Filed under: International News
But instead of this Afrikaner selling bricks and mortar in squatter camps and former homelands, an Irishman by the name of Pat Goldrick is keeping the tills pumping at Cashbuild. While it is hardly a new theme that the lower end of the South African market has been the most resilient, what is surprising is the extent of this resilience outside of the defensive food sector. The government’s social grants, while not new, have given the greatest boost to this market since the European robber barons arrived on these shores. But what may be new is the extent to which people are using, and abusing grants. Anecdotes abound about the employed claiming child support grants and the middle-aged having ID books modified to prove they are old enough for a pension, as is common in welfare states. Another motivation to spend is the growth in low-cost housing, in locations far from the Western recession and Chinese slowdown. New homeowners will want to do alterations and repairs. But apart from the social grants, where are they finding the money? Professor Carel van Aardt of Unisa’s Bureau of Market Research believes this market is far more indebted than is officially recognised. While the big four banks are reluctant to lend, there is no Wall Street-style credit crunch at African Bank Investments – or at the microlender around the corner, who may be ethical or unethical. But the buoyancy in mass-market discretionary spend is unlikely to last. Soon those mining retrenchments announced late last year will start hurting. And more will follow as global demand for commodities remains relatively low. Exporters may also find markets drying up. Unemployment will leave no one unscathed, whether you are a billionaire in Zurich or a store owner in Idutywa. SABC is sweating The public broadcaster has pleaded with the regulator, the Independent Communications Authority of SA (Icasa), to exempt it from paying licence fees because of its public service mandate. The SABC has not been paying licence fees, as do other licensed broadcasters and telecoms operators, since it is a state-owned entity funded by tax payers. The SABC said last week, during the hearings on the draft licence fees regulations, that instead of paying licence fees it should rather be allowed to use that money to upgrade and build transmitters in areas where the signals for TV and radio services were poor. It also said the R250 000, once-off fee for amending an individual licence was a deterrent to infrastructure investment. It went as far as reminding Icasa that the Electronic Communications Act had given the public broadcaster unique preferential treatment. The SABC has always known that its broadcasting signal in some parts of the country is poor – and has conveniently used this problem as a bid to be exempted from paying licence fees. |
Besides, it runs commercial stations such as SABC 3, as well as radio stations that were subsidising the public service channels and should also pay licence fees.
Icasa’s proposed new licence fees could result in an increase of as much as thirtyfold for former value-added network providers, which have been paying about 0.1 percent. of annual gross turnover.
Companies such as ECN have objected strongly to a proposed fee of 3 percent of annual gross turnover, arguing that the increase would erode investments and drive small operators out of business.
They have warned that such increases could be passed on to consumers, who are already paying quite a lot for communications services.
Even if Icasa bows to pressure from these companies, it is unlikely that this would result in further significant reductions of prices for consumers.
The Kebble factor
The proposed merger of fraud-battered JCI and Randgold & Exploration (R&E) is a quick fix aimed at putting the two companies together before numerous legal claims and other difficult matters are unwound.
It looks like another case of greed trumping principle: the merger will, in effect, sweep under the carpet much of the mess related to the alleged fraud and misappropriation that took place when Brett Kebble was the chief executive of both JCI and R&E.
However, proponents of the merger argue that it will save a lot of time and legal fees resulting from an extended legal battle between the two companies. R&E has a claim of up to R14 billion against JCI.
While Kebble was in charge of JCI and R&E, he helped himself to billions of rands’ worth of shareholder funds, giving some to the ANC Youth League, among others.
Investec Bank also benefited from the fishy goings-on, by extending an extensive bailout to JCI.
The way such fraud and misappropriation of funds are being handled stinks. Those that benefited from these activities should be named, shamed and sued.
But all the political links to JCI and R&E make that outcome unlikely – a poor reflection on both the government and the ANC Youth League.
Shareholder activism is all but non-existent in South Africa. More than 95 percent of R&E shareholders present at the meeting regarding the merger voted in favour of it. These are the same shareholders who lost billions of rands to JCI.
Maybe the key lesson to be learnt from Kebble and the R&E/JCI affair is that shareholders should keep away from companies with poor governance.
Investors are generally a gullible and passive bunch – and this matter shows the price they pay for being that way.
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