to the liberal newspapers, it didn’t War would marginalise Afrikaans as a language and alienate take long for a slice of SA to secretly fall in love with Afrikaans speakers. television. Newly built hypermarkets sold TV trays in one In the years immediately after television’s introduction, aisle and TV dinners in another. Families frequently the distribution of advertising revenues also became an postponed social engagements or reneged on civic duties issue. According to West, who was writing in 1977: “The to watch the test pattern before tucking into Longstreet Afrikaans newspapers fear that TV advertising, due to be (featuring a blind detective), or The Avengers, with introduced next year, will hurt them much more than it hurts characters John Steed and Emma Peel. the English language press, which is stronger because of its The Peel character was played by posh-sexy Joanna large black readership. I have heard it suggested, though Lumley, whose dress and hairstyle inspired of flood of this can’t be proved, that recent attacks on the national wannabe “Purdys” in Johannesburg’s northern suburbs. government in the Afrikaans press were inspired not so Municipal election meetings by parties such as the much by doubts over apartheid, as by resentment Progressive Reform Party were known to be postponed for against TV.” fear of a low turn-out due to more appetising adventures in What neither Hertzog nor the comparatively enlightened the TV room. From the Book, the reading from the wing of the National Party appear to have It was a singleBible, after five hours of night-time viewing, had its factored in was the degree to which channel service, fans; a snap poll conducted among Afrikaans television could take the leisured classes with only limited viewers showed that 43% of them gave the minds’ off more frightening things. In later hours of nightly programme a rating of 10 out of 10. years, the travails of Dallas’s JR Ewing viewing, and Evenings of The Brady Bunch, followed by How became the stuff of urban legend, and who television sets Green was my Valley, were succeeded by will ever forget the cruel attention with which Blitspatrollie (The Sweeney dubbed into Afrikaans — were initially the character Falconetti pursued Wesley expensive, as were Jordache in Rich Man, Poor Man? With or Van der Valk was another dubbed series). It was a single-channel service, with only limited television licences without advertising, whether Hollywood hours of nightly viewing, and television sets were slicks alienated Afrikaans viewers or not, initially expensive, as were television licences. here was a commercial gold mine. You rejected its There were issues of exclusion (Motsie’s ritual death in commercial claims at your peril. The Dingleys) and indoctrination, not to mention a glut of Television certainly had its opiate dimension, and wildlife documentaries and travelogues. The Sunday Times’ became more ideologically fixated and censorious as the Gwen Gill complained in January 1977: “What’s in store for 1970s segued into the overt repression and states of us this week? Excitement galore? Sparkling entertainment? emergency of the mid-1980s. Titillating TV? No such luck. Documentaries about faraway Despite this, it is difficult to forget the heady early days, places, the bane of early days, are scattered around the when the arrival of the test pattern was an event, with schedule with gay abandon. Germany on Monday, families bending over their TV dinners to watch. Kathmandu on Tuesday, Haiti and Japan (Wednesday) and All of us have our memories, whether these involve East Africa (Saturday). We’re really on a trip.” newsreaders Michael de Morgan and Dorianne Berry, who Television’s late arrival in SA had been fervently debated appeared on opening night 40 years ago with Heinrich in the upper echelons of the Nationalist Party for years. The Marnitz, or listening to Laurence Olivier’s superb narration in right wing of the party, exemplified by minister of posts & The World at War. telegraphs Albert Hertzog, was opposed to the introduction My memories centre on the beautiful watercolours (one of the new medium for religious and political reasons, showing the front of the Jordache bakery, with a delivery referring to it as “a miniature bioscope over which parents bicycle parked outside) that appeared at the beginning of have no control”. Hertzog paid for his backwardness by every episode of Rich Man, Poor Man, and being petrified being removed from his post, as the party’s left wing got its of Falconetti, my first encounter with evil. way and experimental broadcasts started in the major cities As new televisions were expensive, my family only came in 1975. Nationwide broadcasts started a year later, a full to the jamboree comparatively late. I visited a Jewish friend year after state broadcasting began in Angola, six years after and was explicitly forbidden by my father to watch The the introduction of television in North Vietnam and 11 years World at War episode that dealt with the Holocaust, an after it arrived in Ghana (in 1965). injunction I’ve never forgotten. x

