Economic review

South Africa was placed 74^th out of 104 global mining jurisdictions in the Fraser Institute survey. We have been overtaken by countries such as the DRC, Zambia and the like. The reason for this is regulatory uncertainty and the third iteration of the Mining Chart. Essentially, the risk to ownership is unacceptable.

On the upside, it would appear that our economy is turning the corner. This is supported by a PMI which is once again in positive territory as well as a few other similar indications.

Growth in credit, extended to companies (primarily in renewable energy and property) grew by 10.1% in January, whilst lending to households slowed.

You may recall that, in the early 2000’s, when our economy was growing strongly, our company tax was reduced with the stated intent of encouraging the growth of business. The recent dividend tax increase takes us to a combined level that will be just less than those of Norway and Sweden. Great when you get Scandinavian-level services, but we don’t.

Part of the reason for the encouragement of development of the small business sector is that this sector creates more jobs more cheaply than anyone else? This perception has been dented by a University of Stellenbosch investigation, which revealed that small business contributed just 21% of formal sector jobs in South Africa.

Business review

Indicative of the lows we have sunk to is a report that, globally, our government is the least trusted by its people, with only 15% of citizens feeling that they could trust our government. This cannot bode well for tax morality and the private/public partnerships that our government is punting.

The construction underway at the Suncoast Casino has been threatened by a forum which claims that the developer should involve the local community not only in construction. If one reads Max du Preez, then his take on inclusive development is in line with such an approach; take an active part in inclusive growth or become a victim of populist radical economic transformation.

The new normal: South African average real disposable salaries have declined for the eighth consecutive month, year on year, for the first time since the Bankserv salaries index began in 2003. Average salaries increased by 3.9% in January – below the increase of our cost of living.

An interesting statistic is that it costs an average of 17.9% to send $200 from South Africa to another G-20 country. That is more than double the average cost for the G-20 grouping. This week, by way of example, Rennies would buy a dollar and sell it making an 87c profit per dollar.

Property review

Fortress Income Fund is predicted to, once more, deliver double-digit, sector-beating returns for owners of its B shares.

FNB’s latest Mortgage Barometer indicates that the number of residential transactions in South Africa fell by 4.8% year on year in the 12 months up to the end of October 2016.

Old utility accounts: the Ekuhurleni municipality had not read the meters of a consumer for five years. It billed the consumer based on estimates of the readings for a period of five years. The consumer argued that it was not liable for charges for water that older than three years on the basis that these had prescribed. The municipality argued, in response, that, because the consumer had made payments on a monthly basis, this constituted an acknowledgement of liability for the bill, presented years later and based on actual readings. The municipality also argued that water charges older than three years, included in the final bill, had not prescribed as prescription could only commence running when the municipality actually billed the client and not before that. The judge was scathing of this approach and held that the charges had prescribed and was not interrupted by payments made of estimated charges. The argument ran that a consumer could not have acknowledged liability for debt of which he knows nothing. Prescription started the running not when the invoice was presented to the consumer, but when the municipality should have become aware of the facts that gave rise to its claim.

I have not seen the case but this is the reference: http://www.iolproperty.co.za/roller/news/entry/ruling_on_old_utility_accounts

Practice review

An interesting challenge from an NGO, currently before our courts, deals with the lack of a climate-change impact assessment relating to the Thabametsi power plant. A climate change impact report is not specifically dealt with by legislation but the applicant argues that this should have been considered. The initial report indicated that harmful emissions will be relatively small but the applicant argues that there will be significant greenhouse gas emissions from this plant. If this suit is successful, it would have an interesting impact on our government’s take on coal fired plants.

Cases

Criminal appeals and an increase in sentence

In this case an appeal was launched as a result of an increase in sentence imposed by an appeal court. The appellant contended that his right to fair trial had been violated when the court a quo increase his sentence without giving him notice of its intention to increase his sentence. He argued that, if he had been so notified, he would have had the option of deciding whether or not to withdraw his appeal. This is certainly a new take on the risk which appellants had, until now, faced.

S v Joubert SCA 642/2016

Measure applicable when utilising a home loan to buy a commercial entity

Does the National Credit Act permit a bank to have regard to the projected income of a separate commercial entity when assessing the consumer’s ability to afford to repay a personal loan where the loan is to be advanced for the specific purpose of purchasing that commercial entity? This case, if successful, would have added insult to injury. Wiese was granted a bond by Absa on the basis of a home loan agreement whilst knowing that Wiese would apply the funds borrowed for the purchase of a commercial entity. Wiese defaulted on his payments and the bank took judgement against him. Wiese asked for rescission of the judgement arguing that the loan constituted reckless credit and should be struck down. The court argued that the defence that the loans were personal rather than business in nature, did not hold water given that the NCA provided merely that a bank should take reasonable steps to assess the proposed consumer’s existing financial means, prospects and obligations and whether there was a reasonable basis to conclude that the commercial purpose for which money had been lent would prove to be successful. Absa won the day.

Wiese v Absa http://www.saflii.org/za/cases/ZAWCHC/2017/12.html

Does an order of reinstatement by an arbitrator prescribe when dealing with labour matters?

I know little enough about Labour matters to be wary of this subject. For those in the know, this may be worth a look: Mokgaila v Coca Cola Fortune SCA 76/16

Quotables

Every gun that is made, every warship launched, every rocket fired, signifies in the final sense, a theft from those who hungry and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its labourers, the genius of its scientists, the hope of its children. Eisenhower on (essentially) opportunity cost.

What a man knows is at war with what he wants. Joseph Wood Krutch

Comment

An article by Barney Pityana, says of Brian Molefe that his career is proof that our current Administration does not punish corrupt conduct – it rewards it. Eina.

Our tax ombudsman judge Ngoepe:

“We are becoming a corrupted society. People are employed based on their political connections.”
“One basis for tax collection is that we are forced to pay but I think people should also feel morally obliged to pay tax. If we don’t spend taxpayers prudently people will begin to justify their reluctance to pay tax.”

Whatever one may say of Trump, Wall Street rose by 1.5% and the Dow Jones industrial average posted its fastest 2% rise ever, after his address to Congress on Tuesday. Investors could get to like this man.

In the same vein, he signed an executive directive ordering each federal agency to establish a task force to research all the regulations deemed burdensome to the US economy. Now this is something we haven’t seen, ever?

For those of you who are interested in mountain biking: Nsingisi Lodge, situated near Mid-Illovo, has just opened up a 40km mountain biking trail which is really good to ride, is not over technical, and has great views. Worth a visit.

In the same vein: biking eye protection is very expensive. One can easily pay R700 for a set of clear/coloured protective eyewear. For R20 you can buy from Johnsons a clear, or coloured, set of spectacles which are as good as the fancy ones.

Lighten up

The most serious charge which can be brought against New England is not Puritanism but February.

Joseph Wood Krutch