‘Divert pensions to stave off IMF’ – how safe is your Retirement Fund in SA?

The SA Rand has been hitting new lows lately. As if that - combined with poor investment returns from the JSE - is not bad enough, it is becoming clearer by the day that the government is getting serious about forcing retirement funds to invest in failing SOE’s like...

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ANC to force banks to invest in new coal mines

One of the obvious results of endemic corruption and chronic mismanagement, is that investors start to withdraw and tax revenues start drying up. Local and international lenders are wary of providing new funds to a government that is simply sinking away into further...

Crunch Time For SA? – the SA budget

But is it too little, too late? Time will tell. Volatile time. Crunch time.
Those with retirement savings stuck in SA should be rightfully worried about the long term value of their funds in international value terms

ZAR: South Africa’s share-price

It is often said that a currency is like a country’s share-price. Investors push up the value of a share if they have confidence in its long-term performance. There are many outside factors that effect currency values, but in general a currency will strengthen (or at least remain stable) when an economy does well, and weaken (or become less stable) when it performs poorly.

Junkbond Status: Meltdown?

When it comes to its credit rating, SA had been circling the drain for some time before Standard & Poor's Global Ratings eventually pulled the trigger after the firing of Pravin Gordhan as Finance Minister. Fitch Ratings followed suit soon after. The third...

Could Exchange Control Regulations tighten?

The issue of increased controls placed on foreign exchange transactions by the SA Reserve Bank is not only of concern to investors and business in general, but also a cause of great anxiety amongst Expat South Africans who still have investments back in the country....

Tough Task Ahead for New Leader

The euphoria at the election of Cyril Ramaphosa as the new leader of the ANC - replacing the corrupt Zuma faction - is starting to wear off as  reality sets in. Ramaphosa has his work cut out. His first task is to clean house by getting rid of the corrupt cabal that...

Junk Status Arrives

Standard & Poors delivered a scathing verdict on the management of the SA economy in their downgrade report. In the accompanying article the editor of the Business Day newspaper explains that South Africa has a growth problem, the result of an overly aggressive...

I love South Africa. Charles and I maintain properties there, and we frequently visit. But I find myself in the company of many who are increasingly alarmed by the direction SA is heading. Newspaper and television headlines about state capture and the deteriorating value of the currency is a constant reminder that all is not well. International ratings agencies, the World Bank and the IMF are also concerned. Sporadic good news – such as the recent election of a new ANC president – provides temporary hope, but the long term prognosis remains bleak.

 

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Politics, poor leadership, corruption, mismanagement, lack of policy, low growth, unemployment, high crime, labour unrest, disastrous education system; these are all problem areas that have long been identified with SA. What’s new is the soaring deficit: too high spending on a bloated, inefficient and corrupt government, whilst tax revenues are dwindling. How will the authorities respond to this crisis?

The three “Venezuela concerns” of SA expats are:

Tax increases on assets that will affect non-residents (we have already seen capital gains taxes raised!
Prescribed investments by captive investment funds including pension funds, to shore up government and SOE borrowing (Transnet, Eskom, SAA?)
Tighter exchange control regulations to prevent funds from leaving the country, either via reduced allowances or penalties (Remember the 80’s?)

If SA follows the Venezuela spiral, then the future ability to get one’s investments out of the country could diminish rapidly.

My aim in this section is to post selected information that is current and relevant to expats – the economy, the Rand, etc. There is a blog on specific subjects on the left hand side and curated media articles on the right. Do let me know what you think, and if there are specific topics that you would like to see covered.