Economic review


“The domestic economic growth prospects remain subdued amid weak business confidence, but a further contraction in the 3rd quarter is not expected.” Reserve Bank Governor


Our potential current growth rate is estimated by the Reserve Bank at 1.8%.

It is said that our policy stimulus has taken the form of increased social spending or increased public-sector wages, but not the increased provision of infrastructure or the promotion of research and development and product innovation in the industrial sector. This is one of the factors limiting growth in South Africa.

In the mid--1990’s our manufacturing sector comprised just over 20% of total economic activity in South Africa. This has since declined to less than 13% and continues to lose ground.

This trend is not unique to South Africa. It is reported that sub Saharan Africa has, on aggregate, been de-industrialising over the past 15 years. Why? Theoretically a country starts as an agrarian economy and progresses to an industrial one, then matures into a services-led economy. African countries do not seem to follow this path. One theory is that such countries fall victim to the “innovation curse”. This is described as necessity-led innovation that addresses a small problem that is part of a bigger economic deficiency. An example is the success of mobile technology on our continent because of poor access to basic infrastructure. The rapid growth of this industry was driven by the fact that it enabled people to communicate easily and cheaply. But it also meant that economic resources followed the momentum of this industry’s growth rather than being used for other, broader needs in the economy, such as building roads. The cure appears to be a focus on infrastructure and policies which eases trade and going about doing business.



Company tax is our 3rd largest contributor to tax revenues after personal income tax and VAT. Its relative contribution has fallen from a peak of 26.7% at the start of the recession in 2008 to just 18.9% today. Currently our tax to GDP rose to 25.7% last year – the 10th highest ratio in the world when Social Security taxes are excluded. The world average is 14.5%.


Our car manufacturing sector is doing well and has boosted our domestic output by about 30% over the past 5 years. What publications on this matter do not necessarily the race is the subsidy paid by the State for such growth. I do not have the figures available, but my understanding is that it is a hugely costly affair.


This week past Motlanthe questioned whether our State should increase its borrowings if our debt servicing costs alone stood at R128mn/y. He’s absolutely correct but this will not endear him to his (erstwhile?) comrades.


Business review


FNB’s senior agricultural economist has said that red meat price should fall by 15% by end of January. Thereafter prices should increase significantly as farmers re-build herds. Pork and poultry prices should trend upwards in December owing to increased demand.


The changing face of leadership: leadership is now less apex-shaped and more circular. Groups are led by persuasion and responsive leadership is in vogue. Kenyon (Go read)


Platinum demand will probably beat supply for a fifth year in succession next year. Despite this, prices of this metal are at their lowest since 2008. This is attributable to recycling efforts.


The SCA has ruled against Genesis, saying that Prescribed Minimum Benefits should be paid in full, regardless of the rules of the relevant scheme. SCA Case 20518/14.


Where there is a need there is a way? Zimbabwean farmers face a new tax: this is payable per hectare of farmland and will be used to pay for schools and clinics in rural areas.


Eskom: I was handed an article from Fin24 on the current state of electricity supply in South Africa. Contrary to Eskom’s claims, its generation plant availability has declined over the past 2 years and currently remains flat at about 72%. The reason why we have not had a load shedding is attributable to a decline in electricity demand. See:


Property review


Ooba says that its Average Purchase Price rose by 7.6% yoy in October. Its First-Time Buyers Purchase Price showed a lesser yoy increase of 3.4%. It ascribes this moderate acceleration in price as being owing to demand for residential property exceeding supply.

At present it says that first-time buyers continued to drive the market with 54% of its applications received from this segment.

It reports a bond approval rate drop of 2.7%.

Finally, it reports a slight resurgence in the buy-to-let market; this makes up 5% of all applications.


PGP reports that house prices are rising as follows:

  • KZN 7.1%;
  • Western Cape 8.2%; and
  • Gauteng 5.4%


This week it was reported that the Nasrec Memorial Park had seen the arrival of its first tenants..burials. Desperate times!