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life WHISKY

A WEE DRAM FOR CHRISTMAS Prakash Naidoo naidoopr@fm.co.za

ý Whisky is certainly one of the most popular gifts for Christmas. But with so many brands to choose from and so many more nations than just the traditional Irish and Scots now producing the tipple, how do you find the best whisky for that special someone? We asked some experts what they would choose if they were gifting the malt this holiday season. Lukasz Dynowiak, global ambassador for International Beverages, would go for a bottle of Old Pulteney 21-year-old. He says the whisky is “a special after-dinner treat with a lot of influence from European oak”. And he wouldn’t turn up his nose at some of the more commercial labels, saying a blend like White Horse bottled in the 1980s would be something he would happily accept in his gift basket. For John Quinn, global brand ambassador for Irish whiskey Tullamore, it comes as no great surprise that he would pick a bottle from his own stable, the Tullamore Dew 14-year-old. Though the whiskey was launched only in 2016, Quinn describes it as “a delightful triple-distilled full-bodied single malt”. It draws its Irish character from the fruity style and triple distillation. According to the distillers, the whiskey spends about 13 years in old American bourbon barrels and for the last six months it is finished in old sherry, port and Madeira casks. But if Quinn were to choose a make outside his brand, he says he would go for the 18-year-old Glenfiddich, a single malt from the Speyside region of Scotland. Andy Watts, SA whisky connoisseur and master distiller for Bain’s Cape Mountain Whisky and Three Ships, also makes a first pick from his own brand, settling on a bottle of Three Ships Pinotage Cask Finish — no surprise, since this is a limited edition. Pushed to look further, he says he’d go for the 10-year-old Scottish Tobermory from the Isle of Mull. Independent whisky lover and former director of the Cigar Club of SA, Bernard Gutman, also opts for the Three Ships Pinotage Cask Finish. But he would be as

Lukasz Dynowiak: Old Pulteney 21-year-old

Andy Watts: Three Ships Pinotage Cask Finish

delighted if he were to receive an 18-year-old bottle of single malt Glen Grant. However, that will be available in SA only after June next year. Jeanette Wentzel, of the Whisky of the Week blog, is partial to the Glenfiddich Gran Reserva and would love to receive either a bottle of Bunnahabhain Toiteach, a peated whisky from an Islay distillery, or the Woodford Reserve Double Oaked, a whisky that works well in cocktails. Wentzel believes it is difficult to find something classy for less than R500. On her list of whiskies that cost about R750, she chooses the Glen Grant Major’s Reserve, Glen Moray Classic, Laphroaig Quarter Cask, Three Ships 10-year Vintage Edition and, surprisingly, the Checkers Private Barrel Co No 41. x

John Quinn: Tullamore Dew 14-year-old

December 15 - December 21, 2016

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life inbox BOOKS

BEYOND BORDERS Local authors are using foreign landscapes to explore perennial human issues South, by Frank Owen (Corvus); Zodiac, by Sam Wilson (Penguin)

