Financial Mail April 16 2020

Mboweni and Kganyago go all-in on Covid bailout P4

The drivel machine: 5G, vaccines and viruses P15

Hlophe soap opera: how hasn’t he been impeached? P28

Like it or lump it: retailers oer 20% to landlords P44

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How Covid-19 broke air travel

by TJ Strydom

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41

55

fox

features

money&investing

life

All quiet on the deal front

Power and persistence

Keeping its cash close

Wildlife’s Covid bonanza

cover story

FM FOX 9 Deals (almost) on Ice 10 Another Week 11 Trending 11 Dinner Party Intel 12 Diamonds & Dogs 12 Hot Property 14 Digital

Pattern Recognition Numbers Gimme Entrepreneur Coronavirus in Pictures

FEATURES 22 Airline Industry 28 John Hlophe 32 Political Comment 34 Social Housing 36 Covid-19 Response AFRICA & INTERNATIONAL 38 Zambia MONEY & INVESTING 41 Capitec Results

43 44 45 47 47 48 50 51 52

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cover story

Bank Relief Retailers vs Landlords, 2.0 Renewable Investments Market Watch Global Markets The G Spot Investor’s Notebook Economic Indicators JSE Top Stocks

Gro00 unded Mboweni and Kganyago go all-in on Covid bailout P4

ADFOCUS 54 Telecoms FM LIFE 55 Nature 57 Inbox 58 A Moveable Feast 59 Memes

The drivel machine: 5G, vaccines and viruses P15

Hlophe soap opera: how hasn’t he been impeached? P28

Like it or lump it: retailers offer 20% to landlords P44

by TJ Strydom

15 16 16 17 18

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How Covid-19 broke air travel

PicEG credit R ULHere ARS 4 Editorials 5 Editor’s Note 6 At Home & Abroad 7 Letters 8 Protected Space 40 In Good Faith 60 Crossword 61 Backstory

April 16 - April 22 2020

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editorials MBOWENI, KGANYAGO GO ALL-IN ON COVID-19

Editorial

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Editor: Rob Rose.

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April 16 - April 22, 2020

could exceed 10% of GDP. Mboweni says that given the crisis, a higher deficit may be accommodated if it is temporary, and if reprioritised spending is directed towards health care and direct fiscal support to the most vulnerable people. But he stresses that achieving faster growth has now become “non-negotiable”.

For example, he says that SA must now implement energy reforms promised by President Cyril Ramaphosa, including reducing Eskom’s monopoly and relying more on renewable energy. “In the absence of urgent structural reforms, the considerable fiscal actions to mitigate the current crisis may leave the fiscus at the edge of a cliff,” Mboweni warns. It is conceivable that Ramaphosa and Mboweni will successfully leverage the crisis to force through pro-growth reforms that have been stalled by policy bungling and political resistance.

This would be extremely welcome, but it’s just too late — we have destroyed too much of the economy already.

In the run-up to the global financial crisis, the SA economy grew 5% on average for five years. In 2009, it contracted by 1.5% and shed 750,000 jobs.

This time the outcome will be many multiples of that. But for the past five years, the economy has battled to grow above 1%. Jobs have vanished and tax revenue has plunged, because SA just isn’t competitive any more.

In short, SA was not fiscally sustainable before Covid-19. After the pandemic, which will destroy thousands more firms and jobs, it will be a lot less so.

How SA recovers from this crisis depends on whether the government adopts an entirely new approach to managing the economy — one that puts growth above all else. We will know what path the government has chosen from whether the cabinet agrees this week to close SAA and permit Mboweni to borrow from the IMF. If not, SA will stagger over the fiscal cliff. As it is, we are teetering on the brink. x

123RF/Mathee Saengkaew

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ith the country facing its worst-ever recession, the Reserve Bank and the National Treasury have hauled out the big guns.

That fresh support is necessary is undisputed, but if a surge in spending and borrowing is not accompanied by a sea-change in the way the government manages the economy, the only result will be SA’s fiscal unravelling.

Governor Lesetja Kganyago and the Bank’s monetary policy committee holed up over the Easter weekend, recrunching the numbers. It now expects the SA economy to contract by a terrifying 6.1% this year, compared with its previous forecast of between -2% and -4%.

The prospect has been enough to make policymakers’ blood run cold. And the Bank, often accused of being slow and conservative, acted swiftly and unanimously. Despite the increase in country risk and collapse in the rand, it slashed the benchmark interest rate by another 100BPS in an unscheduled emergency meeting this week, following an equivalent cut last month. It takes the Bank’s total response to Covid-19 to over R600bn.

On the fiscal side there is a lot less space, but finance minister Tito Mboweni also appears to have dropped his initial restraint. Though Mboweni hadn’t revealed the full extent of his new fiscal package at the time of going to press, he is looking to borrow about $60bn, potentially from the International Monetary Fund (IMF), and is seeking cabinet permission to close SA Airways and SA Express, provide more support for small business and temporarily hike the child-support and old-age grants.

While the need for greater government support is unequivocal, it is less clear whether Mboweni can achieve what he’s promising — a large fiscal package to support households and firms, while safeguarding SA’s fiscal sustainability.

Mboweni declined to provide new growth and fiscal estimates, but the Bank has warned (based on its earlier forecast) that the 2020/2021 fiscal deficit

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HAPLESS TOURISM GAFFE

“

We are in a situation that demands swift action and exceptional methods … An essential part of our response to this emergency is the principle of solidarity,” said President Cyril Ramaphosa on Thursday evening, as he acknowledged the scars that an extension of the lockdown will leave on SA. Ramaphosa’s address was a rallying call to unity, and in that context it is lamentable that tourism minister Mmamoloko KubayiNgubane insists that BEE credentials, rather than financial need, will be the criterion for state support.

For one thing, many companies that may not have black equity partners almost certainly employ black staff. Cutting their access to funding based on a scorecard that measures something else entirely undermines Ramaphosa’s call for South Africans to pull together.

Indeed, there was no suggestion of preference in the president’s words — the government had pledged “a comprehensive package of economic support measures to assist businesses and individuals affected by the pandemic”.

South Africans of all races need to know the state has their back; it is fundamental to whether our lockdown will succeed or fail. All players must pull together, especially now — and if KubayiNgubane doesn’t get that, she shouldn’t be in the government. x

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DEATH BY A THOUSAND PAPER CUTS @robrose_za roser@fm.co.za

The projections are dire: GDP growth down 6%-10% and 1-million out of work. To ensure it’s temporary, we must sideline the pencil-pushers

T The danger is clear — myopic bureaucrats mindlessly vetoing applications

here’s a cartoon that ridicules the angst among financiers about putting the world’s economy on ice. The scene is a placid grassland, 65-million years ago. Two brontosauruses gaze at a meteorite burning through the sky, destined for somewhere in the Yucatán peninsula of what is today Mexico. The one turns to the other and exclaims: “But what about the economy!”

To those who’ve seen patients gasping for air on ventilators in New York, the clamour for lockdowns to be lifted “to save the economy” must seem a bit like this. And with a virus that has caused 125,000 deaths around the world now seeping into SA’s townships, it seems borderline sociopathic to speak about “necessary collateral damage” (read: the elderly) to keep the global economy chugging.

But the reality is, small businesses are being brutalised to an extent we’ve never experienced in this country. Our economy, which was already gasping for breath before this, is now firmly in the ICU. This week investment banker Martin Kingston, who is part of Business for SA — a task force from the private sector formed to tackle the virus — painted a bleak picture. “Our view is there is going to be a very significant 8%-10% contraction in the economy for 2020 depending on the length and extent of the lockdown,” he said. Later, Reserve Bank governor Lesetja Kganyago projected a 6.1% GDP contraction this year.

Either way, there’s going to be serious damage.

Worse: “A million people added to the unemployment numbers is what we expect,” said Kingston.

Based on Stats SA’s February labour force survey,

that would mean about 7.7-million people unemployed, out of a labour force of 23.1-million. It would push unemployment from 29.1% to 33.3%. And if you add in the 2.85-million “discouraged job seekers” who want work and can’t find it, that expanded rate blows out to 45.6%. (Or, put another way, there will be just 15.4-million people with jobs, supporting the other 43million South Africans.)

It sounds like a horror show, but as economist Paul Krugman has argued in The New York Times, it’s actually fine if people lose jobs temporarily, if they’re given cash to tide them over. The problem comes when you want to start the economy again, and those businesses have folded and those jobs don’t exist any more.

In recent weeks, Ann Bernstein’s Centre for Development & Enterprise spoke to 233 entrepreneurs about the impact of Covid-19. In all, 95% of them can’t pay staff and half expect they’ll go bust “I think that’s the end of our business,” said one man, who runs a fruit and vegetable business in Philippi, Cape Town. A Soweto spaza shop owner said he won’t be able to pay a cent to his four employees; as it is, “I will not even be able to sustain myself during this lockdown,” he said.

A fashion designer from Khayelitsha said her situation felt hopeless. “I do not qualify for a business grant either, because my documents aren’t up to date.”

These are the people who should be getting the emergency funding you read about. But 86% of these 233 businesses don’t know where to get this aid. And fewer than half would qualify anyway — some aren’t compliant with one or other rule, or don’t have the “six months of bank statements” and financial projections.

Others are excluded because they’re foreign-owned.

If you want to get a sense of why well-meaning initiatives fail, you can see it right there.

The danger is clear — myopic soldiers of bureaucracy, with their strictures and forms, mindlessly vetoing applications because someone wasn’t smiling in the passport picture. You’ve seen them in our labour departments, our home affairs offices and even our banks — unhelpful power-crazed grinches who would sooner bequeath their first-born than part with a cent of the money that isn’t theirs to begin with.

During an emergency, these bureaucrats are a pillow over an economy’s face. And make no mistake, it is an emergency. Take the story of Nosapho Dukuda, a car guard in Mthatha. Dukuda told City Press that without the R50-R70 she takes home on most days, “our reality is that we are going to die of hunger before the coronavirus kills us”.

President Cyril Ramaphosa, health minister Zweli Mkhize and their team get this. Which is why the talk is shifting to a “managed lifting” of the lockdown. But that is weeks away, you’d wager.

So it means that the government, and business, must do better to get relief to those who really need it.

If they want any businesses left standing, we can’t have the pencil-pushers manning the counter. x April 16 - April 22, 2020

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at home & abroad by Justice Malala UNLEASHING THE DICTATOR WITHIN During this lockdown, some of our politicians have let their masks of ‘commitment to democracy’ slip

@justicemalala

T

he extraordinary times we are living through with Covid-19 have, quite rightly, called for equally extraordinary measures to contain the spread of the virus. Measures we thought we would never again see in our country — army personnel in the streets, curfews and even surveillance of our movements and communications — have become commonplace.

We, the people, were prepared to give up many of the freedoms and rights we take for granted for the greater good, for all of us to survive the pandemic. These are extraordinary times, we told ourselves, and all of us needed to make extraordinary sacrifices for the sake of our country and our fellow citizens.

It is, however, always useful as we complete the three weeks of our first lockdown to remind ourselves that these freedoms we fought for — the rights that are enshrined in our bill of rights and which suffuse our entire constitution — are sacrosanct. In times of major stress in societies, here and elsewhere, the temptation to discard these most fundamental of rights is at its highest.

It is already clear that the war to

There are many among our ‘leaders’ who believe dictatorial actions and violence are the medicine that SA needs 6

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April 16 - April 22, 2020

Gallo Images/AFP/Pieter Bauermeister

defeat the coronavirus will test our leaders’ commitment to these rights. It is a time when the use of the army and its might will most tempt many of our leaders to think: “Hey! Maybe things should always be this way.” We must guard against such temptations.

We are not a military or police state.

The past three weeks have illustrated that many of our leaders would like us to be a police state. They would like to issue orders, act with impunity, and not be accountable to any institutions we have established (such as the Independent Police Investigative Directorate) or to the people themselves. As visuals of police brutality flooded social media, some of our politicians let their masks of “commitment to democracy” slip. The dictator within them is not very far under the skin.

On the first day of the lockdown, a journalist asked police minister Bheki Cele if he believed the police were using more force than they should.

Cele laughed: “Wait until you see more force.”

This is not a matter to laugh about.

After just a week of lockdown, eight deaths had allegedly occurred at the hands of the SA Police Service. Only seven deaths had been recorded from

Covid-19 at that point.

We are a constitutional state. When a citizen breaks the law, you don’t force them to perform push-ups or leg lunges. You arrest them and give them a fair trial. Many might disagree. Yet imagine it was you, holding your Woolworths bags, going to do some shopping, and you encountered an overzealous cop. Would you want them to be judge, jury and executioner? No. Cele’s response is not the only one that convinces me that there are many little dictators in our ruling elite. Thabo Mmutle, a member of parliament’s defence committee, praised soldiers who had beaten civilians, saying they were correct to do so because in his view, the bill of rights had been suspended. This is a man who is supposed to provide oversight of the army. He is telling them to go forth and torture civilians.

You know you are really in trouble when the liberal DA’s Makashule Gana, in response to images of police torture, tweets: “This is the best way to deal with them. People must learn to listen and STAY Home. What’s so difficult with staying Home.”

The great Helen Suzman would have been ashamed.

There are clearly many among our “leaders” who believe that dictatorial actions and violence are the medicine SA needs. That sentiment can be found among political actors and leaders in the ANC, the DA, the EFF and many other political parties.

The battle, then, for those who love freedom is to continue to make noise — now and into the future — about the need for accountability and the return to the tenets of our constitution as soon as possible after this crisis. We must not linger here, in this extraordinary state, because there are too many among us who want to stay forever in a country that is like a dictatorship. x

you said... letters

Setting the record straight on GBK I have just read Bruce Whitfield’s article on Gourmet Burger Kitchen (GBK), “Fed Up with Flipping Burgers” (Money & Investing, April 9-15).

Whitfield is correct in that I might have signed the deal, but that particular deal — like all the others in my time as CEO — had the full and unqualified backing of the entire Famous Brands board. And that’s a board representative of seasoned business professionals, most with an impeccable business record of their own.

The impression constantly communicated in the media that I — on my own — was responsible for the GBK transaction is simply not accurate.

Also, I was no longer the CEO of the company at the time, but rather had been retained by the board Kevin Hedderwick Sunday as the group’s strategic Times/Jeremy Glyn adviser, and it was in this capacity that I was mandated to seek an offshore asset for the business at a time when the SA business world was in complete turmoil.

Of course, I am deeply saddened as to how the GBK transaction unfolded after my time, but I can honestly and sincerely say it was not through any lack of a robust and in-depth due diligence, not to mention the guidance and advice of an army of professional advisers.

Kevin Hedderwick Business consultant and former Famous Brands CEO

After hearing that I qualify for a payment holiday on my bond, due to it being up to date, I immediately applied. However, my personal banker seemed unaware of this new “product” the bank was offering.

After I shared the link to an article, my banker said they would consider my application — however, it could take a couple of months.

Now, I want to ask: are the banks really offering payment holidays? Or is this a method to play the role of good Samaritan while having no intention of being one? Or is it a ploy by the banks to improve their books (because they know there are going to be mass defaults)? By giving someone a payment holiday, the debtor will effectively be up to date and in good standing even after three months of nonpayment — in other words, no write-downs.

The process reminds me of an election that seems free and fair, but the number of polling stations in the opposition strongholds are reduced from 1,000 to two. Because of the long queues, people give up and don’t vote. Afterwards, the country celebrates the ruling party’s good stewardship, and how it acted in the best interest of its people. #NoSuchThingAsAFreeLunch Name withheld Joburg

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

good week On Monday, the public got its first sight of the man leading health minister Zweli Mkhize’s health team. And Dr Salim Abdool Karim, who is also a professor of global health at Columbia University and vice-chancellor for research at the University of KwaZulu-Natal, was impressive indeed. As he explained his models of the Covid-19 pandemic to a public starved of exactly what data is driving SA’s response, it was a reassuring sight. Even if his message that SA won’t escape the virus wasn’t reassuring in the least. x

bad week You’d think, after his great “quantity easing” moment, ANC secretarygeneral Ace Magashule would have sworn off making pronouncements about the economy. Yet he remains determined to wade into waters where those more able may hesitate to dip a toe. In his latest edict, the RET crusader has taken a swipe at Tito Mboweni for suggesting that SA consider IMF help during the Covid-19 crisis. Of course, if we simply print more money, all our problems may disappear — much like a certain premier’s Pierneef painting ... x April 16 - April 22, 2020

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123RF.com/Stuartphoto

Bank critics can never take a holiday

protected space by Thuli Madonsela THE MOMENT TO SEIZE Our Covid-19 response is hurting some more than others. This is the time to address that inequality

I

t is said that when you hit rock bottom, the only way left for you to go is up. If this is such a moment for our country because of Covid-19, we must treat it as a wake-up call, and address the structural inefficiencies and injustices in our society.

You’d have to agree that SA is pretty close to rock bottom. This was clear when Moody’s downgraded SA’s sovereign rating to junk status two weeks ago and the rand tanked.

Sunday Times/Esa Alexander

I must admit that until economists gave us the lowdown on the implications of the downgrade, I didn’t realise the result would go beyond just borrowing at high interest. It also heightens the risk of capital flight from government bonds and a run on the rand.

It didn’t help that this took place while SA was in lockdown to arrest Covid-19’s spread, which had already heightened the climate of volatility, uncertainty, complexity and ambivalence. The virus hit SA’s economy when it was already in intensive care.

Still, in every adverse situation there is collateral value. In this case it is the time to re-examine our priorities. In recent days my department at

The virus hit SA’s economy when it was already in intensive care 8

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April 16 - April 22, 2020

Stellenbosch University hosted a Covid-19 digital roundtable titled “Social Justice and Mental Health in the Time of Corona”. Professors from Oxford, Stellenbosch and elsewhere engaged with students and the public about the implications of the virus for poverty, inequality and mental health.

The speakers agreed that to combat the spread of the disease the government could not avoid restrictive regulations with adverse consequences. But while Covid-19 treats everyone the same, the policy response harmed some more than others, due to SA’s glaring socioeconomic disparities.

Consider the picture on the cover of the FM’s “lockdown edition” two weeks ago of a lone rickshaw on an empty Durban promenade. It showed crisply how the self-employed and the informal sector are being hit far worse than many other parts of our economy.

Could the government have done better? It’s true that it had limited policy options, and that sacrifices were inevitable. But were some of the unequal sacrifices avoidable?

During the roundtable the speakers — among them Oxford professor Sandra Fredman, former SA statisticiangeneral Pali Lehohla and myself — applauded the government’s swift and decisive action. But we also highlighted policy design defects that undermined the long-term pursuit of equality and the ideals of shared prosperity.

There was consensus that we need to do more to use data analytics to predict the likely social justice impact of any policy. This means implementing the policy in a virtual environment to assess the impact on various diverse groups.

In the UK this is a requirement under section 149 of the Equality Act.

We don’t do this well in SA, even though I believe a similar exercise is also required under our constitution.

So what would such an exercise entail? You’d have to ask whether each regulation would cause an equal burden, or benefit, across the range of poor and rich; small companies and big business; commuters and car owners; people in big houses and those in shacks; people in cities and those in rural areas; those who have mental health issues and those who don’t; the old and the young; and citizens and immigrants.

Of course, it doesn’t mean that if a policy is likely to harm or benefit one group more than another it must be abandoned. But policy design must be informed by the lived reality of all, using socially disaggregated data — information about various parts of the population. Policy can’t just be modelled against the lives of those who create it.

In Canada, where the impact of the government’s Covid-19 rules has eroded income, economic packages have been designed not simply to protect formal business and jobs, but also to help individuals who are struggling.

In our case this would mean also covering the person who pulls the rickshaw, the car guard and Gogo Dlamini selling crafts.

Compensatory packages, the roundtable concluded, must also factor in the impact of Covid-19 on areas beyond just the economy — like our mental health and education systems.

Many successful people will tell you their journey began only once they’d hit rock bottom. This moment is a chance for SA to reflect on the true meaning of advancing shared prosperity and a society based on democratic values, social justice and human rights. It’s our time to fortify SA so that next time there’s a crisis, we won’t just be firefighters. x Madonsela is the law trust chair in social justice at Stellenbosch University and founder of the Thuma Foundation

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

Most firms have hunkered down in the hope of riding out the Covid-19 lockdown, but a couple of small new deals have been struck Marc Hasenfuss hasenfussm@fm.co.za

ý There has been a paucity of corporate activity during the Covid-19 shutdown — unless investors regard the delaying of dividends and postponing of financial results as noteworthy events.

And the deals that have been brokered have not made headlines.

As small as these transactions are, they do at least represent a semblance of “business as usual” amid the persistent pandemic pronouncements.

Most market watchers expect pending deals to be placed on the back-burner during the the lockdown. No company is going to rush into deals if assets could become markedly cheaper in the foreseeable future. By the same token, a fairly rapid recovery in economic activity could mean bargainbasement opportunities being lost.

Perhaps the most intriguing proposal of the lockdown is the unbundling and separate listing of technology conglomerate Altron’s UK-based Bytes Technology Group (Bytes UK) on the London Stock Exchange.

This forms part of a strategy to release value for shareholders that has been in play since Value Capital Partners took control of Altron in late 2016.

Altron believes its share price does not reflect the “true value” of Bytes UK — noting the business “has increasingly developed a growth trajectory and strategic levers that are different to the rest of the group”.

What’s more, Altron points out that Bytes UK operates in a differ-

DEALS (ALMOST) ON ICE

All quiet on the deal front

123RF/ismagilov

ent geographical capital market with a highly rated peer group.

Bytes UK — which focuses on software licensing, security solutions, cyberconsulting solutions and public cloud migration — represents a fair chunk of Altron’s total business.

Bytes UK has delivered a 10year compound annual growth rate of 20% in revenue and 24% in pretax profit. In the 2019 financial year, Bytes UK contributed 41% of Altron’s revenue and 23% of its earnings before interest, tax,

depreciation and amortisation.

If things go according to plan, Bytes UK will also have a secondary listing on the JSE. Altron says that even in the midst of the Covid-19 pandemic, it believes it is appropriate to prepare for the unbundling and listing. The process could take between nine and 12 months.

Another interesting proposal involves Christo Wiese-controlled financial services boutique Mettle — which recently called off a buyout transaction with Genfin —

bumping up its stake in UK-based lending subsidiary Reward Finance Group (RFG).

Mettle will buy additional RFG shares from Truly Alternative Limited (TAL) for £2bn, boosting its stake in the venture to 82.5%.

RFG — which provides assetsecured short- and medium-term loans and invoice discounting to the UK’s business market — has been a star performer for Mettle. It has overshadowed the muted performance of its SA financial services operations. In the past inter-

April 16 - April 22, 2020

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ANOTHER WEEK

WITH APPRECIATION People walks past a poster thanking health-care personnel, shopkeepers, the French national security, post office staff and farmers, in Paris. Covid-19 has created newfound appreciation for the usually invisible and contracted-out working class — the nurses, hospital cleaners, carers, truck drivers and shelf-packers — who have been indispensable to our very survival

BY THE NUMBERS

im period RFG generated a profit after tax of £1.7m — suggesting some success in the company targeting small and medium enterprises not adequately serviced by traditional banks.

The proposed deal essentially facilitates an exit for RFG executives Thomas Flannery and David Jones (who held their interests in RFG via TAL) after a new executive team was put in place.

Meanwhile, diversified services company Accéntuate has proposed selling off its chemicals business, Safic, for R10m to a group of executives.

This will allow Accéntu- No company ate to focus on is going to its core floorrush into ing business as deals if assets well as reduce could become borrowings. markedly Safic’s net cheaper in the asset value foreseeable was R91.6m at future the end of June 2019 — almost three times more than Accéntuate’s current market value. But Safic also suffered a loss of R23.3m.

At the time of writing, rumours were also swirling that Brian Joffe’s investment company, Long4Life, had snaffled a stake of just over 1% in hotel group City Lodge, which has seen its market value plunge by over 60% in the past three months.

Long4Life is cash-flush, and has been on the lookout for new opportunities to diversify its “lifestyle”-themed portfolio, which includes interests in sports and outdoor retailing, health and beauty, and specialist beverages.

Joffe has previously — while still boss of Bidvest — slowly built strategic holdings in a number of listed companies. Possibly the best example would be pharmaceutical group Adcock Ingram, which Bidvest now controls through subsidiary BB Investment Co. Early views of Long4Life’s rumoured City Lodge foray are that the hotel group may well benefit from fresh strategic insight in an increasingly competitive affordable accommodation space in SA. x

April 16 - April 22, 2020

GLOBAL POVERTY AND COVID-19

Half a billion people

10 years is the estimated setback to global

could be pushed into a life of poverty if the coronavirus epidemic causes a 20% drop in global income levels, Oxfam and the UN say

efforts to tackle poverty.

