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CITY TO BLAME FOR JOBURG’S ESKOM CRISIS

Who expects zero repercussions for not paying their bills?

Most certainly not City of Joburg ratepayers but the city’ s political leadership seems to think this is the way to go This culminated in a row with Eskom that reached crisis point this week

It is mind-boggling that those managing the city contributing the largest share to the country’ s GDP believe that budgeting and paying what they owe are mere guidelines to be wilfully ignored

It is a glaring example of why trust in the ANC government has dwindled to jawdropping lows While Joburg has had eight mayors since the 2021 local election, the city’ s well-paid administrators have a strict legal framework to abide by

Late last week Eskom placed the City of Joburg on notice, alerting it that it would soon cut its power supply due to Joburg’ s debt to the utility, which stands at R6 9bn Municipal debt, which nationally stands at R90bn, poses a stark risk to Eskom’ s balance sheet Electricity minister Kgosientsho Ramokgopa said on Monday that nonpayment by municipalities has ballooned by R12bn in the past three months alone

After Eskom’ s threat to cut off the city’ s supply, Joburg mayor Dada Morero leapt atop his high horse, threatening the power utility with legal action

The city alleges that there are problems with Eskom’ s billing system, and has accused it of inflated bills It used this as justification for failing to pay Eskom what it had agreed to in an arrangement made with the utility

Any resident or business in Joburg is aware that failing to pay a utility bill for a

Editorial Editor: Marc Hasenfuss

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single month results in services cut, even if there is a dispute over the amount billed Once the dispute is settled, the account is then credited Yet the city used the dispute with Eskom to justify its failure to honour a prior agreement to make payment

To make matters worse, this is also the city which has overbilled thousands of residents for years due to its dodgy billing system a hangover from previous ANC administrations which has never been fully resolved

Ramokgopa stepped in to mediate the impasse between Eskom and the city this week; it will simply not look good for power cuts to hit the country’ s economic hub so soon after the minister and President Cyril Ramaphosa’ s administration have taken credit for ending load-shedding

The impact of the potential cuts on businesses and residents in the city would be as harrowing as the rolling blackouts which came to a halt ahead of elections and have been suspended for more than 200 days

While Eskom and the city have been slugging it out over who is to blame for the impasse, it is important for residents and voters to keep matters in perspective

The City of Joburg and its inept leadership, both political and administrative, are a failure

They failed to deal with the billing crisis, to pay their own debtors and have failed to honour agreements they made to do so, culminating in yet another crisis and forcing the national government to step in

Other crises are looming, including water restrictions again brought about by a failure by the city and its utilities to do their job

The 2026 local election is a prime opportunity to punish those responsible for the decline of the City of Gold x

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WHERE RICHEMONT STRUGGLES

Luxury brands conglomerate Richemont has finally tidied up what was a badly frayed mess at its online business by swapping loss-making Yoox Net-a-Porter into Mytheresa, in exchange for a third stake in the enlarged business

Will Richemont now grasp the nettle with regard to the underperforming operations it lumps under the unimaginatively named “Other” segment? These include numerous fashion and accessory brands

The group has not had much success in the “soft luxury” sector even if there are a few sweet spots among the sprawl of handbags and fancy pumps In the six months to endSeptember the “Other” segment again underwhelmed with a 4% increase in sales, but posted another hefty operating loss of €52m

The core jewellery maisons continued to shine, bashing out operating profit of €2 3bn at an enviable margin of 32 9% Shareholders will welcome the acquisition of Italian jewellery maison Vhernier, which will hopefully add further lustre to the margin of this segment Acquisition opportunities in the jewellery space are, unfortunately, few and far between Richemont has €6 1bn cash on hand But would further bulking up of the loss-making fashion and accessory segment be the right strategy? There has been speculation Richemont would offload its poorer-performing pieces Such talk is bound to resurface more audibly if the “Other” continues to drift away from sustained profitability x

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It has to be the cruellest irony that, after 35 years of investment writing, probably my best short-term gain was made on advice given largely in jest by a tennis connection Even crueller is the tiny sum I playfully invested It is something which irks me when, at the time of writing, the magnificent dogecoin has soared over 150% in the past few weeks

editor’s note by Marc Hasenfuss EVERY DOGE HAS ITS DAY

editor’s note by Rob Rose

An almost accidental investment has produced a pleasant surprise. A pity that my outlay was so small

In fact, my crypto portfolio, only recently “assembled” , has lurched up about 30% As a long-suffering value investor, I am not accustomed to such glorious slings of outrageous fortune Naturally, my instinct is to take profit, the word “bubble” flashing every time I check my crypto portfolio My tennis connection reassures me “it’ s only the beginning” which, of course, triggers a foreboding sense of déjà vu

The last time I was reassured that it’ s only the beginning it was, ironically, my ebullient tennis partner Ray, who, after bursting into the club champs quarterfinals, was certain we would have our names on the honour board that year The next day we were unceremoniously dumped by a pair of youngsters, who had zero sympathy for their slightly hungover opposition

In any event, I have been advised to look at other cryptos, specifically sui and ton, that might score if crypto’ s trumpeting rally is sustained

Frankly, I just don’t have the research capacity to delve into complicated asset classes not when I do the hard yards checking the local Virgin Active activity to establish the veracity of Brait’ s recent rally.

Anyway, bitcoin, the undisputed king of the sprawling crypto empire, has more than doubled since dipping under $40,000 on January 22 In the past week or so, the re-emergence of the Trumpinator in the US has whipped up some really frothy sentiment in the crypto market

The way I understand it, a Trump administration could be a game-changer for crypto and digital currencies

There is talk that bitcoin, in particular, could become a strategic asset class as a potential bulwark against inflation

Broader participation in the crypto markets, especially if aided by government support, would obviously boost prices further, especially if big savings institutions were to divert chunks of their client money to this alternative asset class There is even talk that Trump could consider making bitcoin a strategic reserve asset Now that does sound like wishful thinking

If I’ ve learnt one thing over the years aside from never kick a fresh dog turd on a sweltering day it’ s not to set too much store by the promises and pledges of politicians Besides, I don’t think I’ m cut out to be a crypto “hodler” ; it might be instructive and, frankly, my saving grace to be ploughing now

The way I understand it, a Trump administration could be a gamechanger for crypto and digital currencies

through David McWilliams’ s excellent tome Money a story of humanity What more could one ask for in the middle of all this crypto hype than an acerbic and slightly cynical long-term perspective on money?

One of McWilliams’ s observations that really tickled me was that about the South Sea Bubble of 1720 an unchecked episode of euphoria if there ever was one Aside from the infamous South Sea Company, there were a number of other “bubble” companies, including one that purported to produce square cannonballs Such a prospectus would have made entertaining reading I totally get the advantages of storing such explosives in what might have been an incendiary blockchain, but the aerodynamics of a square missile

Moving to matters more familiar, I was rather excited to get the annual financial statements for unlisted public company Capevin Holdings* The good news, for us dividend tipplers, was not in the financial statements, but in the notice of the AGM This confirmed that a dividend of about 100c a share would be paid no later than December 31 So, by the end of this year, those who held onto their Capevin shares after the Heineken/Distell deal would have received back 200c a share in dividends on what was an effective “buy in” price of R15 a share A well-fortified yield is certainly cheering

But what I was trying to glean from the annual financial statements was why liquor giant Campari was prepared to pay, some months ago, a stiff premium to acquire a significant minority stake of 14 6% in Capevin.

For those who need reminding, Campari paid up just shy of £70m (then R1 63bn), which is equivalent to a price of more than R50 per Capevin share Remgro’ s just-released annual report puts a value of R5 283bn on Capevin, which equates to about R24 45 a share That’ s half the price Campari was willing to pay for a stake which, for the record, it acquired, from third parties

If we use Campari’ s price of admission, Capevin carries an inferred value of about R11bn So, which valuation is realistic the one set by a conservative investment company or the one a drinks industry doyen with a nose for a deal gives? Capevin’ s results, disappointingly, don’t carry much colour, or evidence, for that matter, to support a R50-plus a share valuation

It would have been interesting to see the market’ s verdict if Capevin had been listed It’ s probably best to keep the eye steady on the longterm horizon with the aim of capitalising on the group developing its portfolio of top-notch single malts, and hopefully bringing many casks to market when Chinese demand comes flowing back strongly x The writer owns shares in Capevin

power brokers by Natasha Marrian

HOLDING BACK THE MK TIDE

KwaZulu-Natal premier Thami Ntuli is feeling the weight of South Africa’ s second-most populous province on his shoulders

The fragile KwaZulu-Natal provincial government, with a majority of just one seat, is battling to prevent Jacob Zuma’ s party from taking power

It’ s been a busy week for Ntuli: the national government descended on the province for a week-long presidential imbizo; his party, the IFP, had a meeting on Saturday to strategise how to counter the political threat from Jacob Zuma’ s MK Party; on Sunday he met with members of the parties that make up the executive leadership in the provincial legislature; and on Monday and Tuesday he attended an investor conference He barely managed to squeeze in dinner with his wife for his birthday

The IFP’ s provincial leader was elected premier with the support of the ANC, the DA and the N Freedom Party (NFP) after tense post-election gotiations, during which MK, which won 45% the vote in KZN, was left out in the cold

MK’ s performance in the province contributed to the ANC’ s 17 percentage point drop in support nationally

The government of provincial unity (GPU) that Ntuli leads has a slim one-seat advantage over the opposition It requires an abundance of a rare quality for most politicians: loyalty

MK is pushing hard to make inroads in the province and elsewhere, mostly through turn ANC and EFF councillors in municipalities to fresh elections, where the party seeks to enter the governance fray So far, in KZN at least, MK has not shot the lights out in by-elections

could reshape the province but political stability is the key and Ntuli spent the weekend in meetings over precisely this.

Recent reports indicated that the ANC and MK were holding secret talks to work together to take over the province

The unverified reports coincided with increasing activity on WhatsApp groups and social media sympathetic to MK

Ntuli met the ANC, DA and the NFP on Sunday to quell suspicions among partners that there are moves to shift the balance of power in the province

“We met as the GPU to reconfirm our commitment to ensure political stability for the next five years

We all agree that changes in government will not allow any administration to be responsive enough to boost and sustain service delivery,” he says presidential visit last week included a meeting ween the provincial and national cabinet KZN as not recovered from the July 2021 unrest and he devastating floods of 2022, Ntuli says The national government is stepping in to provide support, but there are concerns that this could be slow for instance, the province was told to apply to the national government for funding to mitigate the effects of climate change, even as it suffers from the impact

“MK is a factor we cannot ignore that is why we had a strategy session this weekend as the IFP, considering the political dynamics of the province,” Ntuli says

The political frailty of the coalition led by Ntuli, coupled with the dire socioeconomic conditions in KZN and the threat from Zuma’ s party, makes his task difficult

“It’ s demanding It requires an understanding that the life of the nation is in your hand; if you falter, millions will suffer,” Ntuli tells the FM

The provincial government notes that there has been some progress during its four months in office, including a step up in the fight against crime and a push towards stabilising the provincial budget its finances are in a dire state and growing the economy

During this week’ s investment conference, about R70bn in investments were committed to the province over the next 24 months; Ntuli expects the conference to end with pledges of R100bn This kind of stimulus

It’s demanding. It requires an understanding that the life of the nation is in your hand; if you falter, millions will suffer Thami Ntuli

Nevertheless, Ntuli says: “We believe we ave prioritised what needs to be done and our ECs have hit the ground running, we have to moving forward KZN is not living under normal circumstances ”

Ntuli is also in close contact with Cyril Xaba, the ANC mayor of eThekwini, the province’ s economic heart. He is adamant that if eThekwini falters, the province fails The metro is part of a pilot project for Operation Vulindlela, which is set to include local government in its second phase Minister in the presidency Khumbudzo Ntshavheni told the FM recently that the city was making progress, with the possibility that most, if not all, its beaches would be safe for swimming during the holiday period this year after being blighted by sewage spills for years

KZN was the epicentre of a huge political shift in the 2024 election Zuma’ s support base in the province catapulted his party to the third largest in parliament and the title of official opposition

Ntuli and the parties working with him in KZN are in the front line of the battle to hold back the MK tide and the only way to do that is to ensure visible change in the lives of the province’ s people

“It gives me sleepless nights,” says Ntuli “My job is to ensure that the people must see change, and change that is significant ” x

Thami Ntuli

at home & abroad by Justice Malala at home & abroad by Justice Malala

HELLO DONALD, BYE-BYE BAD VLAD

How SA can succeed with a new man in the White House

If you listen to most US leaders, policymakers and analysts, you will quickly conclude that Russia and its leader, Vladimir Putin, are the country’ s greatest enemy Just five months ago

President Joe Biden branded Putin a dictator, saying on June 6: “I’ ve known [Putin] for over 40 years he’ s concerned me for 40 years He’ s not a decent man he’ s a dictator ”

At a fundraiser in San Francisco in February, Biden insulted Putin and said he might set off a nuclear war: “We have a crazy SOB, that guy Putin and others and we always have to be worried about a nuclear conflict ”

In 2022 Biden called Putin a “ pure thug” and “murderous dictator”

Putin is the same man who, veteran journalist Bob Woodward tells us in his latest book, War, has a close relationship with US president-elect Donald Trump Woodward wrote that Trump and Putin spoke by phone seven times after Trump left office in January 2021, and that Trump sent Putin Covid testing kits during the pandemic, when such equipment was in short supply in the US and unavailable in many parts of the globe

This week The Washington Post reported that Trump and Putin had discussed the Ukraine invasion by phone on Sunday The Kremlin quickly dismissed the report as “ pure fiction” though other news outlets reported that Trump sources confirmed that the interaction did take place

What matters here is that after nearly three years of the Russian invasion of Ukraine, a new leader (Trump, who has criticised the scale of US military and financial support for Kyiv and said he would end the war quickly) is about to disrupt and upend the landscape of war and peacemaking in the region He is about to tear up the old rule book Trump is also selfinterested: the war is too expensive, and he wants to keep his dollars for his

US voters

This is the sort of national interest that South Africa has only paid lip service to in the past South Africa exported $8 32bn worth of goods to the US in 2023 while exporting $282 77m to Russia More than 600 US companies operate in South Africa You hardly see any Russian businesses in South Africa As Ed Stoddard wrote in Daily Maverick, “in terms of economic partnership, it [Russia] is a clapped-out Lada vehicle, a lemon with not much juice to be squeezed from it”

Yet South African leaders have bent over backwards to speak up for Russia and have been prepared to sell out our human rights principles because it is seen as a “valuable ally and friend” , as President Cyril Ramaphosa put it

Few have asked: what is the price and value of this friendship?