William Saunderson-Meyer @TheJaundicedEye

ý There’s a literary Great Trek of sorts taking place. A bevy of local writers have abandoned the familiar SA backdrop, metaphorically leaving home to colonise imaginary hinterlands abroad — the US, in the case of both these novels. There is at least one obvious advantage to this literary migration. The new destinations are likely to prove to be financial El Dorados, for the SA novel-buying populace is small, whereas the transatlantic one is enormous. South, by Frank Owen — the joint pseudonym of writing team Diane Awerbuck and Alex Latimer — is a post-apocalyptic novel set in the eponymous lower swathe of America, following a civil war between it and the North. Similarly futuristic and dystopian is debut crime thriller Zodiac, by Sam Wilson, which plays out in a California whose citizens are immutably divided into castes at birth according to their astrological sign. It all makes for an exciting, welcome departure from the long-running obsession of so much local writing to pick compulsively through the entrails of apartheid and hope to come up with something original and interesting. Says Awerbuck: “As a South African it is hard to write about big issues without focusing on apartheid and giving readers the feeling that they are being preached at. Dystopian literature is also a very serious genre dealing with big issues, but you can sneak them under the radar.” It is about intellectual freedom, agrees Latimer. Working in another space, in another place, allows the writer to “take those heavy things that we have been so exposed to and have dealt with over and over, and then 78

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[come] at them from a new, fresh, completely different angle”. For Wilson, who is Zimbabwean-born but has lived in SA for many years, the matter of setting is simple: “I just don’t feel confident of authentically conveying an SA voice. I felt much more confident writing a version of America, because we are all living somewhere or another in the American empire. “I also appreciate that [writing for an international market] means that though one is seen as an SA author, one is not tied to a geographic location. The recognition is about what one is writing rather than where one is writing.” Awerbuck describes the literary trek as a “reverse cultural imperialism”. “We are all so familiar with America, not only as a setting but as an idea, as a trope.” It’s an imperialism that, in both these novels, has paid off handsomely. America divided Awerbuck and Latimer have imbued South with a dark, brooding Tolkien-like atmosphere. It’s 30 years since wind-borne viruses, deliberately released by the North,

December 15 - December 21, 2016

have reduced the South to perpetual ruin, with every strong wind bringing new mutations of death. The two Americas — the rich North and ravaged South — are separated by an impenetrable wall. The few survivors live haunted lives, avoiding both the wind and one another, for it is a world without government or law. The brothers Garrett and Dyce Jackson are on the run from a vigilante posse when their paths cross that of Vida Washington, who is searching for herbs to treat her dying SA-born mother. They are compelled by circumstances to co-operate. Flight transforms into a quest — travel is by foot, for while there are wild animals, horses have been completely wiped out by the viruses — that takes them to sanctuaries both real and illusionary. Since both Awerbuck and Latimer are independently successful as writers, why collaborate? At the simplest level, it is the result of sharing a publisher, meeting often at book events, and on a whim deciding to work together. Latimer would write a chapter, concentrating on narrative, and then send it

It doesn’t matter whether something actually works or not. Sometimes it is enough that you believe it works Sam Wilson

Alex Latimer: A fresh angle

to Awerbuck who would double its length, “filling in the texture”, as Latimer puts it. Or, as Awerbuck quips, “doing the women’s things”. There was one unexpected benefit, says Latimer: “Once you collaborate you are creating a third voice, a completely new persona. “It’s not what I would write and it’s not what [Awerbuck] would write. It’s what the imaginary Owen would write. “That creates a lovely distance for an author. You can do new, different things in this other voice and not take full responsibility.” South is at turns both terrifying and uplifting. It’s one of those books one wants to enjoy in nibbles, both to prolong it and to better savour its richness. A sequel, North, is in process.

determines your position and life — is not only wonderfully original, but it allows Wilson to riff off it with slyly humorous comparisons. It’s a cleverly subversive way of challenging the reader to upend racial and religious preconceptions, without any preachy didacticism. Says Wilson: “Astrology is something that most people understand but it doesn’t have the historical baggage, the weight of race, religion or class, or any of the other ways that people judge one another. It allows me to be playful and dance around without standing on people’s beliefs and prejudices. That’s one of the things about fiction. It lets you approach the world from a different angle.