In some regions – including Sub-Saharan Africa – the fight could be pushed back 30 years

East Asia & Pacific

239.8m 128.8m

South Asia

Latin America & Caribbean Middle East and North Africa Sub-Saharan Africa Europe & Central Asia Other high income

54.3m 44.9m

4.7m

meet this week to discuss debt relief for poorer nations

Total

547.6m Global poverty has been in decline since 1990. Since then,

44.6m 30.5m

Global multilateral institutions will

Earning less than $5.50 a day is the World Bank’s definition of poverty

this is its first projected increase

Source: Oxfam, UN Wider

DINNER PARTY INTEL...

“I don’t think we should shake hands ever again.

Not only would it be good to prevent coronavirus disease, it probably would decrease instances of influenza dramatically.”

Anthony Fauci, director of the US National Institute of Allergy & Infectious Diseases and adviser to the US president

TRENDING

Blustering deeper into corona quicksand As the Covid-19 death toll soars past 20,000 in the US, Donald Trump fans the crisis in his inimitable way Paul Ash

ý Donald Trump, as he likes to keep reminding us, is “a very smart guy”.

So smart, in fact, that he retweeted a tweet calling for US health czar Dr Anthony Fauci to be fired.

This is, after all, the president who first dismissed the coronavirus as a hoax and, when it became abundantly clear that it wasn’t, began pushing hydroxychloroquine as a cure, a claim that experts — by which we mean people with more than just gleanings from social media on medicine and science, not to mention the widow of an American who tried it — say has no basis in fact.

While the drug is being tested as a possible therapy, the global body of medical opinion is a long way from bowing in the direction of the White House and chant123RF/Erkan Atay

ing “Praise be! A cure!”

While the president seeks to divert attention from his epic fumbling of the biggest crisis to hit the US since the Great Depression or the Spanish Flu or World War 2 (take your pick), the numbers con-

tinue to stack up against him.

As of Tuesday, more than half-a-million Americans have been infected and 23,647 have died, 10,058 in New York state alone.

Yet the leader of the free world, who is becoming increasingly irascible as venom grows on the social media platform from which he appears to govern his country, is trying to tell state governors that he has “total authority” and that the country will open for business when he says it does. Never mind that the US constitution says otherwise.

On March 12, David Litt, a speechwriter for Barack Obama during his presidency, wrote a warning on Twitter following Trump’s “coronavirus address” in which he said no nation anywhere in the world was more prepared than the US. “As a former presidential speechwriter,” Litt wrote, “my careful rhetorical analysis is that he’s gonna get us all killed.”

The coronavirus crisis is Donald Trump’s Vietnam. x

The topics you have to be able to discuss this week

1. Wuhan markets reopen China’s wet markets are back in business this week, despite calls — including from the World Health Organisation — to keep them shut. The country lifted its Covid-19 lockdown on the city of Wuhan last week, and has given its markets permission to open. The markets sell freshly slaughtered animals, fish and exotic wildlife.

Chinese media reports that safety checks have been imposed. Shoppers must have their temperatures taken and show a green card that designates them as free of Covid-19 symptoms.

Huanan Seafood Market, cited as the likely epicentre of the outbreak, has been marked for permanent closure.

2. Dutch tulip disaster Tulip farmers in the Netherlands destroyed millions of flowers in recent weeks as the coronavirus crisis uproots the global floral industry. About 400-million flowers — including 140-million tulips — were crushed over the past month after lockdowns caused demand for flowers to wilt, The New York Times reports.

Usually, Dutch growers make €7bn between March and May, their busiest flower season. An average of $30m in flowers are sold daily.

Flower sellers have remained open in the Netherlands, but exports have dried up.

3. So sorry x 500 Indian police enforcing the country’s lockdown rules have borrowed from the teachers’ playbook. When 10 foreign tourists were caught flouting India’s restrictions they were made to write, 500 times, “I did not follow the rules of lockdown. I am very sorry”.

The tourists had been taking a stroll on the banks of the Ganges River over the weekend.

Indian police have other unusual ways to deal with violators of the lockdown. They have forced people to wear coronavirusshaped helmets, made them do squats and even played them Bollywood songs on a loop.

April 16 - April 22, 2020

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DIAMONDS & DOGS BY JAMIE CARR

HOT PROPERTY THE WOW HOUSE

Cineworld has announced that its executives will defer their salaries 12

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Philanthropy

Cineworld

Deep pockets to the rescue

Blood on the silver screens

Andrew Carnegie was the radical advocate DIAMOND for modern philanthropy, firing off zingers such as “the man who dies thus rich dies disgraced” at his fellow millionaires and living the beliefs laid out in his polemic The Gospel of Wealth by giving away $350m before his death in 1919.

At this current moment of crisis, we have seen the power of wealth to make a significant impact in society, with the pledges announced by the Oppenheimer, Rupert and Motsepe families leading the way in SA. Twitter’s Jack Dorsey has thrown in $1bn to fund global Covid-19 relief, and while Amazon’s Jeff Bezos has come under considerable flak for working conditions and wages at his distribution centres during the pandemic, he’s donated $100m to keep Americans fed.

On a more macro scale, Bill Gates and Warren Buffett’s Giving Pledge scheme has signed up 200 ultra-wealthy individuals with a combined net worth north of $1-trillion to commit to donating the majority of their wealth to philanthropic causes.

The Global Philanthropy Report sponsored by UBS suggests that foundation assets amount to about $1.5-trillion around the world, and the sector is relatively young, with nearly threequarters of identified foundations established in the past 25 years. 60% of assets are concentrated in the US, along with 37% in Europe, and while education is listed as the top priority of foundations, health and social welfare are likely to be shooting towards the top as the pandemic crosses the world.

We should be grateful that there’s substantial capacity, as there’s surely unprecedented need. x

One of the big questions floating around, DOG to be pondered by people with far too much time on their hands during lockdown, is how much consumer behaviour will be changed by the experience once things eventually return to some sort of normality. Now that working remotely has become the norm for so many, will the possibilities it offers be fully replaced by a return to the lengthy commute, the endless business travel and the opportunity to gaze longingly at Myleene from the marketing department?

Now that the Netflix-facing sofa has been permanently dented with the buttock imprints of endless hours of streaming, a trip out of the house to go and see a movie on the big screen sounds like a remarkably appealing proposition. But for the likes of Cineworld, which operates 787 cinemas in 10 different countries, there is a very real struggle for survival. Every single cinema is closed, the company has halted dividend payments, furloughed its staff and is in urgent discussions with its banks as it seeks to do what it can to stop the bleeding.

The company has announced that its executives will defer their salaries until there’s a bit more clarity on a way forward, but it is suffering from the impact of an acquisition spree when it bought Regal Entertainment in the US for $3.6bn in 2018, and it is still in the middle of a transaction to buy Canada’s Cineplex for C$2.8bn.

The shutdown could not have come at a worse time for the company, and the movie industry itself is in turmoil with releases delayed and production disrupted to a previously unimaginable level. x

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April 16 - April 22, 2020

WHERE: Camps Bay, Cape Town PRICE: R29.9m WHO: Chas Everitt International This architectural masterpiece boasts an elevated position with unimpaired sea and mountain views. The house comprises 600m² under roof including four bedrooms, four bathrooms and three reception rooms that offer a seamless indoor/outdoor flow to the garden. A spacious entertainment deck and glass rim pool are situated on the upstairs level to maximise views.

WHERE: Saxonwold, Joburg PRICE: R11m WHO: Pam Golding Properties Set in tree-lined Saxonwold, this spacious family home offers understated elegance and comprises five bedrooms, four bathrooms and various open-plan living and dining areas that flow to a wraparound patio, landscaped garden and pool. Additional features include a study, a gym or office, as well as spacious staff accommodation with three bedrooms.

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Yoga teachers show they’re supple in mind as much as body in their ability to adapt to online streaming in the Covid-19 age of selfisolation

Getty Images/Clive Mason

DIGITAL

Toby Shapshak

ý Since the lockdown started in SA three weeks ago, yoga teacher Shasta Jordan’s online streamed classes have grown by a third.

They are relatively small numbers, but it demonstrates the shift towards streaming in this suddenonset age of self-isolation.

Jordan is a Joburg yoga teacher who specialises in pregnancy and post-natal classes, and has a dedicated following. But she is also an adept convert to this new form of teaching.

Yoga is an intimate wellness practice. The teacher demonstrates the position and then walks around the class, correcting postures. Like all other forms of group exercise, traditional yoga lessons are verboten in the Covid-19 age of selfisolating. Yoga, more than any other form of exercise, seems the least likely to be adaptable to an online format — but the change to remote lessons is proving to be immensely popular in SA, and globally.

“My classes have definitely increased in numbers. It was a great transition to make, but you have to adapt your teaching style,” Jordan told the FM (via a traditional 14

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Full stream ahead for remote fitness lessons phone call). She says her classes have grown under lockdown because the online versions have inadvertently reduced many barriers to entry, not least of which is introducing a new-found flexibility in people’s days. “People [also] don’t have to get into their car and go anywhere.”

Jordan uses an Apple MacBook Air laptop to stream her classes, and upgraded her fibre line at home just before the lockdown, especially the upload speed which is crucial for good-quality streaming video.

She uses Zoom, the video conferencing app that is suddenly in the spotlight for its ease of use (and security issues) in this streamfrom-home period.

But Jordan is proof that yoga teachers show they’re supple in mind as much as body as they

April 16 - April 22, 2020

adapt to this new way of doing a traditional practice renowned for being personal and intimate.

Instead of being able to show the posture and then move around the physical studio to check her students have it correct, she finds she does more demonstration poses herself because of the nature of streaming a video. “It has been more challenging to do three to four classes a day online,” but she has found a clever strategy to keep her eye on her students.

“When I have a strong student in my class, who knows my teaching style and poses very well, I pin that person [to the Zoom screen instead of Jordan’s feed] so that when people look up they see that person and they are seeing perfect posture being demonstrated.”

That enables her to go to her laptop and look at the poses of her

online students, whom she then corrects with verbal instructions.

Her teaching style has changed but at the same time, it hasn’t. “I taught a very specific [post-natal] class today for pelvic reset. I looked at every person on the screen. Some of those people can get lost in a normal class,” she says.

There is another useful and unintended consequence: people do marketing on your behalf on social media. “The opportunity to reach a wider audience is incredible. Other people are advertising for you. They put their stories on Instagram and Facebook. Suddenly I got more exposure than I was giving myself before,” she says.

“There have definitely been some positives to that.”

For another Joburg yoga teacher, Michelle Kriek, online teaching has helped her change the way she

son

interacts with her students.

Kriek does her art classes and yoga classes through Zoom, also preferring an Apple MacBook.

“I have had to learn a lot of skills,” she tells the FM. “I feel lucky that I have been able to maintain students. I lost a few, mostly because of tech or internet connection issues. Most of them are paying, but a handful have said they can’t afford to. I’ve said I would rather they continue, because they are part of the studio, and they pay when they can.”

She has had to shift her focus towards tutorials and masterclasses on techniques because of the nature of streaming to an audience.

She feels lucky to be in an industry where moving to web-based streaming via Zoom is possible.

“Zoom makes it easy to take my art and yoga classes online,” she says.

Jordan and Kriek’s clients mostly pay by EFT. This overcomes the biggest barrier for home practitioners: finding a cost-effective booking and payment system.

Jordan uses a service called Bookamat, which integrates a booking and payment system. She is signing up for PayPal for international payments, from Germany and Dubai. These foreign clients found her because she offered a free, 20-minute, midday meditation session, which has proved not only to be calming for her, but excellent marketing for her yoga.

Arguably the most famous beneficiary of the teach-from-home trend is British fitness YouTuber Joe Wicks, whose physical exercise (PE) classes for schoolchildren have gone truly viral.

Though Wicks has been teaching via YouTube since 2014, his classes in the lounge of his flat have become an internet sensation.

He said he’d had 28-million views in the 10 days since they went viral. He dresses up in funny outfits and chats back to followers who comment (via his brother, who is his producer and reads the text messaging on the screen).

He’s been interviewed by comedian Russell Brand and is a bona-fide celebrity in the new work-from-home era. It seems it couldn’t happen to a nicer guy. x

PATTERN RECOGNITION BY TOBY SHAPSHAK

No, 5G did not cause Covid-19 Conspiracy theories are spreading like wildfire, inflicting much damage in the process @shapshak

T

Those who spread and believe fake news must be the people who also get conned by 419 scams

he World Health Organisation (WHO) already has a word for this other terrible, viral spread of disinformation, calling it an “infodemic”. It’s travelling almost faster than the pandemic itself: waves of blatantly false information.

In the UK people have burnt about 20 base stations — doing untold damage and prompting anger and disbelief from cellphone networks — because of unsubstantiated claims that 5G has caused the coronavirus.

This spectacularly stupid and selfdefeating vandalism means crippling the critical infrastructure most of those vandals are using for internet access to read those absurd conspiracy theories.

Even more painfully ironic is that most of those towers don’t have 5G equipment on them yet. There is obviously no scientific proof for these wild theories about 5G, which a simple dose of common sense can easily dispel. But that doesn’t stop the scaremongers.

I can never understand why people do this kind of crazy Alex Jones (of the notorious conspiracy theory website InfoWars) thing. Cape Town’s Stephen Birch, who posted a video on Facebook claiming coronavirus testing kits were already infected, takes pole position for sheer lunacy. At least he got his day in court, very swiftly. If only that was the punishment that all disseminators of such disinformation faced all the time.

I sometimes fear the worst: that people actually believe this patent drivel. They must be those who get conned by 419 scams or click on the clickbait adverts with improbable headlines that promise fortunes or just distraction.

Last week another conspiracy theory

with an SA connection took hold. The Daily Show host Trevor Noah, who has been filming from his New York home for the past few weeks, interviewed Bill Gates. The Microsoft founder is now the biggest philanthropist globally and has dedicated his huge wealth and enormous brain to solving the world’s most pressing health problems.

Despite vaccines not having been discussed on that show, the conspiracy nuts on Twitter managed to get their fictitious fable that vaccines were going to be tested in Africa going viral. When President Cyril Ramaphosa tweeted a link to the interview (which was actually fascinating and worth watching), the nutters were in full meltdown.

To counter the 5G conspiracy theories, YouTube is blocking them. One can only wish it adopted the same vigour for antivaxxing videos.

WhatsApp is also limiting the number of times a message can be forwarded to five in an effort to halt the spread of disinformation. Sadly, it is WhatsApp’s biggest flaw that it is used widely for the spread of conspiracy theories, fake videos and xenophobia — and it has been used in contentious political campaigns the world over.

At least one positive thing is spreading through the internet, and it relates to 3Dprinted and homemade faceplates and masks. Old T-shirts and scrubs clothing can be used for a sew-less variety of masks, laser-cut faceplates have been designed by Wits engineering students and a fashion house is sewing face masks from traditional shweshwe material.

This useful information at least balances out the blackness. x Shapshak is editor-in-chief and publisher of Stuff magazine (stuff.co.za) April 16 - April 22, 2020

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BY THE NUMBERS

COVID-19: THE IMPACT ON REGIONAL GROWTH

4 2 0 -2

Sub-Saharan Africa

Angola, Nigeria and SA

The fall in growth is a result of

2021f

2020f

2019

2018

2021f

2020f

-6

2019

-4 2018

Reference (no Covid-19)

6

2021f

Scenario 2: catastrophic crisis

is the Bank’s estimate of the cost of this lost output

Outlook for GDP growth SA, Nigeria and Angola will suffer the biggest losses

2020f

Scenario 1: Severe crisis

$37bn-$79bn

is the expected decline in real GDP growth in 2020, pu ing the region into its first recession in 25 years.

This follows modest growth of 2.4% in 2019

2019

Impact on GDP growth rate in Sub-Saharan Africa in 2020 Real GDP annual growth rate, % 4 3 2 1 3.2 0 2020 -1 -2.5 -2 -3 -4 -5 -6 -5.1

2.1%

2018

-5.2%

is the expected impact of Covid-19 on the economic growth rate of Sub-Saharan Africa in 2020, the World Bank reports

Sub-Saharan Africa excluding Angola, Nigeria and SA

2000-2018 average

4%

drop in exports

8%

drop in investments

6%

drop in consumption

The Bank says a moratorium on debt repayments would have an immediately positive impact on government finances. $35.8bn was spent to service debt in 2018, which is equivalent to 2.1% of regional GDP

$500m in funds was approved by the IMF to cancel six months of debt payments for 25 impoverished nations, so they can be er tackle the virus Source: World Bank’s Africa Pulse report

GIMME

Tivoo-Max speaker

Cool factor ★★★★★ /5

Usability ★★★ /5

Value for money ★★★ /5

More than just sound ý Divoom is a maker of portable wireless speakers that use a digital art form called pixel art to stand out from the crowd. Its Bluetooth speakers are retro-inspired and come in the shape of TV or computer screens from the 1980s.

At the top of the line sits the Tivoo-Max, a powerful 40W speaker. You don’t have to be an audiophile to appreciate how powerful its 2.1 stereo speaker is. It is kitted with two 10W stereo speakers on either side with a 20W subwoofer and a bass port. It paired effortlessly with Android and iPhone devices alike, accompanied by the Divoom app to access additional features.

I’ve been using the speaker for calls, which have increased markedly during the Covid-19 16

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lockdown — and to listen to music, podcasts or the occasional radio show.

There’s just something about firing up your favourite playlists on it and appreciating every emphasised beat. The quality is better than that of other Bluetooth speakers in my home.

The Tivoo-Max offers additional features such as the ability to create pixel art, smart alarm functionality, a sleep aid, social media notifications support, and a DJ mixing tool with a piano, xylophone, drum and so on.

It may sound gimmicky, but the pixel art is fun to play with. You’ll have access to a gallery of existing artwork that has been voted up by its community of users.

The speaker is equipped with a

April 16 - April 22, 2020

256 programmable LED panel that displays 16-million colours. Aside from loading favourite images to loop on the display, you can put together your own text and patterns.

Additionally, it can be used as a

daily planner with weather status and a scoreboard if you’re playing games. It also has a noise meter, stopwatch and countdown timer. Messages can be sent directly to other users with an account on the Divoom app, and these will be displayed on their speaker.

Its functionality may sound overwhelming and take a while to grasp, but it supports various “channels” to toggle between modes; one of my favourites is a visualiser for music playback.

The Tivoo-Max retro pixel art speaker is a fun gadget for the whole family and delivers powerful sound even though some features may be gimmicky.

It is priced at R2,300, available at Divoom.co.za. x Nafisa Akabor

ENTREPRENEUR

Nafisa Akabor

ý Naqiyah Mayat, entrepreneur and author of a newly released cookbook, began her food journey by posting recipes on a blogging platform 12 years ago. Mayat, a Joburg-based social media influencer, is the author of The Beginning: Indian Recipes From My Home.

Her debut book tells the story of her start in the kitchen and is peppered with anecdotes about her husband, four children and mother, whom she credits for her culinary flair.

“I wanted the book to be a guideline for cooking Indian food; I didn’t want people to feel intimidated by it, but rather for it to inspire people to begin cooking.”

Mayat used the now defunct Food24 blogging platform to share the dishes she prepared. “I was fairly new to cooking,” she says, which was something people identified with. Many women shared the same concerns and experienced a similar sense of satisfaction at having prepared a good meal.

The blog, easy to use for a beginner, was a path to an audience Mayat never thought possible.

“I would not have considered food blogging if it was on a platform that might have been difficult to navigate.”

By the time the platform was killed off, Mayat had scores of fans who followed her to other platforms. “By then, I had taken a keen interest in styling and photographing food and needed to find a more visual platform.”

Eventually, she moved her brand, then called NiQi, to an Instagram account, but not before creating a blog, aimed at the luxury market that went beyond food. It

Naqiyah Mayat Influencer and author

A sizzling hot brand What started as a food blog mushroomed into a lifestyle brand and a newly published book on Indian cooking also featured travel, fashion and lifestyle, including creative ideas and inspiration for gifting and paper craft.

“At the time of developing my blog and the NiQi brand, my children were very little,” she says.

“There was no pressure to post, neither was my community focused on curated images. Back then, the idea of sharing snippets of

my life on social media felt simple and organic.”

Later, she launched lifestyle workshops with a focus on inspiring women to channel their creative side. “The workshops brought entrepreneurs, business executives and housewives together to allow themselves a few hours of feeling creatively independent,” she says.

The events allowed participants to

connect with others and learn from a panel of experts.

For Mayat, sharing details of her life developed into a business model.

Though she had early ambitions of becoming a psychologist, she ended up studying graphic design and website creation. “I didn’t realise it at the time, but this would set the foundation for all the creativity that followed.”

A stint at a leading market research agency while honing her graphic design skills gave Mayat insights into consumer behaviour.

She moved on before giving birth to her first son, now 11, and has been a stay-at-home mother ever since.

The release of her book this month is the next step in the development of Mayat’s brand. “I want my brand to be the visual representation of hard work, and as with my online progress, this curve will be slow and steady,” she says.

The Beginning is a collection of Mayat’s recipes — this is Indian food with a modern twist. It is beautifully put together with striking imagery and presentation. The recipes are simple to follow, and the ingredients easy to come by.

“I wanted [the book] to be published at a time when I was emotionally mature and professionally capable of taking the vision and developing it into an industry-leading brand,” she says.

Mayat’s next step is the filming of a cooking-based TV series incorporating meals prepared along with her children. And she says The Beginning is the first in a trilogy.

At her book launch she announced partnerships with the 1701 nougat company as well as the Akhalwaya’s spice brand. x

April 16 - April 22, 2020

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CORONAVIRUS IN PICTURES

Strange new world

Alon Skuy/Sunday Times

An awareness sign on the N1 near Plattekloof in Cape Town

Esa Alexander/Sunday Times

Three weeks into an extended Covid-19 lockdown, South Africans adjust to a new normal

Pastor Frank Booysen of the Bethel Full Gospel Church in Germiston conducts a Good Friday service from his lounge

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April 16 - April 22, 2020

Alon Skuy/Sunday Times

Alon Skuy/Sunday Times

A man is tested for Covid-19 in Lenasia, Joburg

Alon Skuy/Sunday Times

People queue for food parcels at the Kwa Mai Mai market in the Joburg CBD

Alon Skuy/Sunday Times

A homeless man at an intersection near Rosebank

Residents of Munsieville township, near Krugersdorp, during lockdown

April 16 - April 22, 2020

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

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28

32

34

GROUNDED

POWER AND PERSISTENCE

WHAT IS JUSTICE?

UNFAIREST CAPE?

SA airlines will struggle to cope with the catastrophic loss of business because of the Covid-19 pandemic, but some are better placed than others to recover

The drama surrounding Western Cape judge president John Hlophe is like a long-running soap opera: sensational, interminable and even repetitive

Stella Ndabeni-Abrahams’ lockdown lunch — and her censure — raise philosophical questions about the law and the meaning of justice

A shortage of affordable inner-city housing makes life doubly difficult for poorer Capetonians. Change may be on the way, but relief won’t come overnight

April 16 - April 22, 2020

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GROUNDED

cover story / airline industry

The Covid-19 pandemic hit SA airlines at a particularly bad time — just before the Easter holidays, normally a peak period for local and international travel.

All will struggle to cope with the catastrophic loss of business but some are better placed than others to recover, once flying operations are resumed. At this point it is not known when that will be and it certainly won’t be back to business as usual

P TJ Strydom

rinted on the headrest of a front-row FlySafair flight, in early November last year, were the words: “Seat reserved for William Webb Ellis.” Just days before, the Springboks had won rugby’s greatest prize — the Webb Ellis Cup — and this was the airline’s way of rubbing in the fact that, as official carrier, it had backed the Boks all along.

Gloating, maybe — but it was also a clear indication that FlySafair associated itself with Springbok coach Rassie Erasmus and captain Siya Kolisi’s strategy of getting the basics right and surprising the opposition in the process.

Until a month ago, FlySafair had the wind at its back. Despite SA’s feeble economic growth, the low-cost operator was soaring, mopping up market share while competitors were working through their own crises.

From zero in October 2014, FlySafair had climbed to 2,400 flights a month by February this year. With 17 aircraft in operation, it was closing in on rival Comair’s 20.

“We’ve enjoyed some great growth over the past six years. To date we’ve transported more than 12-million people,” says CEO Elmar Conradie. This is no mean feat in a market where, in the past decade alone, three low-cost carriers have failed. Conradie’s plan was to expand further, taking delivery of another three Boeing 737-800s later this year and to add more seats to the SA domestic market over the medium term.

Now, everything is up in the air.

Just as FlySafair was rubbing its hands ahead of the Easter holidays — a seasonal spike in demand for flights — the govern-

22

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April 16 - April 22, 2020

and unpleasant — surprises. Think of the fuel-price shocks of the 1970s; the terror attacks of September 11 2001, with the costly heightened security that came in their wake; and the impact of the severe acute respiratory syndrome (SARS) in 2003.

Even before the coronavirus, there was already aggressive competition in SA’s lowcost carrier market between Comair’s Kulula, FlySafair and SAA-owned Mango.

