e-spaces

RETAIL BONDS: The introduction of retail bonds has been a welcome development. But there are a number of cracks that need plastering.

For starters there is little education on bonds to help potential investors sift through the jargon.

The retail investor must fully understand these instruments in order to embrace them as investment vehicles.

But more importantly, people who are likely to invest in retail bonds, are mostly pensioners who are usually in need of a monthly income. At the moment retail bonds only offer quarterly payouts. This is an area which will require more innovation to encourage increased subscription from investors.

The next bold step should be to make monthly payouts possible.

So far though, other bond issuers have gone a step further than the government in making bonds sellable before they reach maturity.

While the current crop of government bonds are not tradeable, Standard Bank and the City of Johannesburg have made theirs tradeable – meaning that investors can cash them whenever they wish to do so.

Given the sophistication of South African banks, creating financial products that suit the ordinary people should not be impossible.

ONLINE SHOPPING: Technology has undoubtedly changed the lives of many people all over the world.

But when it comes buying things they need on line, many South Africans are still sceptical about the service, according to industry observers.

Interestingly, many of these people have embraced technology in other areas of their lives.

When it comes to shopping, they still prefer the experience of going to stores and shopping malls than clicking a mouse to get their weekly food supplies.

In addition to fear of online fraud, low computer penetration and the high cost of broadband have colluded to ensure that the service is available to mostly the elite, and those residing within metropolitan areas.

The projection is that computer penetration will reach 3.8 million by the end of the year. About 17 percent of that have an annual household income of more than R400 000.

Research has shown that online shopping in South Africa will reach a massive R1 billion by the end of the year. This means that those who do shop on line, spend big amounts on their purchases.

They buy from about 700 online stores, which have listed their products on websites such as Jump shopping and Ananzi.

The popular products bought online include flowers, computers, iPods and other technology products such as computer games. It is expected that as the internet speed improves, so will the popularity of the medium as a convenient and cost-effective place for shopping.

According to Independent Online – a sister publication to Business Report – worldwide numbers of people shopping on the internet are expected to double to nearly 25 million by 2010. Total worldwide e-retail spending is likely to reach R280 billion by the same year.

But even if computer penetration in South Africa increases and broadband becomes cheaper, the number of online shoppers will remain small for a long time to come.