As a South African it is hard to write about big issues without focusing on apartheid and giving readers the feeling that they are being preached at Diane Awerbuck

Stars in their eyes Like South, Wilson’s Zodiac, too, has a tenuous SA character connection. Cape Town is the old hometown of astrological profiler Lindi Childs, who is working with detective Jerome Burton on a series of bizarrely brutal murders. Burton is sceptical about whether the answer to the killings can be discovered in astrological theory or constructing a horary chart, all of which makes for a prickly working relationship between the two. However, they find enough common ground soon to conclude that an elaborate killing plan is being executed. The whole concept of Zodiac — that rather than race, religion or wealth, it is the arbitrariness of time and date of birth that

“One of the cores of the novel is that of self-fulfilling prophecies. If you are told from birth that you are going to be poor, useless and not a good worker, you end up in a bad job, which is [the] case with the Aries people in the novel. “These beliefs are based on nothing, on nonsense. But they have very real consequences. It’s that weird moment when fiction turns into reality.” That closure of the loop between fiction and reality happens when one of the characters discovers his parents had faked his birth date to avoid him being stigmatised as a member of a “bad” birth sign. That is, of course, the leitmotif in a number of apartheid-era literary novels,

where the protagonist finds that his “white” identity is actually a sham, a fig leaf hiding the social shame of mixed-race parentage. “Absolutely,” says Wilson. “One does not have to write about SA to reflect that universal truth. It’s what I really enjoyed about writing this novel, that sense of undercutting comforting but fake world views, which, when stripped away, forces the reader fundamentally to question [his or her] reality.” Similarly, there is a parallel between Burton’s antipathy to his bosses summoning the assistance of an astrological profiler and the reliance of present-day Western police departments on the “science” of psychological profilers. Burton’s feelings are no different, one imagines, to the feelings of many cops who believe in a painstaking process of elimination and deduction, rather than the ambiguous subtleties of psychology. “Some things that are accepted in criminal analysis for years as proof have been found not to be as accurate as assumed initially, including DNA evidence. So I loved the idea of someone solving crimes using a flawed method. “Simply the fact that Lindi is focusing her attention on the crime and is thinking it through, is what matters. It is the dedication that solves the crime, rather than the tools applied.” Wilson says he deliberately left ambiguous whether astrology works in that zodiac universe. “It doesn’t matter whether something actually works or not. Sometimes it is enough that you believe it works.” Zodiac as a book certainly doesn’t seem to require an act of faith to work. After a first release in SA, in December it hits the shelves in the UK, then there are sequential rollouts in Germany and the US. Translation rights have been sold in Germany, the Netherlands, Italy, Spain and Turkey. Wilson has also been contracted to do a “semi-sequel”. It is set in the same zodiac world, but in a different part of it, with different characters and dealing with different aspects of life in a world where the populace believes fervidly in astrology. Wilson is a little taken aback by his sudden literary success. “I got really lucky. I had written a comic novel about the collapse of ancient Rome. It was completely unsaleable, but fortunately an editor at Penguin liked the writing enough to open the door to me to write Zodiac.” Clearly, it was all written in the stars. x

December 15 - December 21, 2016

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life Compiled by Sylvia Mckeown

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DOG HOTEL

A SUITE LIFE FOR DOGS For some pooch-owners, their animals are just as important as their children. So when the ‘parents’ have to be away for any length of time, they want to make sure their animals get the right-royal treatment Colleen Goko gokoc@bdlive.co.za

ý South Africans are barking mad about their dogs and there is little they are not willing to do to pander to their pampered pooches. With designer clothes, home-made treats and spa days, some of SA’s canines are sitting in the lap of luxury. In the northern suburbs of Johannesburg, these “fur-babies” and their owners have found accommodation to suit their lavish lifestyles. Must Love Dogs is a pet hotel that caters for small toy-dog breeds as well as certain medium-sized lapdogs. The owner of the business, Ineke Ann Boyle, says the idea came to her in 2009. “My dogs, Princess Leia and Lady J, were the inspiration. There were some really heavy things happening in my life and I went into a deep depression. During that time I went away for a bit and there was nowhere I could take my dogs,” she says. “There were no kennels that could satisfy me and I remember wishing there was somewhere or someone like me who could give the same care to my babies as I would. That’s how the name Must Love Dogs came to be.” The lodging amenities are 15 individual suites with high-end décor, bedding, lights, beds, cushions, chaise couches and doggy beds. Wall heaters and blow heaters are in full use during cold winter months. Windows, fans and porches in each suite are standard and there are radios in every room. “As much as it seems a little extravagant for some, for others — which I didn’t realise, but suspected — this is something they want. But the true magic of the place happens at Central Bark.”