My contention is that a Trump presidency will be positive for the South African government and business if we acknowledge that a key part of his makeup is his belief that he can “make a deal”

He sees the Ukraine-Russia conflict, which has huge geopolitical implications, as merely a deal to be made and everything will be hunky dory

Angola, which has collabor-

Kenya, probably South Africa’ s biggest African competitor for US attention, succeeds because it does not sit in the corner admiring itself for being ideologically pure It acts to attract the investment it needs

In the Trump era, South Africa will need to dial down on its ideological obsessions and set itself up as a “dealmaker” This means being focused on the fact that we want to drive down unemployment, raise investment, attract foreign tourists and raise government revenue We cannot jeopardise our participation in programmes such as the African Growth & Opportunity Act

We need to do the deals that need to be done It’ s the only language Trump understands

If we don’t want to raise our economic growth and defeat unemployment then, well, let’ s go ahead on the trajectory we have been on In the looming era of Trump and others, we will remain an also-ran, and our unemployed youth will soon do to the ANC what they did to the Democrats in the US and the Botswana Democratic Party next door x

ated with the US under Biden to build the multibillion-dollar Lobito rail corridor, is an example of a country that may very well thrive in collaboration with a Trump administration

Donald Trump

on my mind by Tracey Davies

TROUBLING DEVELOPMENTS

The DA’ s densification agenda is raising the ire of residents, who say planning laws boost the council’ s coffers while ignoring their rights

The DA prides itself on its administration of the Western Cape, touting it as an example of how the whole country could function should the party ever get the chance to govern The City of Cape Town is the jewel in the Western Cape crown, with a reputation in the middle-class suburbs at least for largely pothole-free streets, trimmed verges, timely refuse collection and rapid responses to water and power outages

But in recent months a series of public statements by a group of more than 35 residents’ associations the Collective Ratepayers’ Association (CRA) has shown that all is not well in the Mother City Associations from a surprisingly diverse range of suburbs including Milnerton, Camps Bay, Tijgerhof, Noordhoek, Summer Greens, Table View, Maitland, Plumstead, Wynberg, Constantia, Durbanville, Sea Point, Phoenix, Green Point, the city bowl, Observatory and Newlands are up in arms over the council’ s approach to land use planning (how it deals with development) Long-held frustrations appear to have catalysed a city-wide revolt against proposed amendments to the municipal planning bylaw

The dispute centres on densification

The DA’ s powerful PR machine has been hard at work for several years, promoting densification as the answer to managing Cape Town’ s growing population, spatial divisions and infrastructure constraints It argues that the city must become more “compact” and densely populated to optimise economic opportunities and integrate citizens

Sounds good, and most residents appear to accept that densification is necessary But the CRA argues that the council’ s densification agenda is not creating a more sustainable, equitable city

Instead, planning laws are being implemented to benefit property developers and boost the council’ s finances, while residents’ rights and input are ignored and spatial injustice is entrenched

The bylaw amendments, for example, identify a swathe of less affluent suburbs where property owners can build up to 12 “affordable rental flats” without planning permission and without consulting neighbours

Suburbs such as Milnerton accuse city planners of using densification as a cover to regularise existing unlawful development in areas which suffer from a proliferation of illegal boarding houses and backyard dwellings They argue that the council’ s failure to control these is eroding property values and diminishing the quality of public space

Meanwhile, more affluent suburbs are excluded from the affordable rental unit provision But a previous change to the bylaw gives property owners the right to build second and third dwellings on single residential properties, also without planning permission or public consultation

This has led to a dramatic increase in the development of luxury, high-density “ secure estate living” complexes (à la Joburg) in prime areas They generate huge profits for developers and increase revenue for the council through increased rates and the development charges levied for every approval

But residents’ associations argue that

they infringe on the rights of existing property owners, strain inadequate infrastructure, erode the unique character of neighbourhoods and further concentrate wealth in affluent suburbs without addressing the city’ s considerable housing backlog

Administrative justice lies at the heart of the CRA’ s complaint In a constitutional democracy, decision-making by authorities must be procedurally fair and legislative processes must meaningfully incorporate inputs from affected citizens

The CRA has criticised the bylaw amendment process, accusing council officials of dismissing public concerns and treating public participation as a tick-box exercise undertaken without any intention to change the outcome

The CRA has also flagged problematic conflicts of interest: the council acts as primary decision-maker on all development applications, benefits financially from approving them and decides appeals against those decisions members of the mayor ’ s planning appeals advisory panel are all DA councillors Aggrieved residents feel the only way to get a fair outcome is to litigate, an option unavailable to most

Residents say planning officials and the mayor greenlight every development that claims to advance the densification agenda, regardless of its impact on existing residents or the number or substance of objections

A recent article in community newspaper Tabletalk refers to the approval of a controversial housing development, despite 384 objections from residents of Table View and Milnerton

The outcome of the bylaw amendment process will reveal much about whether the City of Cape Town, and by extension the DA, cares about what residents think and is serious about its constitutional obligation to ensure that it acts in a manner that is procedurally fair

Will the council listen to residents’ concerns and reflect the outcomes of the public participation process in the new bylaw? Or will it impose a predetermined outcome on an infuriated populace? x

Davies is director of Just Share 123RF/iconisa

INFRASTRUCTURE

How to fix a crumbling state

New ‘landlord’ Macpherson wants departments to start caring about their properties

Matthew Hirsch

● Dean Macpherson would like to “take you down to the station” Not in the sense of a TV cop drama, but as someone who is often considered to be the biggest landlord in South Africa

The new minister of public works & infrastructure has many properties to manage in a portfolio worth about R150bn and there’ s one in particular he’d like to show as an example of state neglect

The station in question is the police headquarters at Telkom Towers in Pretoria If the oldfashioned slang for a police station is a cop shop, this one is a derelict cop mall

The complex was flagged as a material irregularity by the auditor-general It was evacuated in February and declared unfit for human use

“I know a little bit about property and I’ ve done some property transactions in my life,” Macpherson tells the FM

purchase are complete and the work should start soon

Telkom Towers is an example of a department that lacked care and duty for its properties in the past, he says

“I think that there’ s no pride in public assets, so we don’t look after things.

“There’ s no way this complex was worth R650m 10 years ago We got fleeced ” He calls it the “biggest property swindle ever ” in South Africa

“We got the wool pulled over our eyes, ” he says of a previous administration in which his party, the DA, was the official opposition

Macpherson says the terms of reference for an independent investigation of the

“It is really infuriating that there is that lackadaisical approach when it comes to properties

“We cannot maintain every police station in this country It’ s not possible There’ s a conversation to be had around that We need to better equip line departments to be able to run their own maintenance and infrastructure programmes ”

Macpherson says his department is looking to work with Infrastructure South Africa on getting “standardised police stations” in various sizes “The system as it is is just not working ”

Getting an asset register is one of the challenges He says it will never be 100% accurate

Anyone who says so “should not be listened to It’ s not possible We are contemplating a risk-based register What are the most risky and valuable properties? We start to create different buckets of properties

“We take our assets and we use them That’ s what we want to do We are going to start running the asset portfolio as a business, so we start generating income ”

The department plans to have three categories of properties: first, properties of great value and in good condition; second, valuable but need

Telkom Towers: South Africa’s ‘biggest property swindle’ Alon Skuy

Dean Macpherson: There’s no pride in public assets

Matthew Hirsch

work; third, unusable assets that can be disposed of

ANOTHER WEEK

We are going to start running the asset portfolio as a business

Dean Macpherson

“There are a whole lot of ideas we are working on, but to be fixated on this asset register it’ s not possible The value and condition of buildings change It’ s important to understand what you own, but I think you have to look at it in a different way, ” he says And it’ s not just buildings there’ s land too Macpherson says it’ s not a question of if but when the department will release land to functioning municipalities “What I think would be irresponsible would be to hand over land and buildings to municipalities that cannot turn those into projects for good We will get done what other people have spoken about for a very long time We are going to release that land We are going to ensure that it’ s used for the public’ s benefit “We will do all that we can to support municipalities, other departments and government entities that want to use public assets for public good,” he says

It’ s been just over four months since Macpherson was appointed a minister in the government of national unity (GNU), but he’ s confident that progress is being made

Macpherson, 39, has been a member of the DA for more than 20 years and says the party is showing value in the coalition government

“I don’t think anything quite prepares you for going into government, especially after sitting on the opposition benches for 10 years It’ s very difficult to get things done in opposition I think the DA did the right thing by going into the GNU,” he says x

BY

THE NUMBERS

How safe are you?

Not very, according to the latest Global Safety Report that puts South Africa near the bo om of the log

According to the report’s law & order index scores for 2023, South Africa scores 58 Kuwait, which is rated the safest, is on 98

As for the danger of walking alone, South Africa’s 30 points put it on the same level as Liberia, both marginally head of Ecuador (27)

Source: Visual Capitalist

ROYAL SELFIE Eager admirers clamour to get a picture with Prince William in Cape Town at the weekend The prince was in South Africa to award Earthshot prizes of £1m each to five winners for their environmental work

“Everyone was bloody terrified of him.”

England rugby player Danny Care on the team’s former coach Eddie Jones, who was briefly coach of the Stormers and assistant to the Springboks when they won the World Cup in 2007

TRENDING

Wheel turns as Frelimo loses the plot

Neglecting the masses and forgetting its own history will cost Mozambique’s ruling party

Paul Ash

● On a hot night in Nampula, northern Mozambique, in 1973, a reporter named Kerry Swift was tucking into a lobster at the Baghdad Restaurant when a Fiat G 91 jet fighter screamed overhead

The pilot was Gen Manuel Diogo Neto, commander of the Portuguese Air Force in Mozambique In between flying combat missions, Neto was running the air war against Frelimo guerrillas from his flat in Nampula, maps stuck on the wall and a radio set in the living room

Swift’ s account captures the absurdity of Portugal’ s attempt to quell a distant rebellion in the East African colony it had ruled for nearly 500 years

Fifty years later, another insurgency is roiling through Mozambique’ s northern provinces and Frelimo, the self-declared winner of the recent election, seems to have forgotten its own history

If the people of the north didn’t already feel forgotten

DINNER PARTY INTEL...

The topics you have to be able to discuss this week

by the government in the faraway capital (plus ça change), the discovery of vast gas fields off the coast near Pemba poured petrol on a smoking campfire of grievances The find led to a land grab and jobs for pals, benefiting mostly the southern ruling class, many of whom may never have been north of the Save River

There were few jobs for local people because they didn’t have the skills Much of the food for the project workers came from South Africa because it could not be sourced locally The government, in its shiny edifice

2,500km away, did nothing to fix that

Enter al-Shabaab (the youth), who have the money, training and radicalisation offered by Islamic State They shut down the $60bn gas project while government soldiers, aided first by Russian mercenaries, South African troops and now by the Rwandan army, tried to dislodge them

The gas project rolls on and resentment bubbles Frelimo might need reminding of the old saw: guerrillas may never win wars, but they never lose them either x

1. Dragged down by druglords

Across the page from this Dinner Party Intel is an alarming graphic of global safety that will surprise few South Africans But who would have put Ecuador down there with us?

For years the small Andean nation was relatively peaceful, but its location between the world’ s two largest cocaine producers, Colombia and Peru, has made it a node for drug trafficking, gang violence and murder

2. Rare visit from royalty

South Africa’ s dwindling penguin population is unlikely to be boosted by an exotic breed from the South Pole Australia, it seems, is a preferred destination Last week an emperor penguin from Antarctica landed south of Perth, a 3,400km swim It’ s rare for these penguins to be that far north South Africa, more than 1,000km further, was clearly out of the question.

2. Cellphone silence when duty calls

Zimbabwe has banned police officers from using cellphones while on duty They must surrender the phones to their supervisors once they report to their stations and can use them only during break time No reason was given, but it is widely believed to be part of efforts to curb police corruption

Disgust: A woman reacts to teargas during a protest against the election result in Maputo

Reuters/Siphiwe Sibeko

DIAMONDS & DOGS BY JAMIE CARR

Flying high, but … Bad man falls on bad times

As temperatures plummet and nights get ever longer, residents of the frozen north could be forgiven for thinking that a couple of weeks in Cape Town might be just what’ s needed to revive the spirits However, a glimpse at the British Airways (BA) website at what the airline is charging for the trip over the festive season would be enough to send the hardiest of travellers dashing off in search of some stiff liquid fortification

So it might come as little surprise that BA’ s parent company, International Airlines Group (IAG), has announced a record quarterly operating profit for the three months to the end of September of £1 7bn, notching up a margin of 20% despite labour costs being 14% higher than in 2023

Demand for transatlantic travel was particularly strong, and a recovering business market saw the lucrative premium cabins ever fuller BA has announced plans for a £7bn overhaul after criticism that its cabins, and indeed its cabin staff, were looking a little long in the tooth, and IAG has launched a €350m share buyback scheme

However, all this depends on getting planes in the air, which is proving to be something of an issue given the long-running maintenance issues with the RollsRoyce engines on its fleet of Dreamliners

The company has had to issue its second profit warning in less than two months

BA has been forced into a swathe of flight cancellations due to the number of Dreamliners that are grounded while waiting for maintenance by Rolls-Royce, which in turn is blaming a shortage of spare parts for the backlog None of this will be much consolation for customers without flights, and Rolls-Royce claims that finding a solution is its “top priority” x

The past year hasn’t been all beer and skittles for S4 Capital, the marketing group set up by Sir Martin Sorrell after his exit from WPP in 2018

The company has had to issue its second profit warning in less than two months, and the share price dropped a further 15% as it announced revenue down 19 3% in the third quarter, which it attributed to technology clients continuing to cut back on marketing in the face of “challenging global macroeconomic conditions and high interest rates”

Sir Martin has long been a divisive figure, dating back to the 33 years he spent transforming WPP from a manufacturer of wire for supermarkets into one of the world’ s biggest marketing and communications groups

Striding around the world like a pint-sized colossus, he achieved hostile takeovers of agencies of the calibre of J Walter Thompson and Ogilvy & Mather, the latter prompting group chair David Ogilvy to describe him in public as “ an odious little shit”

So there was no shortage of schadenfreude when he resigned from WPP after allegations of routine verbal abuse of underlings and a blurring of lines between personal and company expenditure, not to mention the incident where a couple of employees enjoying a drink after work were surprised to spot Sir Martin popping in to a house of ill repute

S4 has promised to cut costs, including a significant headcount reduction to reflect the revenue environment, and it has acquired new clients such as Marriott, Burger King and General Motors, as well as developing an AI product to automate workflows in marketing x

good week

If there were any doubts that Duduzile Zuma-Sambudla is her daddy’ s girl, recent political cunning debunked any suspicion OK, it was only in the Pan-African Parliament (an organisation with an appropriate acronym, PAP), a political playground for people pretending to be powerful But it was an indication of her gift for political intrigue The Sunday Times reported that she “quietly ignored” (a euphemism for cheated?) the ANC representative, who thought it was in the bag, outsmarting him and getting herself elected to chair the Southern African Development Community caucus x

bad week

It’ s tempting to compare our latest political melodrama to one on the high seas more than 200 years ago. Today it’ s HMS Red Sails facing a mutiny, with Julius Malema a remarkable reincarnation of the imperious martinet Captain William Bligh of HMS Bounty There’ s even a character resembling Fletcher Christian, the master’ s mate turned mutineer, who was played by Marlon Brando in the movie depiction of the novel Except that Floyd Shivambu today resembles a later Brando character, a corpulent Vito Corleone in The Godfather, with the girth and flatulence of speech to match x

