The recent political rhetoric or should I say open warfare between the premier league a.k.a. Zuma and cronies vs. the reformists is heating up rapidly and likely to get a lot worse before the ANC elective conference in December. The importance of this year’s conference cannot be overstated given the current dire state of SA Inc.
If the incumbent premier league manages to have their candidate elected then the next 5 years will see a continuation of the mismanagement and corruption, which has brought SA Inc to its knees; unless the ANC is voted out of power in 2019, which has a whole host of other ramifications and unknown risks.
The current political situation makes me think of a house on fire where the inhabitants are fighting over who gets to operate the hosepipe. The real issues are no growth, 27% unemployment, debt to GDP of 51%, twin deficits, escalating racial tension, xenophobia, daily service delivery riots, 18 million social grant recipients funded by only 7.4 million taxpayers, bankrupt SOE’s with government guarantees taking the debt to GPD up to 69%, sub-investment grade (junk) debt rating, rampant crime, institutional decline, failing education, …………………………………. SA Inc is in crisis.
The good news is that it takes a crisis to motivate people to fix things. The one thing I am certain about is change is coming, the unknown is whether we will decline further before things change. Spare a thought for Zimbabwe who has been under the rule of Mr. Mugabe since 1980 and by all accounts he will continue as no.1 until nature takes it course. The problem is the longer it takes the greater the damage.
Expect a lot of noise, but try not let it get to you, if you figure out how then please let me know. Avoid emotionally based decisions, fear is a powerful motivator, but seldom results in good decisions particularly when it comes to investing.
Mcomm, CFP®, HdipTax
T. 021-851 3746