Pooch playtime Central Bark is the play area in the centre of the suites. “This doesn’t happen by accident. This took a lot of lessons and learning. At the beginning I took in bigger dogs but you have to keep them in cages and that broke my heart,” says Boyle. “The social environment is key. Dogs are pack and social animals. They need to interact with each other and that doesn’t happen at regular kennels. Central Bark keeps the dogs calm and happy. This is what the real Must Love Dogs is all about.” But it is far from a free-for-all. Prospective guests need to be interviewed. “It is a specific kind of person that is interested in our service. They [prospective guests and owners] get excited by the concept of coming here and bringing their babies and getting to see their rooms and getting to see us,” says Boyle. Must Love Dogs does not accept aggressive dogs. Once the interview is over, clients fill in a comprehensive questionnaire. Some questions pertain to diet, portions and medication. Others are concerned with the sociability of the pooch, and some deal with such issues as whether the prospective guest likes to be tickled, scratched or massaged. The information is enclosed in a file and set in the guest’s suite so that carers are aware of each dog’s individual needs.

As much as it seems a little extravagant for some, for others — which I didn’t realise, but suspected — this is something they want Ineke Ann Boyle

Demanding dogs Some owners are particular with food. One-time guest Queenie had a set menu for each night she was at the hotel. She had a liking for chicken livers made in Worcestershire sauce. “The ‘parents’ said we could not precook her meal and just heat it up in the microwave as Queenie would know and would not eat it. But we don’t judge. There is a cuteness and endearing quality in people taking such care,” says Boyle. Suite prices are R300 per dog per night for a petite room, R370 for a premium room and R450 for the penthouse. For December, the prices are R350, R420 and R500. At an extra cost, guests can be groomed, have personalised cuddle time and have pictures taken and sent to their owners. Boyle says the prices lend themselves to upmarket customers. But a key trait of the kind of people who come to Must Love Dogs is that they see their pets as family members. “Some people literally pack luggage. This and that, in case of this. Their dogs are their children. This is not a big outlay for them. Must Love Dogs puts people like that at ease,” she says. As to her plans, Boyle says the brand will go national and introduce its own products. For worrywart “parents”, a webcam future may be in the pipeline. “What we have is special and it is heading in a special direction,” says Boyle. x December 15 - December 21, 2016

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life outbox THEATRE Holiday fare at the Baxter in Cape Town

LOOK, LISTEN AND CELEBRATE Sewing Saw: Installation view and detail from performance Courtesy of Stevenson Cape Town and Johannesburg

ART Sewing Saw by Nicholas Hlobo

DESTROY AND CREATE ý In order to create something new and beautiful, it often means having to destroy something too. It is this philosophy that guides the work of artist Nicholas Hlobo, whose latest exhibition, Sewing Saw, opened at the Stevenson gallery in Cape Town last week. Hlobo, the 2009 Standard Bank Young Artist Award winner, explores how builders, carpenters and seamstresses use destruction as a precursor to creation. He believes violence is central to renewal and Sewing Saw is an expansion of his personal mythology

that in order to get to the many layers of construction, an object must be deconstructed. Since winning the award, Hlobo has staged solo exhibitions at the National Museum of Art, Architecture & Design in Oslo and the Museum Beelden aan Zee in the Hague. His work has also appeared at the Tate Modern in London, the Centre Pompidou in Paris and the Museum für Moderne Kunst in Frankfurt. The exhibition is open throughout the holiday period, except on Sundays and public holidays (December 16, 26 and 27 and January 2). x