Practise review


The DTI proposes that insurance on credit facilities, such as store cards, be kept at R4.50 per every R1000 borrowed. What I found interesting was its proposal that maximum initiation fees for mortgage agreements is R250. My impression is that banks charge much more than this – possibly termed something else?


My current bête noire is having to explain to notaries public that movables, which are bonded under the Securities by Way of Movables Act, 1993, need to be capable of identification. We consistently receive bonds which do not adequately describe such movables. The result will be, if that bond is ever called up, it will give scant security. This may well lead to the notary, who signed off, to be personally liable. If one considers the sums involved, this is something you do not wish to explore.


A recent judgement (West Dunes case) indicates that City Improvement Districts in Gauteng was not lawfully established and could therefore not lawfully levy charges.




Homeowners Association rules


This case revolved around a dispute over the colour that the outside of a unit may be painted. The court enforced a rule stating that a unit holder needed authorisation to choose a colour that fitted in. An interesting aside was that there is a duty on a unit holder to appraise himself of the rules applicable and to abide by them.

Bushwillow Park Home Owners [2015] ZAGPJHC 250


Seller providing credit for a property sale


We often receive suggestions that the seller, especially of a farm, will be paid by the purchaser at some time subsequent to the date of transfer of the property. The act of giving such credit, if interest is involved, brings the sale and the credit given with in the ambit of the National Credit Act. If not compliant, such an arrangement may well be unlawful and void. Be careful.

La Mer Jeffreys [2015] ZAWCPEHC 57


Eviction of a sub tenant by a tenant.


In this case Engen held a lease which it sublet to the operator of a filling station. The main lease lapsed as did the sublease. Engen sought to evict. The sub-tenant resisted, arguing that a lessee had no right to evict a subtenant. This argument was rejected out of hand and the principle restated that a (sub) lessee was obliged to restore vacant position of the property it tenanted at the end of a lease.

Mighty solutions CCT 211/14




I read the Shakespeare and the Bible and I can shoot dice; that’s what I call a liberal education. Tallulah Bankhead


Weird & wonderful


Don’t drink and… The female libido-boosting has flopped on the market and, one of the reasons described to this flop, is that women are supposed to refrain from taking alcohol.. I confess that the conclusions that this drives me to are of such a nature that they cannot readily be published (do men become more handsome after the 4th beer?).


The term “terrorist” is derived from the employment of, ironically by the French, Francs-tireurs who fought against the Germans in the Franco-Russian wars. Their tactics led indirectly to the adoption of the Geneva Convention. The latter is a bid to make war more palatable to mankind. Pienaar


“The divided Crusaders of the East and West thought themselves safe in the jets as they cowardly bombarded the Muslims of the Caliphate.” IS statement on its blowing up of an Airbus 321.


“Corporate capture appears to be the greatest threat to our movement. The people who amongst us who want to steal people’s revolutionary gains from the jaws of victory and hand it over to the capitalists. "  SACP


Reconciliation? A bridge of reconciliation was built between the “Zulu” and the ”Afrikaner” sides of the Blood River site. The idea was that each side would charge and allow access to the other. What is now happened is that one side charges and the other doesn’t. Naturally the side which is subsidised, is used by persons to gain access to the other, with ensuing unhappiness. No reconciliation this year!


“We are with them right now, just to help them in this crisis. What is happening to them is happening every day in Syria, 100 times a day for 5 years, so we know what that means.” Syrian refugee on the Paris bombing


Lighten up


One liners:


Anytime you wish to demonstrate something, the number of faults is proportional to the number of viewers.

Bye’s first law of model railroading


My mom took me to a dog show and I won!!

Rodney Dangerfield


Cricket is baseball on valium.

Robin Williams


Too bad the only people who know how to run the country are busy driving cabs and cutting hair.

George Burns


And finally,on immigration: