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By Sean Peche of Ranmore Fund Management Limited
I’ve got a challenge for every South African. But before I get into that, let me give you some background.
My wife and I have just returned from 10 wonderful days in South Africa where I presented at the BizNews conference, and then spent a few days with family in the Drakensberg and the fantastic Founders Lodge in the Eastern Cape.
Except we drove on broken roads everywhere but the Western Cape, we watched the lights go off and on every day as the generators kicked in. And I listened to Ian Cameron recite crime statistics too horrifying to repeat.
Our country is broken. But that’s old news.
The good news is:
But we’re running out of time.
I was fortunate enough to play golf with Herman Mashaba at the Biznews conference and he said to me afterwards, “Sean, we need R300m to get out into communities and explain to the people that it doesn’t have to be this way”.
To which I replied, “Herman, that doesn’t sound demanding, surely there are more than 1m South Africans concerned enough to each part with R300 to save our country.”
Chinese wisdom says if you take a big problem and divide it by a large divisor, you have lots of small problems. And small problems can be fixed.
But David Shapiro’s recent article nailed it where he said, “I do know that the people who have taken our country down, are not the people capable of taking it up again.”
So, it got me thinking.
A good investor always wants upside potential to exceed the probability of downside – you should only risk 100 if you have more than 50% chance of making 200.
So what risks are South Africans currently facing?
“If the ANC and EFF form an alliance, all bets are off” said top fund manager, Piet Viljoen when discussing South African investments.
That sounds cataclysmic but then: the country is already on the grey list, we’re risking further isolation by siding with Russia and China, and now commodity prices are collapsing. Anyone want to bet how much further the Rand will fall if the EFF get their hands on the tiller? 30%, 40%, 50%? Who knows, but it will be bad!
So I think Piet is right, and therefore we cannot take a chance of that scenario playing out – meaning we have “one chance” of avoiding this.
And we only have “one year”.
So what should we do?
Riddle me this: How much would you invest to prevent an “all bets are off” scenario where asset values collapse at least 30%, where USD denominated fuel price and fertiliser and seed prices soars, where farmers finally tire of being killed and decide to “replant” in a safer country and where those who can leave, throw in the towel and go?
If you think that scenario has 50% odds, 15% is the number. More, if you think the odds are higher and the ANC-EFF coalition discussions seem to be a 100% certainty. All the political speakers at the conference confirmed that.
Now what if I suggested you didn’t have to invest 15% to avoid a 30% or more melt down of your assets.
What if I suggested that 0.5% should do the trick, wouldn’t you snap that up?
Bloomberg tells me the top 20 unit trusts alone are worth R 1trillion so 0.5% is worth R5.2bn.
And if Herman only wants R300m, can you imagine what ActionSA and the DA could do with R5.2bn?
And now add the value of all SA property, life insurance assets, direct investments in the JSE, cash in SA Bank accounts and the NAV of SA expats like me, and goodness knows how many R trillions that equates to.
So why don’t all concerned South Africans “invest” 0.5% of our global assets into securing our Country’s future?
Do you mean “donate” to non-ANC parties?
No, because “donation” implies gifting assets for no expected return. I WANT a return.
I WANT the DA and Action SA to save our country – I don’t want my family and friends living in the next Venezuela or Zimbabwe. This is an “investment”, not a donation.
And if we invest R5bn with those parties – couldn’t they bombard the airwaves and billboards and all forms of social media and get activists out throughout the country to get concerned South Africans to register to vote, counter all the ANC lies and remind them what they already know – the ANC has broken our country, made us live in a crime ridden state and destroyed jobs.
“But we’re tired and running out of energy” said some friends when I postulated this.
Well don’t give up at the bottom, harness your energy for one more year. Lance Armstrong said, “Pain is temporary, quitting lasts forever.” Do you want to own a house in the African equivalent of Venezuela? Ask your Zim friends how much their monthly pension is worth.
“The DA is already well funded” said others.
Well then why didn’t I see a single billboard highlighting ANC potholes, darkness and unemployment on our road trip? Why didn’t I hear a single political ad on the radio? Why haven’t I seen a single interview with someone from uMngeni comparing life now to before Chris Pappas took over. In short looks to me like all these non ANC EFF parties could do with A LOT more funding.
“But what if they waste my investment?”
That’s why I’m spreading my investment in monthly instalments and across the DA and Action SA over the next year. I’ll reallocate after 6 months, based on the evidence I see that my investment is being well spent. And come voting day, I’ll make my vote count the most.
“I’m not sure this makes financial sense” said a family member.
Well then you better sell every single Rand denominated asset you own and extract every Rand of equity from your home right now, because if everyone is relying on everyone else to make the effort, then “all bets are off” wins and you will be wiped out financially.
“But It irks me that we already pay high taxes and get nothing for our money”.
Don’t feel too hard done by, your maximum capital gains tax is 18%, the UK’s is 28% on residential property and 20% on everything else. France’s is 34%.
Your vat rate is 15%, the UK’s is 20%.
Yes, the UK’s medical care is free, but we have long waiting lists and your private school fees cost a fraction of the UKs.
The only concession I’ll make is we don’t pay for private armies.
“But what do I get for my money?”
Travel to the winelands or berg or bush or beach and then ask me that question.
“But my money is in illiquid assets and tied up in trusts”.
Well untie 0.5% and liquify it via your access bond or the sale of some investments, I don’t care how – we only have 1 year, there’s no time for silly games and selfishness.
“But I live overseas and have all my assets there so it’s not my problem”.
Then do it for your family and friends who’re still there, they need your help. You know the saying “for evil to exist all you need is for good people to stand by and do nothing”. Be a good person.
But what if I spend 0.5% and we don’t stop the ANC and EFF forming a coalition?
Well since it’s 17x what one of the most driven South African businessman thinks they need, I think it’ll make a difference.
And let’s not stop there. Let’s help them by speaking to every person we meet – every friend, waiter, car-guard, retail assistant etc. Ask who they’re voting for and make sure they’re registered – be part of that “big divisor”.
Because just imagine if Action SA and the DA put that money to good use and destroy any chance of the ANC and EFF hijacking our country any further.
Won’t that be the best “investment” we’ve ever made?
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