Over the last few weeks markets and exchange rates have been exceptionally volatile as the horse-trading and negotiations around the GNU go on behind the scenes. While the ministerial positions have now been announced, this volatility is probably going to continue until everyone carves out their niches – and the ‘official opposition’ is not going to sit back quietly. Without adding to the hype, angst and noise that can be found on the airwaves and internet at the moment, RSA is not the same place it was 25 years ago, but there is probably some light at the end of the tunnel – and with our lack of infrastructure it’s probably not an oncoming train. So, do we as investors sit back and twiddle our thumbs? Probably, yes – but there are always opportunities hidden in the chaos.  Emigration is probably the most extreme response we are seeing, but knee jerk reactions have a nasty habit of giving you a black eye, and while they may give you some solace in that you are actually doing something, it is an illusion. You need to have a plan – for now, and into the future. You need to know what your non-negotiables are and what you’ll do if they are breached. You should understand your default financial behaviour – and you are probably going to need help doing that. You just have to look at the slow implosion of Zimbabwe to see that as non-negotiables were breached, the faster the exodus occurred. In stark contrast to Zimbabwe, other places in Africa (and I have lived in several of them) have stopped digging, come back from the brink and are now growing again – with some lapses along the way of course.  |
| I have compiled a list of what I believe should be on the list of non-negotiables so that you can build them into your plan: Education: In disintegrating societies, tertiary education is usually the first to go. This is fairly easy to solve as we are dealing with young adults and not children, and they can leave the country to get educated elsewhere. This isn’t cheap but perhaps cheaper than everyone migrating. The downside is that youngsters who leave the country to get educated elsewhere very rarely return (a loss for RSA on the whole). In RSA, it may not be a failure of Tertiary Education institutions that are the problem, but a quota system that makes it impossible for bright students to study what and where they want. When secondary education fails however, most parents look at emigration rather than boarding school in another country. Fortunately, there are still plenty of world-class private school options in RSA. Again, not cheap, but neither is emigration. You can hedge your bets (especially with bright, academically inclined children) by ensuring they get a secondary education that is aligned to overseas educational institutions (A levels for example) and by building up an offshore investment that can be used for that purpose. If there is the possibility of getting a second citizenship – get it.  Health: As long as good quality health care is available (albeit at a price), people are unlikely to emigrate for this reason, and you may even attract ex-pats (tired of the failing NHS for example). This is where the history in Kenya has been quite different from Mozambique, for example, with good quality private hospitals found in most major cities. I have written at length about RSA’s NHI (National Health Insurance) so won’t go into it again here, but it is now law, signed off by Cyril but facing a barrage of constitutional challenges that are likely to prevent it becoming a reality for years, if not decades. The Minister of Health is Aaron Motsoaledi (previously ANC Minister of Home Affairs and Minister of Health from 2009-2019), The Deputy Minister of Health is Joe Phaahla (was ANC minister of Health). These appointments might just be an indication that this is a lame-duck portfolio as the constitutional court cases progress. On the other hand this is perhaps a missed opportunity to revamp the current health system (which is already universal health care, lest we forget) and stop the wastage and corruption which is estimated to bleed (sorry about the analogy) one third of the annual budget – around $100bn. Medical aid and Gap cover are unlikely to be outlawed in terms of the NHI bill for many years yet. Dread disease (‘life’) cover and/or income protection is an increasingly popular option, especially if you work for yourself, don’t expect a sudden increase in unemployment benefits.  Security: The booming private security businesses and gated communities show us exactly what taxpayers have done about the threat of our rampant crime and overall poor security. The previous incumbent for the Minster of Police has mercifully retired and has been replaced by Senzo Mchunu, formerly Minister of Water and Sanitation, and by all accounts was doing a reasonable job. Of course, one would like to see more prosecutions brought forward on the architects and enablers of State Capture as identified by the Zondo Commission. Somewhere along the line, cadre deployment also needs to be addressed. Individual Property Rights: Nobody needs to be reminded that the straw that broke Zimbabwe’s back was the (often violent) ‘acquisition without compensation’ (AWC) of farms – a cause now championed by the EFF and MK – mercifully neither party is in the GNU. Individual Property rights are often considered central to basic human rights in the West – and confiscation of such property without compensation usually happens as a society moves to the far left – beyond socialism to communism. AWC has been identified by major Western powers as a serious threat to our democracy. Land claims have gone on the back burner for several years now – in part due to the failure of farms that have changed ownership to thrive (lack of skills and experience) and the potential impact on our agriculture. Food and water are quite obviously very basic human needs, and putting John Steenhuisen (DA) in the position of Minister of Agriculture could be a good sign. Remember though this portfolio has been separated from land reform – a post now held by Mzwanele Nyhontso (PAC) – Mr Nyhontso is the only PAC member of parliament and had a very tumultuous tenure to date, having been expelled and reinstated on more than one occasion. One has to wonder what the thinking was or objectives for putting him in this position. With the sidelining of the biggest AWC cheerleaders, property rights are probably not as much of a concern as they were.  In short, for the first time in decades, things are probably looking up. Having said that, this is a good time to relook at your Financial and Retirement plan (if you have one) and make sure you’re maximizing the opportunities – and mitigating the risks. Exposure to offshore shares and markets is smart because you get exposure to sectors and ideas we just don’t have here in RSA – but you don’t have to follow suit and emigrate – at least not yet. Life insurance and short-term insurance are a grudge purchase – but can protect you from large expenses or an interruption in your income earnings ability. If you have a plan, it forces you to look into what you want your future to look like, while you have time to make slow changes that don’t cause you or your lifestyle undue angst – and be less tempted to make knee-jerk reactions. Do you perhaps have a non-negotiable that I haven’t mentioned? Reach out and tell me what they are! Articles and Blogs: Taking a holistic view of your wealth NEW Why do I need a financial advisor ? Costs Fees and Commissions The NHI and what to do about it New-Normal for Retirement? Locking-In Interest rates – The inflation story Situs – The Myths and Reality Tax Residency – New Rules new headaches Are retirement annuities dead A new look at retirement Offshore investing – an unpopular opinion Cobie Legrange and Dawn Ridler, Rexsolom Invest, Licensed FSP 45521. Email: cobie@rexsolom.co.za, dawn@rexsolom.co.za Website: rexsolom.co.za, wealthecology.co.za |