Who Wants the Toughest CEO Job in SA?

For the 11thtime in a decade, Eskom, one of South Africa’s biggest and also one of the most troubled companies has a top job opening and it’s unclear as to whether anyone is ready to fill it. 

Eskom is now seeking a replacement for Phakamani Hadebe, who announced that he is quitting after only being in the position for 16 months. He said that the position took a toll on his health due to the unimaginable demands that came with the role. He went on to say that his decision to leave is in the interest of both his family and the company. 

The one that takes over his position will need to oversee a fleet of poorly maintained, old plants that are struggling to supply enough power for Africa’s most-industrialised economy. Not only that, Eskom has more than $30 billion of debt, about 16 000 more workers then it apparently needs and it needs massive bailouts from the government, who do not have the money to spare. 

The head of capital markets research at Intellidex, Peter Attard Montalto said that he is not able to think of anyone at Eskom that has the technical knowledge and the political savvy that is required of the CEO or even anyone that wants the position. 


95% of the nation’s electricity is supplied by Eskom through burning coal. Only just two decades ago it was actually ranked as the world’s best power companies, however, the country has experienced intermittent blackouts since 2008, which is mainly due to the government hindering it from investing in enough new capacity to keep up with demand and by blocking private companies from investing in generation. 

Not only this, when Jacob Zuma became president in 2009, Eskom’s woes grew. In official inquiries, testimony was given that suggested Zuma’s allies worked with top managers at the utility in order to loot billions of rand. However, Zuma and the former executives deny any wrongdoing. 

When Cyril Ramaphosa replaced Zuma in 2017 as the ruler of the ANC, Hadebe was brought in as well as a new board to sort the mess. They did make headway in fixing financial controls, but accounts continued to deteriorate due to electricity sales not generating enough to cover the interest payments and operating costs. 

The Bailout

In February, Ramaphosa announced that he intended to divide Eskom into three sectors, those being generation, transmission and distribution units. This would be to make the utility easier to manage and raise finance. Later that month, Tito Mboweni finance minister allocated a three year bailout of R69 billion to Eskom, which is far less than what the utility needed. 

So what does the candidate need? Well, they need to be able to run a complex organisation and have a great understanding of the global power sector as well as being an expert in motivating people and politics said Iraj Abedian, the head of Pan-African Investments and Research Services. 

Article Source: https://techcentral.co.za/wanted-a-brave-capable-leader-for-sas-toughest-job/89784/

US-China Trade War is Impacting South Africa

Even though South Africa is thousands of kilometres away from both Beijing and Washington DC, we are still being affected by the US-China trade war. 

The central bank Governor Lesetja Kganyago said that the country is a small and open economy that is able to grow by being able to sell into the global demand, much like other emerging economies that will also be held back by the trade war. 

US and China came to a head this month as tensions built and talks fell apart. Tariffs on Chinese goods has since been increased by US President Donald Trump and he has even put restrictions on the telecommunications giant Huawei. A solution to the ever growing tensions seems to be far off. 

For South Africa, this means that the likelihood of the economy coming out of its stagnation is being affected, which is an eventuality that local companies like Liberty are banking on in order to stimulate revenue growth. 

Also, negative sentiment around equity prices will worsen, which the insurer requires to improve the value of its assets according to CEO David Munro.

The CEO went on to say that at the moment with the US-China trade war, they are battling a little bit of headwind to the extent which equity markets rally increases assets under management and assets that are administered in pension funds. The business is set-up towards equity market performance. 

Kganyago said that in the end there are no winners as the South African Reserve Bank held the key interest rate at 6.75% while cutting the full year economic growth forecast. He went on to say that trade wars are silly because you want to be able to control your market, but you still want to access other markets, which makes it illogical. 

Article Source: https://businesstech.co.za/news/finance/318942/how-the-us-china-trade-is-hurting-south-africa/

Protect Your Home and Make Sure Your Insurance Is Up to Scratch

The things that you own are more than just stuff to you as it can take a lifetime to build a collection of possessions that you love. This then makes it important for you to have financial protection for these items so that if any become lost or damaged you are able to replace or repair them. The best way for you to protect your items is with home contents insurance.

What is Home Contents?

Many people sometimes confuse home contents insurance and building insurance, which can also be referred to as homeowner’s insurance. The structure of the building and everything that is fixed like a geyser, fence etc. falls under building insurance and everything that is inside that is not fixed will be covered by home contents. If you turn a house upside down, then everything that would fall would be covered by home contents. 