Duncan McLeod

● I have a confession to make: since its launch a couple of months ago, I now often engage in long “talks” with AI pioneer ChatGPT’ s new conversational voice tool, known as advanced voice mode

It’ s available on a $20 a month ChatGPT Plus subscription, and I use it mainly to thrash out ideas a bit like throwing things against the proverbial wall to see what sticks I also use it to learn about new topics I’ m interested in

And it’ s made me realise that the next big interface in computing will be voice It will be far bigger and more consequential in the short to medium term than the virtual and augmented reality solutions Silicon Valley giants such as Apple and Meta are racing to develop

A melding of voice recognition tools and AI is going to transform the way humans interact with computers Voice interaction with software will become a ubiquitous part of everyday life much more so than with today’ s relatively backward voice assistants such as Amazon’ s Alexa and Apple’ s Siri These voice assistants are about to get a huge, AI-infused upgrade that will transform the way we interact with online information and services

Apple has already started rolling out more advanced AI into Siri, with major updates to the platform expected in the coming months Amazon,

McLEOD COMPUTING Speak up

Voice computing will be the next big thing and a robot could even do the dishes some day

meanwhile, is readying a longawaited upgrade to Alexa, which next year will get AI smarts from Anthropic’ s Claude suite of large language models Google has spent the past year infusing AI into Google Assistant through Gemini The race is on between these tech giants to define this next era in com

But it’ s a new software tool ca Otter ai that has particularly exc about the poten for voice-based computing Founded in 2016 by AI experts Sam Liang and Yun Fu, Otter is transforming the way I work It’ s like a second brain that’ s helped lift my productivity It has generous free ti to explore too

So far, I use two ways:

● As an AI assi taker and transcription ser vice in Microsoft Teams and Zoom After a meeting’ s done, Otter provides not only a transcription, but also an AI-generated summary of the meeting, along with action points It even allows me to query it with specific questions about the meeting, such as clarifying points raised It’ s not perfect yet, but it’ s already remarkably accurate and useful, and will

only improve with time I can even send it to meetings I don’t have time to attend, getting a summary after the fact that I can read and interrogate with questions

● As a way of noting ideas I often get ideas for articles at the most inopportune times,

such as when I’ m out hiking Instead of looking for my laptop or a notepad, I now simply fire up the Otter ai app and communicate my thoughts to it using my voice, and it transcribes and files them for future use As a result, I never forget an idea

But it’ s in the fusion of AIpowered voice tools and robot-

ics, a field that is also advancing rapidly, where things could get particularly interesting later this decade and into the 2030s As AI chatbots get better at humanlike conversation, embedding them in robots seems an obvious next step There is already talk that Apple is working on a prototype AI-powered home robot in its labs Reports have suggested that Apple sees home robotics as a potential major new product category, and the company is said to be building something for launch by 2027 that costs about the same as an iPhone, or about $1,000 It will be limited in scope perhaps a multifunction tabletop device nitially but kely to be rapid le robot that fols users about is rtedly also in the unk works hase in Apple’ s abs, with journalist Mark Gurman suggesting in an April report for Bloomberg that the company has even explored building a robot that can do household hores

That level of tech ikely to arrive cade due to “ exily difficult enllenges” : the first generation of the Apple robot is more likely to be a mobile virtual assistant that also provides home security monitoring, according to Gurman

Still, the outlook is exciting The next decade in computing is starting to come into clearer view, and it’ s going to be driven in part by voice-based, humanmachine interaction and stunning advancements in AI and robotics x McLeod is editor of TechCentral

123RF

PROFILE

He’s all business

Once he was a guest lecturer at Stellenbosch Business

School;

now he is running it

● In 2004 a young economics student from Ghana was presenting a paper at a Stellenbosch Business School conference Impressed by the country’ s First World infrastructure, he was nevertheless unsettled by the stark disparities in wealth and opportunity

“This disparity still exists, and it’ s painful,” says Charles Adjasi “But it’ s also what drives me to make a difference ” Since that day he has gone from guest lecturer to full professor and is now head of the institution

A milestone was his appointment as head of development finance programmes in 2013, two years after joining the school, when the programme was in its early stages; today it is recognised internationally as a leading one in the field

“We wanted to grow it beyond what it was, to be the lead provider of development finance education, setting the benchmark not just in Africa but globally,” says Adjasi

The business school, which celebrates its 60th anniversary, has also changed dramatically It is the first African business school to have achieved the triple crown of accreditations by the Association of MBAs, which is headquartered in London; the Association to Advance Collegiate Schools of Business International, based in the US; and Equis, a business school accreditation organisation in Brussels

These accreditations strengthened Stellenbosch

Business School’ s reputation, created greater opportunities for collaboration and elevated the quality of its academic programmes, says Adjasi

He says his leadership style has been shaped by the diverse community at Stellenbosch

He credits the school’ s collaborative culture, with its focus on innovation and inclusivity, for having allowed him to grow as an academic and a leader

“I’ ve always believed that leadership [at a university] is about empowerment and creating environments where colleagues and students can thrive,” he says “That’ s something I’ ve carried with me throughout my time at the school

“This is a place where every member of the institution, from the professors to the administrative staff, is valued and encouraged to contribute to its success It’ s a very inclusive space; we need to keep that alive ”

the legacy of excellence while steering Stellenbosch Business School towards new frontiers ” His vision is for the school to be seen not just as a regional leader but as providing a global benchmark for innovative teaching methods and the sharing of knowledge

Charles Adjasi

I feel a great responsibility to continue the legacy of excellence

Adjasi says technology and digitalisation will shape future higher education offerings In particular, he notes, there is a growing interest in blended learning (a mix of online and in-person tuition) as the most viable and costeffective way of providing for the growth in student numbers and ensuring the sustainability of postgraduate programmes

inviting students and the broader community to be part of this process, ” he says “It’ s about having a long-lasting influence ”

Over time, cultivating impactful, responsible leadership has become the school’ s primary objective This means empowering graduates and staff with the skills and mindset needed to drive positive change and contribute meaningfully to the advancement of society.

“I want to see our students and alumni go out into the world with a focus on finding long-term solutions and making a real difference,” says Adjasi

One of the significant moments in Adjasi’ s career was being asked to step into the role of acting director last year when the incumbent departed early for personal reasons Adjasi, who was then the director of research, was appointed after nominations from colleagues, the university and advisory board members

“It’ s been both a challenge and a privilege,” he says “I feel a great responsibility to continue

“With increased competition in the online/blended learning global environment, schools will need to ensure they have the required capacity to explore and invest in innovative educational and instructional technology,” he says

He emphasises the importance of collaboration, not just with industry but also with society and other business schools, as being key to Stellenbosch Business School’ s success

“We want to co-create knowledge that addresses real-life problems and issues,

The same philosophy underlines the school’ s approach to research, which it has consistently advanced in key areas such as sustainable economic growth in Africa, the upholding of ethical standards by businesses, climate change, corporate governance, responsible leadership and gender equity

“We’ re all working towards something bigger,” says Adjasi “It’ s not just about individual achievements, but about collective progress

“That’ s what makes our work here so rewarding ” x

Claire Bisseker

Charles Adjasi

Head of Stellenbosch Business School

FEATURES

The changing of the guard in Washington offers an opportunity to ‘recalibrate’ South Africa’ s relationship with a key trade and investment partner

As China looks to extend its influence in Africa, how will the US respond? Now’ s the time for South Africa to learn to play it smart 22 MAKE AFRICA GREAT AGAIN

It’ s galling that so many white South African men are fawning over a dictator from another hemisphere when our own continent provides such rich pickings for role models

cover story / trumponomics

HOW TO TRUMP-PROOF THE ECONOMY

The changing of the guard in Washington offers an opportunity to ‘recalibrate’ South Africa’ s relationship with a key trade and investment partner

Jana Marais

South Africa has a window of opportunity to implement structural reforms and introduce stimulus measures to help protect the economy against the potential damage of Trumponomics

US president-elect Donald Trump, who will be inaugurated on January 20 2025, is expected to rapidly implement his “put America first” campaign promises, which include sweeping tariffs of 60% on Chinese products and 10% on those from other countries, and cutting US taxes, with potentially harmful economic consequences for emerging markets

Funding Trump’ s plans would require an increase in US debt, which is more attractive to investors than that of emerging markets, which will result in higher

borrowing costs Trump’ s policies are also expected to result in higher inflation, trade disruptions and a slowdown in global economic growth

“This is on the back of already high debt levels and debt servicing costs in our economy and region,” says Xhanti Payi, senior economist at PwC in South Africa

The duration of the dollar strength and resulting rand weakness fuelled by Trump’ s victory is uncertain, but if it persists it will further affect local and regional inflation, says Payi

There is more Though China is expected to be Trump’ s priority when he takes office, there are concerns that the US may not renew the African Growth & Opportunity Act (Agoa) when it expires in September 2025 This law grants tarifffree access for about 6,800 products to qualifying Sub-Saharan African countries Locally, wine, citrus and automotive

exports are the main beneficiaries

Additionally, there are fears that funding for the US President’ s Emergency Plan for Aids Relief (Pepfar), budgeted to run until March 2025, could be halted, and that the US may again withdraw from global climate commitments, reducing related funding and incentives

The good news is that addressing South Africa’ s self-inflicted economic pain can help provide some protection in the short and medium term

“This is an excellent time for South Africa to get its house in order,” says independent economist Elize Kruger “Many of our problems are local, and our focus should now be predominantly local.

”

Kruger notes that, under the government of national unity, South Africa has seen progress on several structural issues, such as improved electricity supply and visa reform, contributing to positive economic sentiment

Xhanti Payi

“We need to build on this momentum by focusing on implementation If you look at logistics, for example, we have an approved freight logistics road map for needed reforms, but we are battling with implementation If we can get logistics right, it will have a significant positive impact on our economy, regardless of what is happening in the US ”

Kruger notes that the US Federal Reserve’ s November decision to cut interest rates by 25 basis points (bp) presents a “window of opportunity” for the Reserve Bank to implement its own rate cut on November 21, providing much-needed economic stimulus “We have a great opportunity to capitalise on the reform momentum, so ideally I’d like to see a 50bp cut ”

Energy industry reform is another area where progress on domestic efforts such as establishing a transmission system operator and improving grid access can unlock further investment, regardless of Trump’ s climate policies That’ s according to Saliem Fakir, executive director of the African Climate Foundation, a nonprofit focused on facilitating climate-friendly energy investments on the continent

With costs continuing to decline, renewable energy investments will be increasingly lucrative, even without incentives As a result, funding from key investors in renewable energy on the continent, including the EU, China and developmental finance institutions such as the World Bank, is expected to continue, says Fakir

“If projects are business-friendly and make economic sense, we will also continue to attract US business and government attention,” he says

Relationship reset

In addition to economic reforms, South Africa’ s diplomatic relations can benefit from some fine-tuning

Stavros Nicolaou, group senior executive for strategic trade development at Aspen and South Africa Inc’ s international cheerleader-in-chief, says South Africa’ s presidency of the G20 in 2025 provides “ a real opportunity to recalibrate” the Pretoria-Washington relationship after the “ ups and downs of the past four years ” As the US will take over the presidency of the G20 in 2026, close collaboration between the two countries will be required

“It will not be in anybody’ s interest for a frosty relationship to set in or to take decisions to cancel things [like Agoa and Pepfar],” Nicolaou says

Recent strains in US-South Africa relations have been caused by, among other things, the row over the Lady R, the sanctioned Russian cargo ship that docked at Simon’ s Town naval base in

December 2022 This led to public allegations by the US ambassador that South African military supplies were loaded onto the ship in support of Russia’ s invasion of US-supported Ukraine Just under a year ago, South Africa filed its case at the International Court of Justice accusing Israel a close ally of the US of committing genocide against Palestinians Nicolaou, who attended the Agoa Forum in the US earlier this year, is reasonably confident that the US will extend the legislation and that funding will continue for Pepfar, which has received $120bn and saved an estimated 25-million lives to date South Africa has been one of the largest beneficiaries.

“Currently, Pepfar provides antiretroviral [ARV] treatment for about 40% of the 6 5-million people in Africa on ARVs,” Nicolaou says Discussions are continuing on allowing local ARV producers to benefit from Pepfar’ s significant procurement budget, with hopes that treatment for about 2-million patients could be

Elize Kruger

as being from “shithole countries”

However, Trump’ s first administration did launch Prosper Africa, a programme aimed at facilitating trade between the US and Africa, complementing Agoa This programme was expanded by the Biden administration

Should South Africa lose its Agoa benefits, the economic pain may not be substantial consulting firm Krutham forecasts it would cut economic growth by 0 1bp-0 2bp in 2026 but it will likely lead to job cuts

“South Africa should have prepared a long time ago to reorient its relations with the US,” says one trade policy expert. “It is quite an anomaly for a country of South Africa’ s size not to formalise an agreement with a key trade partner of the US’ s size as an insurance policy against the multilateral trading system

This speaks to South Africa’ s lack of an overall trade strategy ” Agoa, originally enacted in 2000, does no more than provide tariff-free market access for specific products, and Washington can cancel its benefits for countries it deems are failing to uphold human rights, labour rights and the rule of law, or are clashing with US foreign policy interests In contrast, formal trade agreements cannot be revoked unilaterally and can include supply chain and small business development support and ways to improve broader economic competitiveness, which could be much more beneficial to a country such as South Africa, the expert says

Regardless, building a competitive export base requires a lot more work than simply signing a trade agreement

sourced from the continent, he says.

