There have been some dumb responses to SA’s week of shame. Heading the list, however, is Cyril Ramaphosa’s suggestion of introducing a basic income grant of R350 a month to “show our people we care”. Leaving aside the morality of rewarding bad behaviour, the parlous state of SA’s finances shows it’s unaffordable. Plus it would accelerate an already depressing race to the economic bottom by ignoring the real issue – job creation.
National Treasury disclosed in the 2021 Budget that SA will pay social grants to 18.5m people this year, rising to 19.25m in two years’ time (a third of the total population). This deadly mushroom already costs taxpayers R221 bn. Ramaphosa’s basic income grant knee-jerk, reminiscent of Zuma’s departing free tertiary education “gift” to taxpayers, would add another R45 bn a year to the base cost. Put differently, social grants would then swallow over half of all personal income tax.
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Instead of pandering to populism, CR would do far better by offering hope to its top half a million individual taxpayers, many of whom are suddenly considering alternative futures. These globally mobile people, under 1% of the population, contribute around a third of SA’s R516 bn annual income tax receipts (see above). Given the personal sacrifices required to climb the income ladder, some may view another handout as the last straw. Especially the next generation, as Purple Group’s Charles Savage articulated when we chatted this week.
Cyril also faces a battle on another front. Despite all the evidence from the KZN coalface (see my interviews with McCormick, Alcock, Carter, Veness and Sooliman) there are some who are already revising history. In the light of all this evidence to the contrary we were tempted to ignore Moeletsi Mbeki’s assertion the riots weren’t organised. But, as our policy is to present all sides, we didn’t. Here’s the link to the Mbeki interview on BizNews.
Excellent insights on the chaos, this time from ground level, are contained in yesterday’s interview with James Martin, who heads economic development for the uMgunglovu District Municipality (KZN Midlands). Martin, who spent a few nights last week with his shotgun on the bridge overlooking PMB’s Liberty Mall, explains how the day was saved by an unrecognised member of the middle class – taxi owners. Their emergence as a bulwark for free enterprise  – and a powerful counter balance to anarchy – is a rare bright spot from the past week’s disaster.
I’m confident we’ll be a shining more rational light onto recent events during a special webinar at noon tomorrow (Thurs 22nd) where I’ll host inimitable Brenthurst Wealth founder Magnus Heystek (above) and Eunomix’s straight shooting Claude Baissac. The title: “SA QUO VADIS – where to from here?”. Here’s the link to register: https://attendee.gotowebinar.com/register/5776326534417232910
Finally, we’re now well into the reporting season for US companies and will keep you updated as results come through from stocks owned in the BizNews Share portfolio. One of our favourites, Netflix, reported late last night. Details below from our partners at the Wall Street Journal. More good news is that US stocks rebounded strongly last night after Monday’s selloff.
The next monthly update on our BizNews Share portfolio – for Premium members only – is on Tuesday (27th) at noon. If you’ve been following our recommendations please make a diary note. Significant changes will be made on Tuesday. Register here: https://attendee.gotowebinar.com/rt/3785234117773097230
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