Before the shutdown, Comair CEO Wrenelle Stander estimates overcapacity to have been as high as 30%. With that number of seats available, any slowdown was bound to hurt domestic airlines.

But travel, due to tourism peak times and school and university holidays, is a seasonal business with steep rises and sharp falls. So while January and February are traditionally low-demand months, business usually starts to pick up from March. Comair — which operates Kulula and British Airways domestically and regionally — had planned to divert some of its regional seats to local routes to meet this increased demand, says Stander.

That was not to be.

The impact of Covid-19 on business has been huge, says Kirby Gordon, FlySafair executive and head of marketing.

“We felt it creep in slowly, with some corporate business being the first to go,” he says. “A lot of global firms were putting total embargoes on travel before we even started reporting cases in SA.”

By the middle of March, President Cyril Ramaphosa had declared a national state of disaster, and advised citizens to start practising “social distancing”. This had an even more severe effect on domestic travel.

Demand dropped by about 55%-60% overnight, estimates Gordon. By March 27, when the lockdown took effect, flights were grounded.

Not being able to fly is pretty much a worst-case scenario, says Gordon.

“Everything is parked for now, which is harrowing, so we just hope [the lockdown does] what [it needs] to do so that we can get back to work.”

Airlines are now set to be grounded until the end of April. What happens after that is anyone’s guess. There are no guarantees that SA skies will be reopened completely, as the extent of the virus’s spread is still unfolding.

Though the rest of the world has experienced similar situations before, this is a first for SA, says aviation industry analyst Joachim Vermooten.

And when flights resume, no-one knows how the pandemic will have changed flying habits, as it’s even tougher to predict new attitudes to tourism and business travel than

What it means: Airlines in SA will have to conserve cash and remain nimble to be in the best position possible when flying resumes

Elmar Conradie

Freddy Mavunda

ment announced a 21-day nationwide lockdown to halt the spread of the coronavirus.

Domestic airlines, including FlySafair and competitors Comair and SAA, were grounded as part of the lockdown, which has since been extended to the end of April.

SA is, of course, not the only country to clamp down on movement in an attempt to prevent Covid-19 from overwhelming health services. Responses vary from nation to nation, but the result has largely been the same: severe restrictions, sharply weaker growth prospects and lingering uncertainty.

And it has utterly decimated airlines. The Boston Consulting Group estimates the knock to the industry may be “even harder, perhaps, than the events of 9/11 and the 2008 global financial crisis put together”.

Flight schedules across most of the world have been disrupted by the pandemic, which the International Air Transport Association (IATA) believes will slash industry revenues globally by $314bn — a 55% drop in passenger revenue.

SA’s share of forgone flight sales could be more than R40bn: 10.7-million fewer passengers are expected to fly this year, and IATA estimates that nearly 187,000 jobs in SA alone are at risk as a result, directly and indirectly. Aviation’s annual contribution to the SA economy is more than R70bn.

For national carrier SAA, which has been on its knees for years, this probably represents the final rites. It’s already in business rescue, and it’s difficult to see it surviving Covid-19. But for SA’s private airlines, notably Comair and FlySafair, the virus is particularly ominous.

As it is, airline profit margins are notoriously thin: passengers are extremely pricesensitive, and the airlines are exposed to sudden input-cost increases that they cannot immediately pass along to consumers.

Though the global industry has been profitable since 2012, for airlines to make money, planes must obviously be in the air.

But by the end of March, most of the world’s aircraft were on the ground. A report by aviation consultancy Cirium says only 38% of the available inventory of aircraft are now in service.

In SA, everything is grounded except for some cargo operations and flights that have been chartered to return stranded foreign nationals to their countries of origin. “[T]he extent of the current crisis is dramatic and exceeds everything seen so far,” Rico Merkert, an aviation and supply chain management expert with the University of Sydney Business School, tells the FM. That takes some doing for an industry that’s no novice when it comes to sudden —

April 16 - April 22, 2020

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cover story / airline industry it is to guess when your checked-in bag will roll out on the baggage carousel.

Vermooten believes any restart plan needs to anticipate a lower level of demand.

As a result, capacity should be rolled out only on a moderate scale, while making provision for losses until reasonable load factors are achieved. Up to that time airlines need to focus on conserving cash, he says, by offering “rebookings and vouchers instead of ticket refunds, and [instituting] compulsory leave for staff”.

Crude awakening The irony is, airlines have ground to a halt at a time when crude oil is trading near multi-

year lows. A stand-off over production between oil giants Saudi Arabia and Russia led to a supply glut that pushed the price of crude to as low as $20 a barrel last month.

Because fuel tends to represent 30%-40% of a carrier’s operating cost, according to Merkert, this would have been a windfall for airlines under normal circumstances. And some must be champing at the bit to get back in the air and cash in.

“The problem for many airlines is that they have hedged much of their fuel requirements at much higher prices,” he says.

Due to the volatility of oil prices and exchange rates, airlines often take out cover to hedge against big swings in fuel costs. So

the oil-price plunge could even translate into huge losses for those involved.

SAA knows only too well how badly that can turn out, having found itself on the wrong side of just such a hedging transaction. The sharp drop in value of the rand at the end of 2002 and subsequent recovery cost the airline R6bn in 2003, and Transnet, at the time still the owner of SAA, had to bail the airline out.

While losses are hardly a new phenomenon for airlines, the sheer size of that hit contributed to a marked change in SAA’s trajectory. It was soon unbundled to become a standalone state-owned entity.

Since then, equity injections and guaran-

STAYING HOME Number of passengers, March (y/y change) 0%

Africa

Australasia

Europe

Latin America

Middle East

US

-10% -20% -30% -40% -50% -60%

Wrenelle Stander

-70%

Manan Vatsyayana/AFP

Source: IATA Economics

Note: Based on bookings data for March 2020

Airline stocks and state support Airline stocks have been hammered since mid-February, when the severity of the coronavirus crisis became apparent. As travel restrictions and mandated groundings kicked in worldwide, the sell-off wiped out years of gains, ranging from giants such as American Airlines to low-cost operators such as Hungary’s Wizz Air and Dublin-listed Ryanair.

American Airlines dropped from more than $30 a share to about $10, jumping and diving as punters backed it, then dropped it.

Most of the major full-service carriers that combine domestic and international flights have shed about two-thirds of their value, while the share prices of low-cost airlines such as Southwest, Ryanair and Wizz Air have typically halved.

Ryanair boss Michael O’Leary told the Financial Times that his airline has the cash to survive for as long as 12 months without

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generating revenue, but that staff have taken pay cuts in the meantime.

The problem for airlines is that a large part of their liquidity buffer is money owed to customers. The International Air Transport Association (IATA) estimates that airlines at present have a $35bn liability for tickets that have been sold, but for which the flights have not been delivered.

Given the turmoil in the sector, most airlines have called for some sort of state support.

The US government has earmarked $58bn in loans and grants for airlines as part of a $2trillion stimulus package for the economy, but the money comes with strings attached.

Airlines have to keep servicing their routes — a tough task when there are hardly any passengers, and parts of the supply chain have been disrupted.

Singapore Airlines (SIA), in contrast, opted to go to the market with a sale of shares and convertible bonds of as much as $15bn. It helps to have a sovereign wealth fund on board: the airline’s largest shareholder,

HEAVY LOSSES

Air passenger revenues

600

Y/y change 45%

400

30%

200

15% 0%

0

-15%

-200 -400 -600

-30%

Scenario estimate 2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

The quick and the debt But survival during a global crisis depends very much on an airline’s war chest.

“Airlines with low debt exposure and substantial cash reserves can withstand

-45% Freddy Mavunda

Estimated potential loss: $314bn

$bn

Though the airline won’t provide the exact split between the two segments, it confirmed that before the lockdown, its passenger business contributed a larger share of the profits. The currency slide will expose other parts of the business. Some of FlySafair’s leases, for example, are dollardenominated.

Source: IATA Economics

tees from the government have kept the airline going. But for the past 16 years there has always been a reference in its results and annual reports to “recapitalisation”. The oneoff shock to its capital structure was kicked down the road, until the carrier was pushed into business rescue last year.

Earlier this year, in an attempt to avert disaster, SAA closed some domestic routes, and suspended all its international and regional flights until end-May. (The airline’s business rescue practitioners have until May 29 to publish a plan to save the state-owned company. But it has already issued a notice of its intention to begin section 189 retrench-

ment consultations with unions, so job losses seem certain.)

While SAA’s future is anything but assured, the lower fuel prices could still present opportunities for airlines agile enough to take advantage of the situation.

“If a direct competitor has not hedged and is, as a result, able to purchase fuel at spot market prices, and if that competitor passes on the cost savings of that, then that could be a very big problem and a huge competitive disadvantage for the hedged airline,” Merkert says.

It’s a situation that could work out well for FlySafair, which doesn’t hedge the currency or fuel prices, says Conradie.

But any boost would depend in large part on what happens after Covid-19 Temasek Holdings, agreed to underwrite the and how the airline positions itself to cash call. grow passenger numbers.

This doesn’t reflect general investor FlySafair is the passenger brand in appetite for airlines at present, says aviation the larger Safair, which has a large analyst Joachim Vermooten, but is “a dollar-based cargo business on the defensive investment decision to assure the rest of the continent for international long-term survivability of SIA”.

NGOs such as the World Food ProSpecific relief measures have also been gramme. The steady stream of hard taken by Colombia, Australia, China, Norway currency, says Conradie, is a natural and New Zealand, while talks between major hedge for the business.

European airlines and governments have Despite the lockdown, Safair’s carbeen taking place for weeks. go business is still operating, because IATA estimates that emergency aid of up humanitarian aid and relief are conto $200bn will be required globally to save sidered essential. Since it is paid in the airline industry. dollars, the cargo business will benefit “I personally think this is a conservative from the slide in the rand to more estimate, but much depends on how quickly than R19/$, as foreign investors fled the crisis can be overcome,” says University emerging markets and ratings agency of Sydney aviation academic Rico Merkert.

Moody’s downgraded SA’s credit ratMeanwhile, plenty of livelihoods are at ing to junk status. stake. “Our estimation is that about 25-million In recent years, FlySafair’s rapid jobs are at risk until the aviation sector is growth has changed the balance in the functioning again,” IATA CEO Alexandre de group, with 17 passenger planes now Juniac said last week. “[That’s] equal to the operating alongside its six dollar-earnentire population of Australia.” x ing cargo aircraft.

Takeoff: FlySafair Though FlySafair only started domestic lowcost operations in 2014, its owner, Safair, has been in operation since the 1960s. Safair is half-owned by management and the rest is split between foreign investor ASL Aviation and an employee trust as BEE partner.

Over the years, the airline has carved out a tidy niche in specialist airlift services in Africa with aircraft that can use short dirt runways.

The aircraft leasing business has also been a mainstay for years; Safair does both “wet leasing” (supplying staff, aircraft, pilots and snacks) and “dry leasing” (supplying only the aircraft). Safair operated Kulula’s maiden flight in 2001 and has handled flights for Air Namibia, SAA and Ryanair, among others.

When Safair introduced its own low-cost carrier six years ago with FlySafair, it took a leap into a practice that was well-established in Europe and the US but still foreign to SA — paying for checked-in luggage.

“When starting up, we looked at the bag attachment rates in markets where this model was already mature and one usually sees that bags are attached to between 12% and 15% of tickets — which is still low compared to the SA market,” says FlySafair CEO Elmar Conradie.

Initially, more than 60% of FlySafair’s passengers checked in bags, but this has since dropped to about 45%. x

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cover story / airline industry groundings better,” says Vermooten.

Gryphon Asset Management portfolio manager Casparus Treurnicht agrees.

“Airlines investors are in for a bouncy flight if their operations are even slightly geared,” he says.

So how deep are the pockets of FlySafair,

Takoff: Comair Commercial Air Services (Comair) announced its arrival on the local aviation scene in 1946 by flying nine planes in formation from Cairo to Germiston.

The company first operated as a charter service, transporting passengers from places such as the Congo. It soon started scheduled flights, with small planes flying daily to the Free State centres of Odendaalsrus, Kroonstad, Bloemfontein and Bethlehem, and on to Ladysmith and Durban.

By the 1960s it was also selling small aircraft into the booming SA market as the official distributor of Cessna, and servicing them too.

Comair listed on the JSE in 1967, and later expanded the business into packaging, neon signage and domestic appliances. By the mid-1970s it was flogging luxury business jets in SA, along with its Cessnas.

By the early 1990s it was starting to rival SAA: it was operating flights on some major domestic and regional routes, but at lower price points than the national carrier.

In 1996 it started operating local and regional services in Southern Africa under a licence agreement with British Airways, and in 2001 it launched Kulula, which it considers SA’s first low-cost carrier. x

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or Safair, for that matter?

It’s hard to tell, as the company is not listed and doesn’t publish results. An analysis of the latest financial year would in any case be of limited value, as airlines spend cash quickly in testing times — IATA expects the global industry to burn through $61bn in this quarter alone.

The JSE-listed Comair certainly seems to be conserving as much cash as it can. It said earlier this month that it was walking away from its planned R75m acquisition of Star Air Maintenance and Star Air Cargo.

Comair has had some painful setbacks in the past year, and its share price on the JSE has fallen by about two-thirds as a result.

Not least of the setbacks was the grounding of its aircraft — even before Covid-19.

Banking on Boeing’s 737 Max 8 as part of its move to more fuel-efficient planes, Comair took delivery of the first of three of

END MARCH 2019

END MARCH 2020

Source: IATA Economics using data from FlightRadar24

the aircraft last year. But when two Max 8 planes belonging to Lion Air and Ethiopian Air crashed within months of each other, killing more than 300 people, their safety was called into question.

As a result, most operators grounded their Max 8 fleets. Passengers tend to vote with their feet where safety is concerned.

Since early last year, one of Comair’s Max 8 planes has been on the ground in Joburg, and another in Seattle, in the US. The third is still on the assembly line, says Stander.

The company has had to spend R131m on leasing other aircraft to keep operating as usual. On top of that, a substantial part of the purchase price of the Max 8 was financed, so Comair is paying interest on loans it used to buy planes it cannot use, creating a working capital squeeze. “We have in the region of R1bn tied up in the procurement of the Max fleet,” says Stander.

Air passenger volumes Actual

Industry RPKs (bn/month) 850 Seasonally adjusted

800 750 700 650 600 550 500 450

2016

2017

2018

2019

ever, state aid should be made available on a nondiscriminatory basis to all airlines, probably pro rata in relation to their market shares before the regulatory grounding orders,” he says.

Despite the gloom, FlySafair’s Conradie remains upbeat. “There are always opportunities in turbulent times,” he says. “Our strategy is to remain nimble in order to be able to respond to those opportunities as quickly as possible, should they present themselves.”

But at this point, it’s a big “if”. x Paul Yeung/Bloomberg

prospective flyers fly more cheaply — or, perhaps, stop flying at all.

This would reshape domestic air travel.

For SA’s low-cost carriers, it will mean competing and “staying above water until one of the three has to leave the market”, says Merkert.

Once that happens, margins will become more lucrative, he adds.

But some form of state support will be vital, says Vermooten. “Civil aviation networks are essential for SA’s economy. How-

IN A NOSEDIVE

2020

Note: RPK, or revenue passenger-kilometres is the measure of demand used by airlines. It’s calculated by multiplying the number of paying passengers with the distance they’ve travelled Sources: IATA Economics, IATA Monthly Statistics

In this context, it should have been good news for Comair that SAA agreed to pay it R1.1bn plus interest as a settlement for anticompetitive conduct more than a decade ago. But SAA’s woes mean Comair may not get the full R790m that is outstanding.

SAA failed to pay its December instalment. Despite making provision for the loss of the full outstanding amount in its accounts, Comair is still pursuing payment.

For SAA, the tough times could shake things up dramatically, says Treurnicht. “Let’s see what surprise interventions the government comes up with, while it is in so-called business rescue. [The airline] is literally insolvent. I cannot see a better time [politically] for the government to restructure and implement radical measures.”

Pie (chart) in the sky Even if infection fears abate overnight and travel restrictions are lifted, the Covid-19 pandemic could continue to haunt airline businesses for some time. Markets have priced in a global recession and ratings agencies believe the SA economy is heading for a sharp contraction.

“Plenty of research indicates that there is a direct correlation between GDP growth and growth in passenger numbers, so it’s particularly hard to buck the trend in an economy that is struggling,” says Conradie.

As the effects of lower earnings due to a five-week lockdown feed through, consumers’ disposable income will come under severe strain. While FlySafair, Kulula and Mango have, in previous economic cycles, benefited from passengers trading down from full-service flights to low-cost options during troubled times, the severity of the downturn in SA will determine whether

Cathay Pacific: moving on and up Cathay Pacific is no stranger to slashing flights or asking staff to take unpaid leave. And the airline showed last decade just how quickly fortunes can change in the wake of a crisis.

After severe acute respiratory syndrome (SARS) appeared in the Far East in 2002, Hong Kong-based Cathay Pacific was one of the worst-affected companies. By the first quarter of 2003, the virus had a firm foothold in the former British territory. It had spread to 26 countries within months.

With 8,000 cases, SARS infections were nowhere near the numbers for Covid-19, but the virus led to a steep drop in passenger demand, and several months of heavy losses for Cathay Pacific. The immediate effect on travel was devastating: an 18.4% decrease in passenger numbers for the year. The airline parked 22 aircraft and cut its passenger schedule by 45%.

Years later, when asked about the 2008 global financial crisis, Cathay Pacific’s then CEO Tony Tyler said: “SARS was worse in that passenger

levels collapsed. But equally, we knew it wasn’t going to last forever.”

The first half of Cathay Pacific’s 2003 financial year was a disaster, with the airline posting a loss of HK$1.24bn.

But as soon as the World Health Organisation removed Hong Kong from the list of SARS-affected areas, the airline moved quickly to lure back travellers. It slashed fares by as much as 30% and gave away 10,000 tickets.

Passenger numbers rebounded sharply, buoyed by pent-up demand from business and leisure travellers alike. But margins were much lower and Cathay Pacific’s profit that year dropped by two-thirds to HK$1.3bn.

The exercise in belt-tightening, however, was a useful one. The airline cut operating costs and made the organisation leaner just as it was about to expand. Later that year, it started regular flights to several Chinese cities and broadened its global reach.

For its 2004 financial year, the airline soared to a profit of HK$4.4bn — at that time its second-best result yet. x

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feature / john hlophe

POWER AND PERSISTENCE The drama surrounding Western Cape judge president John Hlophe is like a long-running soap opera: sensational, interminable and even repetitive Karyn Maughan

T

here are some political and legal stories in SA that seem, like soap operas, to be destined to carry on forever.

One of them is the on-again, off-again 15year corruption prosecution of former president Jacob Zuma, who has yet to face trial for allegedly accepting bribes from his former financial adviser, Schabir Shaik, and French arms company Thales.

The Zuma soap opera gained popularity in the early 2000s, and gripped the nation after he ascended to — and then descended from — the highest office in the land.

As with all entrenched daytime television shows, there seems to be no prospect of the Zuma soap opera concluding any time soon.

But that history-shifting drama may have some competition, in its reach and impact, in the perennial soap opera that revolves around the fortunes of Western Cape judge president John Hlophe.

The Hlophe soap opera is, in part, intimately connected to that of the former president. And outside of the suggestions that Hlophe attempted to use his position to orchestrate pro-Zuma court rulings, there are also some powerful similarities in their plot-lines. These include the belief shared by Zuma and Hlophe that they have been mistakenly identified as villains when they are, in fact, victims.

While Zuma may no longer wield the kind of power that once made him a key player in SA’s story, Hlophe remains a polarising force in the nation’s legal community.

He has had three brushes with impeachment, but only one complaint against him — related to his alleged efforts, in 2008, to swing a Constitutional Court ruling in favour of Zuma — has resulted in him actually facing an impeachment inquiry.

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That inquiry has been stalled for two years for reasons that appear, on face value, to be flimsy.

Now a complaint laid against Hlophe by his deputy, Patricia Goliath, and a court case launched by forestry, fisheries & environmental affairs minister Barbara Creecy that involves Hlophe and his personal attorney Barnabas Xulu, have fuelled more controversy about the man who may just be SA’s most controversial judge.

To understand why the latest episodes of the Hlophe drama may have potentially devastating implications for SA’s bench, it’s important to focus on one of the most pivotal characteristics of any good soap opera: there is no sense that it will ever end.

With no resolution of the Hlophe saga in sight, it threatens to become an increasingly histrionic drama, challenging popular perceptions of judges dispensing justice in a calm, impartial and rational manner.

Even a cursory glance at the allegations and counterallegations made by Goliath and Hlophe against each other, and the fallout that has followed, reveals details so sensational, and so acrimoniously described, that they would not be out of place in the context of a bitter divorce. And many of these have an air of familiarity about them — a sense of a plot-line repeated.

The two judges’ mutual antagonism exploded into the public domain on January 15 this year, when Goliath lodged a 14-page complaint against Hlophe and his wife, judge Gayaat Salie-Hlophe. In it, she accused the pair of gross misconduct that, she claimed, had compromised the proper functioning of the Cape high court.

“I am sharply aware of the broader ramifications of this complaint,” Goliath stated, with a clear consciousness of the storm that was about to rock the high court and the judiciary.

nuclear deal.

She also says he gave preferential treatment to his wife and claims he assaulted and verbally What it means: abused two judges. One For 15-odd years of them, Mushtak Parker, Hlophe has has denied that Hlophe benefited from assaulted him — a claim the judiciary’s that has outraged the biggest weakmultiple judges to whom ness: its apparent Parker allegedly reported inability to hold his “Hlophe assault”. itself to account Hlophe responded to Goliath’s complaint with one of his own, in which he accuses Goliath of leaking her complaint to the media in “a deliberate, calculated political ploy to subject me and judge Salie-Hlophe to the torture of public condemnation and to increase calls for our removal from the bench”.

He continues: “The leaking of the complaint to the media was not done to inform the public on matters of public interest, but was a malicious and bad-faith attempt to generate public outrage, lynching and condemnation at my leadership of the division The Time /Trevor Samson and that would support calls for my immediate suspension and removal.”

“However, I am left with no option but to Hlophe adds that he has “been subjected to pursue it in the light of the continuous, and susimmensely prejudicial, unfair and adverse pubtained, assault upon my dignity by [Hlophe], lic commentary by journalists, the media and who makes my working conditions intolerable.” the general public” as a result of the leak of Right at the beginning of Goliath’s complaint Goliath’s complaint — which, he says, “pre— in which she says Hlophe effectively sidelined dictably” resulted in calls for his removal, “from her after she returned from serving as an acting quarters that have a history of attempting to justice at the Constitutional Court — she hints at devalue my contribution to the judiciary”. what may have led to her apparent fall from the The conduct committee of the Judicial Serjudge president’s graces. vice Commission (JSC) decided in a two-one “Hlophe has accused me of not supporting split that neither complaint was worthy of an him,” she says. “I accept that on several occaimpeachment investigation. It’s a call that mulsions we had disagreements. I sought on those tiple legal insiders have described as “bizarre”, occasions to uphold and protect the constitution given the seriousness of the accusations. in keeping with my oath, especially when his Hlophe’s response to Goliath’s claims does, conduct fell short of an acceptable standard.” however, make it very clear that he regards Goliath accuses Hlophe of trying to influence himself as an undeserving target. It also strongly the appointment of judges perceived as suggests that he is convinced that any criticism “favourably disposed” to then president Zuma to of his leadership is unjustified and driven by preside over Earthlife Africa’s challenge to the illegitimate agendas rather than raising any real Russia-SA intergovernmental agreement that and salient concern about his conduct. would have paved the way for a R1-trillion

It’s an approach Hlophe has frequently employed in response to a myriad inquiries and court cases.

Those legal processes have raised serious questions about, among others, the judge president’s apparent bias in cases that involved his personal attorney, Xulu, and his decision to grant a company from which he’d received money from the right to sue his fellow judge, Siraj Desai.

To understand how the Hlophe saga assumed its soap opera status, and to evaluate whether he is correct in his projection of himself as a victim of a shadowy racist agenda, it is crucial to traverse the messy history of his brushes with impeachment.

It’s equally important to interrogate why, until now, the JSC has failed to deal with the deeply serious claims against him with any degree of urgency or seriousness.

Hlophe, then a full-time academic at the University of Transkei with a master’s degree from Cambridge University, was just 36 when he was appointed in 1995 to sit as the first black judge at the Western Cape High Court.

Five years later, he was appointed to head the court, which presides over some of SA’s most high-profile criminal cases, and, Before 2004, I was because of its proxa darling of the imity to parliament, is legal profession. I frequently called was a superstar ... upon to decide key Until 2004. Until legislative disputes. the racism report Four years after his John Hlophe elevation to judge president, Hlophe became embroiled in a series of ugly controversies.

One centred on his handling of the now notorious “New Clicks” case, a crucial medicine-pricing regulation dispute between then health minister Manto Tshabalala-Msimang and certain pharmaceutical companies.