Not everyone shares Nicolaou’ s views on Agoa Some trade experts believe the US will continue to extend the pact as a counter to China’ s rising influence on the continent; its Belt and Road initiative has brought substantial infrastructure investment, mainly aimed at securing key natural resources needed to fuel China’ s economy Others expect the US to demand reciprocity in the form of formal trade agreements, such as the one the previous Trump administration started negotiating with Kenya Another possibility is that Agoa will be extended but that South Africa, given its middle-income country status, will lose its benefits in 2026

Neither Trump nor Kamala Harris, the Democratic Party candidate, campaigned on any specific Africa-focused policies, indicating that the continent is not a top priority for the US During Trump’ s first term, he sparked a diplomatic storm by describing immigrants from the continent

Take wine as an example South African exports to the US, the world’ s biggest wine market, totalled a mere 12-million litres in 2023, accounting for only 0.001% of all US imports, according to SA Wine Industry Information & Systems South Africa’ s market share of global wine production is about 3 9%, illustrating that we are punching below our weight in the US market, even with the current benefit of duty-free access under Agoa

One challenge is that other major exporters such as Australia also enjoy tariff-free wine access to the US, thanks to formal free trade agreements Another challenge is creating consumer awareness Wines of South Africa (WoSA), a nonprofit industry body tasked with promoting South African wine exports, is funded by a levy on wine sales, and the weaker rand means the WoSA marketing budget only stretches so far

“Even small European wine regions and I’ m not talking about the likes of a Bordeaux far outspend us in terms of marketing in the US,” says Jim Clarke, WoSA’ s marketing manager in the US “We also don’t have many South African

cover story / trumponomics

companies with the economies of scale to come into the US market at an attractive price point and then have the budget for marketing spend ”

Clarke warns that it is misleading to think of the US as one big market; regulations, consumer behaviour, trends and awareness of South African wine vary from state to state and region to region

Building the market therefore requires constant work and collaboration with a wide range of stakeholders, including the embassy and consulates in the US, and industry bodies such as South African Tourism and Wesgro, Clarke says

What is clear is that a strong diplomatic presence in the US is a minimum requirement for protecting South Africa’ s interests Ronald Lamola, minister of international relations & co-operation, announced the reappointment of former Western Cape premier Ebrahim Rasool as ambassador to Washington, a role he previously filled under the Obama administration between 2010 and 2015 Following his ambassadorial term, Rasool has served as a scholar in residence at Georgetown University in Washington and as a senior fellow at Rutgers University in New Jersey

SA SHOULD MAKE LIKE MARADONA

South Africa has a window, with inflation and inflation expectations falling rapidly, to lower the inflation target to 3%. But will we take it?

Claire Bisseker

The view that South Africa’ s inflation target could be lowered to 3% in the first half of next year, relatively painlessly on the back of rapidly falling inflation, has been dealt a blow by Donald Trump’ s US presidential victory

Bullish expectations that the target could be lowered as early as the February 2025 budget were dashed last month, when finance minister Enoch Godongwana said more technical work was required to estimate the potentially negative impact on households

Reserve Bank governor Lesetja Kganyago has, however, long been convinced of the merits of lowering the target, given that the Bank succeeded after 2017 in moving the country from a de facto 5 9% target to a 4 5% target with little pain

Kganyago has become increasingly strident in arguing for a lower target since first raising the issue in 2021 South Africa’ s inflation target at 4 5% remains high relative to many emerging markets, which mostly have point targets of about 3% This imposes various costs on the

Speaking at a media conference on November 12, Lamola said there is an “urgent need for South Africa to have a presence in the US” and that Rasool’ s credentials are expected to be processed “quickly” as he has served in Washington before

Describing the relationship between the US and South Africa as one that “has never been straightforward” and that remains “dynamic and evolving” , Lamola expressed confidence that Rasool is well suited to engage successfully with a wide range of stakeholders across party lines

“Obviously there will be challenges on a number of issues,” Lamola said “We will continue to engage to find mutually beneficial outcomes on Pepfar, Agoa and a number of other mutually beneficial programmes ” x

economy and makes it less competitive Kganyago’ s urgency is probably because the timing would appear to be ideal over the next few quarters as headline inflation and inflation expectations are tumbling in tandem

When the Bank moved from a 3%-6% target range to explicitly targeting the 4 5% midpoint, the economy was on a structural disinflationary path aided by the pandemic As a result, the Bank managed to achieve the new target and anchor inflation expectations at a lower level without sacrificing any growth in the process

However, from a low of 2 9% in February 2021, CPI spiked to 7 8% in July 2022, driven by the Ukraine crisis And because inflation was sticky on the way back down, inflation expectations became unmoored

They have been trending downwards this year but remain backward-looking and have yet to re-anchor around the 4 5% target (see graph) In the third quarter, inflation expectations were for CPI to average 5 1% this year, before sub-

siding to 4 8% in both 2025 and 2026

By contrast, the Bank’ s forecast is for CPI to average only 4.6% this year, 4% in 2025 and 4 4% in 2026 Moreover, the Bank expects CPI (at 3 8% in September) to average just 3 6% in the final quarter of this year, and 3 7% and 3 8% in the first two quarters of 2025.

“This gives inflation expectations more chance to anchor around 4 5% and provides an opportunity to lower the target,” says Citi economist Gina Schoeman

“With a 25 basis point [bp] rate cut in September, and further 25bp cuts likely in November, January and possibly March, the Bank could lower the target while still removing its restrictive monetary policy stance ”

In other words, it could shift to a 3% target while still cutting rates This is significant as many have wrongly assumed that a shift to a lower target would necessarily imply hiking rates

However, with Trump taking the White House, the risks to the inflation outlook have risen as his policies are likely to put downward pressure on the

rand as is already manifest

This means there is no guarantee that the Bank’ s benign inflation forecasts will transpire Even without Trump, potential double-digit domestic electricity tariff increases from July 2025 pose an upside risk to the inflation outlook

Monthly CPI readings are expected to start lifting back above 4 5% from midyear, which would make lowering the target more difficult if the process is delayed until then.

“What matters,” says Schoeman, “is whether inflation expectations have anchored at least at the midpoint by then It’ s difficult to see a world where an inflation target can be lowered without a [growth sacrifice] if inflation expectations remain above the current target ”

Last month, in a hard-hitting guest lecture at Stellenbosch University, Kganyago dismantled many of the arguments that may be preventing Godongwana from giving him the green light

The first myth is the belief that because the country suffers from relatively high inflation it needs a relatively high inflation target However, this ignores the influence of the target itself in shaping trend inflation, says Kganyago

He cites, for example, the fact that in 2000, both Chile and South Africa adopted inflation targets Chile went for 3%; we went for a range of 3%-6%

Since then, our average inflation rate, at close to 6%, has been almost two percentage points (pp) higher than Chilean inflation, which has been a bit under 4%

The upshot is that Chile’ s prices are now 2 8 times what they were in 2000, while ours are 4 5 times higher

“It was not that we faced a higher world oil price or a higher wheat price

And both countries had professional, independent central banks,” explains Kganyago

“The difference was that we had a higher inflation target ”

The second misconception, and a standard objection to lowering the target, is that because South Africa has persistently high administered price inflation those prices set by the government for services such as water and electricity if it lowers the inflation target it will have to hurt the rest of the economy

SHARP DISINFLATION

South African annual CPI

Source: Stats SA

EXPECTATIONS TUMBLE

self-fulfilling power of expectations the Maradona theory of interest rates

This term was coined by former Bank of England governor Mervyn King He used the two goals Argentine football great Diego Maradona scored against England in the 1986 World Cup to explain how central bank credibility, and forward-looking inflation expectations, can deliver lower inflation outcomes without necessitating steep hikes in policy rates

In a speech in 2005, King said Maradona’ s first goal in that game, which became known as the “hand of God goal” because he touched it illegally with his hand, “ was an exercise of the old mystery-and-mystique approach to central banking His action was unexpected, time-inconsistent and against the rules He was lucky to get away with it His second goal, however, was an example of the power of expectations in the modern theory of interest rates ”

Source: BER Inflation Expectations Survey Q3 2024

bigger point he makes is that even with high administered prices the Bank would not have to push the rest of the economy into deflation (price cuts), it would just need everyone else to implement smaller price increases

“Of course, it is highly desirable to have lower administered prices And it is easier to have lower inflation, and lower rates, where these categories are helping, and not hurting, the disinflation effort,” he concedes “But let us not pretend we must live with a relatively high inflation target just because of our administered price problem It did not stop us from getting from 6% inflation to 4 5% ”

Inflation was not forced down by a recession; it was managed lower by clear and credible communication

Since administered prices, which make up 16% of the inflation basket, have long been stuck about 2 4pp above headline inflation, this means that with a 4 5% inflation target, other prices in the economy can rise by about 4% However, with a 3% inflation target, other prices would be allowed to rise by only about 2 5%

This may seem an impossible ask, but Kganyago doesn’t see it that way The

The third concern about lowering the target is that the short-term costs would be high that the Bank would have to raise rates, squeezing the economy and worsening unemployment in order for inflation to slow

“This trade-off between growth and inflation strikes some people as unacceptable, even when they understand that lower long-term inflation would be desirable,” says Kganyago

However, citing two research papers by local economists, he notes that there was little or no growth sacrifice in getting inflation to 4 5% Both papers suggest that this was because the Bank’ s hawkish commitment to 4 5% was fully believed Or, as Kganyago puts it, “inflation was not forced down by a recession; it was managed lower by clear and credible communication” What Kganyago is describing is the

For his second goal Maradona ran from inside his own half, beating five players, before scoring, and all by running virtually in a straight line Because the English defenders reacted to what they expected Maradona to do move left or right he was able to go straight on Monetary policy works in a similar way

So if, for instance, the Bank announced firmly that it was lowering the target to 3%, market participants would expect monetary policy to tighten given that the Bank is highly credible and always does what it says it will do Price setters would then adjust their behaviour accordingly and market rates would likely rise in anticipation, cooling demand and driving inflation lower In that event, official interest rates might not need to rise on a vastly different path than would otherwise have been the case

In our current circumstances, rates might not need to rise at all, though the Bank may well cut less, especially if the Fed cuts less because of Trumpian inflation This explains Godongwana’ s concern about the impact on struggling consumers

But Kganyago thinks the basic misconceptions around lowering the target have resulted in a discussion that is “too pessimistic and insufficiently ambitious” As he sees it, South Africa has an opportunity to achieve permanently lower inflation and therefore permanently lower interest rates at very little cost and should seize it

Godongwana is understandably cautious, but it would be a real pity if we allow Trump to delay our chances of seeing how adept Kganyago is at dribbling the ball x

Lesetja Kganyago

features / international relations

SHIFTING DYNAMICS

As China looks to extend its influence in Africa and South Africa how will the US respond?

While the world’ s attention was focused on Donald Trump winning the US election, President Cyril Ramaphosa was meeting senior Chinese officials in Cape Town to cement and strengthen trade and political relations

Ramaphosa and senior members of the ANC held closed-door meetings with members of the central committee of the Chinese Communist Party (CCP) In Joburg, the CCP met with ANC leaders, including secretary-general Fikile Mbalula and treasurer-general Gwen Ramokgopa The CCP, the founding and still ruling political party of modern China, has maintained a political monopoly and has overseen the country’ s rapid economic growth and rise as a global power

Leading the Chinese delegation was Li Xi, who, according to the Brookings Institute, has close ties to Chinese President Xi Jinping He is also the seventh-ranking member of the politburo standing committee of the CCP Li was also recently in Kenya, meeting President William Ruto

The discussions were about expanding investment opportunities, enhancing co-operation and increasing trade

The meetings underscore the close economic ties between the two nations and officials see the meetings as part of ensuring an increase in trade Both countries are also members of Brics China’ s influence on Africa is growing China is South Africa’ s largest trading partner, while South Africa is China’ s No 1 trading partner in Africa

Total bilateral trade grew from R614bn in 2022 to R692bn in 2023, according to the presidency Among the main exports from China to South Africa are electric batteries, while South African exports are mainly minerals, including gold and platinum China’ s investments

in South Africa have been steadily increasing, particularly in infrastructure and manufacturing

However, critics argue that the trade relationship is unbalanced, with South Africa primarily exporting raw materials and importing finished goods from China “The relationship continues to grow but we do have some trepidation,” a senior official who attended the meeting tells the FM “Trade between us is unequal China has opened up the market for us to have more access, but now it’ s up to us to be a lot more aggressive It’ s not an absence of love from China, but rather South Africa has to seize opportunities to increase trade, and that means we need to produce more ”

cancellation could have significant economic implications for South Africa, as the country relies on Agoa for benefits from the export of certain agricultural products

We will continue to accrue benefits from having no enemies but sticking to our positions

Vincent Magwenya

Trade experts are concerned that the country’ s close ties with China will be an issue for the incoming Trump administration Could these ties lead to a withdrawal of preferential access to the US market for some African countries, including South Africa? The Africa Growth & Opportunity Act (Agoa) which provides for that access may be under threat

Earlier this year, several US legislators called for a review of South Africa’ s Agoa access, citing its close relationships with Russia and China A

Speaking to the FM outside Tuynhuys after the China/South Africa meeting, presidency spokesperson Vincent Magwenya disagreed that this would be an issue “We will, as South Africa, pursue an independent foreign policy and we will maintain our relations with our historic partners, including China, but also we will have to continue our relationship with the US and we should be allowed to and other countries should respect that ”

Prof Randall Carolissen, dean of the University of Johannesburg’ s business school, tells the FM that Chinese trade with Africa has increased enormously over the years, while the US relationship has been lagging “China’ s trade with Africa is exceeding at least $250bn, whereas US trade in Africa is at just $50bn ”

Ramaphosa recently visited China and met Xi, and the countries elevated their bilateral relationship to a strategic co-operative partnership underpinned by strong political ties, balanced trade and transformative economic growth Government insiders tell the FM that

Crystal Orderson

this has recently been elevated to a “ special strategic relationship”

Carolissen says China has been much more active than the US in investing in major infrastructure projects across Africa, building ports, railways and road networks “China has been involved in more than half of the infrastructure contracts on the continent, and those are the realities that the US will have to contend with ”

He also highlights that China’ s investments in Africa have been met with criticism, particularly regarding debt sustainability and environmental impact

With the world on edge regarding Trump’ s protectionist policies, Magwenya says the government is not having sleepless nights over USChina disagreements

“We’ re not nervous about being forced to take a stance that will suit a particular global power or global agenda We believe our stance is the correct one We will continue to accrue benefits from having no enemies but sticking to our positions And

relations with Brics countries, including China and Russia, remain an important and strategic platform for us ” Magwenya says disagreements between China and the US should not be an issue for South Africa “Spats among or between global powers are not for us to enter ” Magwenya says they are not worried that a Trump presidency will have an impact on the Agoa renewal “The US recognises the strategic

importance of South Africa on the continent, and therefore of maintaining a positive relationship We have no reason to be worried or apprehensive because of a Trump win If anything, it’ s a relationship that we will be seeking to grow ”

The Biden administration has, however, already expelled countries including Uganda, Niger, the Central African Republic and Gabon from the trade pact for governance, security and human rights issues and there is concern that South Africa may be next

South Africa is the US’s largest trading partner in Africa, with more than $20bn in two-way trade volume, according to US Census Bureau data from 2020

Only a third of the country’ s exports to the US benefit from Agoa However, the major sectors that are benefiting from the trade deal include agriculture and the automotive sector “Under a Trump administration, with its ‘America First’ mantra, trade policy would likely be insular and transactional,” notes Ronak Gopaldas, an economic policy expert at risk management consultancy Signal Risk

The University of Pretoria’ s Prof Chris Isike argues that it’ s time for South Africa and the continent to stop accepting crumbs from the US “Trump has viewed Africa with contempt and disregard There is benign neglect and a paternalistic relationship with the continent It will be difficult to say if Africa will benefit from a Trump presidency Interesting times ahead, but as Africa, we have to stop reacting and rather the US must come to us as a mineral-rich continent ”

Carolissen says that whatever the fate of Agoa, the US will have to accept that China is making big inroads into Africa He highlights the shifting dynamics in US-Africa trade relations, with China’ s influence continuing to grow “I fully suspect Agoa will be redrafted and will be relooked at to make it more strategic for the US and more for a lever to push in a particular direction ”

123RF/mishchenko

South Africa is confident that Agoa won ’t be redrafted, and with the country taking over the G20 presidency from Brazil in 2025 and the US taking over from South Africa in 2026, Magwenya says Trump will probably be joining the other G20 leaders for the summit in Joburg next year x

Brics buddies: Chinese President Xi Jinping with President Cyril Ramaphosa in Beijing in September Gallo Images/AFP/Li Xueren / Xinhua

Features / politics comment

MAKE AFRICA GREAT AGAIN

It’ s galling that so many white South African men are fawning over a dictator from another hemisphere when our own continent provides such rich pickings for role models

Chris Roper

One of the images doing the rounds on South African social media is of a crisp white wall in Blaauwberg, Cape Town, on which is triumphantly, and professionally, painted the word “Trump” in bright red, and “#47 #45” in smug blue

This is as pathetic as it is enraging What is it about the Donald Trump narrative that arouses the flaccid political members of our middle class? And yes, the puns are intended Because these people really are dicks

I’ m sure you ’ ve been puzzled at how many red Make America Great Again hats you ’ ve seen worn by some of our own podcasting class, which is the budget version of what Guardian writer Caroline Haskins calls the manosphere Boy, they must be so happy that the president of their fantasy world is back in the saddle Finally, it means something to be an alpha male in this country again! And in many instances, that would be white and an alpha male

A study published by the Proceedings of the National Academy of Sciences “found that a leading predictor of support for Trump over party affiliation, gender, race and education level was belief in ‘hegemonic masculinity’ , defined as believing that men should be in positions of power, be ‘mentally, physically, and emotionally tough’ , and reject anything considered feminine or gay Some heterodox influencers gained a following by embodying or promoting precisely this brand of masculinity, and giving their followers a script for blaming dissatisfaction on women ”

CNN and other US media, presumably regretting the business threat caused by some alienating things they’ ve said in the past, are hastily trying to forge a narrative that

AFP / Stanislav Kogiku

US citizens are not racist misogynists who voted for daddy, but in fact complex characters who were really influenced by Kamala Harris and Trump’ s takes on the economy Perhaps that’ s correct (narrator: it is not), but I guarantee that race is behind a large chunk of our homegrown Trump worship. One way or the other To put it in an elliptical way, it’ s not just masculinity that is feeling threatened in South Africa, it’ s a certain type of historical masculinity

Elon Musk, the South African manosphere’ s Jesus to Trump’ s God, has also now been freed up to properly enjoy his title of being the richest dick in the world After Trump’ s victory was seen as inevitable, he posted a picture on X showing him holding a sink in the Oval Office, captioned “Let that sink in” He posted a similar picture when he took over Twitter in 2022, and I’ m sure he’ s gleeful about the prospect of rebranding the US of A as the US of X Not to mention all the policy influence he’ s about to wield If nothing else, this is starting to make moving to Mars seem an attractive prospect

But back to the local Trumpists It’ s not really that they think it’ s cool that Trump is, for example, anti-immigration Though that is kind of funny when you think of how irate they get when the EFF tells them to go back to Europe It’ s that they don’t seem to realise how pathetic it is that they need to adopt the propaganda of another country to make sense of their own

The late great Kenyan writer Binyavanga Wainaina, who is the subject of an excellent essay by Jeremy Harding in the London Review of Books (LRB) of a couple of weeks ago, must be turning in his grave In a 2005 satirical essay “How to Write About Africa” , Wainaina wrote bitingly about the way the West imposes a stereotypical narrative when writing about Africa It includes all the greatest hits such as poverty, colourful natives, anthropomorphised animals and the like A sample: “In your text, treat

It’s not really that they think it’s cool that Trump is, for example, anti-immigration. It’s that they don’t seem to realise how pathetic it is that they need to adopt the propaganda of another country to make sense of their own

Africa as if it were one country It is hot and dusty with rolling grasslands and huge herds of animals and tall, thin people who are starving Or it is hot and steamy with very short people who eat primates Don’t get bogged down with precise descriptions Africa is big: 54 countries, 900-million people who are too busy starving and dying and warring and emigrating to read your book

“Never have a picture of a well-adjusted African on the cover of your book, or in it, unless that African has won the Nobel prize An AK-47, prominent ribs, naked breasts: use these If you must include an African, make sure you get one in Masai or Zulu or Dogon dress ”

And now we have an equally ridiculous version of this: Africans, or in this case South Africans, using the narrative of a US strong man to talk about, and even understand, their own country It’ s shameful At least make up your own BS

In his LRB piece, Harding quotes from an essay by another Kenyan writer, Nanjala Nyabola, titled “Why Do Western Media Get Africa Wrong?” Nyabola argues that the first Western journalist to arrive on the scene and file a story (often a disaster story) is treated as a more reliable voice than local bloggers or reporters. The result, she writes, is often an unwitting description of “what the West is not a chaotic world, riven by ethnic tension, poverty and conflict even though a foreign correspondent from an African country would have no trouble picking out the same faultlines in Europe or the US”

How true that rings We shouldn’t be uncritically lapping up the master narrative of Trumpists, we should be turning the tables and writing about how chaotic the faultlines of US democracy are And, after all, they could learn from us

In a 2008 essay written for the Mail & Guardian, “The Aspiring Dictator’ s Guide” , Wainaina laid out some rules for how to be a successful African dictator The rules could also usefully be adopted by president-elect Trump Rule 1: “Be the richest man in your country ” Wainaina lists some examples: “If you are a second-generation dictator, this is not hard; just blackmail the guy who came before you If you come

from an oil-producing country, this is even easier (many Nigerians and Angolans, Chad) If you are a South African, then anything with the word ‘black empowerment’ works fine ”

Trump has pulled an even cleverer move here He won ’t be the richest man in the US, but he has cosied up to the richest man in the world That’ s the sophistication of the First World for you Does Rule 3 apply, in some twisted way? “Make America or China happy Make Israel and Saudi Arabia very happy ” Weirdly enough, it does Trump will just add Russia to the mix Rule 10 is unfortunately all too applicable (see CNN’ s volte-face page 22): “A free press is important But have shares in all major media and make sure that you allow them to be very critical of everything, except you ” And Rule 12 is going to be the real kicker for Trump: “Be nice to your fellow world dictators; you may need them to give you a home some day ” All of which is not to say we should be ignoring what is happening in the democracy formerly known as free I’ m reading Zeinab Badawi’ s An African History of Africa, which gives the alternative view to the Western narratives of colonialism and slavery that have dominated the subject I was struck by a passage about reinterpretations of the history of Dido, the founder and first queen of the Phoenician city-state of Carthage in 814 BCE

Badawi writes about meeting a Tunisian archaeologist, Leïla Ladjimi-Sebaï, at the ruins of Carthage to discuss Dido Ladjimi-Sebaï related with “great enthusiasm how Dido was for her an extraordinary and pioneering woman, and how Virgil in her view had completely misrepresented her story Leïla said that Dido had actually killed herself because she did not want to marry a Berber leader ” And this is the comment by Badawi that stood out: “The details of Dido’ s story do not matter as much as the fact that Leïla and many other academics on the African continent are challenging well-established Western perceptions of a history that has overlooked their perspectives ”

Badawi isn’t pulling a JD Vance here, who you ’ll remember said that he was OK with making up facts as long as it got the story out She means that contested facts aren ’t the important bit, it’ s the fact that an African is taking the time to contest those facts, pushing back against the assumptions of Western discourse Can’t our local Trumpists be more like this? I mean, come on Take ownership of your own shithole country Trump don’t care x

RESOURCES

Think big, act small

NextSource plans to parlay a Madagascar graphite mine into a diversified critical minerals company, by way of materials for EVs

David McKay

I believe we would be open to

consider South Africa. If you look at the investment environment, it is changing significantly

- Hanré Rossouw

● China dominates huge portions of the mining supply chain for electric batteries In copper, for instance, a key element for all electric vehicles (EVs), it controls less than 10% of mining production But coupled with refining capacity, that relatively modest market share increases to 50%, according to data collected by the Financial Times In lithium, another crucial ingredient in battery manufacture, China controls 10% of the metal’ s production but 65% of the total supply chain when refining capacity is added For other, equally important minerals such as rare earths, the dominance is almost total In graphite, a mineral required to make anodes in batteries (copper and cobalt are used in cathodes), China controls 65% of primary mining output and 90% of processing capacity Omniscience like this gives China pricing control “When I look at the benchmark prices for lithium or graphite, they are way below the actual cost curve, ” says Hanré Rossouw, CEO of NextSource Materials, a Toronto-listed business which has former Xstrata boss Mick Davis as its chair “China artificially creates barriers to entry to the raw material value chain They subsidise their industries because they’ ve got the ability to do that ”

It is not known if US president-elect Donald Trump

will follow through with threats to impose 100%-200% levies on Chinese EVs, but for places such as Europe at least, nonChinese suppliers of critical minerals and components are likely to attract a premium for production This is the space in which Rossouw hopes NextSource can operate Rossouw was CFO of Xstrata Alloys between 2011 and 2013, a bit of history that proved decisive when he was headhunted from Sasol in April this year where he had been CFO for just over two years “I was happy there,” says Rossouw “When I was headhunted I said I wasn ’t interested in a CEO role, but they said a gentleman called Sir Mick Davis was involved So I said: ‘OK, tell me about it.’ The bait was thrown.” NextSource has only one asset, the recently commissioned Molo graphite mine in Madagascar, which supplies its own pilot anode battery facility in Mauritius But as Rossouw says, quoting Davis: “Think big but act small ” In other words, Molo is the first step in building a diversified critical minerals company with downstream capacity

The diversified mining model has lost its cachet in recent years, as evidenced by the streamlining strategies of BHP, Glencore and, more recently, Anglo American Investors seem to prefer an uncomplicated exposure to single commodities As a result, pure copper plays tend to command a premium over portfolio miners Rossouw, who led Investec

Asset Management’ s mining team as the frontier and emerging markets fund manager, has a slightly different mindset

“With the fragmentation that one sees in the battery metals industry, it’ s very difficult for capital allocation The power of diversification and the derisking of your commodity cycles, especially in this world where these markets are prone to manipulation and extreme movements in price, will be a proposition for the likes of an LG or a Tesla or a Volkswagen to be a partner of choice

“That ultimately is the proposition,” says Rossouw, who is keen not to be teed up as the guy behind an “Xstrata 2” . NextSource’ s strategy does seem to resemble Xstrata’ s remarkable rise to prominence during the so-called supercycle, however “Let’ s not go there,” says Rossouw when comparisons are drawn between the previous cycle in commodities and what’ s going on now But he tells the FM he supposes the company is endeavouring to be “the Xstrata of the battery metals industry” with one important caveat

“I’ m not Mick’ s man, ” he says Though Davis is chair of NextSource, his investment vehicle, the privately held Vision Blue Resources (VBR), is not a holding company Vision Blue won ’t be setting up investments for NextSource It has a 47% stake in NextSource, and while recognising the significant benefits of having a supportive shareholder in VBR and Davis as chair, Rossouw says he will act in the interests of all its shareholders

At the time of speaking, Rossouw was less than a week in the job His first goal is

quite clearly to build up Molo to its first phase nameplate capacity of 17,000t a year of large and small flake graphite (the latter trademarked SuperFlake for the electric battery vehicle market). Large flake graphite has an existing industrial market which NextSource will supply through agreement with ThyssenKrupp, the German steelmaker and engineering company

But the sizzle on the steak is the EV market From a forecast 1 4Mt this year, flake graphite demand is expected to grow to about 5Mt 10 years later, driven mostly by electric mobility

Unlike the options in the chemistry in the cathode part of the battery, where there’ s debate over which minerals will come to dominate the technology, graphite is the mineral of choice for 95% of the anode manufacture

Downstream anode component production is key to NextSource’ s ambitions,

especially given China’ s control over raw materials Rossouw says he’ s prepared to look at other possible locations for an anode battery facility, even though the pilot plant is building up in Mauritius Discussions have been held with Saudi Arabia and the United Arab Emirates, he says

South Africa is also a possible destination for a facility Before the elections this year, Davis passed the country over as an unattractive destination, but Rossouw strikes a more hopeful tone

“I believe we would be open to consider South Africa If you look at the investment environment, it is changing significantly

We have a motor industry and it could be there are incentives to put up a battery facility But one has to probably time these things at an appropriate pace ”

Shares in NextSource have struggled in the past 12 months, down about 56% at the time of writing Rossouw says the firm’ s performance tracks the Chinese graphite price “It is a function of very low commodity prices and that actually makes access to capital difficult,” he says One of the reasons Davis brought Rossouw in is his background in institutional investing “What’ s important for us is that we can back it with a proposition that will raise capital but ultimately broaden our capital base to more institutional investors That will enable our growth journey,” he says x

China dominates vast swathes of the mining supply chain for

Mick Davis: The former Xstrata boss is chair of NextSource

Remove risk, focus on growth

Investor appetite for Hyprop has seemingly been restored as the mall owner’s turnaround efforts start to pay off

Joan Muller

● After five years in the doldrums, Hyprop Investments finally appears to be back on a sustainable earnings growth path

The former market darling owns nine shopping centres including Rosebank Mall, Hyde Park Corner and The Glen in Joburg and Canal Walk and Cape Gate in Cape Town

The counter lost favour in recent years on the back of complicated African and East European ownership structures, high gearing, underperforming retail assets and a somewhat erratic dividend policy.

Like most of its peers, Hyprop was also hit by pandemic-induced trading restrictions and rental losses in a bid to prop up struggling tenants, as well as higher-forlonger interest rates

The latter not only curbed consumer spending in its malls but also led to a sharp increase in Hyprop’ s debt servicing costs

However, in the past three months

Hyprop’ s share price has rallied about 35%, placing it as the JSE’ s second-best performing property stock year to date (after Waterfall City developer Attacq)

Hyprop has notched up a total return of 43 2% in the first 10 months of 2024, well ahead of the South African listed property index’ s 26 8% over the same period, figures from Anchor Stockbrokers show

Analysts say the rerating was triggered by the long-awaited disposal of Hyprop’ s stake in a Sub-Saharan Africa portfolio of shopping centres co-owned with Attacq

Hyprop’ s share in three malls in Ghana and one in Nigeria was sold to unlisted

property fund Lango Real Estate in August in exchange for Lango shares worth about R800m

Hyprop’ s Sub-Saharan Africa portfolio was a drag on earnings for several years due to poor trading performance and local currency volatility, which led to huge valuation writedowns

Market sentiment was further bolstered by Hyprop declaring better than expected results for the year to June The company guided for a 15%-20% drop in distributable income but delivered a more palatable -8 6%

Importantly, Hyprop is now on track to return to positive territory in the year to June 2025, with earnings growth forecast at 4%-7%

But Hyprop’ s turnaround hasn’t happened overnight it was preceded by a lengthy fiveyear restructuring under CEO Morné Wilken

The industrial engineer, previously at the helm of Attacq for six years, embarked on a strategic repositioning of the business shortly after he joined Hyprop in early 2019

Wilken tells the FM that exiting Nigeria and Ghana and its US dollar-denominated African debt obligations was a priority “Our Africa exposure has long been a noose around our necks It cost us

a lot of money ” Wilken started to simplify the African debt structure shortly after he joined Hyprop, but offloading the SubSaharan Africa portfolio took longer than expected

The Lango transaction was an important milestone, he says “We managed to sell the entire African structure as well as the four properties in one deal It means Hyprop no longer has debt exposure to the rest of Africa and no further money needs to be reinvested in these markets ”

It also frees up management to focus on its core portfolios in two remaining geographies South Africa and Eastern Europe

Though Hyprop now has indirect exposure to the rest of Africa through Lango, management plans to sell its shares in due course

HYPROP SNAPSHOT

Portfolio value: R38bn

Geographical split (by value): South Africa: 64%; Eastern Europe: 30%; Rest of Africa (Lango shares): 6%

Number of properties: 9 (South Africa) + 4 (Eastern Europe)

South African portfolio: Canal Walk, Somerset Mall , Cape Gate & Table Bay Mall (in the Western Cape) and Rosebank Mall, Clearwater Mall, The Glen, Woodlands & Hyde Park Corner (Gauteng)

Eastern Europe portfolio: The Mall (Sofia, Bulgaria), City Center One East (Zagreb, Croatia), City Center One West (Zagreb, Croatia), Skopje City Mall (Skopje, Macedonia)

Source: Hyprop Investments

Canal Walk: Twenty new stores in the past year

investing

Wilken inherited other legacy issues besides the loss-making Sub-Saharan Africa portfolio, including a complex ownership structure of Hyprop’ s East European shopping centres

Six malls spread across Serbia, Montenegro, Macedonia, Bulgaria and Croatia were held jointly through Hystead and PDI Investment Holdings

Wilken was instrumental in the collapse of the ownership structure in 2022, which allowed Hyprop to take full control of four malls and sell the other two, significantly reducing the company ’ s euro debt in the process

which don’t necessarily pay the highest rentals but bring in more feet

Besides simplifying Hyprop’ s debt structures and geographic exposure, management withheld several interim dividend payouts post-pandemic to further shore up the balance sheet, a move that didn’t necessarily please investors

Still, impressive headway was made to strengthen Hyprop’ s balance sheet, with the company ’ s loan-to-value shrinking from about 53% to 36.4% since 2019.

Wilken also introduced various measures to reposition Hyprop’ s South African portfolio, which is now made up of nine malls worth R25 4bn

A priority was to shift away from the historic focus on short-term dividend growth to appease investors Wilken says Hyprop was previously so focused on income growth it didn’t reinvest enough money to ensure its local malls remained relevant

He moved from a rental-centric to a tenant-centric approach Taking short-term pain for longer-term gain was required, he says Some longstanding anchor tenants were replaced with new ones including Checkers and Zara

“Focusing only on growing rentals in the absence of higher tenant turnovers is not sustainable,” says Wilken “When we help tenants to increase sales and reduce their cost of occupancy, they can afford to pay higher rentals down the line ”

The marked improvement in the performance metrics in Hyprop’ s local mall portfolio for the year to June suggests this approach is starting to pay off

Notably, rental reversions on lease renewals turned positive for the first time since 2018 The latter clocked in at a positive 5 8% for the year to June, up from -7% a year ago

Hyprop now also has one of the lowest retail vacancies in the real estate investment trust (Reit) sector at 1 8% No fewer than 20 new stores opened at Canal Walk in the past year

NOT SHOPPED OUT

Source: Infront Hyprop Investments vs JSE SA listed property index – weekly – based to 100

There are also several new tenants at Pretoria’ s Woodlands centre, including three new drivethroughs for Steers, Burger King and Chicken Licken, as well as The Fun Company and WCellar (part of Woolworths’ s extension project)

At Somerset Mall in Somerset West, a R320m extension and refurb is under way Wilken says

this should provide “huge” upside on completion within the next two years

Hyprop’ s earnings recovery will be further supported by the recent R1 68bn acquisition of Table Bay Mall near Cape Town’ s Bloubergstrand Wilken is also looking to grow Hyprop’ s East European exposure

He says: “We have now taken all the risk out of the balance sheet, simplified the business and restructured the portfolio For once, we can focus on growing our business instead of sorting out problems ”

The question for investors who don’t yet own Hyprop shares is whether the stock is still worth buying, given the already substantial share price rally

Curwin Rittles, investment analyst at Metope Group, says though Hyprop no longer appears as cheap as it was a year ago, there’ s further upside to be had “if management maintains its disciplined financial approach, effective capital recycling and sufficient capex investment” .

He adds that Hyprop’ s increased exposure to the desirable Western Cape as well as plans to bulk up the East European portfolio should support longer-term earnings growth

Still, as Garreth Elston, MD of Golden Section Capital, points out, Hyprop like most of its South African peers is navigating a largely stagnant retail environment that will only likely improve in the second half of 2025

Not all of Hyprop’ s local malls are out of the woods, with Hyde Park Corner in Joburg seemingly still struggling

Elston says investors may take a seat on the sidelines for now to see if management delivers on its promises to return the company to inflation-beating earnings growth

“The next set of results will be important to retain investor interest in Hyprop in a competitive retail-focused Reit sector,” he says

Earlier this week Hyprop was trading at about R41, which places the stock at a distributable income yield of about 7% and a 32% discount to NAV x

Table Bay Mall: One of Hyprop’s nine South African malls

view from the Thames by Deon Gouws Being paid for your pain

Aclient contacted me in mid-September, having just read an article in The Economist titled “What Will Happen If America’ s Election Result is Contested?” Kamala Harris had been leading Donald Trump in the polls since she was anointed as the Democratic candidate when Joe Biden stepped down six weeks earlier Could Harris actually win? And, if she did, were we likely to see a repeat of the January 2021 insurrection by Trump supporters?

The article painted a pretty bleak picture, referring to the outcome as a “foregone confusion” What now, the client asked, given that our firm is responsible for managing a large proportion of his family balance sheet, and the portfolio is heavily weighted towards US equities Was it perhaps time to take some risk off the table?

Also relevant was the fact that the S&P 500 had already added nearly 20% in the first eight months of 2024

Put differently: at the time of the client call, the market had already exceeded the year-end target of even the most optimistic strategist on Wall Street surely

this could not continue?

I did not purport to have an answer; I never pretend to have a crystal ball when it comes to investments (let alone election results) To be bullish about the long term is one thing (history teaches us that markets tend to go up over time), but the short term is always uncertain Anyone telling you otherwise is an opportunist, if not a liar

Thankfully, I had just come across a piece of research by Bespoke Investment Group in the US Looking back over the past seven decades, they illustrated how $1,000 invested in the US stock market and keeping it there only while a Republican was in the White House would be worth just more than $27,000 today If, however, you had invested $1,000 and retained exposure over periods where the president was a Democrat, you would have ended up with about $62,000 today (the Democrats have been in charge for the majority of the past 70 years, which is the main reason for this higher amount)

But here’ s the kicker: if you had simply invested the same $1,000 when Dwight D Eisenhower was inaugurated in 1953 and left it untouched for the full period, your investment would be worth nearly $1 7m

today The message is clear: don’t get political, and don’t mess with the power of compounding. Or, to resort to that old cliché: it’ s not timing the market that counts, but time in the market

Having shared these conclusions with the client, we agreed not to tinker with the portfolio and just as well The S&P 500 has added another 7% since our conversation; more than half of this increase took place in just the first few days after the election

Markets are discounting mechanisms, and with asset prices ripping higher, consensus seems to be that four more years of Trump should be positive for business and markets (certainly in the US, if not elsewhere) I will refrain from pontificating about tariffs and inflation and interest rates no doubt there will be obstacles in the road as well

Treading a fine line

One more thing: last month, I opened my column on these pages by saying there was one presidential candidate that I didn’t want to win (Harris largely for economic reasons), and another that I really hoped would lose (Trump based on his many character flaws) My headline summed it up as a choice between the devil and the deep blue sea; I certainly had no intention to personally “endorse” either candidate

When a topic is interesting, it’ s often also polarising. Being mindful of this, I generally try to tread a fine line when writing anything, understanding that many readers will have an opposing view I do, however, draw the line when it comes to Manchester United and Tottenham Hotspur, as also pointed out in last month’ s piece ;-)

My opinion about the election ultimately has no relevance, and one can hardly argue with 73 4-million American voters who put Trump back in the White House

While I’ m not ecstatic about the outcome, I will celebrate the fact that my clients and I are being paid for the pain, given how positively markets have reacted to date Long may that last x Gouws is chief investment officer at Credo, London

Celebrating victory: US presidentelect Donald Trump with Melania and Barron Trump

Reuters/Carlos Barria

the ghost train by the finance ghost

Why I’m hailing Uber

In the past 12 months Airbnb has delivered a return of 16 5% That’ s certainly not bad, is it? But Uber is up 44%, so that has proved to be the right choice over this period I can ’t resist a cautionary tale about IPOs in frothy markets, as Airbnb is still trading below its hyped-up price on the first day of trading back in 2020

Both these companies represent the new-age economy, in which platforms connect owners of assets with people who need to use those assets for a short time At Uber, it’ s all about transport whether of people, food or parcels At Airbnb, the focus is on accommodation and related experiences On paper, these sound like very similar businesses Both of them have even managed to achieve the ultimate success for any brand: becoming a verb! In practice, though, they appear to have very different moats and, arguably, growth prospects This is why I’ m a shareholder in Uber and not in Airbnb

Before digging into why I feel that way, we need to consider the relative valuations to see what the market thinks. We can use a price/sales multiple here, as it works well for growing platform businesses that tend to have dicey profitability until they reach that magical inflection point of having sufficient scale to unlock sustainable profits and cash flows

Over three years, the average price/sales multiple at Airbnb was 10 7 At Uber, it’ s much lower, at 3 2 Here’ s the more interesting thing: in the past three years, the multiple at Airbnb has unwound from 23 6 to 7 8! At Uber, it has unwound from 6 to 3 6 In both cases, higher interest rates and a dose of realism in the market caused havoc for the multiple It just affected Airbnb to a far greater extent, as high multiples are more vulnerable to macroeconomic shifts or underlying disappointments in earnings Even today, Airbnb is trading at more than twice the multiple of Uber Is each dollar of revenue at Airbnb really worth that much?

To answer that question, we need to

move past the price/sales multiple It’ s helpful, but it can never be the only valuation metric you use What really drives value is how effectively a company turns revenue into profits and thus cash returns to shareholders

So, to really compare the valuations, we can use the free cash flow margin (free cash flow divided by sales) and then compare that to the sales multiple Airbnb achieved free cash flow margin of 30% over the past twelve months. At Uber, that margin is 10 1% Based on the sales multiples, Airbnb is therefore trading at an effective free cash flow yield of 3 8% (on a sales multiple of 7 8 you ’ re paying $78 for every $3 of free cash flow) and Uber is at 2 8% Despite what a quick glance at the sales multiple would suggest, Uber is actually trading at a premium to Airbnb (a lower yield is a more expensive stock) It turns out that the market is putting more value on the Uber platform than on Airbnb, an approach that I agree with

In the latest quarter, Airbnb grew revenue by 10% and Uber grew by 20% Therein lies another secret to the valuation differential: a combination of growth prospects and the efficiency in which sales get turned into cash flows

Uber just grew free cash flow by a ridiculous 133% year on year, as the platform has reached the stage where much of the additional sales growth now falls to the bottom line This is a core part of my investment thesis in Uber and it suggests that the free cash flow margin is on the up Over time, this should support the Uber multiple moving higher, with the share price return as a function of multiple expansion and underlying earnings growth. That’ s the theory, at least

No room to grow

Above all else, my view is that Uber actually solves a problem that needed to be solved It’ s a safe way to get around on demand and with card payments, across many places in the world, through one app Though Airbnb’ s original offering was also unique, allowing people to rent out spare rooms and air mattresses on their living room floors, these days it is trying to compete with the likes of Booking com because it ran out of growth Uber, on the other hand, still has plenty of room for its core to grow Wherever possible, I prefer a simple business model to a more complicated one Uber is my choice x

Driving change: Uber solves a problem that needed to be solved

123RF/Jair Fonseca

economic indicators

AFRICA TOP STOCKS (EXCL

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TOP TRADED STOCKS

November 5 - November 11

FAT WALLET

Drive a hard bargain

A reader asks whether it makes sense to move vehicle finance from one bank to another where the interest would be lower but the term longer

Question:

My vehicle finance charge is 12 75%, and with 52 months to go the instalment is R4,339 Another bank is offering a 10 5% loan over six months at R3,691 to refinance it, as I qualify for one of its bank accounts and a perk of that account is preferential rates Yes, the interest is lower, but the term is longer and so more interest will be paid

If I ask for a reduced term the interest rate is lower, and so is the interest, because of the shorter term. But the instalment will then be the same due to additional fees being added when refinancing an initiation fee and another fee that will be added to the principal amount (not much, but when paid over that period it makes a difference) I’ m in two minds

A Fat Wallet Facebook community member

Answer:

My first thought is to contact your existing lender and ask for a reduced rate, showing the bank that you have a competing offer at a lower rate.