ý Now in his 70th year, Pieter-Dirk Uys has performed on stages all over the world more than 7,000 times and this festive season he takes his one-man memoir, The Echo of a Noise, to the Baxter Theatre in Cape Town. Uys is just one of the many big names that will be on stage at the theatre this holiday. Included in the line-up will be Alistair Izobell in Kaapse Jol, Nik Rabinowitz in Fortyfied, and Ameera Patel and Jaques de Silva in Whistle Stop. This mix of music, comedy, drama, romance and family entertainment will end with a New Year’s Eve party on December 31. Audiences from that evening’s shows will converge on the Baxter’s foyer to sing, dance and party into the new year with some of the stars from the shows. The ticket prices on New Year’s Eve will be varied to include the show, a complimentary glass of bubbly or orange juice and the traditional balloon drop. The live band, under the musical directorship of Camillo Lombard, promises to keep the party going till late. x

RESTAURANTS Oyster Box New Year party

A NIGHT AT THE TAJ MAHAL

A ticket for the evening is R2,500/person. Reservations can be made by calling (031) 514-5000 or e-mailing restaurants@oysterbox.co.za

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ý If you are in Durban this holiday and looking for a fun way to see in the new year, head to the Oyster Box’s lavish “A Night at the Taj Mahal” party. This Indian-themed event will be held in the restaurant’s Grill Room, Pearl Room and Ocean Terrace, and will combine new-age extravagance with the charm and hospitality of yesteryear. Tuk-tuks will transport guests from the parking lot to the hotel entrance. There will be hookah pipes, flamethrowers and even a henna mehndi lounge, all set against the strains of a live Bollywood band. So kit out in an elegant sari or bejewelled turban, and head to the Oyster Box. x

December 15 - December 21, 2016

Booking for any of the shows and the New Year’s Eve party is through Computicket, online at www.computicket.com or at any Shoprite Checkers outlet

TRAVEL: FOOD

FRIENDS, FOOD AND FELLOWSHIP Conflict Café offers diners a unique opportunity to break bread and build bridges

Madeleine Morrow

ý Conflict Café sounds like the sort of place you might go to have a row — something akin to the argument clinic in the memorable Monty Python sketch, in which John Cleese is paid to engage in angry exchanges. Nothing could be further from the truth. Conflict Café is in fact a peacebuilding initiative — a culinary evening that presents food from countries in conflict. It encourages diners to share a table, a meal and a conversation. The café is a fortnight-long, pop-up dining experience in the vaulted tunnels beneath the sprawling concourse of Waterloo Station in London. The venue is atmospheric, subterranean and slightly musty, with trains thundering overhead from time to time. The annual event highlights the challenges facing conflict-ridden countries by serving up food and facts. This year, the cafe’s opening coincided with the International Day of Peace (September 21) as part of the Talking Peace Festival. The festival — organised by International Alert, a peacebuilding NGO that works in 25 countries racked by war — finds creative ways of engaging the public to think and talk about peace through art, film and food. Sri Lanka was aptly chosen as a focus for 2016, as it is the 30th anniversary of both International Alert and its programme in that country. At the event, a message from Archbishop Desmond Tutu, one of International Alert’s patrons, was on display. A slice of Sri Lankan life Many of the 60 diners attending Conflict Café on that night were keen to learn about the conflict in Sri Lanka; others declared themselves to be out for a good meal in an unusual venue. Seated at long, communal tables, strangers began to break the ice over