Hlophe and judge James Yekiso ruled in favour of the minister, while Hlophe’s then deputy, Jeanette Traverso, ruled in favour of the pharmaceutical companies.

The fact that the ruling was split would normally have been seen as a sure-fire reason to grant the pharmaceutical companies leave to appeal. Instead, Hlophe would wait an extraordinary five weeks before dismissing the application to appeal against the ruling.

That delay, in an urgent case with profound implications for all South Africans, resulted in the pharmaceutical companies’ lawyers taking unprecedented action: they appealed directly to the Supreme Court of Appeal, without Hlophe’s go-ahead.

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feature / john hlophe The supreme court agreed to hear their application. Hlophe dismissed the application for leave to appeal two days after the appeal court had heard arguments on the case.

The saga became even more messy when the appeal court upheld Traverso’s minority ruling, overturning the one given by Hlophe and Yekiso.

In a scathing judgment, appeal court judge Louis Harms found that the judge president had denied the pharmaceutical companies the right to a fair hearing by unreasonably delaying his decision on their appeal application.

Hlophe reacted to the judgment by telling The Star that he “couldn’t care less”, before denying that he had unreasonably delayed his decision on the application. “There was no delay in my view. I don’t know what they are talking about,” he said.

Hlophe’s conduct in the pharmaceutical case arguably needs to be viewed within the context of another storm of controversy that engulfed the high court in November 2004.

Prior to the appeal court ruling, Hlophe released a 43-page “Report on Racism in the Cape Provincial Division”, in which he accused Traverso and former Cape judge president Edwin King of racism.

In the report, Hlophe said he and other black judges had “numerous” experiences of racism by white colleagues “deliberately trying to undermine the intellect and talent of black judges”.

He also accused one of the advocates representing the pharmaceutical companies, Jeremy Gauntlett SC, of racism — a move that suggested his belated response to the companies’ application may have been driven, in part, by his own personal antipathy towards the advocate.

The heads of court evaluated Hlophe’s report and found that his allegations “against individual judges and some of the members of the legal profession have, in general, been refuted by the persons concerned”.

Hlophe, however, has never retracted the accusations, and his portrayal of himself as a victim of racist forces within the legal community was seemingly not undermined by the apparent lack of response to his report.

This was arguably due, in no small part, to apparent unresolved racial tensions within SA’s legal community, which had been the exclusive domain of white men for decades.

Five years after Hlophe accused white judges and advocates of trying to undermine black judges and stall transformation, he would suggest that his authorship of the report was the genesis of the second, as yet unresolved, gross misconduct complaint 30

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On the spot: Western Cape judge president John Hlophe during the Judicial Service Commission tribunal in 2013 Gallo Images/Nelius Rademan

against him: that he had sought to influence two Constitutional Court judges to rule in favour of Zuma in 2008.

At the time, the newly elected ANC president was attempting to challenge the legality of search-and-seizure warrants used by the now disbanded Scorpions to collect more than 93,000 documents as evidence against him in raids conducted in August 2005.

Acting justices Bess Nkabinde and Chris Jafta would go on to tell the JSC subcommittee, tasked with deciding whether Hlophe should face possible impeachment, that the judge president told them both separately that the Supreme Court of Appeal — which had dismissed Zuma’s challenges to the legality of the warrants — had got it wrong.

According to Jafta, Hlophe told him that the cases involving Zuma needed to be looked at “properly” because he believed Zuma was being persecuted just as he (Hlophe) had been persecuted. Jafta said

Hlophe told him “sesithembele kinina (we pin our hopes on you”.

Jafta said he initially did not believe Hlophe was trying to influence him, but rather that he “was wishing for a decision that would favour Mr Zuma because the SCA had found against Mr Zuma and Thint [now Thales]”.

Four weeks later, when he learnt that Hlophe had made an appointment to meet with Nkabinde, Jafta said he realised that the judge president may have been trying to influence him. He warned Nkabinde that Hlophe might try to discuss the Zuma cases with her.

In her evidence, Nkabinde said Hlophe had told her telephonically that he “had a mandate and that they could talk about privilege”.

The issue of attorney-client privilege was one of the key challenges raised by Zuma’s lawyers, as the Scorpions had also seized multiple documents from Zuma’s attorney,

“My brother, you know that you cannot talk about this case. You have not been involved in the case, you have not sat on it and you are not a member of the court to come and talk about the case.”

She testified that Hlophe had then told her he did not mean to interfere with her work, but said he went on to explain “that the point is that there is no case against Mr Zuma”.

He repeated that “Mr Zuma has been persecuted, just as he [Hlophe] was persecuted”.

During his interview with the JSC subcommittee, Hlophe denied much of the evidence given against him, suggesting Jafta and Nkabinde may have misconstrued certain of his comments. He categorically denied trying to influence either of them.

In his written response to the JSC, Hlophe also suggested that the Constitutional Court complaint against him was driven by improper and potentially racist motives linked to his authorship of the 2004 report on racism.

“Before 2004, I was a darling of the legal profession,” Hlophe stated. “I was a superstar.

There were people in the legal profession, including some retired judges, who were saying openly that John is a star, he is a future chief justice of this country ... Until 2004. Until the racism report.”

Michael Hulley, during the raids.

According to Nkabinde, Hlophe told her, when he visited her in chambers, that the reason he was there was, among other things, that “a concern had been raised that people who are appointed at the Constitutional Court should understand our history”.

Asked who these people were, Hlophe If good leadership responded that he had is about unity, “connection with some harmony and ministers, whom he from reasoned time to time advised”. disagreement, According to then Hlophe has Nkabinde’s evidence, clearly failed on Hlophe then started talkthat count ing about the Zuma case, saying it was “an important case and that the issue of privilege was also important”.

“It had to be decided properly because the prosecution case rested on that aspect of the case.”

Nkabinde said she responded by snapping:

As he would later do in response to Goliath’s complaint, Hlophe laid a countercomplaint against the Constitutional Court judges, accusing them of breaching his rights because of the way they made their complaint.

In that countercomplaint, as he had done in response to Goliath, Hlophe strongly criticised the Constitutional Court judges, accusing them of jumping on the bandwagon of those who were trying to get him impeached, adding that this “kind of bandwagonism” had been “in vogue” since the release of his racism report.

Despite the obvious disputes in the testimony given by Hlophe and the Constitutional Court judges, and after not allowing any cross-examination of the judges to determine who was telling the truth, the JSC subcommittee found that “the evidence in respect of the complaint does not justify a finding that Hlophe is guilty of gross misconduct”. The appeal court later overturned that decision, which it described as “an abdication of [the JSC’s] constitutional duty to investigate the complaint properly”.

That was not the end of the drama, though.

It would take years, and multiple legal challenges, before an impeachment tribunal related to the matter would finally get under way — only to be halted by Hlophe’s successful efforts to force the recusal of one of the judges who would decide his fate.

The tribunal has now been stalled again, over as-yet unresolved disputes between the government and Xulu over the state’s payment of his fees.

Xulu has his own dramatic plot-line in the story: environment minister Creecy has launched litigation containing damaging claims that Hlophe granted legally questionable orders in his lawyer’s favour.

What makes Creecy’s case particularly awkward for both Hlophe and Xulu is that it follows an appeal court ruling, three years ago, that admonished Hlophe for acting with apparent bias in a case involving Xulu.

In that case, Hlophe reversed an order obtained by the National Prosecuting Authority (NPA) for the preservation of the assets of businessman Matthews Mulaudzi, as part of the state’s efforts to prosecute him for a R48m fraud case.

In 2017 appeal court judge Visvanathan Ponnan slammed Hlophe for his “untenable” finding that the NPA had no prospect of convicting Mulaudzi. Worse, Hlope had ruled against the state without even reading its response to Mulaudzi’s claim of innocence.

Creecy’s case revolves around a September 2018 order granted by Hlophe, allegedly behind closed doors, to appoint Xulu’s firm, B Xulu & Partners Inc, as one of two “implementing agents” in a more than R100m American repatriation settlement.

Creecy has raised multiple questions in relation to that order, made in connection with American “Lobster King” Arnold Bengis’s criminal decimation of the West Coast rock lobster population. She wants the order rescinded, a move that will again place Hlophe’s relationship with his attorney under a harsh judicial spotlight.

It must be pointed out that this foray into the Hlophe soap opera captures only limited highlights (and low lights) from his 20-year reign as the Western Cape’s most powerful judge.

Right now, his court is deeply divided into camps that either ardently support him or oppose him. If good leadership is about unity, harmony and reasoned disagreement, then Hlophe has clearly failed on that count.

If, however, he is measured on his ability to manoeuvre his way out of situations that seem certain to end in his undoing, he is clearly a master strategist.

Hlophe may turn out to be neither a supervillain nor a victim. But he is a very clever man, who has been able to both expose the divisions within the judiciary and benefit from its greatest weakness: its inability to hold itself accountable.

In doing so, he’s been able to ensure that his soap opera continues to run, without any fear of resolution, for as long as he wants it to. x April 16 - April 22, 2020

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feature / political comment

WHAT IS JUSTICE? Communications minister Stella Ndabeni-Abrahams’ lockdown lunch with Mduduzi Manana — and her censure from Cyril Ramaphosa — raise philosophical questions about the law and the meaning of justice

Chris Roper

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ast week, many South Africans pondered two perhaps unanswerable questions: “What is justice?” and “Why is there no yeast in Woolworths?”

The one is a deeply philosophical conundrum, and let’s be frank: can we ever really know? But we should, I think, take a stab at the other, working out what constitutes justice in our frustrating country, and how the term applies differently to different people.

There has been the usual wildly oscillating range of reactions to President Cyril Ramaphosa’s censuring of communications minister Stella Ndabeni-Abrahams. To remind you of the story, in case you’ve already forgotten it in the heady whirl of pandemic content, Ndabeni-Abrahams flouted lockdown regulations and popped in to chow down with Mduduzi Manana, our former deputy minister of higher education & training and the proud holder of a conviction on three counts of assault on women.

Manana, displaying the same lack of finesse that we assume drove the style choices in his cookie cutter McMansion (check it out on YouTube), Instagrammed a picture of the meal.

To cut a long story into a tweet, Ramaphosa acted swiftly and suspended

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Ndabeni-Abrahams for two months, one of Underscoring the gamut of attitudes was them without pay. one burning, fundamental issue: has justice Responses were varied. Some people been done? In a time when governments were extremely critical of the perceived appear to be playing lockdown lotto with the leniency shown, and especially of the dislaw, making a bunch of seemingly illogical parity in the way people are treated dependecisions — cigarettes banned, chocolates dent on their level of privilege. A sample not — and seeing which ones get lucky, headline: “While Cabinet Minister Gets a many of us are turning to the artists of the ‘Slap on the Wrist’, Homeless are Shot at for absurd to make sense of it all. Those of us Trying to Leave Unsafe Camp”. who aren’t adherents to religion, take comOthers were approving of Ramaphosa’s fort from the lesser fictions of writers such actions, perhaps because they as Franz Kafka. were more realistic, as well as betKafka’s famous novel The Both law and ter versed in the history of SA Trial deals with the bureaucratic justice are politicians and accountability. This morass of the state that is the damaged when attitude was probably best encaplaw. It contains a parable, our political sulated in the headline: “Whatever “Before the Law”, in which the peacocks You Think of Stella’s Sanction, It’s a story’s unnamed protagonist is decide to shake forced to wait before the gate of Step-up from the Zuma Years.” their feathered In a famous example of how law for his whole life. arses in our much former president Jacob “Before the law sits a gatefaces Zuma enjoyed sniggering at the keeper. To this gatekeeper idea of accountability, when the comes a man from the country Constitutional Court finally ordered him to who asks to gain entry into the law. But the comply with the public protector’s instrucgatekeeper says that he cannot grant him tion to reprimand former police minister entry at the moment. The man thinks about Nathi Mthethwa, public works minister Thuit and then asks if he will be allowed to las Nxesi and former minister Geoff Doidge, come in later on. ‘It is possible,’ says the he fake-complied by telling them “I hereby gatekeeper, ‘but not now.’ deliver the reprimand required.”

“The gatekeeper gives him a stool and

allows him to sit down at the side in front of the gate. There he sits for days and years. He makes many attempts to be let in, and he wears the gatekeeper out with his requests.”

As the man is dying from old age, he gathers his last fading energy, and asks the gatekeeper a final question. “‘Everyone strives to attain the Law,’ [asks] the man, ‘how does it come about, then, that in all these years no-one has come seeking admittance but me?’ The doorkeeper ... bellows in his ear: ‘No-one but you could gain admittance through this door, since this door was intended only for you. I am now going to shut it.’”

This parable pretty much encapsulates why Stellagate (why has nobody annoying called it that yet? Oh — I guess they just have) resonated so much with us.

In SA, our relationship to justice is an uneasy one, as if with a mysterious egg we’re sitting on and trying to hatch. Will a fluffy chicken pop out, or a vicious reptile? (You’ve probably just realised that Kafka is much better at metaphors than I am.)

The parable tells us justice is different to the law: “Justice is what is promised by law; its possibility is what keeps us obedient, patient, and

hopeful,” to quote an essay mentioned later in this column.

The potential for justice is what keeps us behaving as good citizens, and this is especially true during a lockdown, where we all sit in front of our individual, law-determined, firmly closed doors, waiting for justice.

Before the law, the man from the country spends his life waiting for a justice that never arrives. In an essay that references “Before the Law”, in Stanford University’s Arcade magazine, James Martel writes that “the law can itself be said to be a product of our expectation for justice. Though the man from the country never gets ‘access’ to law in its perfect and fullest sense (a law infused with justice, we could call this Law, with a capital L), it permeates and regulates his life nonetheless.”

This is why it’s so infuriating when we can see so clearly — when we get our noses rubbed in it, to be frank — that justice becomes contingent when it’s activated.

Contingent on who you are, on your level of access to power, and on the whims of those tasked with administering justice.

But it’s equally infuriating when the arrogant actions of a ministerial malcontent —

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one whose egomania is eclipsed only by her tenuous grasp of geography — force us to play out the fiction of justice at a time when actual lives depend on law-abidance.

Law is a system of rules, and the lockdown laws originated because of a specific What it means: and violent global In a time when moment: the coronagovernments virus crisis. Justice, appear to be however, is the idea playing that gives the law its lockdown lotto, value, and both are many of us are damaged when our turning to political peacocks artists of the decide to shake their absurd to make feathered arses in sense of it all our faces.

In Kafka’s parable, everyone gets their own individual door in front of which to wait for justice. Justice never comes, but the expectation is what keeps society together.

Now, thanks to the cauldron of Covid-19, and the actions of people like Ndabeni-Abrahams, that expectation has been shaken. It’s not what she did that’s so heinous; it’s what she did to us. x

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4/3/20 11:12 AM

feature /social housing Building a community: The old Woodstock Hospital in Cape Town has been ‘occupied’ by housing activist group Reclaim the City Ruvan Boshoff

UNFAIREST CAPE?

A shortage of affordable inner-city housing makes life doubly difficult for poorer Capetonians. Change may be on the way, but relief won’t come overnight Alistair Mackay

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here is a narrative out there about ‘occupiers,’” says Karen Hendricks from her bedroom in the nursing quarters of the old Woodstock Hospital.

“People think they’ll be shot or robbed. They think it’ll be so dirty in here. But every public toilet has a roster. Our people do their duty. We cleaned up this building. The building inspector even said to me [that] not even in wealthy communities do you find this level of co-ordination.”

Hendricks is a chapter leader for Reclaim the City (RTC), a community movement of poor and working-class people that advocates for affordable housing in Cape Town. Along with her son and 76-year-old father, she is one of about 900 people occupying the old hospital and surrounding precinct. The “occupiers”, as they’re called, have renamed it Cissie Gool House, in honour of the late anti-apartheid civil rights leader from District Six. RTC took control of the site back in 2017, when the City of Cape Town sold Tafelberg, a chunk of public land in Sea Point, to private developers instead of developing it for social housing. What began as a symbolic occupation has since become a community: a communal garden feeds the children and elderly, and there is a crèche for single-parent households, as well as security patrols, youth monitors and a team in charge of maintenance.

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Hendricks herself joined the occupation when she was evicted from her family’s rental home in Woodstock. “Many of the occupiers were evicted from around here,” she says. “My family have lived in Woodstock for four generations. We survived the Group Areas Act. But since 2010 the city has been putting up rents because of gentrification and they don’t want to build any affordable housing near the city centre. Some of the other occupiers come from further out because they’re tired of living so far from jobs and schools.”

The community that’s grown as a result is poor, she says — but that “doesn’t mean we can’t show people how to build a new housing model”.

Cape Town’s housing backlog stands at about 365,000 units, and accommodation in the city centre is unaffordable for most. The city is the most expensive residential property market in Africa. According to the “2019 Africa Wealth Report”, the average price per square metre in Cape Town is more than double that of Sandton. A Property24 trends report shows that the average listing price of a two-bedroom apartment in the city is R4.1m, compared with R1.3m in Joburg.

Prices at the upper end of the market

have been flat for a while, due to emigration and decreased interest from foreign buyers, but Pam Golding Property Group CEO Andrew Golding says the market is cyclical, and Cape Town will remain “a perennial favourite with investors and buyers because of its favourable climate and natural beauty.

The city is well run and has a host of attractions and amenities.”

There has also been a shift, Golding says, from freehold to sectional-title properties as more people opt to live in smaller, more secure apartments. They are choosing to live closer to work to avoid traffic congestion and risWhat it means: ing transport costs. This has driven up the cost of There is a dire accommodation in cenneed for tral Cape Town, and is greater fuelling the construction diversity in of luxury residential towCape Town’s ers across the city centre inner-city and Atlantic seaboard. housing to Golding says there is benefit the more than R13.5bn worth poor of property development in the pipeline for the CBD alone.

Cape Town’s tallest residential building, 16 on Bree, is nearing completion. Nearby, construction has started on The Rubik, a 27-

storey luxury tower block, with a 24-hour concierge service. Harbour Arch, a mixed-use precinct with six residential towers, has broken ground. And apartments in The Onyx, a redevelopment of the old Nedbank building, are on sale. You won’t pay less than R1.9m for a studio apartment in these buildings; penthouses go for as much as R20m.

Ndifuna Ukwazi is a nonprofit group that advocates affordable housing in Cape Town. In 2018, it published a series of research papers on inclusionary housing, looking at access to residential developments by race and class. It found that only 4.6% of households can afford the average two-bedroom apartment. According to the organisation, 75% of households in Cape Town earn less than R18,000 a month (the figure rises to 92% for black households), and most people cannot afford to pay more than R1,500 a month in rent or R140,000 to own.

This puts rents in the city centre “out of reach [for] most middle-class South Africans, let alone the poor or working class”.

A lack of affordable housing is not unique to Cape Town. In the UK, property prices have risen at twice the rate of wages for four decades, and the average price of housing in San Francisco doubled in just five years. What makes Cape Town’s housing activists angry, though, is that the spatial injustice in SA is linked to apartheid-era planning and forced removals. Market factors have only exacerbated this historic legacy.

“The city has a constitutional obligation to reverse the legacy of apartheid,” Hendricks says, but she believes there is no political will to do so.

According to RTC, not a single unit of affordable housing has been built within the city centre since 1994, even though the city holds large tracts of land in well-located central areas that could be used for exactly this purpose. Instead, it says, the city leases some of this land to golf courses and parking lots. RTC is resisting the renewal of a 10-year lease of 45ha of prime public land to Rondebosch Golf Club for a nominal fee of R1,058 a year.

At a packed community meeting in Salt River, Hendricks tells the crowd: “Our people die on the [housing] waiting lists.”

Activist Thapelo Mohapi replies: “Land in

Cape Town is disposed [of] in a way that only benefits the rich. These elites pay less for this land per month than we spend on transport.”

Malusi Booi, mayoral committee member for human settlements, says housing is “very agenda-driven, highly politicised and legislatively heavy”. A “politicised fog”, he says, hangs over development.

According to Booi, Cape Town has a number of unique challenges, including a high rate of urbanisation, a shortage of available land and a “not in my backyard” mindset, where people resist new developments in their neighMy family have bourhoods. The lived in council has, until now, Woodstock for focused on housing four generations. provision on the We survived the periphery of the city, Group Areas Act. where land is cheaper But since 2010 and large “breaking the city has been new ground” projects putting up rents can be built to scale. because of Activists argue that gentrification this entrenches poverty Karen Hendricks by keeping the poor away from opportunities, but it nevertheless improves the lives of those who were previously living in slums.

Breaking new ground projects allow people “who were prohibited from owning assets under the apartheid regime” to buy property, says Booi, adding that these developments are built close to public transport nodes.

“The city can only spend on housing what is allocated by the national government. The funding that it gets is spent. Due to financial and economic problems in SA, grant funding is decreasing but building costs per unit or site are increasing,” he says.

Booi believes a more diverse approach to housing is needed, and that partnerships with the private sector will have the biggest impact.

“We need large-scale, integrated, mixed-use developments.”

Cities in various countries — Brazil, Ireland and the Netherlands, for example — have adopted inclusionary housing policies that either enforce the provision of affordable housing in new residential developments of a certain size, or offer incentives for it. Joburg approved such a policy in February 2019. Cape Town expects to publish its own for public comment within two years. That will be too late to capitalise on any of the R13.5bn luxury developments in the pipeline, but is nonetheless important for the development of the city.

Property developers may be open to the idea.

In 2017, luxury developer Blok tried to pilot a voluntary model called 80:20, where 80% of units were to be sold at market prices, with 20% comprising cross-subsidised affordable units.

The project would have built affordable oneand two-bedroom apartments on the floors typically reserved for parking, but a change in bylaws meant Blok would have had to reapply for planning approval, and it decided against pursuing the affordable housing component.

Blok CEO Jacques van Embden says the model was “designed to achieve integration”. He still believes the model is scalable to most sites, but it will require the city to relax zoning restrictions around additional bulk or parking.

There are glimmers of hope. Conradie Park, a partnership between the provincial government, the City of Cape Town and the private sector, is under construction near Pinelands, close to the city centre. Just under 50% of its residential units have been reserved for lowincome housing.

Booi says people shouldn’t think the city is doing nothing, just because there is no construction on site. It’s busy with rezoning applications and feasibility studies, and planning for a number of gap-market and social housing initiatives in central Cape Town in Salt River, Woodstock and the CBD. But “transforming the spatial patterns of Cape Town will not happen overnight”.

For those living in abandoned buildings or far-flung townships, 26 years is not “overnight”.

At the RTC community meeting, an angry woman shouts that she’s tired of excuses. “How can you tell us you won’t build housing on Rondebosch Golf Club because of the floodline? Langa is on a floodline; Khayelitsha is on a floodline.

All the places [where] you dump our people are on a floodline. In June, there will be water running into our homes,” she says.

Back at Woodstock Hospital, Hendricks offers an innovative solution. “If the city decides to renew the lease to the golf course,” she says, “it must also lease this land to Cissie Gool House. And we want the same discounted rate — R1,058 a year.” x The writer’s spouse is employed by Ndifuna Ukwazi April 16 - April 22, 2020

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feature / covid-19 response

THE MOTHER OF INNOVATION

Amid shortages of critical medical equipment and apparel due to the Covid-19 pandemic, companies around the world are altering their manufacturing output to meet demand

Adele Shevel shevela@businesslive.co.za

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he world has been turned on its head and businesses are reconfiguring what they do, either to survive or to help to provide critical supplies in the battle against Covid-19. Or both.

“Not since World War 2 have so many companies in the business of making cars, clothes or other items been asked to switch up their production lines for the common good,” says international news organisation Quartz. In that conflict, makers of silk products stepped up to churn out parachutes for the armed forces, while carmakers diverted their production lines to aircraft engines, guns and tanks.

A similar scenario is playing out today, as companies step up to redirect resources and production lines to minimise the fallout from the Covid-19 pandemic. Car companies, for example, are producing medical supplies, while luxury businesses are ditching runway gear to create masks and medical gear, or switching from perfumes to hand sanitisers.

The liquor industry is also mixing up its production output. SA Breweries has started producing hand sanitiser, and Distell — normally associated with drinks like Savanna and Klipdrift — has committed 100,000l of alcohol to be used for sanitisers, as well as other hygiene and sanitising products.

The company will provide 20,000l of alcohol a day for hand sanitiser, to be produced at its Wellington and Goudini factories, which usually make the Amarula, Bain’s Whisky and Olof Bergh brands. It estimates it will be able to produce 40,000l of sanitiser a day.

Petrochemicals company Sasol is also producing alcohol for hand sanitisers and disinfectants, and the company has delivered about 8Ml to the local market and its own laboratories in recent weeks. Its daily ethanol production figure is close to 300,000l, based on information from its annual financial report.

But Hendre’ Barnard, secretary of the Southern African Craft Distilling Institute, says: “If we assume that entire daily production is turned into 65% alcohol hand sanitiser, that works out to less than 8ml a

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Repurposed: Four Pillars Gin Distillery in Healesville, Australia, has turned to making hand sanitiser. In SA, small producers are struggling to get the necessary regulatory approvals Carla Gottgens/Getty Images

person in SA. That’s not enough. And that’s if we’re assuming it’s only [going into] hand sanitiser; alcohol is also used on surfaces, [and for] food and production facilities.