If your existing lender won ’t budge, there isn’t much point in transferring the loan, as there’ s no benefit to you

That said, your new bank will appreciate the business and as such see you as a “better customer” This may bring benefits in time, for example a better home loan due to your having multiple products at the same bank The bank may also have a rewards programme that you will get more from as a result of the vehicle loan

Simon Brown, Just One Lap

TConnect the data dots

Among the torrents of information that rush at us from all directions, there are some gems that can provide useful insight if we understand the links

o an investor, data and information are essential Without them we ’ re simply unable to make decisions And these days we have a ton of data coming at us all day, every day

This is the easy data, coming directly from the company, via data aggregators, or from media, social media and the like It’ s great, as it means we ’ re up to date with what matters It is also a challenge, because it is just too much information for any one person to process So we have to be selective I ignore entire sectors, markets and exchanges because I don’t have the capacity to process it all

The flip side to this avalanche is that there are very useful gems we can find that can help us make better decisions

For example, Pick n Pay is closing stores, and this will hurt some landlords A Pick n Pay store is not a space that is easy to re-let to another tenant, especially as Pick n Pay is pretty much always an anchor tenant. These stores are large, with lots of storerooms and often cold rooms, not something many potential tenants would use The closing of Pick n Pay stores will hurt real estate investment trusts (Reits) with exposure to this

Another piece of useful information is

the recent announcement from Murray & Roberts that De Beers had informed it that it is “reviewing its operational plans at Venetia mine, and that a significant portion of the works under Murray & Roberts Cementation’ s contract will imminently be descoped” In other words, De Beers is cutting back on diamond mining at its Limpopo mine, and this will hurt struggling Murray & Roberts If you ’d been reading the Anglo American announcements about diamond sales and kept abreast of labgrown diamond sales trends, this is not a major surprise Now, of course nobody knew at which mine De Beers would cut production, but any Murray & Roberts shareholder certainly should have had this risk on their list

Another recent example was the Pepkor trading update, in which the company states it has been gaining market share in some categories, including clothing Well, then, the question is: who is losing market share? The Truworths trading update shows us who, as local volumes have likely been negative

A last example is the post-election violence in Mozambique, which should have alerted you to possible challenges for Grindrod This was confirmed by a

What the smart money is doing

Mark du Toit, portfolio manager at OysterCatcher Investments

BUY: Prosus

Buy technology conglomerate Prosus for its main asset, Tencent, which makes up 90% of the group’ s value

Tencent is a leading technology company in China with revenue streams including gaming, platforms (WeChat), payments, cloud services and online advertising Earnings growth remains robust, with year-on-year operating profit growing above 20% In addition, Tencent is increasing its dividend payout and share buybacks to increase shareholder returns Tencent’ s earnings growth is expected to continue despite the weaker Chinese economy The superior earnings growth and increasing revenue outside China remain underappreciated by the market, creating the opportunity to buy x

123RF/sylvearts

voluntary Sens announcement from the company

The trick is knowing how to use the information In the case of Grindrod it is probably a passing problem (so an opportunity for those wanting to buy a little cheaper), and Reits are likely to solve their difficulty in time. But the Truworths matter is a real challenge

Treating the data and information like a giant jigsaw puzzle can yield useful snippets we can use But often we have to dig deep into the data flow to find the gems and connect the dots x

SELL: South African listed property

South African listed property counters have had a steep share price rally this year In fact, last week the FM asked whether the real estate investment trust rally was over pointing out that popular counters such as Attacq (more than 50%); Hyprop, Fortress and Emira (all more than 40%); and Vukile (38%) had all registered stellar year-to-date gains to end-October Overall, the sector is up in aggregate 26% year to date and has materially rerated

Looking ahead, we expect returns to be more muted and in line with nominal GDP plus dividend yield There are better returns to be earned owning South African retailers and local banks x

Simon Brown

jse top stocks

Special Report ?????

Special report

Why premiums go up

Medical schemes have hiked contributions to stay in the game as postpandemic normalcy returns and health-care inflation surges

● Medical schemes have announced their annual contribution increases for 2025 At the lower end of the scale, Discovery Health announced an average weighted contribution increase of 9 3%, Momentum Medical Scheme 9 4% and Medshield Medical Scheme 9 6% Sizwe Hosmed Medical Scheme announced the highest average increase at 13 82%

The higher contribution increases announced this year need to be considered within the context of lower contribution increases during the pandemic, says Anthea Towert, certified financial planner professional and principal consultant of Insight Advisory Solutions

“During the pandemic, claims were lower than normal and medical schemes built up reserves Most medical schemes allowed their members to benefit from these reserves by announcing unusually lower contribution increases in 2021 and 2022 The downside, however, is that these low increases put those schemes in deliberate lossmaking positions so that claims paid to members were higher than contributions collected from members ”

This loss-making position can ’t be sustained indefinitely, she says, adding that medical schemes are slowly returning pricing to more sustainable levels by raising contributions

Medical schemes say they took several factors into consideration before setting the rate at which contributions will increase for 2025 “Among critical factors, we considered the unit costs at which healthcare goods and services will increase in 2025 Affordability remains important to ensure members can retain their health-care cover, ” says Medshield Medical Scheme principal officer Kevin Aron

“Health-care inflation outstrips the consumer price index [CPI], and as a scheme we need to make provision for this so that we can cover the services rendered to members ”

South Africa is not unique in experiencing health-care inflation typically higher than CPI

Bonitas Medical Fund CFO

Luke Woodhouse says a number of factors drive health-care inflation, including the rising prevalence of chronic and lifestyle diseases such as diabetes, hypertension and obesity; the rising cost of medical technology and drugs; an ageing population; the high cost of specialised medical skills; unregulated private health-care costs; exchange rate fluctuations which affect the cost of imported medical supplies; limited competition; and increased utilisation

“Changes in lifestyle and medical innovations have

The fact that medical aids are becoming unaffordable for many people is the unfortunate consequence of a stagnant and fragmented regulatory environment

Anthea Towert

increased life expectancy, which means people require health care for longer, increasing the strain on the healthcare sector

“In countries such as South Africa, with a high incidence of chronic diseases, the pressure is even more severe Though health-care inflation slowed during the pandemic, industry data suggests that since 2023, health-care inflation has started to rise to levels equivalent to and beyond pre-pandemic levels,” he says

The challenge is that aboveCPI increases are not sustainable for consumers, particularly considering that average salary increases are only expected to be about 6% this year

“The fact that medical aids are becoming unaffordable for

Medical cover

many people is the unfortunate consequence of a stagnant and fragmented regulatory environment,” says Towert “For too many years medical schemes have been subject to unreasonable and extremely expensive prescribed minimum benefit [PMB] requirements which have not been substantially revised for more than two decades, despite the fact that the Medical Schemes Act requires regular revisions

“Unfortunately, while the world has changed, PMBs have not The act requires that medical schemes must pay health-care providers in full, at whichever cost they choose to charge for these PMBs, unless the scheme can negotiate a contract with those providers ”

PMBs are not the only issue Towert has with regulations She also objects to the imposition of open enrolment, which means schemes cannot refuse an applicant cover, and community cover, which means everyone in a benefit option pays the same premium

“Outdated and incomplete regulation has resulted in an ongoing deterioration in the number of lives covered by medical schemes,” she says “Younger, healthier individuals are choosing not to belong to medical schemes until they need health care and, even then, they are able to voluntarily opt out of the system What this boils down to is that the remaining individuals being covered by medical schemes are ageing and becoming progressively less and less healthy, and more expensive to cover ”

The question is, just how sustainable is the medical scheme industry? Medical schemes say they need to

Medshield Medical Scheme principal officer Kevin Aron

increase their base and bring in a larger pool of younger members to cross-subsidise older and less healthy lives Towert agrees, pointing out that without regulatory reforms, particularly in the areas of mandatory membership, risk equalisation and PMBs, the future looks challenging

“Membership could continue shrinking with an ageing base, leading to higher claims utilisation and contribution increases that outpace inflation,” she says

In South Africa, medical scheme contribution inflation has consistently outpaced salary inflation by 3%-4% annually As a result, says Towert, a growing number of medical aid members are downgrading to more affordable plans or discounted options “Even more concerning is a trend which is seeing dependants being removed, with families making difficult decisions to remove

healthy dependants from coverage and prioritising sickly family members to help reduce costs,” she says

All medical schemes in South Africa are guided by the Medical Schemes Act and the Council for Medical Schemes (CMS), which acts as the industry’ s regulator In response to growing demand for more affordable health-care cover, a number of financial service providers have introduced health-care insurance products These differ from medical scheme plans and are typically offered at a lower price point because they are not obliged to offer expensive PMBs Health-care insurance products are popular among younger professionals looking for cost-effective coverage for their day-to-day health-care needs

Towert says the growth of primary health-care insurance is a direct consequence of

regulatory shortcomings in medical schemes, coupled with growing demand for affordable health-care cover

The medical scheme industry has submitted proposals to register low-cost benefit options However, the CMS has not yet finalised the rules governing these options

Reduced and removed co-payments minimise out-of-pocket expenses

Medshield Medical Scheme reduced and removed co-payments to minimise out-ofpocket expenses for members, while also increasing benefit limits by at least 6% on numerous plans In addition, the scheme announced improved GP and revamped hospital networks, and introduced specialist networks which will minimise co-payments for non-PMB ailments It has also increased benefit limits on oncology, external prosthesis

and pregnancy scans, as well as basic and specialised dentistry and optical services

“A priority for Medshield has been to unlock real and personalised value for members,” says Aron “Our value proposition is reflected in Medshield’ s promise to provide genuine support and meaningful experiences across every member interaction Our 2025 benefit offering and contribution adjustments balance affordability, increase members’ access to quality health care and ensure Medshield remains a viable and sustainable medical scheme, as evidenced by the scheme’ s latest AA- with a positive outlook GCR rating

“We are a stable organisation that will be around in the long term, with a selection of member-centric benefit plans to cover members’ needs as they navigate life,” says Aron As part of the 2025 Medshield product offering, a streamlined

Special Report ?????

suite of benefit options caters for different health-care needs from birth to maturity Medshield offers eight benefit options and two efficiency discount options, specifically developed to cater for various health-care needs

“At Medshield, we work together We unlock real, personalised value for our members This value proposition reflects our promise to provide genuine support and meaningful experiences across every member interaction We always have the members’ best interests at heart, being their true partner for life ”

Besides receiving more benefits, members will continue benefiting from Medshield’ s value-added services in 2025

A mental health medicine benefit has been included for 2025, as well as the new Medshield Mind support portal, a user-friendly, comprehensive and accessible web platform

designed to provide Medshield members with valuable resources and tools to help them maintain good mental health Members can also unlock value through Medshield Wellness, Medshield MOM and Medshield Kids

A new WhatsApp service line and a revamped Medshield app will improve member experience

Medshield also announced an additional gap cover partnership with leading insurance brand Sanlam Medshield members can now benefit from below-retail prices

“Our collaboration with an additional gap cover partner is designed to close the gap between a member’ s Medshield plan and the actual health-care costs incurred, ensuring that Medshield members can access quality health care without risking the stress of unexpected medical bills,” says Aron

Ensuring the scheme’s long-term sustainability

Bestmed Medical Scheme announced the second-highest average contribution increase, at 12 75% CEO and principal officer Leo Dlamini says the current and the following year ’ s financial position determines a scheme’ s contribution increase “Bestmed has maintained relatively low single-digit increases for the past six years and, as such, required a higher increase for 2025 It is important to note that over this period, the scheme increased the overall benefit option limits while limiting the reductions of benefits,” he says

Dlamini says beyond delivering value-for-money options to its members, Bestmed’ s priority is balancing the cost of providing extensive coverage with managing long-term

Bestmed CEO and principal officer Leo Dlamini

Special Report ?????

financial sustainability

“We have seen an industrywide phenomenon where schemes’ solvency ratios are decreasing, which for many is a direct result of contribution increases that were historically below inflation, and an increase in claims and treatment costs, especially related to oncology and pathology In recent years, the cost of health care has risen substantially and medical inflation has, for a number of years, exceeded CPI, which is a major contributing factor in the annual medical scheme increases being higher than CPI Additionally, the industry has seen a proliferation of fraud, waste and abuse ”

He doesn’t see value in comparing schemes’ contribution increases, given that each one ’ s financial position is unique “Historical decisions regarding benefit richness, contribution increases as well as claims experience will determine the current financial position Subsequently, different schemes will have differences in these variables and thus different increases,” he says

Dlamini says the scheme recognises the financial strain health-care costs can place on members, especially those in lower-income brackets, which is why it offers a range of benefit options to suit different financial needs

“Bestmed remains among the most affordable medical schemes in the country, with an average contribution

increase for the past five years (from 2020 to 2024) of 7% and 7 8% if we include the 2025 increase,” he says Contribution increases, says Dlamini, are an outcome of what members require in terms of claims and what the service providers offer in terms of price for the services they provide Medical schemes respond to these drivers both claims utilisation and price of clinical services by adjusting contributions to ensure there is sufficient funding collected to fund these costs If there is an overrecovery in any one year, the amount remains that of the scheme and is used to fund members’ future health-care needs

Enhanced benefits include a focus on mental health

Bonitas Medical Fund announced a weighted increase of 10 2% for 2025, ranging from 8 7%-14 9% per plan, with the latter affecting only 1% of members The scheme has added a mental health component to its GP network to facilitate early disease detection, diagnosis and multidisciplinary care coordination through a highquality network of doctors

In addition, it will provide more personalised engagement and support through an enhanced maternity programme to treat antenatal and postnatal depression

Other new benefits, says Lee Callakoppen, principal officer of Bonitas Medical Fund, include hearing loss manage-

How to reduce your medical aid costs

● The increased cost of living, persistently high interest rates, salary increases that are not keeping pace with inflation and the growing cost of medical scheme membership are combining to put household budgets under more strain than

ment, which includes free online hearing screening for all South Africans and not only scheme members Bonitas members on selected plans will receive hearing aids, audiology services and hearing aid acoustic services if they use a network provider

A weight management programme, led by a biokineticist registered with the Biokinetics Association of South Africa, provides a holistic approach to weight loss that includes access to a dietitian and a psychologist for support on exercise, nutrition and mental health

It has enhanced its maternity programme to include support for expectant mothers, including early identification and weekly engagement for high-risk pregnancies, and post-childbirth follow-ups to mitigate the risk of prenatal and postnatal depression The programme also includes mile-

stone reminders for children under three, immunisation reminders and online screenings for infant and toddler health as well as screening by an ophthalmologist for premature neonates on all options except BonCap Antenatal vitamins are covered on all plans through savings or the scheme’ s Benefit Booster

Bonitas’ s Benefit Booster is the only benefit in the market which provides members with access of up to R5,000 as an additional benefit to use for out-of-hospital expenses, at no extra cost. For 2025, the scheme has opted to bolster the Benefit Booster on seven plans to offer even more value for money while providing access to additional benefits

The scheme’ s geriatric care programme is a personalised range of screening, prevention and wellness benefits for older members which can be performed in the comfort of their own homes It includes wellness screenings, vaccines for flu and pneumonia, age-appropriate screening for prostate, breast and cervical cancer, osteoporosis screenings, coordination of care with a nominated GP, chronic care management and support and fall risk assessments to allow senior members to live independently

Cutting-edge, AI-driven diabetic retinopathy screenings are offered in partnership with PPN The screening also detects several other conditions that could affect the eyes x

ever The latest Altron FinTech Household Resilience Index reveals that households spent 36% more on servicing debt in the second quarter of 2024 than in the first quarter of 2022

The index, which investigates the financial resilience of South

African households particularly their ability to cope with debt and repay loans found that the average debt cost burden on South African households reached its highest level in 15 years in the second quarter of 2024

The good news is that there are ways to reduce your medical aid costs, says Anthea Towert, a certified financial planner professional and principal consultant at Insight

Advisory Solutions

“Start with a medical scheme hospital or core plan that reimburses health-care professionals at 100% of the medical scheme rate This ensures you are fully covered for private hospital treatment for both emergency and planned hospital events, as well as comprehensive treatment for chronic illnesses If it’ s an option, select a network-enabled hospital plan if there is a

Lee Callakoppen, principal officer of Bonitas Medical Fund

hospital network facility near you, as these usually offer lower premiums and better value ”

Next, she suggests supplementing a hospital plan with gap cover “This will cover the major medical gaps left by your medical scheme and help with shortfalls on inpatient doctor fees that exceed scheme rates, co-payments and sublimits on scans, scopes and out-of-network hospital admission deductibles ”

