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African Briefs

Africa Brief                                                                             1 May 2017

What not to worry about     

by Cees Bruggemans                   words 600

Whereas SA wasted 14 months of hard work in one cabinet reshuffle a few weeks ago, with the apparent intention of making state interests subservient to the president’s, and were punished with an immediate credit downgrading to junk, many geopolitical interests proceeded with gusto to favour their own.

Throughout, global markets nearly serenely sailed on, SA included, positioned on some distant outerwing, with Rand, bond & equity markets only minimally punished for the Zuma action, carried it as they are by the current fair winds of global capital. These winds suggest steady global growth acceleration, if from a low base, with minimal inflation elevation, steady central banks, and carry trade remaining the main feature, as yield seeking in more risky locations keeps outweighing the so-called political risk & fears of disruption & dislocation.

Africa Brief                                                                             23 April 2017

Finance Ministers on barricades      23/4

by Cees Bruggemans                    words 720

There remain many who keep mourning the departure of Gordhan, and who have the deepest misgivings about Gigaba. What is it that creates anxiety?

Gordhan surrounded himself with good people who believed in conventional fiscal policy, trying to limit deficits and dubious spending, and arranging the tax burden so that it might do least damage to the economy, in all instances looking out for the poor in society so that they with fewest means might be burdened least.

Africa Brief                                                                             18 April 2017

Misreading risk     

by Cees Bruggemans                    words 400

Throughout last year, and into this year, finance minister Gordhan led a merry growth campaign that SA can get it right, if only we try. There was a tail risk of his sudden departure, that everyone kept talking about, but that few discounted as real. And thus growth recovery became painted in, indeed acquired new life.

Tail risks are only small probability events (if with enormous impact). Yet the way many viewed this issue with great trepidation, and their eyes wide open, it shouldn't have been seen as a tail risk, marginally discounted. Instead it should have been seen as the main political scenario, a matter of when, not if, and discounted as such by markets.

Africa Brief                                                                             10 April 2017

Autumn harvest     

by Cees Bruggemans                    words 750

Our Autumn is barely three weeks old, and we already have had to endure raging storms buffeting our financial markets & economy. It isn't easy so far to assess the storm damage, short- or long term. But this doesn't keep some people from banding numbers around as if these are given outcomes, only to materialise.

The Rand could weaken (a lot), our interest rates could resume rising (according to some by 3%), the country risk rating could yet be more thoroughly thrashed deeper into junk (downside liberally mentioned), household and business uncertainty could deepen yet more, their withholding of spending eroding the growth rate anew, to the point of even sinking us ingloriously into recession.

Africa Brief                                                                             26 March 2017

A balance of forces     

by Cees Bruggemans and Prof Willie Esterhuyse                   words 550

From a very distant past, we were wired by nature, to fight when this was needed. It was often accompanied by cruelty. As societies evolved, to the point of creating civilizations, a veneer was added, sometimes thickly applied and sometimes only very thin gruel, which we ended up calling nurture.

Our own dominant civilization is still the Western and her nurtured veneer we have come to call modernity, born from deep challenges these past 500 to 1500 years.

Africa Brief                                                                             5 March 2017

SA patiently waiting     

by Cees Bruggemans                   words 350

It has been true for years as the stagnation took a greater grip, but it was last month’s budget that drove it home forcefully. SA is down to patiently waiting for something better to happen, though not blind to the downside.

What is true for stretched taxpayers is true for universities. Max Price, UCT’s vice-chancellor, apparently thinks the worst of the student disruption is behind us. If not, a bigger slide awaits for higher education. Just so for many middle class households and businesses, favourite beasts of burden for a political class determined to overturn the existing order, and having a whale of a time doing it.

Africa Brief                                                                             21 February 2017

Crossing the “heh,heh” Rubicon     

by Cees Bruggemans                    words 660

In the hey days of the Roman Republic, no general was allowed to bring his troops into Rome. The river Rubicon was the red line in the sand. Julius Caesar chucked all that, and the place was never the same again.

The old White SA nationalists, when they needed total state power to achieve their aims, relied on legalistic States of Emergencies, overruling all established laws for the duration of the “crisis”. Our current president doesn't seem to feel the need for that.

Africa Brief                                                                             12 February 2017

SA prospects     

by Cees Bruggemans                   words 600

With the radical economic transformation agenda becoming ever more explicit politically, how is this being absorbed by the SA economy? It used to be that “shocks” (unexpected events, with forward data implications) caused deep market disturbances (sell-offs…). Shocks could put the economy into recession if there were sharp inventory corrections, and shocks could trigger booms if affecting sentiment positively (sharp commodity price rises).

How do recent events rate in this respect, and how is the economy affected?

Africa Brief                                                                             29 January 2017

The Old Order dissolves    

by Cees Bruggemans and Prof Willie Esterhuyse                   words 930

Winning a game-changer election is one thing, a point in time. The changes following in its wake take time to crystalise. So with Trump, where we are barely a week into his Presidency (though already three months into his new reality). The outline of big coming changes have been sketched, but the implementation will take time and run a mostly uncertain course. Meanwhile markets this week resumed their bullish mood of pre-Christmas, sensing great things ahead.

South Africa had its latest game-changer election already 23 years ago, with the period of major changes already stretching over 35 years. The outline of its new dispensation is by now much advanced, though the biggest changes probably still lie ahead.

Africa Brief                                                                             22 January 2017

The Banality of Binary     

by Cees Bruggemans                   words 860

It is a stark choice, the one between two extremes. Yet SA is facing exactly that this is year regarding the choice of its next leadership. Between the extension of a patronage state, in which a small elite sees the entire economy at its service; as compared to a return of serving people and country, for a better life for all.

But this sense of a binary is playing out on a far greater canvas, too. For it is essentially what President Trump is offering America, and beyond it to a far greater watching world. The difference between outstanding success or failure.

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