“In addition, most bulk alcohol and sanitiser supply has already been purchased by the government and other entities for hospitals, clinics and public services. That does not leave a lot — or any — for NGOs or private individuals.”

Barnard’s institute represents a large portion of the more than 130 craft distillers and

craft spirit producers in the country, many of which want to produce hand sanitisers during the crisis. The problem is that many of these small distillers are not yet able to produce the products legally.

The SA Revenue Service has waived excise duty on alcohol used for the production of sanitisers, and provided an amendment that allows applications to be completed online and processed quickly. But this amendment only applies to “bona fide” manufacturers of sanitisers — which means the

manufacturer has to be registered as such. And the distilleries have not been able to fulfil the registration and related testing requirements because many of the relevant departments and service providers are closed.

“Legally, distillers around the country who did not manage to get their registration in place before lockdown are not allowed to produce sanitiser,” says Barnard. Despite this, many are doing so — because they’re misinterpreting government communications, they’re taking a chance, or they’re taking the view that it’s a social imperative. But it could have retrospective legal ramifications, he warns.

“We’ve been working on this for more than two weeks, even before the lockdown. We’re asking for the government to suspend — without room for misinterpretation — all requirements related to sanitiser manufacture for licensed micro liquor manufacturers, so we can help our local communities,” says Barnard.

“We have clients with orders from the SA National Defence Force and police service — it’s not just smaller businesses, old-age homes and local clinics and charities we’re trying to help.”

Outside of the sanitiser sector, other SA companies are also coming to the party, adapting their output to meet specific needs around the crisis.

Curro Holdings, the largest JSE-listed education provider, has offered the services of its 3D printers and staff to help make protective face shields for medical workers. And a group of 3D printing enthusiasts, with the help of funders, launched Ruach 3D late last month. The initiative is using 3D technology to equip health workers with various products, including face shields and masks.

First Ascent — best known for its hiking gear and leisurewear — has also turned its attention to producing face masks for health-care workers. Now an essential-service supplier, the First Ascent Cape Town factory is producing thousands of masks during lockdown, the company says. And Ford SA has begun production on 57,000 face shields at its Silverton plant.

Netflorist, too, is reinventing itself as an essential-service supplier. The company, which normally delivers fresh flowers and gift packages, now has an offering of fresh fruit and vegetables, tea, coffee, biltong and chocolates, among other “essential” items, and it has plans in the pipeline to deliver groceries too.

Quartz makes the point that technological developments such as advanced robotics, data analytics and 3D printing have made it easier for companies to switch gears and manufacture even complex products.

For example, the advances allow companies the adaptability to help plug the gap for products such as ventilators and respirators.

In SA, state arms and technology company Denel has announced it will design and develop medical ventilators in partnership with other state-owned entities, research bodies and medical technology companies.

And appliance brand Defy is looking to start producing ventilators by the end of the month.

According to news website Business Insider, SA hopes to produce 10,000 ventilators by the end of June, ramping up to 50,000 if necessary.

Further afield, companies such as Ford and General Electric (GE) have also entered the medical equipment game.

Carmakers are the first to admit they don’t know much about this arena.

“We’re not the experts here, but we can help the experts,” Ford spokesperson Mike Levine told IEEE Spectrum, the website of the world’s largest professional organisation for engineering and the applied sciences.

The company is leveraging its expertise in fast manufacturing, logistics and supply chain operations. Ford has said it is working with 3M to manufacture “powered air-purifying respirators, which come in the form of a hood, or fullface masks”.

It’s also going to work with GE on expanding production capacity for GE Healthcare Systems’ ventilator, with a simplified design that should allow for higher-volume production. According to Ford CEO Jim Hackett, it currently takes GE about 27 hours to build Legally, distillers a ventilator. He estiaround the country mates Ford can cut who did not production time in half. manage to get In the UK, Formula their registration in One teams have place before responded to the govlockdown are not ernment’s call for allowed to assistance, and are produce sanitiser looking into producing Hendre’ Barnard — or assisting with the production of — medical devices. Mercedes last week received approval for a respiratory device that could keep Covid-19 patients with lung infections out of intensive care units.

And Dyson, the British technology company that makes household appliances such as vacuum cleaners, air purifiers and hairdryers, has received an order from the UK government for 10,000 ventilators, CNN reports. Company founder James Dyson told the news channel the group has designed and built an entirely new ventilator called the “CoVent” since he received a call from UK Prime Minister Boris Johnson.

British American Tobacco (BAT), owner of cigarette brands such as Lucky Strike, Dunhill and Camel, is usually associated with the opposite end of the health spectrum. Now it is working on a possible coronavirus vaccine using tobacco plants.

“If testing goes well, BAT is hopeful that, with the right partners and support from government agencies, between 1-million and 3-million doses of the vaccine could be manufactured per week, beginning in June,” the company told The Guardian newspaper.

BAT’s biotech subsidiary, Kentucky BioProcessing, has moved to pre-clinical testing for the product. It’s not a commercial endeavour, according to the company. “We’ve been very clear,” chief marketing officer Kingsley Wheaton told the FM last week, “anything we do on Covid-19 is entirely not-for-profit.”

Also in the Covid-19 treatment realm is Japanese camera company Fujifilm, through its subsidiary Toyama Chemical. The company already manufactures a flu drug called Avigan (favipiravir is the generic version), which is being tested in China as a possible treatment for Covid-19. About 30 countries have already made requests to Japan through diplomatic channels to buy Avigan, and the government has said it is considering providing it for free to aid the fight against the coronavirus.

Elsewhere in the manufacturing sector, luxury goods and beauty groups are applying their skills to producing apparel and masks for health-care workers.

Beauty conglomerates L’Oréal and Coty are using their facilities to produce large quantities of hand sanitiser for European hospitals. And French luxury group LVMH — home to Louis Vuitton, Bulgari, Tiffany and Dom Pérignon, among others — has moved into making hand sanitiser that will be freely available to the public. It’s also commissioned a Chinese supplier to produce 40-million health masks. The first batch of 10-million will be distributed to French health-care authorities.

Luxury group Kering, owner of Gucci, has said the fashion brand will produce more than 1-million masks and 50,000 medical overalls in Italy, and once local medical authorities give the go-ahead in France, its Saint Laurent and Balenciaga brands will do the same.

Prada has said it will produce 80,000 medical overalls and 110,000 masks for Tuscan health-care personnel, after a request from the Italian region’s government.

Fast-fashion retailers are also on board.

Swedish fashion giant H&M is “quickly arranging” for its supply chain to manufacture personal protective equipment for hospitals and health-care workers, according to industry website FashionUnited. In Spain, Inditex, the parent company of Zara, is looking to refit its textile factories to make hospital gowns.

Athletic brand Nike is reconfiguring its resources — it is prototyping face shields for medical professionals by repurposing elements of its signature shoe, the Nike Air. x April 16 - April 22, 2020

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africa

international zambia

FEELING THE FALLOUT Zambia has so far been spared a rapid spread of the coronavirus. Nonetheless, the country’s economy and its people are feeling the effects of the pandemic Alexander Mutale

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n the streets of the Zambian capital Lusaka, residents are worried about the possible spread of the coronavirus in their country.

“The deeper you think about Covid-19, the more you wonder if your breathing rate is normal,” says Mwewa Chitambala, a building administrator in the city.

Journalist Kapulu Manjimela expresses a similar sentiment. “The more I think and watch news channels, I actually feel my chest in pain, and think I have a pain in my throat,” she says. “So today I told myself no more watching, and I am not feeling those things. It’s better to watch cartoons whenever I’m tempted to change to news channels — it’s so depressing.”

Zambia has so far been spared the brunt of the global pandemic, which at the time of going to print had reached 1.4-million confirmed cases around the world. The country has a caseload of just 39, of whom five have recovered, and one death has been recorded.

All the cases in Lusaka trace back to a cluster of people who travelled to Pakistan (and those who came in contact with them), according to health minister Dr Chitalu Chilufya, while two cases in the Copperbelt involve a couple who returned from a holiday in France.

“This cluster — the cohort — is under tight confinement,” says Zambia National Public Health Institute director Prof Victor Mukonka. “We’ve ensured we shield the public.”

But while the spread of the virus in the country has, so far at least, been contained, the indirect effects are starting to bite.

Already, finance minister Bwalya Ng’andu has revised his economic outlook.

“You may recall that during my 2020 budget address, I projected that the Zambian economy would grow at 3.2%,” he told journalists late last month. “In view of the recent developments, growth is now projected to be lower, at around 2%.”

In 2018, travel and tourism was the fastest-growing sector in Zambia, contributing $1.8bn to the economy (6% of GDP) and employing more than 300,000 people, according to the World Travel & Tourism

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Council. But disruptions in international air transport from the US, Europe, Asia and within Africa have put a severe dampener on the sector. Emirates, RwandAir and SAA have all suspended flights into Zambia, while other carriers have scaled down their operations.

“Consequently, some hotels and lodges have already reported significant reductions in bed occupancy rates, to less than 20% from an average of 50% for the same period last year,” Ng’andu said.

By late last month, the sector had already lost $6.9m for this year alone due to cancelled bookings and decreased numbers of tourists, according to tourism minister Ronald Chitotela.

Near the prime tourist destination of Victoria Falls, the David Livingstone Safari Lodge & Spa has closed its doors until at least May 31, when management will review the situation.

“This is due to the unexpected impact of the Covid-19 virus and the resulting unprecedented The deeper you number of cancelthink about Covidlations received to 19, the more you date, the [cancellawonder if your tion] of most flights breathing rate is into and out of Livingstone, the lack of normal Mwewa Chitambala self-drive bookings and any local support,” says group MD Steve McCormick.

“Business has literally and understandably slowed down to a trickle.”

The copper sector, an economic lifeline for the country, is feeling the pinch too.

Zambia is the second-largest copper producer in Africa after the Democratic Republic of Congo, and the metal accounts for more than 80% of its exports and foreign exchange earnings. As at March 25, copper prices were down 23% from January, from $6,165 a ton to $4,754 a ton.

“Copper export earnings are expected to decline substantially by more than $1bn in 2020 if the situation persists,” according to Ng’andu. “Mineral royalty tax collection will also decline.”

For economic and business consultant

Chibamba Kanyama, the depreciation of the kwacha is of particular concern. It’s lost more than 20% in value, and is trading at about ZK17.50/$, which will mean higher debt service costs for the country.

“The depreciation of the kwacha will have far deeper consequences on livelihoods in Zambia than the coronavirus itself. Static incomes in the face of a weak local currency means the purchasing power of the already vulnerable people is weakened further. Even the middle class will see demotion of status in a few months,” says Kanyama.

“The response to the depreciating kwacha needs very serious attention and [we] pray that the minister of finance is quietly engaging critical [international] partners to bail us out.”

Then there’s the ripple effect of disrupted supply chains as a result of economic lockdowns and border closures.

SA is Zambia’s largest import partner, accounting for 30% of Zambia’s total imports.

The UN Comtrade database put annual imports from SA at a value of $2.73bn in 2018 (the most recent available statistics).

But with SA under lockdown, Ng’andu fears a knock-on effect on manufacturing, mining, and the wholesale and retail trade (though a check by the FM of Shoprite and Pick n Pay stores in the Copperbelt city of Chingola showed no shortage of SA goods on the shelves).

It’s already having an effect on revenue collection, with VAT and customs duty for March expected to be 25% below target.

Chilufya says the government is working with its bilateral partners to ensure there is no disruption in the movement of goods and services.

“To this effect, truck drivers who are being admitted into the country are being screened at the border and those who are found to be asymptomatic are being entered into our tracking records and escorted to points where they are being taken into mandatory quarantine places. So far, we have received 125 trucks into Livingstone and the drivers have been offloading and are now quarantined in a facility of isolation,” he says. “This is part of the government’s strategy to minimise importation of Covid-19

from … high-risk jurisdictions.”

On March 26, President Edgar Lungu announced the first official measures to contain the spread of the virus. He closed schools, colleges and universities, and restricted international flights to Kenneth Kaunda International Airport to ensure efficient and effective screening and tracking of travellers by health authorities.

Though Zambia is not under a total lockdown — travellers are still allowed entry into the country — those who exhibit symptoms upon screening are quarantined in a medical facility for treatment, while all those who enter the country and show no symptoms of the virus are required to self-quarantine for at least 14 days at their own cost.

Prominent lawyer Dickson Jere, for example, was contacted by the Zambia National Public Health Institute on his return to the country in mid-March, and ordered to self-quarantine. “Today I had a wrap-up call with the … institute after the expiry of my 14 days. So I will be part of the statistics … of those ‘integrated into society’ after undergoing the 14-day [quarantine],” he says.

As part of government’s containment strategy, Lungu also ordered that public gatherings such as conferences, weddings, funerals and festivals be restricted to not more than 50 people. Restaurants may operate only on a take-away and delivery basis and all bars, nightclubs, cinemas, gyms and casinos have been ordered to close.

It’s taken a toll on business owners.

Mwila Frederick, for example, has had to shut his small one-room bar, and the stock of Chibuku (local traditional beer) he ordered the day before the closure has now gone bad.

“I also have to think about how I will survive for the next two weeks when I will not [be able to] open my bar,” he says.

“My income is not much, but at least it is daily, and I provide for my family from it. So this closure is bad for a small businessman like me.”

Linda Phiri, who sells vegetables at a local market in Chingola, says the support the traders are receiving from the local councillor has meant they can continue earning a daily living.

“We were afraid of losing business when the president announced that gatherings of more than 50 people will not be allowed,” she says.

“Here in the market we are many. But now, our councillor and his people have provided dishes and hand sanitisers, and have been educating us on the hygiene prac-

tices that will help us to serve our customers without any risks. So our fear is gone, and we have continued our business even if there are few customers now. They are afraid of coming to places like [the] market.”

Though the government’s current measures would seem to be yielding some positive results — at the time of going to print, it had not recorded a new case since April 2 — the fact that the borders remain open has not gone down well with many, and calls for a lockdown have grown.

“To a doctor, one death is one too many.

Life must come first, at all times and in all circumstances,” says Dr Aaron Mujajati, for-

mer registrar of the Health Professions Council of Zambia who now works as a specialist physician in Lusaka.

He says if a lockdown is going to save lives, the government must choose between saving lives or saving the economy.

“If you come to think of it, the economy will take a severe beating with or without a lockdown,” says Mujajati. “My perspective is biased because we are trained to think and take action that saves life first and the rest is secondary. There is a maxim in medical practice that says: ‘Life before limb.’ It means that I must save your life first, and deal with the rest later.” x

What it means: The Zambian economy is feeling the knock-on effect of the Covid-19 pandemic

Zambian president Edgar Lungu

Getty Images/AFP/Timothy A. Clary

April 16 - April 22, 2020

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IN GOOD FAITH BY CARMEL RICKARD

COINING IT A Kenyan bank that claimed six times the amount of a loan it had made to a client has been told to pay back the money

A

decision by Kenya’s appeal court last week has brought home a sad fact: some banks, especially those dealing with home loans, treat customers as though the law doesn’t exist, charge them as they like, and fail to keep proper records.

The case concerns Scholarstica Muturi, a stock exchange agent who took a loan with Kenya’s House Finance Co Ltd in about 1998. She asked for 3-million

@carmelrickard

123RF/phoenix28

‘It can never be justified that one borrows KSh3m, pays KSh18m — and the bank is still not satisfied’ 40

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Kenyan shillings and offered two properties she owned as security.

Muturi was supposed to repay the loan over 15 years, but when she was unable to meet her repayments, one of the two properties was sold against the loan.

That sale raised KSh3.5m.

Some time later, Muturi again could not meet her repayments, April 16 - April 22, 2020

and the second property — the home where she lived with her family — was sold by the bank for KSh16m (in court papers she claims it was valued at KSh32m).

In 2010, incensed at what she believed was a major injustice perpetrated against her, Muturi launched legal action against the bank and the buyer of her second property.

During argument, it became clear that the bank had made a great deal of money out of its loan to her.

In fact, Eric Ogola, the high court judge hearing her complaint against the bank, wrote: “It is clear that the bank … merely treated [Muturi] as a cash cow, which it milked to the extent of even denying the calf the milk.

“It can never be justified, in any society, that one borrows KSh3m, pays KSh18m — and the bank is still not satisfied.”

Ogola found that the bank had failed to keep proper records and arrived at the amount it claimed Muturi owed “as a result of guesswork”. He said “unlawful regimes of interest” had been charged on the account.

According to Ogola, Muturi had in fact already paid off the loan at the time the bank decided to sell off her second property, making that sale “unlawful, irregular and invalid”.

The judge ordered that the entire proceeds of the sale had to be repaid to Muturi with interest of 26% — the rate at which she’d been required to repay her initial loan.

The bank appealed against Ogola’s judgment, and three judges of

the appeal court gave their decision on the matter last week.

In their ruling, the appeal court judges note Muturi’s submissions: she had asked Kenya’s Interest Rate Advisory Centre for help and was told that the bank had charged interest that was unlawful, violating provisions of the banking laws.

When she afterwards challenged the bank about the way it had operated her account, she was given a credit of almost KSh2.5m without being told how that sum had been arrived at, or why the bank was holding credit for her that she had not requested.

The bank, on the other hand, denied any wrongdoing, and claimed that the high court’s decision should be overturned.

A matter of record In their ruling, the appeal court judges pointed out that new banking laws that came into effect in 2007 applied to the case retrospectively. They also said the bank had itself confirmed that it had recovered KSh18m from Muturi in relation to an original loan of KSh3m.

“The bank was not entitled to do that,” said the court.

Dismissing the bank’s appeal, the judges also supported Ogola’s finding that the bank was unable to calculate exactly what was due to Muturi, “because it had not kept proper books or records” in relation to her account.

From the records made available to the high court, Ogola could not work out what was owed to the bank at the time the new Banking Act came into force.

Moreover, by the time that legislation came into effect, Muturi had already repaid the loan “three times over”. x

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

CAPITEC RESULTS

Keeping its cash close Gerrie Fourie: Mercantile has adopted Capitec’s tougher provisioning regime Freddy Mavunda

One of SA’s best-capitalised banks, Capitec, has iced its final dividend as it braces for the Covid-19 fallout Stephen Cranston cranstons@fm.co.za

ý There was an air of the calm before the storm in Capitec’s year-end results to February, which will almost certainly be the last good set of numbers before the financial devastation of the Covid-19 pandemic becomes clear.

Capitec has treated the coronavirus as a post-balance sheet event on the advice of its auditors, says CEO Gerrie Fourie.

Yet it has chosen to scrap the final dividend “after extensive deliberation” on what Covid-19 might do to business this year, erring on the Reserve Bank’s guidance rather than shareholder demands.

Capitec’s executives have also waived 2020’s cash bonus, and there’ll be no increases in management fees this year.

In what feels a lifetime away, Capitec continued its much-envied growth in headline earnings, up 19% to R6.3bn.

It again raked in the most new customers of any bank: 200,000 clients a month, which is still twice the rate of newcomer TymeBank.

Fourie says, reasonably enough, that it is too early to measure the financial impact of the pandemic.

“It did not affect the level of credit repayments or of premiums for our funeral policies in March yet,” he says.

But it has already had requests for financial help from a third of its business banking clients in recently acquired Mercantile Bank, and 80,000 of its 1.2-million retail borrowers.

And Mercantile has so far waived rental payments on the point of sale devices offered to shopkeepers.

Capitec knows a lot about adapting already, and it is certainly no longer the controversial microlender it was a decade ago.

Fourie says three-quarters of the growth in net income was driven by products which are not term loans.

April 16 - April 22, 2020

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money&investing Rm 8,000 7,000

35

34

27

27

2016

2017

36

34

27

28

2018

2019

31 28

6,000 5,000 4,000 3,000 2,000

Headline earnings Source: Capitec

Return on equity (%)

2020

Capital adequacy (%)

For example, Capitec now has an 8.1% market share of retail deposits, which grew 22% last year to R87.5bn.

It has almost 600,000 credit card users, with a book of R5.4bn and a 4.4% share of industry balances.

And its most successful diversification has been its funeral plan: a joint venture with Sanlam, which has already issued 1.1-million policies. With R413m in net income, funeral policies are poised to overtake credit cards as a profit contributor within two years.

Nonetheless, 55% of net income, or R10.1bn, is provided by lending.

Capitec is, however, getting better at managing this book, with bad debt recoveries increasing almost threefold to R1.3bn.

The credit loss ratio of 7.2% was well down on the previous year’s 8.6%, but still looks huge relative to other banks, whose losses are about 1%.

“That’s not a fair comparison,” says Fourie.

“If you could carve out the area where we compete with the big banks, we would look competitive.”

Capitec is nonetheless fishing in a richer pond, with more than half of its unsecured loan sales now to people earning more than R20,000 a month — the only part of the retail credit industry showing any real growth.

To attract these better-quality loans, Capitec has reduced average interest rates from an eyepopping 28% in 2017 to less than 24%.

Capitec was about to open its giant new central head office just outside Stellenbosch — which will cost R900m — to conduct next month’s AGM from there.

But in the wake of Covid-19, it had to renew the lease on all 13 premises it used before.

That means it now carries a double head 42

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April 16 - April 22, 2020

office cost, similar to the one which has held back growth at Investec Bank in London.

As for the dividend decision, Nolwandle Mthombeni, banks analyst at Mergence Investment Managers, says the call was unexpected.

Capitec, she says, is the most highly capitalised of the listed SA banks, with a capital adequacy ratio of 31%.

Still, while Capitec’s policy is to pay out 40% of its earnings, Mthombeni says investors would not have been buying Capitec for yield anyway.

After all, it has a trailing dividend yield of 1.8% compared with well over 10% from Nedbank and Absa.

Capitec’s share price has not been immune from the sell-off in bank shares either and it is now down in line with the banking index, year to date.

Mthombeni says that a large proportion of

IMPROVING IMPAIRMENTS Credit loss (%) 14

Net credit impairment charge Rm 6,000

5,000 11.4

11.9

11.4

4,000

12 10

8.6 7.2

3,000

8 6

2,000

4

1,000

2

2016

2017

2018

Net credit impairment charge (Rm) Source: Capitec

2019

2020

0

Credit loss ratio

Capitec’s credit clients work in the retail sector, which is likely to see substantial retrenchments.

Fourie says 27% of Mercantile’s business clients believe that they cannot survive a one-month lockdown without laying off staff, and 56% are already considering retrenchments.

In this light, the Covid-19 pandemic makes last year’s acquisition of Mercantile seem distinctly ill-timed.

It was argued that the deal would be a springboard into the business banking market, in particular the 131,000 formal medium-sized companies in SA. In addition to its 4,000 business banking clients, Mercantile has a strong position in merchant services, providing point of sale devices to 28,000 merchants as well as payment services, foreign exchange and rental finance.

Yet these are the businesses at the frontline of the lockdown, which economists fear could end up costing more than 1-million South Africans their jobs this year.

That is likely to have a serious impact on Mercantile’s credit impairment charge, which in

the period more than doubled to R114m.

Fourie argues that this mainly reflects the fact that Mercantile adopted Capitec’s tougher provisioning regime.

Its headline earnings for the four months were a modest R3m but it should benefit from Capitec’s cheaper long-term funding, though there are no plans to rebrand the business for another two years.

Fourie could not resist a dig at Discovery’s claim to be the first behavioural bank. “We have given almost R3bn back to customers for good behaviour, with R2.3bn interest paid on savings and almost R500m in savings through reduced digital bank fees.”

Capitec plans to move further upmarket with its access facility: a revolving credit product with no set term; it is also entering the vehicle finance market through the back door.

Along with WeBuyCars, it offers credit specifically to buy cars older than five years.

This is the area in which the traditional vehicle finance market does not operate. (The first Capitec-backed vehicle was a 2010 VW Touareg for R190,000.)

Capitec has been written off as a house of cards several times before.

But its ability to continue delivering superior returns can help explain why its market cap is now double that of Nedbank and Discovery, and 50% larger than that of Absa.

It sits on an earnings multiple of 20, whereas FirstRand is on eight. Yet FirstRand is much more diversified, and it isn’t that far behind the Stellenbosch scrapper when it comes to customer satisfaction.

Nobody can predict who is going to emerge from the coronavirus crisis as a relative winner, but bank customers are likely to continue voting with their feet. That stands Capitec in good stead. x

BRAVE NEW WORLD JSE bank index vs Capitec Bank Holdings– daily 110 105 100 95 90 85 80 75 70 65 60 55 50

Capitec Bank Holdings JSE bank index

Apr

Source: Infront

Jul

Oct

2020

FY Heps up 19%

2019

CAPITEC: KEY INDICATORS

Apr

BANK RELIEF

Small biz: still on your own Warren Thompson thompsonw@businesslive.co.za

ý The lockdown ordered by President Cyril Ramaphosa to stop the spread of Covid-19 has thrown the country’s largest banks — and millions of their clients — an unprecedented curveball.