Gap cover has become a must-have, agrees financial planner and adviser Dawn Ridler She advises her clients to use a gap cover not linked to their medical aid “It requires a little more paperwork but is usually more cost-effective ”

Ridler cautions that some gap covers have an entry age limit, which is why it’ s advisable to take it out sooner rather than later

When it comes to day-to-

day medical expenses, Towert says there are two options The first is to add an affordable primary health-care insurance policy to cover doctor visits, basic pathology and radiology, basic dental and optical care and prescribed medication

The other option is to add a medical savings account to your medical scheme plan, with a set savings amount based on your chosen plan “The benefit of medical scheme cover is that the full contribution, including the medical savings account portion, qualifies for a medical tax credit Primary health-care insurance, however, is taxable,” she says

If the annual medical savings account allocation is not sufficient, set aside additional funds in a personal savings account specifically earmarked for health-care expenses

Most financial advisers will recommend downgrading to a

more cost-effective plan rather than opting out of medical scheme membership There are two reasons for this First, regulation requires medical schemes even on the lowesttier benefit options to provide access to essential treatments, including chronic medication, and hospital care for lifethreatening conditions Healthcare insurance is not regulated in the same way and lacks this prescribed minimum benefits coverage guarantee Second, if a member exits a medical scheme and later wishes to rejoin, they can face waiting periods or late-joiner penalties, especially if they are older than 35 By downgrading, members keep their continuous essential coverage, avoiding these penalties and delays

Throughout 2024, medical schemes have focused on enhancing member engagement and improving service delivery Digital health solutions,

telemedicine and wellness programmes have become more prevalent, offering members convenient and cost-effective ways to manage their health These innovations have improved access to care, controlled costs and enhanced health outcomes

There is now more positivity about the South African economy; however, unemployment remains high, and consumers are having to make difficult financial choices The medical scheme industry is not immune to this trend Consumers are taking their financial constraints into account when evaluating their medical scheme choices based on the cover they can afford, rather than the cover they actually need, leaving them at risk x

Writer: Lynette Dicey Sales: Cris Stock

life

FOOD

THANKSGIVING, A MOVEABLE FEAST

A US tradition is catching on here, but it needs some tweaking

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

John Besche

● On the fourth Thursday of November, Americans put politics and personal grievances on pause to count the year ’ s blessings over a hearty Thanksgiving feast At least in theory Cornucopia centrepieces and “Kumbaya” moments live mostly in Martha Stewart catalogues and Norman Rockwell paintings Thanksgiving tables are fertile ground for awkward silences, bitten tongues, and quotable rants from drunken uncles

There’ s an unwritten record of who carved the turkey wrong in 2007, and there’ s probably a burnt casserole to pick at

politely Still, there’ s something wonderful about Thanksgiving’ s invitation to look at the world through rose -tinted glasses by gathering around a large bird or its meatless alternative and give thanks

Abraham Lincoln once invoked Thanksgiving to “heal the wounds” of a nation captured by civil war, and 161 years later, most Americans wouldn’t miss it In a globalised world full of discord and distress, Thanksgiving is catching on in unexpected places, South Africa included

“[South Africans] like what Thanksgiving is,” says Chris Keene, CEO of Thrupps & Co “You’ re giving thanks You’ re

giving back South Africans come in and say: ‘OK, we ’ ve got our family together We’ re also going to do Thanksgiving ’ Because they like the idea I think we ’ ve become a lot more of an open society, and people have embraced it ” Keene says Thrupps has catered to expat US families for as long as he can remember, but he didn’t pay much attention to Thanksgiving until about 10 years ago Nowadays, the grocer that’ s nearly as old as Joburg puts on a weeklong Thanksgiving display table at its Illovo emporium on Oxford Road, and Keene has noticed that local requests for full Thanksgiving spreads outnum-

ber inquiries from Americans Dani Pick, owner of the Butcher Shop & Grill, says turkeys fly off the shelves at the Mouille Point branch partly because more Americans are making a home in Cape Town, and also because locals see Americans celebrating Thanksgiving in “movies, series, magazines, all those type of things, TikTok and it’ s almost like a ‘monkey see, monkey do’ thing” It’ s a phenomenon Pick has observed at the Sandton location too, and he doesn’t see the demand for Thanksgiving staples abating soon The spirit of the holiday is beguiling in its own right Keene’ s eyes brighten when he

life ?????

says his own family have started to celebrate a form of Thanksgiving in recent years It’ s a convenient way for South African families to get ahead of Christmastime logistics Since so many South Africans travel over the holidays, Keene says, the fact that children are in school and parents are at work in November gives friends and families a chance to have a fullscale holiday feast that wouldn’t be possible come December Thanksgiving might have made inroads in South Africa, but the imagery

Americans associate with the holiday could be a tougher sell not least because the idea of wearing a scratchy Gobble Gobble jersey isn’t all that attractive on a muggy summer afternoon in KwaZulu-Natal Down to the corny cartoons lining turkey day tableware, Thanksgiving décor reflects a deeply US mythology unlikely to resonate with South Africans

does the tradition of schoolchildren fashioning brassbuckled pilgrim hats and handprint-shaped turkeys out of construction paper and it’ s maturing with the country’ s own sensibilities in a way South Africans can relate to

It’s almost like a ‘monkey see, monkey do’ thing

Any American over the age of five can recount the story of the first Thanksgiving four centuries ago, when pilgrims broke bread with Native Americans, who helped the settlers survive their first winter in Plymouth, Massachusetts

Legend has it that the Mayflower Pilgrims, the indigenous Wampanoags, and a Native American liaison to the pilgrims named Squanto celebrated for three whole days in convivial peace As it turns out, the first Thanksgiving might not have had turkey at all, the liaison’ s name wasn ’t really Squanto and his fluent English was no happy coincidence Tisquantum had been kidnapped and enslaved by an Englishman and returned to what was to become the US to find his tribe had been wiped out by disease, leading him to live among the Wampanoags on Cape Cod

The popular account of the first Thanksgiving is historically dubious at best, a violent act of whitewashing at worst Thanksgiving’ s message of harmony and gratitude persists as

“Our awareness as a nation of Thanksgiving has evolved as we ’ ve come to understand and recognise our own history regarding the treatment of Native Americans,” an official from the US mission to South Africa says in a written statement to the FM “But the values we celebrate on this national holiday community, family, gratitude, charity are as important to Americans as ever Our celebration of the holiday crosses religious, ethnic, racial, socioeconomic and political lines we all celebrate as fellow Americans in many ways on that day Those values and the celebration of unity through diversity are shared by both the US and South Africa, making our Thanksgiving celebrations here in South Africa particularly special ”

The US embassy in Pretoria cannot confirm how many Americans live in South Africa, but all are aware that Thanksgiving celebrations in Mzansi are indeed special South Africa’ s Day of Reconciliation on December 16 falls just 18 days after this year ’ s Thanksgiving on November 28, when the southern hemisphere summer will call for creative takes for the South African palate

Pick says his US clients have started to take cues from South African summertime staples

“The Americans have started to follow our Christmas style of lunches and so on, ” says Pick “We celebrate in the summertime, as opposed to the winter, and for that reason, we tend to be eating a lot more things like seafood, prawns, those kind of things that we put on the braai ”

Pick says the deli section of the Butcher Shop & Grill though not the restaurant

will carry all kinds of meats suitable for Thanksgiving: lamb, rib and, of course, turkey Though shoppers in South Africa are unlikely to find an XXL wild turkey flown in from Pennsylvania Dutch Amish country

Keene at Thrupps says his store hasn’t been able to import turkeys from the US since Covid

Pick says the US can ’t supply enough, so the Butcher Shop & Grill is bringing in turkeys from South America “[They’re] not as large as the American turkey So the turkeys we sell are anywhere from 2kg to 4kg.”

Though Peruvian and Brazilian turkeys often sold in South Africa are about half the size of the North American behemoths entry-level birds weigh in at about 6kg the smaller birds are turkeys just the same, and there are a couple of benefits to a lighter bird For one, they’ll fit inside a South African oven Two, they roast much faster obviating the international charge to consult the pros at the 1-800Butterball Turkey-Talk Line, a hotline that helps with turkey prep And two 4kg turkeys can provide two different stuffings to easily furnish a feast for 15

While roasting is the traditional approach, and first-timers might want to err on the safe side, there’ s no shortage of online tutorials to help the bravest hosts deep fry or encase their turkeys in monkfish, or even conquer the challenging turducken, deboned chicken stuffed into a deboned duck and further stuffed into a deboned turkey

If you ’ re looking to participate in Thanksgiving without spending two days in the kitchen, Thrupps offers spreads complete with its homemade cranberry sauce from November 22 Keene says customers

need call only a day in advance for bespoke stuffings, and his team will do their best to accommodate any request, but the default will be a classic sage -and-onion stuffing made from scratch

Naturally there’ s no dinner party without a wine pairing Though Keene prefers a chilled Cederberg chenin blanc as a complement to turkey, he says Thrupps will offer a seasonal light red Thanksgiving favourite too

On the third Thursday of the month (November 21 this year), France releases its first red of the year ’ s harvest: Beaujolais Nouveau Elgin estate Radford Dale believes it has a South African equivalent The estate’ s business development manager, Tom Prior says the Radford Dale wines made with the Beaujolais varietal gamay, priced between R199 and R399 a bottle, come close

The winery is the first local estate in 20 years to cultivate gamay grapes It believes the way gamay takes to South African terroir will further highlight the country’ s status as a viticultural powerhouse Radford Dale’ s 8ha of gamay vines represent nearly the entire local planting

“Gamay we see as being as adaptable to our vineyards in the Cape as chenin; it loves granite soil compositions,” says Prior

Inevitably, around Thanksgiving dinner tables in the US and even here there will be talk of Donald Trump, but Joe Biden will have the stage: a few days before he will deliver his final presidential turkey pardon from the White House x

Dani Pick the Butcher Shop & Grill

crossword

Cryptic No 299

ACROSS

1 As a whole where diplomats excel (6)

4 Red Sea wrongly deleted (6)

9 Upset some runners? Let’ s hear about it (5,3,5)

10 Exclude a possible cause of faulty measurement (4,3)

11 Badly cared for tree (5)

12 It will be less than the normal fare (5)

14 Silly, but not completely insane (5)

18 Start operating in the theatre (5)

19 Distribute information for the press? (4-3)

21 Court verdict on Eve? (5,8)

22 Luther is about to dash violently (6)

23 Get a point before time? Not quite (6)

DOWN

1 Introduce rents I adjusted (6)

2 Hit or miss affair indicating a wrongful conviction? (5,3,5)

3 Monk’ s lodging has nothing for a music-maker (5)

5 The point of no return (7)

6 Rise! And it means the bank will make regular payment (8,5)

7 Barren land that’ s rested, perhaps (6)

8 Final result of a snap decision? (5)

13 Possession out of reach at telephone kiosks (7)

15 Cleaning brush, barely used! (6)

16 Husky banter (5)

17 In a way my sort is hardly fair! (6)

20 She’ s exact about one point (5)

PREVIOUS SOLUTION

Across: 1 Comes to light;

7 Smart; 8 Pence; 9 Ire; 10 Flour mill; 11 Yonder; 12 Layman; 15 Acts a part; 17 Nap; 18 Circa; 19 Booms; 21 Short circuit Down: 1 Charity match; 2 Sea; 3 Option; 4 Important; 5 Hindi; 6 Selling point; 7 Stern; 10 Free as air; 13 Monks; 14 Iambic; 16 Torch; 20 Oar

backstory

Mellisa M oodley

Regional CFO Africa at Westfalia Fruit

What’ s your one top tip for doing a deal?

Spend time thoroughly understanding what the other party aims to achieve from the deal, and use that insight to find common ground. Active listening and timing are also crucial in this process

What was your first job?

I worked as a cosmetic sales consultant at a Foschini store on weekends while studying full-time at the University of KwaZulu-Natal to complete my bachelor’s and postgraduate degrees in commerce.

How much was your first pay cheque, and how did you spend it?

In 2001, I earned R10 per hour on Saturdays and R15 per hour on Sundays. Growing up from humble beginnings, I needed to earn money to cover personal expenses and contribute at home. My first luxury purchase was a pair of Levi’s jeans, a brand I had always admired, and it gave me a sense of pride to be able to afford and wear my first branded item

What’ s the one thing you wish somebody had told you when you were starting out?

Take the time to explore your career options and choose a path that aligns with your personality. As a newly qualified chartered accountant, I was focused on finding a job in a successful company, but true job satisfaction comes faster when you choose the right path from the start

Additionally, I wish I had realised the importance of having a mentor earlier. Allowing strong senior women to guide me boosted my confidence and belief in my ability to overcome barriers.

If you could fix only one thing in South Africa, what would it be?

The unemployment rate Increasing employment would reduce crime, raise disposable income and boost GDP, ultimately attracting more foreign direct investment Also, we need to ensure unfettered access to education to unlock the potential of our younger generation.

What’ s the most interesting thing about you that people don’t know?

I was born on M other’s Day, which I believe is a forever gift to my mom I am also a mother of three wonderful boys born 18 months apart. Balancing work and family life has been challenging, but I’ve managed it with self-preservation, daily exercise, proper nutrition and strong support from my husband I’m also a foodie, and I believe food is a small luxury of life that brings people together and strengthens connections

What’ s the worst investment mistake you ’ ve made?

Investing in broad-based BEE share schemes with long vesting periods

The underlying shares performed well initially, but they declined just before the vesting date

What’ s the best investment you ’ ve ever made? And how much of it was due to luck?

Buying my first home We were fortunate to find it before its first show day. Though it was a fixer-upper, we negotiated a good price, and with some improvements its value has appreciated significantly.

What’ s the best book you ’ ve read recently, and why did you like it?

My two go-to books are Mind Power by John Kehoe and The Monk Who Sold His Ferrari by Robin Sharma. I reread them every two years to realign my thoughts and focus on building and shaping my inner self. Selfdiscipline, gratitude and balance all contribute to my goal of inner peace.

What is the hardest life lesson you ’ ve learnt?

Be selective about who you share your precious time with spend it with those who genuinely care about you and celebrate your successes. And base your happiness and peace of mind on things in your control; don’t let others dictate your emotional state

What phrase or bit of jargon irks you most?

“This is above/beyond my pay grade” . While it’s acceptable if someone genuinely lacks the knowledge or authority to decide, this phrase is often used to avoid difficult or challenging tasks.

What is something you would go back and tell your younger self that would impress them?

Enjoy and appreciate your youth don’t rush to grow up, as adulthood brings responsibilities. Also, aim high and don’t limit your ambition. My life has evolved in ways my younger self never imagined possible

If you were President Cyril Ramaphosa, what would you change, or do, tomorrow? I would immediately address the electricity and water shortages, which are essential for our daily lives and the success of businesses. My next focus would be on education and health care, ensuring they are accessible and affordable for all.

Homegrown. World class.