cocktails called koko uhana — coconut rum, coconut cream, passion fruit and lime juice. With proceeds of the drinks going to the charity, this was a delicious way to fundraise. Between courses, International Alert’s Rabia Nusrat presented a potted history of this multicultural country, which comprises about 20 ethnic groups and four major faiths. While the details of decades of war were far from appetising fare, the country’s colonial history (Portuguese, Dutch and British), plus its ethnic mix, has produced a diverse and vibrant cuisine. Chefs Minha Hameed and her son, Gaz, presented a spicy selection of home-cooked Sri Lankan dishes, crafting the menu so as to give diners a taste of many of the country’s geographic regions. We began with coconut rotis alongside three sambals and a tiny cup of rasam, a spicy bouillon said to aid digestion. Soon diners were mopping their brows as the spices in the sambals began to take effect. Unlike the flaky, roll-up rotis familiar to Indian cuisine, we were offered disc shaped, biscuit-like flatbreads made with shredded coconut. Main courses were served in simple tin bowls. These were not the sharing platters ubiquitous in trendy restaurants, rather the essence of communal togetherness. “The concept is to share and talk. In Sri Lanka we all share together,” said Gaz Hameed. Along with bowls of rice and some of the best poppadoms I can recall, we feasted on four curries and two vegetable sides — bonchi (sautéed green beans) and keera (shredded cabbage, curry leaves and a heap of chilli) — that set our palates on fire. Guests were soon debating the virtues of each dish. While mutton curry was familiar to

most, wattakka kalu pol (pumpkin curry) and dhel maluwa (breadfruit curry) were less so. The waxy, potato-textured breadfruit was the mildest dish of the evening, its mustard colour adding vibrancy to the table. The superb fish curry was my favourite and I quizzed the chefs on how they had given the tuna steaks such an exquisite taste. Gaz Hameed generously explained that the tuna should be soaked in tamarind water and then grilled. Breaking the ice It is the confluence of cuisine, culture and politics that excited the Hameeds about Conflict Café. Said Gaz Hameed: “It is strangers sitting down eating our food, asking about it, getting to know the cuisine, getting to know the country and the people, then getting to know what’s happening and why things are happening. Like in SA you had apartheid. With food it is easier to break the ice.” By the time dessert was served, new friends were sharing stories about their origins. While tucking into wattalapam — a coconut custard pudding with jaggery, cardamom and cloves — we worked in teams on a quiz about Sri Lankan politics and culture. Who knew that the literacy rate is 92% or, more astonishingly, that volleyball is the national sport? There were whoops of disbelief, as most guests assumed that the correct answer was, surely, cricket. Conflict Café made for an evening of people talking peace, laughing together and taking the message of International Alert home. As we made our way out into the London night, Gaz Hameed’s words replayed in my mind: “In Sri Lanka we say that we eat with five fingers. Because five fingers are not the same, but you bring [them] together and [they] work beautifully. It’s the different cultures, the different ethnicities, the different people — you bring it together and you always eat well.” x December 15 - December 21, 2016

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food for thought by Justice Malala

HOPE AMID THE MADNESS It’s been an outrageously rough year, so head on over to the Soweto Theatre, where you can find a nice drink and some hope for a better 2017 @justicemalala

W It seems to be finding its feet. This gem of a place in Jabulani has been going for a while. You should see it: architecturally it’s brilliant

hat a year. I enjoy a political scandal and the odd social upheaval now and again, but 2016 was the year of the outrageous. It’s crazy everywhere. There was time when one could rely on Jacob Zuma and the Guptas to cause the big ructions. Not this year. The Brits went and did it with Brexit. The Italians have just signalled that they will follow the Brits into the valley of folly. And the Americans? Yikes! Donald Trump’s utterances demonstrate conclusively that the village of Nkandla in KwaZulu Natal is not the only producer of political miscreants in the world. Then there is Vladimir Putin. The less said the better. Between Putin and Trump we are sitting on huge global shifts. It’s not all doom and gloom. Zuma is on his last legs. No-one will miss him, except the Gupta family. Maybe. The judiciary is strong. Civil society is robust.

Journalists are not in jail. Even business leaders are finding their voice. Great stuff, I say. And the Soweto Theatre is all go. It seems to be slowly but surely finding its feet. This gem of a place in Jabulani has been going for a while. You should see it: architecturally it’s brilliant. It has the look and feel of the constitutional court building in Braamfontein and the Apartheid Museum near Gold Reef City. Sometimes, somewhere, someone makes a good call. The decision to build this theatre was one of those calls. Last year I was invited to a Standard Bank function at this place. Midweek. Daytime. It was such a great idea: the venue was perfect, the catering excellent and afterwards we enjoyed wine from the Morara Wine & Spirits Emporium just down the road in Mofolo Central, another suburb of Soweto. Morara is owned and managed by Mnikelo Mangciphu, a co-founder of the wildly successful Soweto Wine Festival.

What an afternoon it was: the sunset, lovely weather, great wine in a beautiful building. Last week my friend Winston Skosana asked my mother out for a date. Well, not just her. Winston invited 18 toppies and mamas to see a tribute to the famous Manhattan Brothers, a popular SA singing group from the 1940s and 1950s. The quartet made the US Billboard charts in 1956, reaching No 45 with the song Lovely Lies. The concert was at the Soweto Theatre. I drove my mother over. She and the other old geezers walked out of there beaming, energised, laughing with joy. It was brilliant, they said. The hour-long concert took them through the music of the era and brought back great — and sad — memories. “We should get some of my friends to come and see it,” said my mother. Then she had another thought: “Maybe rent a bus from Hammanskraal?” At the same time as their concert, the Abantu Book Festival — “a literature event that provides black writers and readers the platform and visibility they deserve”, say the organisers — was taking place at the venue. Bookish young people bustled about, talking books and sipping wine. Young and old, from the Manhattan Brothers concert and the literature fest, jostled at the bar. This is a fabulous venue, a nascent artistic hub and a great place to have a nice drink and chill in Soweto. It tells me we have a great future here, despite what this year threw at us. Have a great festive season and a happy 2017. x Soweto Theatre ★★★★ Corner Bolani Link and Bolani Road, Jabulani, Soweto Tel: (011) 930-7461/2/3 ★★★★★ Thuli Madonsela ★★★★ Excellent ★★★ Good ★★ Poor ★ Hlaudi Motsoeneng

December 15 - December 21, 2016

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backstory JOHAN VAN WYK

COUNTRY MANAGER, COTTON ON GROUP, SA

milestones in my young daughters’ lives as they were growing up. Where were you when Nelson Mandela was released from prison? I was in Kimberley, where I had just started out as a trainee store manager of the Ackermans store in the CBD. What’s the worst airport you’ve been in? Ones where there is a no-show on a Friday afternoon. Is there such a thing as “enough money” and, if so, how much is it? It depends on your viewpoint. Money to me is just a commodity, and enough to get by is enough. Who is your favourite hero of fiction? I don’t read fiction, but I love Jason Statham movies. Tell us about a hidden gem in SA that not many people know about. I live in Pretoria and love Kievits Kroon. It’s the best close getaway by far.

What’s the most interesting thing about you that people don’t know? I played in a rock band, love woodwork and am an international judge of large-breed dogs. Nominate your eighth wonder of the world. My wife — she is my best friend. What do you consider the most overrated virtue? Virtue is important, but always be accountable for your decisions and behaviour. What is your biggest indulgence? I love spending time with people, 88

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December 15 - December 21, 2016

whether at work or socialising, and having a good single malt to round things off. What was your first job? I am a shopkeeper and will always be one at heart. Which phrase or word do you most overuse? “We’ll manage it.” What’s your one top tip for doing a deal? Always be optimistic, but ethical and fair in negotiations. What is your biggest regret? In the early days of my career, I missed

What is the one investment you wish you had made, or made earlier? You can never spend enough time with family and always put people first, in whatever you do. What are you reading at the moment? And what’s the one book everyone should read before they die? I am a student of Jim Collins’s work and Good to Great is his best. The Biblical principles are the most valuable for me. When and where are or were you happiest? I am probably now the happiest I have ever been in my life — I have a wonderful family and lead a balanced lifestyle; those are most important.

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