SA reported its first case of Covid-19 on March 5; just three weeks later the nation was placed in lockdown.

Anecdotal reports suggest that many small business owners are not receiving the support that banks have been quick and vocal to announce.

After all, the country’s lenders have the backing of the Reserve Bank, which has relaxed capital requirements.

The measures allow banks to roll over loans for affected consumers and businesses without having to post additional capital, a significant step in providing the industry with the space to manoeuvre in what is expected to be a financial calamity.

With this leeway in place, the banks agreed at a high level to offer consumers and businesses the flexibility to reduce or defer repayments for up to three months during the crisis.

But whether relief is getting to clients — hundreds of thousands of small business owners among them — is another matter entirely.

One of them, Mark George, who employs 80 staff across businesses in the legal services, transport, hospitality and construction industries, says applying for relief with the big four banks has been a nightmare.

“We pride ourselves on our impeccable credit record. From the time the lockdown was announced, we started making inquiries about payment holidays and the like. Absa took our details but haven’t come back to us. Standard Bank say they are still reviewing our application. Nedbank said they would provide us with

Freddy Mavunda

a moratorium where repayments would be Roughly 17% were from business clients added to the end of the term, but we would be inquiring about cash flow relief, alternative placed on what looks like some kind of debt funding and resource support. review. WesBank did give us some leeway by “Since April 1 [to April 5], our provisional allowing us to just pay the interest on our peranalysis is that approximately 34,000 FNB sonal vehicles, but not on our revenue-generretail/individual customers who applied last ating trucks,” says George. week may qualify for cash flow relief and credit The group’s main banker, FNB, is also a insurance,” the bank says. client of George’s legal services business. He says even when they showed FNB the invoices Like FNB, Nedbank has had high levels of for money they were owed, the bank appeared inquiries in respect of debt relief. unwilling to assist. “We had to threaten them to Absa says call volumes regarding its retail take our main bank account away before they credit products have increased substantially would reconsider. They have still not come since the lockdown. back to us,” George says.

“Call volumes have increased 104% for perThings don’t look much more efficient in the sonal loans, 7% for cards, 335% for home loans public sector either. George has made applicaand 198% for vehicle finance, with payment tions to the Unemployment Insurance Fund and relief the top query raised by customers,” says the government’s SME fund. “Relief is not easily Christine Wu, managing executive for customer accessible. Everyone says they want to help and value management at Absa’s retail and business assist, but when you go through the motions it banking division. seems like it’s very difficult. It has been a real But the official line appears to be a world eye-opener.” away from the struggles that business owners Clearly, the banks have yet to marshal like George are experiencing. resources to cope with the demand.

Absa, for one, says the “uptake” from comFNB says the response to the measures has mercial clients has not been that substantial yet. been overwhelming.

The bank expects requests for payment relief “According to the bank’s provisional analysis, concerning commercial asset finance and mortin the first week after gage-backed business announcing Covid-19 loans to gain momenOFF THE LOWS relief measures it Absa vs Standard Bank vs FirstRand vs Nedbank – daily tum this month and was receiving 1,000 next.

Based to 100 requests per hour on Absa has also its app and FNB.mobi 100 shrugged off criticism 95 channels from retail that its customers have 90 85 and business bankbeen unable to get 80 ing customers,” it through to its call centre 75 says. agents, though it admits 70 About 80% of it has reduced the num65 60 those requests were ber of people in its conAbsa 55 from individuals tact centres.

Standard Bank 50 FirstRand inquiring about “We have continu45 Nedbank Covid-19 solutions in 40 ously been monitoring 35 relation to home volumes, and while an loans, personal loans, increase was experi17 Feb 18 Mar 17 Apr overdrafts and credit enced over month-end, Source: Infront cards. this was more or less in 2020

Banks were quick to proffer Covid-19 relief, but for clients to get actual help has proved another matter entirely

Absa: The bank has shrugged off criticism that its customers have been unable to get through to its call centre agents

April 16 - April 22, 2020

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April 16 - April 22, 2020

RETAILERS VS LANDLORDS, 2.0

Retailers dig in for rental fight A payment overture by SA’s apparel retailers to landlords sees parties ‘not too far apart’ Grant Pattison: “Why not apply principles rather than standoff negotiations, which is just one ý A group of most of the country’s biggest party trying to strong-arm the other? Turnover clothing retailers have put forward a “guideline” rental with some fixed costs would be the way to landlords, offering to pay 20% of rental oblithe problem could be solved.” gations during lockdown.

The issue is that many, if not most, It’s hardly a negotiation, though: Property Industry Group members are Turnover rental the retailers say it’s a final offer and if with some fixed also suffering acute cash shortages of the terms aren’t accepted, they’ll costs would be their own. revert to a nonrental payment stance. the way the Estienne de Klerk, spokesperson The group includes TFG, for the Property Industry Group and problem could Truworths, Woolworths, Mr Price CEO of Growthpoint SA, says: “You’ve be solved Group and Pepkor under the banner got everybody coming at you for disGrant Pattison of the National Clothing Retail counts or relief … there’s a view that Federation of SA. everyone has infinite liquidity; it’s not Deemed nonessential services, apparel so. We pay most of the rates and taxes for most retailers have been hard hit by the national cities and none of the cities have rushed over to shutdown. assist the real estate industry in our time of Despite legal advice that rentals aren’t, in need other than Stellenbosch municipality.” fact, owed during this period, they say they’ve Worse, he says, “over the past 10 years the undertaken these discussions “in the interest of industry has absorbed an average increase of ubuntu”.

559% in rates and taxes, in the context where The plan is to pay inflation was 220% HOLDING IT TOGETHER for all utilities — like over the same period”.

Mr Price vs Pepkor vs TFG vs Truworths vs Woolworths water and lights conDe Klerk says they – daily – based to 100 sumed during lockdon’t agree with the down, as well as a retailers’ legal opinion 120 further 20% of normal 115 but want to avoid a 110 rental and operating legal dispute.

105 costs — until the end He believes there’s 100 95 of April to cover scope for “a very con90 rentals and rates and structive discussion 85 taxes. and I don’t think the 80 75 The retailers had parties are particularly 70 asked the Property far apart”.

65 Mr Price 60 Industry Group to Dis-Chem, meanPepkor 55 Truworths consider making while, has come out to 50 TFG rental concessions defend its request for a 45 Woolworths after lockdown, linked 40 rental reduction during 35 to turnover, but this lockdown, despite the Oct Nov 22 Dec 27 Jan 24 Feb 28Mar 27 Apr request was denied. fact that it and rival Says Edcon CEO Clicks have the rarSource: Infront Adele Shevel shevela@businesslive.co.za

2019

line with volumes during similar periods,” it says.

Bizarrely, Standard Bank says volumes to its call centres have generally been in line with prior periods. But it has seen a sharp increase in the number of users adopting its digital channels, “with new registrations up more than 50% compared to the same period a month ago”.

But the desperation is almost palpable, judging by the volumes of applications received by the Oppenheimer and Rupert initiatives.

In the space of two days, the separate schemes received over 20,000 applications for far more than the R2bn they had committed.

So what is officially available to bank clients whose incomes have dried up?

From April 1 to June 30, relief measures apply to clients who have displayed “sound banking behaviour”, such as honouring their repayments consistently.

These include no instalments or repayments over the next three months, a preferential interest rate and no initiation fees on any relief granted.

But, interest and fees will continue to accumulate.

Relief, such as it is, has been patchy and seemingly unco-ordinated.

Standard Bank, for example, announced that students would receive a three-month reprieve from any repayments on their student loans, which would include a 0% interest rate over the period.

Similarly, small businesses — those with a turnover of less than R20m per year — were granted three months’ worth of instalment relief between April and June, though fees and interest will continue to accrue.

This was extended to low-income earners, or those earning less than R7,500 a month.

Nedbank’s blanket relief has involved cutting the minimum credit card repayment to 2.5% of the outstanding amount as well as allowing clients with fixed deposits to access up to R200,000 without paying penalties.

Absa has extended cover on its retrenchment benefits to pay the minimum instalment on credit agreements for up to three months if clients don’t earn an income.

Clients seeking relief from FNB will need to describe how the lockdown has impacted cash flows and make arrangements on a bespoke basis.

Fresh out of reporting season, the country’s big four banks all had one thing in common: a sudden uptick in bad debt numbers.

Back then, bank executives were confident that, at the very least, they would be able to contain credit loss ratios to their internal limits.

But that was pre-Covid-19.

No one is making such assertions now. x

Foschini: Deemed nonessential services, apparel retailers have been hard hit Freddy Mavunda

2020

lords sent on Thursday, Saltzman said the pharmaceutical group had paid all the utilities, rates and extra charges for April, as well as 50% of the basic rental.

But it suggested that April rental “be the higher of 50% of basic rental or turnover rental of 1.75% across all trade, including our dispensaries”.

Saltzman says this offer “does not deprive any landlord of the annual figure for top-up rental”.

“In fairness, I have asked for the same consideration as other traders of nonessential goods.”

OUTPERFORMERS Speaking to the General retailers index vs Clicks vs Dis-Chem – daily FM, Saltzman says Based to 100 Dis-Chem stores 105 are not completely 100 open.

95 While essential efied status of being 90 goods contribute a essential-service 85 significant portion of providers. group turnover, To a large extent, that 80 75 nonessential goods is reflected in the share Clicks 70 carry much higher prices of both compaJSE general retailers margins and therenies: neither was subject 65 Dis-Chem 60 fore contribute subto the same degree of 55 stantially to the botsell-off in last month’s 50 tom line. market rout. Clicks has, 17 Apr 18 Feb 17 Mar “We think it’s a in fact, added to its gains fair request because this year and while 5.7% we know landlords sounds hardly stellar, it’s Source: Infront are granting other an astonishing outperforretailers of nonessential items complete dismance against the 36% counts, partial discounts, and not only for this decline experienced month but the next three months.” by the general retail index.

Saltzman says he’s had mixed feedback to “It’s a negotithe letter. “I’ve had acceptances, rude and ation, not a aggressive letters and polite no’s, but not everyrefusal to pay body has got back to me yet. All I’m asking for rent,” says Disis a fair deal.”

Chem CEO Ivan Rachel Wrigglesworth, chief commercial Saltzman. officer of Clicks, says the company is continuing In a note to to pay rent on stores and pharmacies, which landcontinue to trade as they have been classified as providing essential services.

Pattison argues that the same principles retailers and landlords are juggling with could apply to Ivan Saltzman: general financial conduct.

It’s a negotiation “If you received your full Freddy Mavunda salary or normal income, you should pay all your accounts in full. If you earned nothing, it’s fair not to pay.”

That, ideally, would extend to the government on taxes and tax collection. x

RENEWABLE INVESTMENTS

Now is not the time to back-pedal SA’s energy security is no longer top of mind in the Covid-19 crisis. But a big investment push, now, is what SA needs Lisa Steyn steynl@businesslive.co.za

ý It’s funny to think that less than six weeks ago, the National Treasury’s “number one” task was to resolve SA’s electricity supply crisis.

That was a different, pre-Covid-19 lifetime, and the pandemic has radically changed government spending priorities, if not forever, then for a long time to come.

Before Covid (BC), SA had made some promising moves towards reforming the energy sector. Eskom would be unbundled, another round of renewable power would be procured, red tape preventing self-generation of power would be cut and municipalities in good standing would be allowed to buy power directly from independent producers.

But the economic devastation wrought by the lockdown has prompted the Reserve Bank to forecast negative economic growth of at least 6.1% this year.

In a negative growth environment, with suppressed energy demand, even less money to go around than before and the rand on its knees, could SA’s energy plans be shelved?

Globally, renewable projects are already dropping off.

Riccardo Puliti, the World Bank’s global director for energy & extractive industries and regional director for infrastructure in Africa, says the economic slowdown, low oil prices, and the increasing shortage of required components will probably have an impact on the broader clean-energy transition — including the deployment of renewables.

In the US, the Solar Energy Industries Association is reporting supply-chain disruptions, delays to projects, and sales challenges, while Bloomberg New Energy Finance has cut its 2020 global solar demand outlook.

“This may be the first year that solar capacity additions decline since the 1980s,” says Puliti.

April 16 - April 22, 2020

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money&investing

Norwegian research company Rystad Energy forecasts that growth in newly commissioned solar and wind projects will now be wiped out for 2020 and cut by a further 10% next year as the US strengthens and currencies fall across the globe.

“We expect these movements in the foreign exchange market to cause companies to pause contracting key components, which are typically procured in US dollars,” Rystad said in a statement. “Renewable projects in Australia, Brazil, Mexico and SA will be especially impacted, as projects in the procurement phase could face capital cost increases of up to 36% due to the rapid depreciation of local currencies in these countries.”

In SA, the rand breached 19 to the dollar for the first time at the beginning of March and remains above 18 to the dollar currently.

Jennifer Layke, global director of the energy programme at World Resources Institute (WRI), a global research nonprofit organisation, says in some markets green-power project deployment has dropped as much as 30% this year.

But Tobias Bischof-Niemz, director of renewable energy company Enertrag SA and co-author of SA’s Energy Transition, sees the economic downturn as temporary.

He says governments around the world are likely to consider economic stimulus — such as investing in infrastructure — to kick-start their economies back into growth mode.

Puliti says stimulus packages and development funds should promote investments in sustainability and resilience, to help meet development and climate goals and to better prepare for future shocks.

In SA, this stimulus could take the form of building new power generation — something which might have been viewed as a luxury just five years back, but is not the case today, Bischof-Niemz says. “[The cost of] building new wind farms and solar plants in many instances is lower than the pure cost of burning coal.”

Furthermore, he says, an investment is not an expense if you invest in the right things.

“The very small space that the Treasury has 46

financialmail.co.za

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April 16 - April 22, 2020

Medupi: Cash-strapped Eskom will prove a stumbling block

to manoeuvre is now even smaller. It must use that to help those who lost their jobs in the past few weeks. It should not be to spend scarce resources on energy infrastructure that is not future-proof. That would be a luxury.”

He says SA’s energy blueprint, the Integrated Resource Plan (IRP), will remain valid, though the demand projection may be temporarily out of step with a post-Covid-19 reality.

But he says the main reason the IRP needs SA to build new power stations is less about the demand projection and more about the 13GW of power produced by ageing coal-fired power stations that need to be replaced by 2030.

“We know from the long-term planning what we need. That won’t change, but if we build it today we can stimulate the economy in the short term at the same time,” he says.

Cash-strapped Eskom will, however, prove a stumbling block. Already its inability to bear the responsibility of buying power from independent power producers (IPPs) has stalled the launch of a new round of projects, despite SA’s pressing energy crisis.

“Eskom’s financial problems are infecting the IPP payments,” says Bischof-Niemz.

However, he says that could be instantly resolved if the responsibility for payment of IPPs is taken out of Eskom and transferred to a transmission system operator, as envisaged in the government’s plan to unbundle the utility.

The coming economic downturn provides even more reason to fast-track Eskom’s restructuring.

The government would also do well to quickly remove the regulatory hurdles preventing business from generating its own power.

According to Niveshen Govender, COO of the SA Photovoltaic Industry Association, any economic stimulus plan will require power to drive it, and self-generation can play a key role.

“Self-generation could potentially have zero cost to the government and quick build times allows for rapid access to energy,” he says.

“Unlocking the market segment will lower demand and allow Eskom to better serve its key clients. And as an economy we can better reach many non-urban South Africans through small-scale systems or mini-grids to achieve universal electrification.”

Even if the local economy is expected to contract, and suppresses power demand in the short term, Bischof-Niemz thinks the government should also not

abandon any of its emergency power-procurement initiatives too soon, given that SA produces many commodities which are key for global industries.

“SA’s electricity demand might be driven more by what the world economy does, and less by what SA’s economy does.” he cautions.

In a post-Covid-19 world, the WRI’s Layke says, green energy has a critical role to play in economic development and it remains the key to mitigating climate change.

To help revive projects, the government should encourage these investments through various incentives, Layke says.

Though incumbent industry has the ear of many major governments, now is the time for that to change as business leaders — like Richemont’s Johann Rupert — warn of a fundamental economic reset.

“We have to look at impact on humanity through our economic decision-making. I hope policymakers recognise investment in a business-as-usual approach doesn’t build for those attributes,” says Layke.

“Government budgets are going to be cashstrapped and in most markets, the economics of renewables will come to the fore.” x

Tobias Bischof-Niemz: An investment is not an expense if you invest in the right things Russell Roberts

market watch by Marc Hasenfuss

The share price of Ascendis took off like a Benzedrine addict being chased by a rabid Doberman

P

Shopping spree

lague diary, week four: This entry has been abridged by the lockdown’s long weekend, but it was, I’m delighted to report, a short and spectacular session. Not only was the veggie patch not violated by the pesky primates (whereabouts, at the time of writing, unknown), but I had a rare rocket in the portfolio.

The share price of pharmaceuticals group Ascendis — where I have dosed up and down in recent weeks — took off like a Benzedrine addict being chased by a rabid Doberman.

In truth, I was a little baffled by the sudden price action last Wednesday through into Tuesday’s morning trading session. The fact that Ascendis’s Cyprus-based subsidiary, Remedica, manufactures chloroquine was hardly a revelation — and some punters had highlighted this fact on Twitter some weeks ago already (when Ascendis was trading under 40c). Obviously some market watchers are now of the view that Remedica, which has been slated for sale in Ascendis’s debt-culling exercise, has become a lot more marketable.

Presumably banks might also be more willing to give Ascendis — which seems to be ticking over operationally — a little more leeway on loans. Still, sans Remedica I’m not sure how excited I could be about Ascendis. Consequently I took enough profit on Thursday to cover my cost of investing and buy a lunch at Magica Roma (when it reopens).

I can now also enjoy a carefree ride through whatever eventually transpires at Ascendis (and with a bit of luck grab some more Adcock Ingram). A little more alarming is that I have depleted my vitamin B tablets (made by an Ascendis subsidiary), which means I have to train harder in the backyard gym to keep the stress levels at tolerable levels (for the rest of the family).

At the time of writing I’m rather pleased to report that I have managed to fit in a 30- to 35-minute aerobics session on 13 out of the 14 lockdown days. I

motivate myself with a “training soundtrack” — some righteously strident riffs from Rage Against the Machine and The Stooges — with a warm-down and stretch session facilitated by Miles Davis’s So What or the pastoral plucking of Pat Metheny. Speaking of exercising (options), I know last week I bemoaned the timing of the dash of cash mobilised from my offshore unit trusts. With the rand now back below R18/$, I feel more justified in my decision, and having a lighter bond in this testing time should preclude those alltoo-regular 3am panic attacks.

Rupert to the rescue In terms of investing, it was a quiet week. I added to my position in Reinet — a decision I certainly did not rue when reading last week’s riveting cover story in the FM. I’m glad to have some of my measly savings entrusted to Johann Rupert, in a vehicle purpose built for capital preservation over the longer term. I also took a few more Sabvest when the price dipped under R27. On the other hand, I skimmed off a little of my position in Hosken Consolidated Investments — perhaps secretly hoping I get another chance to buy back at levels seen last month. Trellidor, Argent Industrial, Zeder, PSG Group and Montauk Energy are on the watch list, but my sense is that there may still be a better time to buy. I did snaffle a few Libstar — not a difficult decision when I cast an eye over this company’s food brands scattered all around our kitchen. Then could not resist a small punt of aluminium extrusion specialist Hulamin at under 90c.

Hulamin carries a market capitalisation of just R280m. When I think of the sprawling plant and equipment as well as the “green” aspects of aluminium products, I’m sure a takeover must be a distinct possibility. Market talk is that there is a large seller offloading Hulamin, so this might still keep a lid on a price rebound in the short term. I also took a few Naspers, where an intriguingly large discount persists despite the group’s best efforts to nullify this. x

Executives at big US companies bought their own stock in record numbers last month, capitalising on a sharp drop in equity prices and injecting optimism into a market rally that has since gathered momentum.

Insider buying from CEOs, chief financial officers and directors at US public companies hit $1.1bn in March, the biggest total since October 2013. The purchases came from 994 executives, a new record.

Financial Times

Bloomberg/Michael Nagle

@marchasenfuss

Rockets and wild riffs

GLOBAL MARKETS

BUY THE DIP Insider buying is tracked closely by investors to gauge the levels of confidence in boardrooms, and helps explain a near 23% gain in US stocks since March 23

Right Said Fed The Federal Reserve has moved to provide an additional $2.3-trillion in loans to shore up the US economy during the coronavirus pandemic by setting up new facilities to deliver credit to small businesses and municipalities, and expanding measures introduced last month to back corporate debt markets.

In addition to setting up new lending tools, the Fed said it would also increase the size and scope of facilities announced last month aimed at helping corporate credit markets. Financial Times April 16 - April 22, 2020

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47

the G spot by Giulietta Talevi

A reset for Sasol @GTalevi Giulietta@bdtv.co.za

In that world we will have to be fitter and be able to still be relevant, and that’s what we’re preparing ourselves for

48

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A

high-stakes game of of $40-$50, which is a suschicken between tainable price.

Saudi Arabia and In that world we will Russia is over with have to be fitter and be able this week’s deal, to still be relevant, and under Opec’s banner, that’s what we’re preparing to cut 9.7-million barrels of oil producourselves for. tion per day in May and June. The cuts are the biggest in history, but there’s Are you saying that Sasol still doubt that it will compensate for is still a relevant business the extraordinary collapse in demand in both synfuels and — which traders reckon to be double chemicals, where oil is the size of Opec’s production cuts — abundant and very because of the Covid-19 lockdowns. cheap? Will Sasol as it Still, there’s more support for the oil exists now still be here in 10 years? price, which is critical for SA petroFG: That’s the question. Will we be able chemicals player Sasol, whose shares to weather, for the next five years, an oil have doubled since skidding to their price at $20? The answer is no. lows of under R30 just two weeks ago.

But some say that Opec is effectively What I’m asking is whether it would dead. If that is the case, we asked render parts of the business obsolete?

Sasol CEO Fleetwood Grobler whether FG: There are two lenses in this. And the it will fundamentally change Sasol’s one lens is outside SA, where we’ve got business case. chemical and production facilities that FG: You know, markets are effective in produce into an array of industrial, medthe end and markets can’t withstand ical, home-care, laundry and [other] supplying and pumping oil at a negative applications — there we would norvalue or at $10 a barrel. malise and the world will go on and that So I think there will be a balance will stay relevant. coming in; the question is the timing and The pressure is really on the SA value how long lockdowns will last. chain that is based on the facilities that But there will be sanity in the market we’ve got here based on coal. to come back to regulate [it] and say: Now, if you ask me how it will play you can’t produce goods where it’s out in the long term, just remember two below your cost of production ON THE MEND? and you burn cash.

I think all of those oil-produc- Sasol share price (R) – daily ing countries will come to that 300 realisation very quickly because money speaks.

250 And it will be self-regulating, to say: OK, now we need to do 200 something and the first thing to do is cut back.

In February, we were in a world of between $50-$60 oil [prices], in March it changed drastically to a world where oil is maybe $20-$30, and once the impact of Covid-19 and supplydemand works through, we will probably not recalibrate [back] to $50-$60, but maybe it’s a world

.

April 16 - April 22, 2020

150 100 50

Jan 17 Source: Infront

Feb

18

Mar

17

Apr

things. The one is that the world needs more energy. There are more people, and the need for energy is not going to fall away, and there’s no way that renewables will be stepping into the space of energy demand growth given population growth. So I think that is one specific anchor. Energy, whether in the form of renewables, gas, or oil — is needed for us to survive in the next 10 years and there is growth still.

The second thing is, everyone in this industry is under the same pressure. We are not under more pressure than some of the big guys. We are just aggravated because we are in a Fischer–Tropsch coal value chain. But if we get ourselves further reset we would still be relevant.

That’s the quest of any company: how do you survive, what do you need to do.

And we will come up with ways to live in that world.

You must be relieved that the share price has recovered somewhat. Would you now go ahead with a rights issue?

FG: From a management point of view the share price will be what it is. What we control is the plans we’ve announced.

So we will do the self-help measures of about $2bn, which we as management need to deliver, and we are making solid plans against that.

The second thing we said is we will have to dispose of assets and that has to be between $2bn and $4bn — if it’s only $2bn we need to consider a rights issue, but if we deliver more [through] the dis-

Survival mode: Sasol’s Secunda coal-to-liquids plant in Mpumalanga

money&investing Bloomberg/Waldo Swiegers

Production cuts: Saudi Aramco’s crude oil processing facility, in Abqaiq Dina Khrennikova/Bloomberg

demand should that come back after lockdown.

UNDER PRESSURE Brent crude $/barrel – daily 70 65 60 55 50 45 40 35 30 25 Jan 17 Source: Upfront

Feb

18

Mar

17

Apr

posals we will do fewer or maybe zero rights issues. That’s our first prize and we are working day and night to avert a rights issue, so that is the way we think about it. I’ve got no reason to believe we will not be successful.

How do you remain calm in this market?

FG: Of course there is agony in terms of how we got ourselves into this position and we see the results [of that] in the destruction of value of our shareholders and that’s the sad part. But the point is, you can feel sorry for yourself but that won’t help to get it back on track.

FG: Every two years there’s a scheduled turnaround and then you go into shutdown mode and start up again after the work has been done.

So it’s not a big deal, it’s well practised. But we can’t use this opportunity to do some of the maintenance work because you need to plan for things you want to replace: equipment, catalysts, process materials et cetera. To shut it down takes a couple of days and to get it back will take around a week to 10 days.

People may worry about security of supply and if you can’t start it up again what’s going to happen? But there’s adequate inventory.

So, for example, at OR Tambo, all their facilities are full, we’ve got another 20 days’ storage that’s full in Sasolburg, so it’s well covered and there’s no risk that we won’t be able to supply

Clearly there’s been a big cut in demand for synfuels, but according to your update, you haven’t seen a reduction in demand for chemicals. Why is that and where is the demand coming from?

FG: In SA we have a number of markets that chemicals go into: we’ve got some explosives and fertilisers [businesses]; of course some of the nonessential mining activity has been halted during lockdown so there is a demand impact there, but, for example, coal mining continues and we still supply explosives into these industries.

We’re still doing fertilisers, so the lockdown isn’t systemically going to impact that.

On the polymers side — polypropylene and polyethylene — there are still essential industries that continue to produce materials, for example in use for packaging for food, so we have seen a slowdown in demand but we can up our export focus, and there is still a very resilient demand [there].

In industrial solvents there is big demand for [products] that go into sanitisation and disinfectants, so there we aren’t impacted at all. In fact we’ve seen an almost eightfold increase in demand from February to March, it’s really big so we can prioritise that to supply locally. x

Fleetwood Grobler: The pressure is on the SA value chain Sunday Times/Esa Alexander

In your update last week you said Sasol and Total SA had decided to suspend production at oil refinery Natref until further notice.

Besides the impact that will have on fuel volumes, is a full shutdown going to be costly and logistically complex?

April 16 - April 22, 2020

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investor’s notebook by Stephen Cranston

Don’t follow the herd

U @scranston

ntil the coronavirus crisis there seemed to be a relentless move into passive funds. And there is no doubt that the low cost of these funds makes a huge difference to the amount of capital accumulated for retirement.

But there is nowhere to hide when markets come down, like the US Dow Jones industrial index, which shed 23.2% in the first quarter of 2020.

If active management is ever going to regain market share it needs to exploit the weaknesses of the herd mentality which index funds reflect.

This has behavioural finance at its core.

After all, there has always been a large dollop of psychology in successful investing.

Bestselling author and academic Benjamin Graham might not have explicitly referred to psychology, but he is well known for characterising the behaviour of stock exchange investors as Mr Market.

His protégé Warren Buffett sum-

Inappropriate risk-seeking behaviour often drives bad outcomes and nasty surprises

marised it as being greedy when others are fearful and fearful when others are greedy.

So I was interested to see a consultant at Alexander Forbes, Hannes van Zyl, delve into behavioural finance in the latest “Manager Watch Annual Survey”.

The backdrop to his article was the 22.3% increase in the Dow in calendar 2019, which was a laggard compared to the 35.2% from the tech-heavy Nasdaq.

Van Zyl reminds us that in traditional textbook investment, investors are risk averse and rational, and seek to maximise value. But he says inappropriate risk-seeking behaviour often drives bad outcomes and nasty surprises.

The article also delves into clunky psychological jargon, like overconfidence bias and confirmation bias. Basically: people overestimate their ability.

This is particularly true of fund managers, as luck plays a huge part in their outcomes.

Investors pay too much attention to past successes and too little to past failures. And, of course, they say successes are a result of skill, while failures are

due to bad luck.

Confirmation bias occurs when the answer to a question is based on an existing belief or theory — think how zealot value managers have burnt client money through their obstinance.

They simply ignore evidence to the contrary.

Short memories Ultimately, Van Zyl tries to dispel the view that this time it’s different — so take all your assets offshore.

This view is championed by my former colleague Magnus Heystek. Investing locally, Heystek argues, guarantees a poor outcome.

Recently, of course, investing anywhere except cash has given a poor outcome, but it has been worse in SA as the crash in the rand has magnified losses on the JSE for foreigners.

But Van Zyl argues that many investors have short memories.

Since December 2001, a R100,000 investment in the JSE’s all share index has increased to more than R800,000.

The US S&P 500 was initially a poor place to invest, as up to January 2005 the rand appreciated from 13.84/$ to R5.66.

In fact, a December 2001 investment in the US stock exchange for a rand investor would only have broken even in real terms in October 2015.

Still, the fiscal strength of SA is now far worse than in the days of Thabo Mbeki.

And the coronavirus is, truly, “different”. It is far more of an uncertain factor for markets than even the global financial crisis was. x

123RF/Adrian Hillman

STAMPEDING OUT / EUROPEAN ETF INDUSTRY HAS WORST MONTH ON RECORD IN MARCH AS INVESTORS PULL €21.9BN 50

financialmail.co.za

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April 16 - April 22, 2020

economic indicators AFRICA TOP STOCKS (EXCL SA) Maroc Telecom Safaricom Attijariwafa Commercial Intl

ECONOMIC INDICATORS

Country

Market Cap ($000s)

Price Total Return Ytd

Morocco

11,098.82

129.00

-15.69

Kenya

9,969.07

26.35

-16.35

Morocco

7,003.81

341.00

-31.66

Egypt

6,077.22

65.15

-19.89

INTEREST RATES

Latest

Month ago

Apr 10

Inflation (% change y/y) 4.6

4.5

Prime

8.75

9.75

Producer price index

Feb

4.5

4.6

NCD*

5.68

6.55

7.23

Repo

5.25

6.25

6.75

Jibar*

5.60

6.48

7.15

Safex†

5.25

6.33

6.73

Credit Aggregates (% change y/y)

Nigeria

5,205.59

117.00

-17.61

Morocco

4,072.77

205.75

-25.86

Vodafone Egypt

Egypt

2,397.39

157.32

143.23

Eastern Co SAE

Egypt

1,795.82

12.57

-19.32

Industry (% change y/y) New passenger car sales

Mar

-26.8

7.5

New commercial vehicle sales

Mar

-34.6

-15.9

Claims on the domestic pvte sector

Feb

5.09

5.01

Total loans and advances

Feb

4.54

4.81

Total domestic credit extension

Feb

4.17

4.38

Nigeria

1,718.18

830.20

-43.52

Ciments du Maroc

Morocco

1,695.43

1,200.00

-27.71

Cosumar

Morocco

1,572.07

170.00

-22.34

Retail sales

Jan

1.2

-0.5

Nigeria

1,448.51

18.85

-27.86

Wholesale sales

Jan

1.9

2.5

Egypt

1,233.10

15.39

-26.40

Manufacturing production

Jan

-2.0

-5.9

Mining production

Jan

7.5

0.1

Abou Kir Fert & Ch Equity Group Holdings

Kenya

1,168.81

32.80

-38.69

Nigeria

1,147.65

14.00

-10.31

Mineral sales

Morocco

1,147.53

3,350.00

-14.10

Trade (Rbn)

Egypt

1,096.92

10.12

0.60

East African Breweries

Kenya

1,082.74

145.00

KCB Group

Kenya

998.86

34.50

Stanbic IBTC

Nigeria

713,13

26,00

-32,10

Morocco

697.91

537.00

-24.90

TMG Holding

Egypt

6,82.65

5.21

-36.23

Access Bank

Nigeria

617.17

6.65

-33.50

Kenya

592.01

182.25

-10.00

Zenith Bank Wafa Assurance Telecom Egypt

Banque Marocaine

Standard Chartered

Jan

24.2

-5.3

Imports

Feb

95.45

103.61

-25.83

Exports

Feb

109.60

100.89

-36.11

Trade balance

Feb

14.15

-2.72

Gold reserves

Mar

6.45

6.53

SDR holdings

Mar

2.45

2.46

Forex reserves

Mar

43.53

45.72

Gross reserves

Mar

52.43

54.71

Net reserves

Mar

44.77

45.36

Week ago

Year ago

EXCHANGE RATES

12-mth low 12-mth high

Precious metals ($/oz) Gold Platinum

* 3 months

† Overnight rate

Bond yields (%) Apr 10

8.210

8.180

8.740

11.050

9.460

9.410

R208

4.975

6.070

7.040

R209

11.480

10.095

9.665

Apr 10

Month ago

Year ago

12-mth low 12-mth high

INSPIRED THINKING

Developed Markets — Rand per foreign currency unit

1,662

1,621

1,302

1,271

1,687

US dollar

18.03

15.98

14.02

13.87

19.04

738

725

899

602

1,028

Euro

19.58

18.26

15.82

15.49

20.56

2,179

2,164

1,392

1,304

2,774

UK pound

22.42

20.92

18.36

17.22

23.35

15.18

14.39

15.28

12.00

19.29

Japan yen (100)

16.56

15.61

12.60

12.44

17.53

Canada dollar

12.84

11.73

10.55

10.45

13.40

Aluminium

1,441

1,448

1,851

1,426

1,857

Best Fixed Income and Forex House 3rd Consecutive Year

Copper

4,993

4,824

6,476

4,625

6,537

Nickel

11,600

11,181

13,114

10,806

18,153

Base Metals ($/t)

1,703

1,642

1,956

1,566

2,286

15,073

14,189

20,967

13,335

20,967

Zinc

1,887

1,872

2,921

1,803

3,031

Iron Ore

83.14

79.17

87.77

76.24

118.96

Energy

Switzerland franc

18.55

17.25

14.04

13.81

19.48

Australia dollar

11.23

10.56

10.02

9.70

11.47

Brazil real

0.28

0.28

0.27

0.25

0.30

China yuan

0.39

0.43

0.47

0.37

0.50

India rupee

4.23

4.63

4.94

4.02

5.10

Russia ruble

4.09

4.68

4.61

4.02

4.68

0.24

0.26

0.29

0.23

0.29

26.59

29.86

70.55

20.44

73.89

Malaysia ringgit

Coal ($/t)

58.25

62.75

74.35

58.25

91.00

Thailand baht

1.82

1.96

2.26

1.73

2.28

Botswana pula

0.66

0.71

0.75

0.64

0.76

Agriculture (R/t)

Yellow maize

2,777

2,849

2,686

2,457

2019 SPIRE AWARDS

2019 SPIRE AWARDS

Best Forex House

4th Consecutive Year

Developing Markets — Foreign currency unit per rand

Brent ($/bbl)

White maize

Year ago

R213

Silver

Tin

Month ago

R186

Palladium

Lead

10.25

Gold & Forex Reserves ($bn)

COMMODITY PRICES Apr 10

Year ago

Feb

Banque Centrale

Guaranty Trust

Month ago

Consumer price index

Dangote Cement

Nestlé Nigeria

Short-term interest rates (%)

1010508/FMCB

Company

3,981

2,741

2,814

2,599

2,417

2,982

Wheat

5,420

5,565

4,582

4,347

5,610

Sunflower

5,950

6,013

4,988

4,835

6,145

Economist: Global Markets Research,

Soya

6,760

6,978

4,738

4,479

7,085

Rand Merchant Bank (tel) +27 11 282-1040 or e-mail: Mpho.Tsebe@rmb.co.za

The information in the commodities column is provided by Mpho Tsebe,

RMB. Solutionist Thinking.

CELEBRATING OUR PARTNERSHIP WITH OUR VALUED CLIENTS AT THE 2019 JSE SPIRE AWARDS. Clients are at the heart of our business, which is why we are honoured to have been recognised at the 2019 JSE Spire Awards – the benchmark for the South African Capital Markets. Our Solutionist Thinking is not only what sets us apart, it’s what inspires us to consistently deliver innovative solutions for our valued clients.

Corporate and Investment Banking

Search RMB Awards Rand Merchant Bank is an Authorised Financial Services and Credit Provider.

April 16 - April 22, 2020

.

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51

jse top stocks COMPANY

CLOSING PRICE (THURSDAY) (C)

PROSUS NV ANHEUSER-BUSCH INBEV BHP GROUP PLC BRIT AMER TOBACCO NASPERS LTD-N GLENCORE PLC ANGLO AMER PLC ANGLO AMERICAN PLATINUM FIRSTRAND LTD VODACOM GROUP STANDARD BANK GROUP ANGLOGOLD ASHANTI MONDI PLC SANLAM LTD CAPITEC BANK HOLD SOUTH32 LTD KUMBA IRON ORE GOLD FIELDS LTD MTN GROUP LTD BID CORP LTD IMPALA PLATINUM ABSA GROUP LTD SIBANYE-STILLWATER SHOPRITE HLDGS CLICKS GROUP LTD DISCOVERY LTD NEDBANK GROUP OLD MUTUAL LTD BIDVEST GROUP NEPI ROCKCASTLE ASPEN PHARMACARE QUILTER PLC SASOL LTD MEDICLINIC INTL PLC ASSORE LTD PEPKOR HOLDINGS NORTHAM PLATINUM GROWTHPOINT PROP MULTICHOICE GROUP EXXARO RESOURCES INVESTEC PLC MR PRICE GROUP SPAR GRP LTD/THE TIGER BRANDS LTD WOOLWORTHS HLDGS LIFE HEALTHCARE PICK N PAY STORES AFRICAN RAINBOW MINERALS AVI LTD HARMONY GOLD MNG NETCARE LTD VIVO ENERGY PLC DIS-CHEM PHARMACIES LIBERTY HLDGS TFG FORTRESS REIT LT A FORTRESS REIT LT B REDEFINE PROPERTIES RESILIENT REIT BARLOWORLD LTD TRUWORTHS INTL SAPPI LTD TELKOM SA SOC LT EQUITES PROPERTY RCL FOODS LTD/SO ASTRAL FOODS LTD ROYAL BAFOKENG PLAT OCEANA GROUP LTD MOTUS HOLDINGS

52

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.

123,604 85,330 29,427 66,090 258,860 3,226 32,817 87,824 4,061 12,340 11,339 38,039 30,105 5,506 107,100 2,299 34,400 11,288 5,137 24,816 10,370 9,373 2,910 12,442 26,572 9,085 11,100 1,177 15,500 8,568 10,910 2,626 7,449 6,313 31,532 1,225 8,191 1,375 9,000 10,950 3,680 13,662 18,078 17,115 3,026 2,035 6,018 12,180 7,700 4,726 1,673 1,650 2,400 7,015 8,180 1,195 180 267 3,810 6,910 3,121 2,282 2,151 1,816 990 19,900 3,200 5,900 3,693

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

MARKET CAP SHARE (Rm) PRICE RET. YTD (%)

2,038,961 1,723,019 1,669,850 1,516,238 1,129,852 429,842 410,462 236,798 227,801 226,546 183,684 158,976 146,374 129,024 123,837 111,416 110,798 99,711 96,795 83,234 82,860 79,460 77,843 73,574 66,075 59,806 55,728 55,420 52,743 50,195 49,799 49,228 46,633 46,542 44,021 42,726 41,756 41,559 39,826 39,278 38,085 36,954 34,819 32,488 31,730 29,861 29,696 27,193 25,859 25,647 24,076 20,890 20,642 20,077 19,367 16,207 16,207 15,468 15,245 13,891 13,825 12,502 10,995 10,846 9,494 8,542 8,281 7,695 7,083

April 16 - April 22, 2020

17.27 -26.14 -7.62 12.97 13 -25.63 -15.71 -30.32 -32.93 7.03 -32.63 20.84 -7.74 -30.39 -25.94 -12.11 -12.4 18.86 -32.65 -23.62 -26.18 -37.22 -18.92 0.15 4.83 -23.64 -48.2 -36.12 -22.86 -27.94 -8.49 -7.48 -75.45 -18.19 18.53 -31.37 -33.74 -32.11 -22.75 -16.5 -44.01 -25.14 -8.47 -17.08 -36.16 -17.44 -5.81 -21.38 -13.45 -7.7 -11.31 -27.85 -9.43 -32.18 -45.28 -30.21 -67.37 -64.68 -41.34 -35.52 -32.82 -47.74 -38.23 -9.2 -10.41 -6.5 -35.51 -4.14 -54.8

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

NA 4.54 1.86 2.49 10.93 -0.03 2.76 70.18 5.5 9.34 15.85 -0.03 1.67 3.42 49.84 -0.03 50.49 0.19 4.91 13.48 3 17.15 0.01 5.9 6.72 9.57 24.62 2.04 9.35 0.71 13.48 0.08 -10.4 0.17 49.38 0.62 3.63 2.08 -1.2 32.88 0.48 10.64 11.19 24.53 -1.48 1.75 3.03 22.34 5.94 -2.64 1.75 0.11 0.65 11.14 11.6 1.39 1.39 0.62 13.84 11.47 2.05 0.27 4.53 1.9 -0.18 16.58 0.05 4.86 9.72

2.66 2.88 1.66 3.42 7.56 0.11 2.1 86.08 4.88 10.08 17.25 1.83 1.23 5.11 63.54 0.1 35.93 0.57 7.05 14.15 30.84 16.34 8.03 7.33 8.09 8.69 22.7 2.21 13.63 0.6 14.32 0.08 10.91 0.29 35.78 1.01 13.65 2.19 8.04 21.2 0.52 122.89 12.38 13.57 2.9 1.65 3.36 24.51 5.38 8.8 1.73 0.13 1.01 9.71 11.23 1.61 1.61 0.96 6.04 9.46 5.24 0.28 4.53 1.61 0.94 24.5 6.95 6.02 8.22

DIVIDEND FORWARD YIELD (%) DIVIDEND YIELD (%)

NA 3.77 8.74 10.2 NA 11.1 5.99 1.25 7.34 6.44 8.77 0 5.4 6.07 1.75 2.95 13.6 1.71 10.71 2.66 0 12 0 2.56 1.67 2.37 12.75 10.2 3.87 12.9 0 2.94 23.28 2.73 6.66 NA 0 15.88 NA 5.17 14.68 5.39 4.11 6.2 6.2 2.6 3.9 8.21 5.32 0 6.63 2.76 1.43 10.15 9.6 13.23 13.23 37.83 14.05 6.98 12.3 0 17.4 7.97 2.53 4.52 0 6.15 NA

0.12 4.09 6.31 7.58 0.33 8.07 4.81 5.3 6.7 6.8 8.66 1.1 4.84 6.49 2.33 3.66 9.8 2.67 11.57 2.68 10.62 10.85 12.69 2.75 2.03 2.56 11.61 10.22 3.87 13.56 2.24 4.31 10.54 2.92 5.48 2.7 NA 16.26 7.06 12.34 12.77 4.89 4.64 4.6 5 5.68 3.98 9.15 5.55 0.8 6.86 4.18 1.68 10.63 8.3 12.47 89.26 33.29 15.29 6.37 11.05 1.69 6.62 8.87 3.19 6.83 4.15 6.77 10.71

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

NA 10.19 12.49 42.37 37.51 6.16 14.99 18.16 23.76 21.69 15.6 -0.86 21.18 16.16 26.59 7.78 37.45 -2.17 8.29 15.66 -9.61 13.12 -10.74 19.15 39.65 15.23 14.38 NA 17.27 NA 12.23 NA 4.52 -3.84 20.69 NA 0.35 8.74 NA 19.5 10.96 38.99 28.76 19.03 -2.25 11.82 47.79 15.68 36.11 -8.62 24.39 NA 55.97 12.58 19.74 0.92 0.92 8.06 4.16 12.35 20.35 15.01 10.18 12.98 4.77 29.18 -1.76 15.3 NA

10.59 7.36 17.16 11.71 10.89 2.15 10.28 29.37 20.34 22.05 16.06 23.07 13.68 15.07 26.34 4.58 36.56 14.99 15.2 13.32 32.73 13.23 48.98 15.75 36.21 11.06 13.36 7.92 15.61 12 10.17 8.15 4.58 6.06 9.56 5.37 36.92 9.58 30.41 16.88 11.4 24.56 28.86 13.36 31.55 13.25 46.79 14.65 34.05 16.39 22.72 18.91 32.91 6.77 16.38 NA 15.73 9.72 11.31 7.77 23.95 6.77 8.77 NA 6.63 24.41 9.62 NA 13.41

P:E FORWARD P:E

NA 10.81 8.75 12.09 26.69 NA 6.49 12.39 7.98 13.09 6.42 23.3 9.17 15.92 21.47 NA 6.78 31.46 11.14 17.05 18.89 5.36 NA 18.48 38.85 9.47 4.26 5.65 12.05 5.57 6.08 NA 5.63 16.92 5.84 12.46 22.56 5.22 NA 3.62 3.4 12.23 16.01 12.94 9.03 22.94 19.15 4.54 15.29 10.94 9.77 9.1 37.09 0.61 6.77 8.76 8.76 6.75 6.38 7.97 5.52 3.86 4.27 11.97 27.2 11.89 63.49 10.84 3.49

25.89 16.53 9.91 8.66 19.08 16.23 8.73 10.2 8.33 12.24 6.57 11.62 12.43 10.78 16.86 12.99 9.57 11.09 7.29 17.53 3.36 5.74 3.62 16.97 32.86 10.46 4.89 5.33 11.37 7.31 7.62 14.78 6.83 9.78 8.81 12.13 6 6.27 11.2 5.17 3.17 1.11 14.6 12.61 10.44 12.31 17.94 4.97 14.31 5.37 9.68 7.27 23.66 7.23 7.29 7.44 1.12 2.78 6.31 7.3 5.95 4.49 4.75 11.27 10.51 8.12 4.6 9.8 4.49

TOTAL SELL

TOTAL HOLD

TOTAL BUY

0 2 2 1 0 1 1 1 2 4 1 2 1 0 1 0 7 0 1 1 1 0 0 4 4 1 3 0 0 0 2 1 1 1 2 0 0 1 0 0 0 4 0 7 3 1 3 0 2 1 0 0 1 1 0 1 2 1 0 4 2 2 1 1 2 0 1 0 2

1 13 9 4 0 5 11 6 6 4 4 4 4 2 8 8 2 7 2 1 2 3 1 3 4 1 1 4 4 0 4 1 6 5 2 4 1 3 2 1 1 4 7 3 2 4 4 4 3 3 4 0 4 1 4 4 1 6 3 3 4 3 7 1 1 2 0 1 1

13 18 14 18 14 17 11 2 5 5 8 3 11 2 2 13 2 3 9 5 6 9 6 4 1 2 9 2 6 5 4 8 3 4 1 2 7 3 6 9 3 2 4 1 6 3 4 5 5 2 4 9 4 2 6 0 1 1 3 4 4 5 4 3 1 3 6 4 3

jse top stocks COMPANY

CLOSING PRICE (THURSDAY) (C)

MASSMART HLDGS ECHO POLSKA PROP VUKILE PROPERTY IMPERIAL LOGISTICS SUPER GROUP LTD KAP INDUSTRIAL HYPROP INVESTMENTS EMIRA PROPERTY FUND LIBSTAR HOLDINGS RFG HOLDINGS LTD SA CORPORATE REAL EST THARISA PLC MPACT LTD NAMPAK LTD MERAFE RESOURCES

zar x exchange DALE CAPITAL GROUP LIMITED RUNWAY PROPERTY GROUP LIMITED SENWES LIMITED TWK INVESTMENTS LIMITED SENWESBEL LIMITED TRANSFORMATION INVESTMENT PORTFOLIO LIMITED

3,000 718 659 3,046 1,575 210 1,964 792 660 1,438 145 1,037 815 181 33

P:e — Price:earnings ratio as at recent annual results. Forward P:e — Price:earnings ratio at next annual results. Tot Sell/Hold/Buy — number of buy, hold, and sell recommendations. Sum of sells, holds and buys — number of analysts following company. All information provided by Bloomberg and Bloomberg sources. The FM undertakes to transmit the information as accurately as possible and is confident it is correct, but is not able to warrant its accuracy. Companies not being tracked by analysts will not appear in the above listing, market capitalisation notwithstanding.

