Economic review


Foreign affairs:


The debt level in China has climbed to an unprecedented 247% of GDP. The result of this is that Moody’s have lowered its credit outlook for China to negative. The cost to insure the Chinese government bonds against default for 5 years is in excess of the cost of credit-default swaps on the Philippines which has a rating 5 levels below that of China. And you think we have problems?


Brazil’s economy shrank 3.8% last year, its biggest contraction in 25 years; pushing our other Brics partner into its worst recession for more than a century. And the Olympic Games are coming….hardly a moneyspinner.


Zimbabwe is in a pickle. The banks have again limited cash withdrawal amounts (this time by 60%). Zimbabwe has serious liquidity problems and international banks are less and less willing to deal with Zimbabwean banks because of the high risk perception. This has led to intermediary banks, which deal with Zimbabwe, being shifted to African and Chinese banks. The push in Zimbabwe, away from the dollar towards the yuan, has not helped. Mr Mugabe says that the US is punishing his government for taking back black people’s land.


Local news


Déjà vu: Barclays will be selling out – again. One of its problems is that whilst it owns only 62% of Absa, regulators require it to hold capital to support this investment as if it owns 100%. This is not a great deal for Barclays as it is in difficulty elsewhere. However, to return to the capital issue, Barclays’ African holdings return a healthy 17% on equity whilst its parent reports a return of 8.7%. The reason is that the capital it has to hold in order to comply with its European capitalisation requirements is just too high. The reported bath that Barclays will take is said to be in the order of £400m.


Total domestic new vehicle sales in SA for this year has been revised downwards for the 4th consecutive quarter: a pointer to our anaemic economic growth. This is old news. I mention this because I need to be refer to this in the property section below.


Business review


Allan Grey has started a Tax-Free Balanced Fund to hold the funds that one may save annually without paying tax on the interest. Worth a look. They are, after all, one of the best performing financial houses in South Africa.


The Hauwei P8 Lite has won the Product of the Year at the 2016 innovations awards in the Value Smartphones Category. Looking at the specs it is surely a good deal.


If you own a Samsung cellphone you will be familiar with its intuitive and personalised auto-complete system (this even works for Afrikaans). This system is termed Swiftkey and has just been acquired by Microsoft.

Another Microsoft acquisition is Sunrise. This is a calendar-linked system which Microsoft plans to add to its Outlook e-mail system to speed up its calendar functions.


PwC has is reported that South African organisations have reported the highest rate of economic crime – including cybercrime – in the world over the past two years. Our reported rate of having been victim to such crime is twice as high as the global average. The worst of these are asset misappropriation followed by procurement fraud and bribery and corruption.


BEE at all costs: Lonmin has propped up Shanduka (think our vice president, Ramaphosa) to the tune of R2.26bn. The reason for this loan is attributed to Shanduka not having been able to meet its repayment deadlines by December. The reasons are given but one wonders whether our vice president deserves the accolades heaped upon him.


Property review


The FNB House Price Index for February rose by 6.5% year on year. Not great.

The average real house price growth is still practically 70% above the January 2001 price level. That’s quite expensive, especially given the negative real growth rate above.


This week past high I met a local mortgage originator and asked what business was like. The response was that it was great; never busier. Why – surely our economy is doing quite poorly? She attributes this to a pent up market, the perception that one needed to get into the market now and, interestingly, an increase in sellers dumping unaffordable properties.


Practice review


The Lewis Group announced in October that it would be refunding R44m to consumers after the NCA had breathed on it for its practice of miss-selling loss of employment insurance. This apparently is the tip of the iceberg as that group makes some R1.25bn from insurance, delivery fees and extended warranties. Papers have been served on Lewis which challenge these practices as unreasonable and illegal.


The Financial Services Board is having a go against Liberty and Alexander Forbes on their treatment of so-orphan funds. These are funds which are closed down and not paid out on owing to recipients not having been found.


The South African Medical Association and others have lost a challenge in the Competition Appeal Court in which the Court concluded that it would be in the interests of justice and the public at large to continue the investigation against restrictive horizontal practices before the Competition Tribunal. Our own legal regulating authority has had its wrists slapped over this sort of thing and it would be most interesting to see what transpires.


The historical judgement on section 118 of the Municipal Systems Act has caused a moerse stirring amongst property professionals. Generally speaking, this judgement will probably not cause much of an upset in the way we do business in buying and selling property. Section 118 (5) exempts residential property from the continuation of a lien in favour of a municipality for historical debts - ordinary house sales would therefore not be subject to such a lien. In some of the writings I have seen on the subject, members of the public are urged to ensure that the conveyancers make extra sure that all municipal debts are paid. How does one do this? It is difficult enough extracting a rates quote from the municipality. Asking them whether they are really, really sure will undoubtedly produce no result.


Our latest circular from our local Deeds Office may be found here:


Cases and such


Timber farming and tax


When is one a timber farmer? The question is an important one as it determines whether a timber farm sold is regarded as capital or income. The SCA deals with sections 14 (1) and 26 (1) and points out that the deeming provisions only applies to farmers who are people who actually farm. Very few of us are au fait with tax as it applies to farmers; reading this case would be profitable for the few who are.

Kluh investments SCA case 115/2015


ESTA and rentals


The above Act defines an occupier as a person residing on land which belongs to another; the tenants in question were in compliance with the relevant provisions of Esta but had rental contracts for which they did not pay the rental. In issue was whether, at a hearing before the Land Claims Court, the land owner could rely on common law to terminate the rental contracts by reasonable notice. The court held that failure to pay a rental was a lawful ground for the termination of a right of residence. That, however, is not the end of the enquiry. The requirement holds that termination must also be just and equitable. In this case the conduct of the landowner in the case at hand and the situation that the tenants found themselves in led the court to find that eviction could not proceed.

Molusi SCA 96/15


Allocation of payments by municipalities


May a municipality, in terms of section 102 of the Municipal Systems Act, re-allocate payments made for usage from one account to another account of the same account holder? On the ipse dixit of that section, yes, the Act gives a municipality the authority, and not the customer, to decide which account to credit.

Pearson ZAKZDHC 93


Liens on members shares by a company


It is common practice in South Africa for a company to hold a lien on members’ says the secure payments of amounts owed to the company by those members. In fact today such liens will often be established within the memorandum of incorporation of a company. There are problems with such provisions when such shares are partly paid and, more especially, in that it allows an entity a right to seize and sell another’s assets without the intervention of a court. If this interests you, ask me for a copy. (Do note though that I will only send these out about a week after the request as I find it convenient to bundle such requests.)

Delport 2015 SA Merc LJ 540




A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves. Lao Tzu


Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others. Jack Welch


If you want to lead the orchestra, you must turn your back on the crowd.




Being PC is difficult. The Equality and Human Rights Commission in the UK has warned businesses that they would be breaking the law should they ask for any particular characteristics in a job advert that would stop certain groups from applying. Examples are:

  • requiring a permanent address to open a bank account (this discriminates against Syrian asylum seekers);
  • requiring a tall person (this discriminates against women); and
  • using gender-specific terms such as “barmaid” (rather a bartender).

And you thought it was just us?


About three quarters of the people in prisons in Switzerland are not citizens. Perhaps they just don’t understand the language?


Nummawan will be co-chairing an EU in commission on health employment and (I love this) economic growth, alongside the French president.


Economic racism: this is defined as a predilection to not support black-owned enterprises. It is said that emancipation can only be achieved when black people, i.e. black consumers, support black business. So who is to blame for this?


The ANC chief whip Mr Sizane said, after his vacation of that office: “We have been consistent on our position that President Zuma needed to pay a portion of the Nkandla money in line with the Public Protector’s decision.” There you have it.


Lighten up


“Life is like a dogsled team. If you ain’t the lead dog, the scenery never changes.”  Lewis Grizzard


“Success in almost any field depends more on energy and drive than it does on intelligence. This explains why we have so many stupid leaders.” Sloan Wilson


Only one man in a thousand is a leader of men — the other 999 follow women.

Groucho Marx


The problem with being a leader is that you’re never sure if you’re being followed or chased.

Claire A. Murray