Building insurance doesn’t cover home contents, so if you own your home, you will need to have both of these insurances. If you rent a property, then you will need to have home contents insurance and make sure that the landlord has building insurance. 

What is Covered by Home Contents Insurance?

Everything in your house is covered by home contents insurance and protects the contents from fire, theft, malicious or weather damages. You are also able to add additional cover to this so that if any accidents occur like spilling coffee on an expensive sound system, you can still get protection. 

There is also all risks cover, which you shouldn’t ignore. This cover protects personal items that you carry around with you. These will need to be specified and insured separately. These items usually include laptops, cellphones, tablets, jewellery, watches and so on. However, insurers do differ, so you will need to find out what items are specifiable under all risks cover. 

If these items are not specified, then you will properly not get paid out for their loss whether you were mugged or if they are lost in a house fire. 

Wait…There is more to know about protecting your home and its contents…

Make Sure Your Home Contents is Insured to the Right Value

Many of us will only evaluate the value of our home contents when we take out the insurance policy and don’t update the value over the years. This means that many of us will actually be underinsured. This means that if you need to make a claim then the insurance will pay a pro-rata, which means you will receive less money than what it costs to replace the goods. 

Over time, you get more and more stuff and you will also upgrade technology, move to a larger home or have kids. When you hit a milestone in your life or an event then this is a good time to relook your insurance and see if you are still adequately covered. 

Make sure you keep receipts of things of value and take photos of items and rooms for your records. 

Also, your home contents should be insured for its replacement value and not the original purchase value. For instance, if you bought a sofa 10 years ago it will be worth less today. The value estimate that you give to your insurer should be for the cost of replacing it with a new similar item. You need to keep the costs of your contents up to date with current market prices. It does cost more to insure for replacement value, but it’s better to be slightly over insured than underinsured. 

How Can You Save On Home Contents Insurance?

One way that you are able to save on home contents insurance is to compare offers. You are able to find websites that will gather the best home contents insurance offers for your needs from reputable insurers. You are then able to go through the various offers and compare not only the premium but also what the insurance offers. Your decision shouldn’t be based on price alone, but also what the policy covers, so you can get the best cover for the best price. 

Another way to save is to combine home contents and vehicle insurance with one insurer. Insurers may offer a reduced rate by getting both home and car insurance through them. 

Make sure that your items are protected for any eventuality by getting home contents insurance. 

3 Basic Options Available for Income Investment

Income investing could be the key to living a life of leisure whilst still having passive income rolling in, however, income investing is not passive and without obtaining the right advice and planning, investees and retirees could soon see their capital base deplete instead of being able to enjoy the income. 

With these assets, the ideal scenario would be to create income streams that are more than inflation as well as to generate capital growth. Income investing then takes time, skill and dedication. 

Income investors have three basic investments options available, but they each carry their own risks and rewards. 


There are a number of investors that rely on dividends from companies, which is where the investor owns shares in the company, which become a source of income. However, not all companies are the same and receiving consistent dividend payments are based on the quality of the company’s earnings. 

Rental Income

Real estate values are increasing and rentals are more in demand, so being able to collect income through rental from direct property investments can be rewarding. 

However, the property market can be unpredictable and is not stable. Your rental property investment can be turned upside down when there are economic downturns, problem tenants and changing trends. 

Real Estate Income Trusts is a riskier direct investment with higher yields relative to listed property.

However, income received from listed properties has greater revenue diversification, spreads investment risk between different sectors as well as geographically and it requires less direct involvement. 

Also, rental income tax is unavoidable and you will need to look at how adding professional management fees to the mix effects your investment outcomes. 

Fixed Income

From time to time you are able to find attractive interest rates with fixed income securities and money market instruments, which are generally associated with periods of higher inflation. 

However, your principal capital becomes at risk of losing its real value or purchasing power over time due to the higher inflation. 

Due to tax, fixed income assets can lose their appeal as a long term investment when they are compared to growth assets like property and shares.

Corporate bonds are another attractive investment option as they trade at higher yields than equivalent maturity government bonds. However, you should note that these have an additional credit risk, which the higher yield compensates for. When the credit rating on a company’s debt is low then the higher yield should compensate the investors due to the risk of potential default. 

3 Key Investor Issues that Ramaphosa will Face Post-Election

Now that the election is done and dusted, the focus for investors will now move towards President Cyril Ramaphosa’s ability in addressing issues of concern according to the chief economist and advisory partner at Citadel, Maarten Ackerman.

Ackerman has highlighted three post-election issues that investors will be watching closely.

The Cabinet in Size and Structure

International investors probably see the cabinet announcement as more important than the actual election results, especially as it was already expected that the ANC would win. 

Through the announcement of the cabinet, we shall see if Ramaphosa is confident enough in his position to resist pressure from opposing ANC factions to appoint cabinet members and reduce the size of the cabinet. 

International investors will then probably wait until after the announcement to make any decisions or commit to foreign direct investments into the country. 

Vital Economic Policy and Transformation

In the first few months of the year, any meaningful policy reforms have failed to be implemented. However, Ramaphosa is now free to push forward with reform and set a new direction for the economy for the rest of the year. 

Investors will be watching to see whether the government will finally implement the policies that are needed to get economic growth going and to address the issue of unemployment. 

There are many challenges and among these there the removing of red tape for small and medium enterprises in terms of seeking finance and registering businesses, addressing the structural economic issues and restoring Eskom and its financial health. 

Ramaphosa has attempted to create confidence and trust as well as drive investments towards key manufacturing and mining sectors. However, these areas demand a lot of energy, so fixing Eskom’s capacity is a priority according to Ackerman.

Eskom is a Major Concern

The concerns surrounding Eskom are critical for investors as the government will need to repair and boost Eskom’s capacity in relation to electricity production if the economy in South Africa is to grow or alternatively to be open to alternative energy producers. 

Ackerman went on to say that even though the National Energy Regulator has approved tariff hikes on electricity for the next three years, the government seem to be sensitive to the impact that these higher tariffs have on consumers. 

Over the next few months, higher tariffs will start to be felt throughout the economy, which could lead to further job losses in the mining and manufacturing sectors and creating strain on businesses and consumer confidence. 

Already, Eskom is selling 2% less electricity when compared to ten years ago as companies and consumers are moving to alternative power sources, whilst the state owned enterprises current capacity issues mean that they are not able to support the governments aim for 3% GDP growth. 

Article Source: https://www.fin24.com/Money/Investments/ramaphosas-3-key-post-election-investor-issues-20190516

Don’t Steal from Your Future

In South Africa, members of a pension fund are able to access their pension benefits before retirement and unfortunately many choose to do just that without fully knowing the effects that these early withdrawals can have. 

It may seem like a quick cash fix to draw from your pension fund when you face a job change or resign, but you are actually hurting yourself. Firstly, there will be a reduced amount available at retirement and there are also tax consequences. 

Withdrawing your pension before its time is a risky manoeuvre and can do more harm than good as you will be sabotaging your financial wellness in retirement. The sad truth is that only about 6% of South Africans are able to maintain their standard of living in retirement. The issue arises because of the high cost of living and rising debt, so many members are looking to access their retirement fund as a solution. 

You may have a decent lifestyle during your earning years, but often will not have a decent retirement secured. This is due to a lack of proper financial planning and discipline. 

It’s Not for Debt

If you are considering resigning to access your retirement fund so that you are able to use the cash to pay for your living expenses or to pay off debts, then stop and think again. You need to look at the reason you are in debt, which can usually be down to having a bad relationship with money and trying to fund a lifestyle that you are not able to afford. 

Having a budget can ensure that you do not live beyond your means and can help you to not steal from your future self. 

You need to practice restraint and not buy material things just because the people around you have them or because you have seen something on TV or social media. You can only fake wealth through loans and credit cards for a short period of time and it is not a sustainable way to live. Also, this will just lead you to a debt trap and you will end up paying more. Resist the urge to dip into your retirement fund and rather speak to a debt counsellor if you feel you are over-indebted. 

The bottom line is that you should not use your retirement fund for anything other than your retirement, no matter how bad the situation gets.

In the Days Before the Elections, Foreigners Dumped Billions in South African Bonds, But They Are Piling Back

International investors dumped billions in South African government bonds in the run up to the elections according to the JSE numbers. In the four trading days before Wednesday, international investors sold South African government bonds of R4.2 billion.

However, they started to pile back in straight after the elections even though there are fears of a global trade war. 

The first day back of trading after the elections showed that R372 million in local bonds went to net buyers. 

On the Friday after the election, increased gains showed that international buying probably accelerated. There was a gain of a percent on Friday to 8.45% for the government ten year R186 bond.

Forecasts proved to be correct as the election results increased the demand for bonds and could be said to be more positive than investors thought.

Local government bonds that have decent yields compared to other markets are being seen as valuable by international investors according to Edgar Mafoko the portfolio manager at FNB Wealth and Investments. The rand was also in a better spot on Friday as it was trading at R14.19 to the dollar.

However, due to a standoff between the US and China, the post-election gains were followed by a sharp slump in the global markets. 

Large losses occurred in the market ahead of the US governments decision to increase tariffs from 10% to 25% on $200 billion of Chinese goods on Friday. However, markets turned higher on Friday after US President Donald Trump received a letter from the Chinese President Xi Jinping that asked for the two countries to cooperate on a trade deal.  

According to Mafoko, the post election relief may take a few months to be seen. Also, the rand and bonds may start to run even harder if the trade tensions are resolved. 

Article Source: https://www.businessinsider.co.za/bonds-and-the-election-2019-5

Buying a New Home? 5 Important Checks to Make

If you are buying a home for the first time, then this is the year to do it. The property prices have slowed down and we are experiencing a positive lending environment. However, if you have found your dream home then you need to do some checks before your put in that offer.

It’s a good idea to have a home inspection conducted before you buy a home. You can also include a clause in the offer to purchase that makes it subject to stipulated repairs. This means that your offer comes with the condition that the seller must fix any damages. 

So, what essential checks should you do before you buy a home?

Is The Geyser in Good Condition?

The general condition of the geyser should be checked by a registered plumber and to make sure that it meets regulatory requirements. The geyser needs to be in top condition because replacing a geyser can cost thousands and if a geyser leaks or bursts then it can destroy a room and the items in that room. 

Is The Roof in One Piece?

The roof of a home can hold many surprises, so get a registered builder to inspect it and check for any cracked tiles, potential leaks and so on. You don’t want to find that further down the line that there are roof problems as these can be expensive to fix. 

Pay Attention to the Ceiling

A ceiling can hold many secrets, so you need to look out for mould or fresh paint jobs that could be hiding damp or mould. 

What’s the Garden Like

Is the garden green and beautiful? If it is then be careful. You need to think about how much you will spend to maintain it and if it’s a water wise garden. You may find that down the road you will need to redo the garden to make it low maintenance and water wise.

Check for Electrical Faults

The seller will need to get an electrical certificate issued, which will identify any electrical faults. If any issues are identified, then the seller will be responsible for getting these fixed. 

Have a professional inspection done and if you know someone that has experience in spotting problems then take them to view the property with you. 

The home that you move into needs to be structurally safe, up to code and damage free. Add the home inspection clause to the contract so that your offer is dependent on a home inspection. However, keep in mind that the seller may see your offer as less desirable with this clause included, especially when the seller knows there are things to fix. But you want to make sure the home is safe and won’t cause you expensive issues later on, so it is advisable to include the clause. 

Why Investors Are Hoping for a Big ANC Win

This Wednesday, South Africans will be casting their votes and investors are hoping that the ANC has a strong win so that stability can return to the market. 

Source: www.thesouthafrican.com

According to the City Press, who spoke to several economists, investors and market analyst explained why it is important for the ANC to gather a lot of support on May 8th

If the ANC gains strong support of around 60% then:

  • Ramaphoria will gain a second wave, which will result in a market rally and boost the rand.
  • Policies are more likely to be implemented and when there is policy certainty growth is stimulated. 
  • The reform agenda of President Cyril Ramaphosa will be able to continue and he will be able to carry on tackling corruption. 
  • Foreign investors will be more willing to put money into the country
  • Eskom will be in a better position to reform, which will then please rating agencies

However, on the flip side, if there is low support for the ANC then:

  • It will show a rise in populism, which is anti-business. This will then lead to further uncertainty, a wobble in the market and the rand would weaken. 
  • Coalitions will need to form; which South African has proven to be bad at. This will result in further uncertainty.
  • Ramaphosa will be in a more delicate position and further down the line he could be removed
  • Eskom reformation will be uncertain and this can lead to downgrade by rating agencies. 

However, the growth prospects of South Africa over the next few years will remain subdued and even the reform that is strongly supported will take time no matter the outcome of the election.

Article Source: https://businesstech.co.za/news/government/314974/why-investors-want-a-big-win-for-the-anc/