MARKET CAP SHARE (Rm) PRICE RET. YTD (%)

6,574 6,519 6,302 6,130 5,851 5,475 5,026 4,140 4,019 3,779 3,669 2,800 1,412 1,249 829

ISSUED SHARES

-41.54 -58.13 -66.03 -44.65 -44.62 -50 -64.96 -35.81 -13.04 -1.97 -52.61 -34.16 -42.28 -73.5 -56.51

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

-4 0.07 1.84 -10.15 3.26 0.37 0.65 1.55 0.47 0.83 0.09 0.04 -4.81 -1.33 -0.54

LAST BID

LAST OFFER

202,040,920

0.88

0.00

47,995,092

10.50

0.00

180,789,308

10.00

12.00

35,100,993

0.00

116,091,853 2,323,577

-0.54 0.12 1.94 5.63 2.76 0.39 6.47 1.53 0.87 1.17 0.39 0.2 2.44 1.27 0.12

PREVIOUS CLOSE

DIVIDEND FORWARD YIELD (%) DIVIDEND YIELD (%)

0 0 27.95 9.06 0 NA 38.99 19.27 3.79 1.41 26.23 4.32 5.15 0 12.12

0.19 32.78 29.79 8.28 NA 6.29 31.05 16.87 3.99 2.72 26.76 6.99 8.75 15.72 40.74

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

7.76 NA 11.69 14.05 12.04 11.13 7.38 8.84 4.65 9.79 6.87 13.48 -2.18 -0.46 0.95

-3.45 12 11.04 13.36 7.84 9.07 7.82 NA 9 11.25 NA 17.5 NA NA 7.77

P:E FORWARD P:E

NA 4.79 4.71 NA 4.46 5.07 8.79 5.61 11.85 17.12 4.18 11.56 4.39 NA NA

NA 3.05 3.4 5.41 5.71 5.42 3.04 5.18 7.58 12.29 3.74 2.86 3.34 1.42 2.7

MARKET CAP (R000)

TOTAL HOLD

TOTAL BUY

3 0 1 0 1 1 1 0 0 0 1 0 0 1 0

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

2 3 5 6 5 5 2 4 5 4 2 5 3 2 4

CLOSING PRICE

CHANGE

VOLUME

VALUE

0.88

0.88

0.00

0

0

177,796

10.00

10.00

0.00

0

0

479,950

12.00

12.00

0.00

0

0

2,169,471

13.10

6.50

09/04/2020

28.00

28.00

28.00

0.00

0

0

982,827

30.90

12.33

09/04/2020

4.00

4.75

4.75

4.75

0.00

0

0

551,436

6.00

3.70

09/04/2020

0.00

1.10

1.01

1.01

0.00

0

0

2,346

1.10

1.00

09/04/2020

April 16 - April 22, 2020

YEAR HIGH

TOTAL SELL

YEAR LOW

TRADE DATE

0.90

0.80

09/04/2020

10.00

10.00

09/04/2020

.

financialmail.co.za

53

adfocus telecoms

DATA REALITY CHECK The government’s intention to reduce data costs is causing a focus shift in advertising among once-arrogant and cash-flush telecom operators, as the coronavirus outbreak is set to place strain on the global sector as a whole

Jeremy Maggs jmaggs@iafrica.com

ý Telecoms advertising in SA is again going through a pitch upheaval process, with MTN looking for new agency partners and Cell C on the cusp of changing agencies.

The FM understands Cell C has already made a decision to move its business from McCann1886, and that MTN hopes its pitch will be concluded in the next two to three months.

Bedevilling the latter is the global Covid-19 lockdown, and it’s likely that this will be done remotely via video link.

The FM had a number of questions for MTN about its reasons for changing agencies and the new skills it’s looking for. The queries went unanswered. But it’s fair to say all local telecom advertising is undergoing a major shift in focus.

Notes veteran media planner Mike Nussey: “Telecom companies have been dealt a reality check and are not as arrogant as they once were. And they aren’t as cash flush. This has been driven in part by the focus on data costs by agencies of the SA government, which has

MTN IS AFRICA’S TOP TELECOM FIRM Most valuable telecom brands by region (US$)

Europe North America $63.7bn Rank 1

$40.0bn Rank 4

MENA $8.5bn Rank 16

LatAm $6.1bn Rank 25

Africa Source: Brand finance 54

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.

April 16 - April 22, 2020

more on data services and MTN’s 5G rollouts have meant the brand is well placed to cater to this growing demand. Says Brand Finance CEO David Haigh: “MTN is to be commended for its performance in its home market as well as further afield. It is increasingly recognised throughout Africa by customers as providing a high-quality service, because its brand image is deeply rooted in more than just marketing campaigns.”

While that might be encouraging for MTN, the global telecom sector as a whole is on the back foot. Brand Finance says the brand value of the world’s biggest companies is set to lose an estimated $1-trillion as a result of the coronavirus outbreak, with the telecoms sector seeing less of an impact than the likes of the aviation sector.

Says Haigh: “The Covid-19 pandemic is now a major global health threat and its impact on global markets is very real. Worldwide, brands across every sector need to brace themselves for the coronavirus to hugely affect their business activities, supply chain and revenues in a way that eclipses the 2003 SARS outbreak. The effects will be felt well into 2021. The telecoms sector can be seen as much more resilient in the face of Covid-19, while it experiences a faster revolution in data handling as a result of the remote $49.0bn working revolution we are seeing all Rank 3 around the world. Telecoms brands are in essence already being pressure tested, having had an immediate spike in demand, and now is the time to engage with customers and promote their offerings during this crisis.”

Verizon is now the world’s most valuable telecom company, with a brand value of $63.7bn, overtaking its US rival AT&T ($59.1bn).

Despite its 14% drop in brand value, Deutsche Telekom retains its place as the most valuable European telecoms brand. The fastest-growing brand is Vietnam Posts & Telecommunications Group, which recorded impressive 42% growth to $2.4bn. x

caused a change in their thinking.”

Nussey believes their advertising campaigns will have to deal specifically and honestly with the cost of data. In the past they have often been vague and confusing. In terms of the MTN pitch, the trade website MarkLives reports that MTN’s request for proposals covers all markets the company operates in, and all invitees are specifically global holding companies. MTN’s current local agency is TBWA\Hunt\Lascaris, part of the Omnicom Group, which has indicated it will participate in the pitch process.

As the process is unfolding, MTN has just been ranked Africa’s top telecom company by the brand research consultancy Brand Finance.

Its latest survey values the brand at $3.3bn, boosted by “a solid overall performance for the year, despite challenging economic conditions and regulatory challenges in some markets”.

Brand Finance says MTN has grown its subscriber level steadily over the past year and boosted its revenues. Customers spending

$40.0bn Rank 43

Australasia $8.1bn Rank 17

Asia

life

MAJOR TOM ý Add a dash of crazy cool to your space with this piece from Kare. It rotates to show Bowie cat and two other pop art-inspired felines. kare-design.com

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

WILDLIFE’S COVID-19 BONANZA Luke Alfred explores an unforeseen element to Covid-19 — the return of animals and perhaps, even, a healthier planet ý Many of us lost souls in lockdown will have seen the meme of the Loch Ness monster hauling itself out of the water, accompanied by the words: “Now that the humans are in isolation, wildlife in Scotland returns to normal.”

As Covid-19 shuts down streets and suburbs, airports and towns, so the animals are returning.

This might not take the form of the Loch Ness monster romping through the streets of Glasgow in search of Scottish shortbread, but there are countless other examples of the animal kingdom’s recent offensive.

Perky boars have been spotted wandering Barcelona’s streets. Wild turkeys have been shown munching the grass in California schoolyards, and the world’s most loved herd of goats, in Llandudno, north Wales, have been starring to virtual applause in the pages of The Guardian.

The goats are pretty much doing what goats normally do — eating –— but this time they’re

doing so in deserted streets. Coming in off the fields surrounding the town, they clearly have the freedom to do mostly as they please.

You fancy they know it, too. Pretty soon one of them is going to be running for mayor.

Closer to home, the animals are also returning.

The latest social media darling was a hippo, seen browsing last weekend through the streets of St Lucia in northern KwaZulu-Natal, unaware of the clicking of smartphone cameras around it.

Recent runs of sardines and anchovies off the Cape west coast seem to be unusually large, with the fish venturing closer to the shore in greater numbers than usual. This might be explained in ways other than the animals returning during lockdown, but the cormorants and seagulls catching the huge shoals of fish just off the beach don’t appear to be arguing.

The KwaZulu-Natal Sharks Board has pulled up its gill nets and drum lines for the duration of the

lockdown, as reported in Getaway magazine. The nets are an emotive issue for environmentalists because they trap sharks, larger fish and turtles by the gills as they swim. Unable to move, the fish die a slow death from starvation.

Most nets have been replaced along the Hibiscus Coast in recent years by drum lines, massive buoys that have baited hooks attached to the lines hanging from them. The purpose of the drum lines is to attract sharks but not the other marine species such as turtles and even occasional whales, who won’t be lured by them.

The Sharks Board says this is a better way of protecting swimmers and surfers because the drum lines substantially lower the percentage of random entrapment caused by gill nets.

The worldwide story of the animals’ return to deserted city streets has, however, been dogged by accusations of false news and egregious Photoshopping. Some of the images we’ve been

April 16 16 -- April April 22,, 22, 2020 April

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financialmail.co.za

55

life inbox Getty Images/Corbis

123RF/Steve Estvanik

The latest social sliver of beach that seeing are almost media darling certainly false. There are emerges at low tide. was a hippo, no dolphins, for example, With each passing day, seen browsing scything through the the sand seems more last weekend waters off Venice. untroubled by footprints, through the But the quality of the more pristine. Such streets of St city’s water has views inspire me to Lucia in undoubtedly improved. wonder what this There is less traffic on the northern coastline in St James, KwaZulu-Natal water and less human next to Kalk Bay, was like traffic on the cobbled 10, 50, 100 years ago. streets. Fish have returned and you The images in my mind’s eye can suddenly see through glass-like wind backwards at speed, to when water to the bottom of canals. there were no houses here, to when If the water quality has improved, the railway line wasn’t built and even air quality has too. Traditionally the aquarium on the common hadn’t smog-shrouded cities like Los appeared.

Angeles have reported huge Soon, even the early lime kilns improvements in air quality now that that dotted the coves and inlets have cars, buses and trucks aren’t vanished. The milkwood forest that running. reputedly stretched from Muizenberg Gauteng’s traditional blanket of to Simon’s Town is miraculously grime, building up now that we’re in restored. Only the animals and the autumn and heading towards winter, first man remain. has also been substantially reduced Such imaginative trawls are what through the spate of recent rainy we do in lockdown. We wonder what days and lack of traffic on the roads. once was and reflect on how much has changed. We reflect on how Slim pickings much we have changed it, how With the reduction in air pollution the much plastic we have brought into weather will change, if only the world, how blasé we are about temporarily. As we head through carbon emissions, how casually we autumn it might even be getting consume, how thoughtlessly we slightly colder earlier in the year, with travel. clearer night skies and therefore This moment of reflection is why more stars. lockdown has spawned so much While the animals return (and, in social media navel-gazing and the case of Llandudno’s casually anguish among the chattering entitled goats, take over), not all classes. So many Facebook diaries, news is good. The pigeons in San so many witty reflections on binge Sebastian, in northern Spain, are Netflix watching, binge drinking, starving, reports a friend who lives in binge eating, as all the city. those early lockdown With Covid-19 hitting Spain badly, resolutions fall like the no-one has ventured onto the streets rand/dollar exchange and squares. The pigeons, reliant on rate. crumbs and pickings, have been Dead time makes us forced into a crash diet. Said friend wide-eyed. Never has reports they’re looking less plump so much bad poetry than usual. And they’re tetchy, too. cascaded, like rubbish, All this leads one to wonder through the world. about humankind’s relationship with Never have we been as the natural world. The lockdown sensitive and provides an opportunity to look sentimental as we backwards through time, to glimpse are now. into yesterday and beyond, to see The return of the how the natural world might have animals is part of this been, however fleetingly. sentimentality. I am prey From where I’m writing in my to the contagion. I want study I look down on the sea and a to know if that squirrel 56

financialmail.co.za

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April 16 - April 22, 2020

FOOD reported to have darted in from the garden to raid the left-behind melon rind and seeds in my suburb was doing so because of lockdown.

I have no way of telling. I only know that for a precious window I — like all of us — am seeing the world differently. It’s a gift, a strange gift, to be sure, but a gift still.

The other day I saw a rat squashed by a car tyre in the middle of the road. Blood dribbled from its open mouth but it was still alive – it moved. I fancied that the rat, like the shrinking pigeons of San Sebastian, was hungry. It was scampering from the park, where it usually forages, to the houses on the other side of the road because it needed food.

I’ve been reading about rats.

Scientists now believe they have empathy because they get visibly agitated when one of their number is in distress. They do what they can to help.

Rats are our worst nightmare, creatures of dirt and darkness, creatures of the very apocalypse in which we find ourselves. But as we now have time on our hands, in the spirit of emotional and spiritual challenge, let’s try to understand them.

As we are so besotted with the returning animals, why not stretch our imaginative powers out of our comfort zone? Why not consider the maligned rat?

It might help to know that scientists tell us they chuckle when tickled. x

Gallo Images/AFP/Federico Vespignani /Anadolu Agency

Get meal kits delivered, support local

UCOOK is on fire ý After weeks of countrywide lockdown, the demand for meal-kit deliveries is booming as housebound South Africans look for ways to avoid the shops while keeping themselves well fed.

“We’ve seen a huge spike in growth over the past two or three weeks,” says Chris Verster-Cohen, co-founder and chief marketing officer of Cape Town-based mealkit delivery service UCOOK. Their story is the stuff of startup dreams; blue-sky thinking from two friends — Verster-Cohen and co-founder David Torr — who waited tables at night to pay the bills. They worked from a corner of the family garage, with borrowed money for start-up capital, and their first order was for just 21 meal kits.

On that occasion they famously forgot to include the recipe cards, and even though most of their clients were family and friends, orders quickly dried up. But they refined the offering, and with angel investment and venture capital from Silvertree managed to scale the business to a point where UCOOK dominates the local mealkit delivery market.

And demand has rocketed by 25% since the beginning of March.

In life before lockdown the company was delivering around 120,000 meals per week. Today that figure is north of 150,000.

Business has been so brisk that the company has had to limit orders to existing customers, placing a hold on new clients signing up.

Globally, the figures tell a similar story. Market leader HelloFresh — based in Germany, but operating in 12 countries including the key US and UK markets — expects revenue for the first quarter of 2020 to top €700m. That’s almost 70% up on the same

period in 2019.

“With the country on lockdown you’re guaranteed to be home,” says Ryan Brouwer, COO at UCOOK. “There are no restaurants open, and for many people UCOOK is the most appropriate solution, because the shopping is done, the recipe is provided.”

While the lockdown has led to a boost in UCOOK’s business, it has also brought challenges.

With concerns around supply chains and their own labour force, “we were unsure if we would have to close down entirely over this period, but things have stabilised and we’re very happy to be able to continue trading”, says Verster-Cohen.

Brouwer adds: “The first decision we made when we heard about the lockdown was to simplify recipes to focus on fewer suppliers. All these externalities become a business risk, so we moved to limit potential problems down the line.”

Though launched in Cape Town,

UCOOK’s client base is today split 50/40 in favour of Gauteng; the remaining 10% is made up of smaller cities serviced by air-freighting meal kits.

“But with the lockdown we’ve had to cut all national [air-freighted] deliveries for this period,” says Brouwer.

The lockdown and increased demand have also pushed back the company’s plans for overhauling its website and launching new product lines that were to include ready-toeat frozen meals and a retail presence.

Instead, it is launching an ancillary food delivery service offering pantry essentials — dairy, meat and fresh vegetables — alongside the UCOOK meal kits.

“Many small-scale farmers and producers were supplying restaurants and markets, and have now lost their route to market. We want to work as with as many of these as we can. It provides a market for these suppliers, and enables our customers to stay home,” says Brouwer. “For now it’s a really good add-on that will bolster the UCOOK offering, and is operationally a lot more simple … but it is also there as a failsafe in case the structure of meal kits is no longer possible or relevant.”

It’s sensible

Chris Verster-Cohen, co-founder and CMO (Left) and David Torr, co-founder and CEO

planning amid the uncertainty of when the lockdown will be eased or lifted, but it’s also part of UCOOK’s growth strategy to claim a greater “share of throat”, as the drinks business puts it, in the post-Covid-19 future.

With an array of subscription services, UCOOK wants to take care of everything from your fresh bread

and milk to your restaurant-standard evening meal.

“We’re trying to focus on habitual purchases,” says Verster-Cohen.

“Meal kits are good for a brandbuilding exercise, and the core of what the business is, but we’re pivoting to new categories, and looking to own those categories.”

Richard Holmes

How it works Each week 12 new dishes are made available on the UCOOK website for delivery the following week. Clients select their preferred number of meals (two, three or four) and portions (one, two or four) from dishes across three cooking styles: Health Nut, Easy Peasy or Vegetarian. While its in-house chefs create most recipes, UCOOK also collaborates with celebrity chefs like of Liam Tomlin and Franck Dangereux. UCOOK also places heavy emphasis on working with local suppliers, from artisan butchers to communitybased agricultural projects. x ucook.co.za

April 16 16 -- April April 22,, 22, 2020 April

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a moveable feast by Fred Khumalo

THE WORST PART IS, IT’S TRUE Lockdown got me binge-watching. I don’t want to spoil it, but you don’t emerge from the experience emotionally unscathed

W

ith the lockdown denying us the freedom to go out, meet friends, go to the movies, wine and dine, I continue with my quest of finding creative new ways of dealing with boredom and cabin fever.

Today, we cook. I know we could simply defrost those bunny chows we bought from Curry and All the other day, but we need something to keep us busy, something to take our minds off our current state of boredom, which could drive one crazy.

The restaurants we visited only a few weeks ago are now a distant memory. It seems like it was a long time ago when we last went out. How time flies.

So, come on, put on your apron.

Bring out the fancy crockery. I love those ladles. Don’t worry, I’ve got the ingredients for today’s recipe.

We’re cooking a complex dish. So watch carefully. The ingredients in themselves are exotic.

Here we go: take this huge dollop of Brakpan. Put it in that big dust bowl called Oklahoma. Throw in lots, and I mean lots, of tigers and lions. Don’t be shy, throw them in.

Now, sprinkle in some redneck gay guys. Throw in a modern-day Hindu guru with a predilection for cultish behaviour. For good measure, throw in some meth addicts.

Season with some polygamy. Throw in a pinch of some true, sincere animal love. Shoot some guns. Draw blood.

Then stir it all together again.

For yeast, use some supersize egos which will ensure the whole thing rises and swells quickly.

Stir it up again. Wait for it to bubble.

Put it in the oven. Turn on the heat level to “super hate”. And voila! There you have Tiger King. Sit back and enjoy.

Were it not for lockdown, I probably wouldn’t have given a second glance to Tiger King, the trending crime documentary miniseries on Netflix.

But with lockdown upon us, things

@fredkhumalo

A police spokesperson confirmed officers were called to the complex to intervene but security guards prevented them from entering 58

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April 16 - April 22, 2020

Tiger King

Which brings me to an outrage closer to home. In defiance of lockdown conditions, musician DJ Maphorisa apparently continues to meet and work with big groups of people at his music studio, which is in his house in Midrand.

Concerned neighbours, through their homeowners’ association, reported him to the police, following this up with an official letter.

According to a source in the association, Maphorisa said he could not stop working as he had bills to pay.

Police spokesperson Brig Vish Naidoo confirmed that officers were called to the complex to intervene but security guards prevented them from entering.

Ridiculous. If Maphorisa and his fellow mamparas don’t care about their own lives, they shouldn’t be allowed to jeopardise the lives of others.

It’s irresponsible people who might just contribute to the quick spread of the virus. Why isn’t Bheki Cele cracking down on this fool already?

Irresponsible behaviour can only prolong the lockdown misery we are in.

We want our lives back. We want to go and work out there in the world. We want to go out dining again. x

DJ Maphorisa

Gallo Images/AFP/Michelly Rall /MTV Africa Music Awards

were moving at such a pace that when my daughter — not for the first time — convinced me to sit with her in front of a TV, I relented.

So we binge-watched. I don’t want to spoil it for you. But you don’t emerge from the experience emotionally unscathed.

What makes Tiger King so infuriating is that it is not a fictional story. It’s real.

And it is still unfolding in the US. How the land of the brave allows such abuse of animals is beyond me. I didn’t know this, but according to the series there are more tigers in captivity in the US than there are in the wild in the entire world.

And then there is the easy availability of guns. Crazy.

life memes

Laugh or you’ll cry In the face of adversity and, well, the gigantic disaster of Covid-19, people sure get clever.

And amusing. Here’s a round-up of the best local and international examples of fighting the devastating flu with the funny - WhatsApp jokes, tweets and memes included.

Sarah Buitendach

April 16 - April 22, 2020

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crossword Cryptic No 71 1~2~3~45`6`7` 8`````~`~`~`~ `~`~`~9`````` 0`````~`~`~`~ `~`~`~~-````` =````q``~`~`~ `~`~~`~`~~w~e ~r~t~y``u```` i`````~~`~`~` ~`~`~`~o````` p``````~`~`~` ~`~`~`~[````` ]``````~`~`~` SCRIBBLE PAD

ACROSS 4 8 9 10 11 12 18 20 21 22 23 24

This provides a novel introduction (7) Armament for fighter pilot? (3-3) Quite a considerable distance to the hole (7) Provide goods in a flexible way (6) Becoming sort of ties for stage scenery (6) I re-state translation of formal composition (8) One wouldn’t expect to be given this (8) Once a legal wrong to get money by force (6) One who is foiled in his sport? (6) Crying out for a vocation (7) Fails to contact the girls (6) Not so inclined to behave sycophantically (7)

DOWN 1 It’s a fly — that could be a misleading statement (7) 2 Rejected from the team — collapsed (7) 3 South in darkness? Just the opposite (6) 5 About a strange paper to come back into circulation (8) 6 Didn’t remember to show activity in the stronghold (6) 7 They have big bills for lifting equipment (6) 13 Nine cats for example (8) 14 Seek various opinions on records about

America (7) 15 Provide a new set of clothes as compensation (7) 16 Soup — that’s how the animal ends up!

(2-4) 17 Likely to be taken for a mug? (6) 19 Almost exact summary (6)

SOLUTION No 70 Across: 1 Information; 9 Imp; 10 Generally; 11 Titan; 13 Asinine; 14 Reason; 16 Angler; 18 Builder; 19 Asset; 20 Orientate; 21 Air; 22 Inalienable.

Down: 2 Nap; 3 Organ; 4 Menial; 5 Torsion; 6 Oil-fields; 7 Picture-book; 8 Typewriters; 12 Tradition; 15 Ordinal; 17 Ornate; 19 Areca; 21 Awl.

Nal'ibali 21-Day Story Challenge Nal'ibali challenges you to read or share a story for 15 minutes or more with your family each day.

Make your pledge at www.nalibali.org and post pictures of your story-sharing sessions online.

Tag @NalibaliSA and use the hashtag #21DayStoryChallenge.

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Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved: Achieved:

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financialmail.co.za April 16 -centre April on 22, 2020 Contact us by calling our call 02 11 80 40 80, or in any of these ways:

Here’s how: Colour in the star when you have shared your story!

Complete one week and you could win a book hamper; complete three weeks and you could win a mini-library!

To enter, send a photograph of your calendar and story sessions to info@nalibali.org

backstory KHAYA BUTHELEZI MD: Aphinko Consulting

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

If there is no skin in the game, there is no deal.

What was your first job?

As a journalism student at Natal Technikon (now the Durban University of Technology), I was hired as a part-time media monitor in the run-up to the elections in 1994.

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

R1,500, which was a lot of money for a Durban township boy at the time. I used it to open my first bank account and spent the money on building materials for my mother’s house in KwaMashu.

What is your lockdown routine?

I’m mostly up by 5am and I start by catching up with e-mails I may have missed during the night. I then have a one-hour workout in the garage. By 8am, I’m at my home office desk with a cup of coffee in hand and breakfast. I wake my kids up by 9am to get ready for their online lessons at 10am. We all take a break for lunch. Back to work at about 2pm … I could work until 8pm before my wife starts complaining that she did not marry our bedroom TV. What is your biggest regret?

Selling my Cape Town house.

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

That not everyone has your best interests at heart.

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

That as a 12-year-old boy, I built a shack near an army camp in Umlazi township in the mid-1980s to score quick “beer errand” tips from apartheid soldiers.

What has been your worst purchase?

My Cadillac BLS luxury sedan — I wanted to stand out on the road but it was short-lived; it started giving me mechanical problems from hell.

What is the one investment you wish you had made, or made earlier?

Capitec. A financial analyst in Cape Town didn’t like the stock and convinced me not to add it to my portfolio.

What do you consider the most overrated virtue?

Hard work! While this is important, being shrewd takes you places and opens doors.

How do you cope with load-shedding?

When the lights go out all my children congregate in my room and we, the parents, share our childhood stories.

If you were President Cyril Ramaphosa, what would you change, or do, tomorrow?

First, I would fire all underperforming ministers, including the prima donna Stella Ndabeni-Abrahams. Second, I would not extend the lockdown but enforce strict hygiene measures to save what’s left of our ailing economy. In the long term, I would modernise the ANC. A sophisticated economy like ours cannot be led by economically illiterate cadres from Luthuli House who make idiotic policy statements like “When the rand falls, we will pick it up again”. All MPs in the country must go for economics 101 training. Third, entrepreneurship training should be compulsory from primary school to tertiary levels.

April 16 - April 22, 2020

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