Research Featured in Marc Faber’s MMC Report

My Africa investment strategy research was published by Marc Faber in his Monthly Market Commentary this month, available exclusively to his subscribers. The report titled The Africa Boom: It’s a ‘Government Cycle’, Not a ‘Business Cycle’ was sent as a standalone in addition to Marc’s MMC. Link. Visit Marc’s website.

Trading Africa Summit Presentation

I presented my and ETM’s macro view on the Africa consumer boom at the Thomson Reuters 3rd annual Trading Africa Summit held at the One & Only in Cape Town this week.  You can download the PowerPoint presentation at the link below – Thomson Reuters will make a video of my talk available sometime next week that I’ll link to as well. You can download my presentation and see a pic by following the link.

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A Challenger To SuperSport and Dstv?

Great article by Alec Hogg on BDlive about who this serious challenger is:

A decade and a half after Nethold died, Naspers’s pay-TV cash cow is now at risk. Mr Rupert’s South African arm, Remgro, holds 31.2% of Sabido, the media division of black-owned conglomerate HCI. Sabido is best known for its stake in, beneficiary of South Africa’s only private free-to-air television licence. Fifteen years after its launch, the television station generates earnings of almost R700m a year and was recently valued at R8.2bn. catapulted former trade unionists Marcel Golding and Johnny Copelyn into the ranks of the super rich — their HCI shares are worth R1.1bn to Golding, R700m to Copelyn.

Next month, Sabido launches OpenView HD. It has Multichoice in the cross-hairs. For consumers, OpenView has an irresistible price point. Pay R2,000 for the installation and get 15 channels for free. No monthly subscription charges — ever.

OpenView is touted as a Golding-Copelyn initiative, an extension of’s drive into the African continent. But for Remgro’s chairman, it is personal. Mr Rupert has large interests in the sports world, the critical segment for Multichoice’s R625 a month top-end viewers.

Rugby is the obvious starting point. His empire extends to the MARC Group (formerly SAIL), which controls the Blue Bulls and has a substantial stake in Western Province.

Mr Rupert is a global figure in golf. And through the Laureus Awards, his influence stretches further. He is sure to call in favours from a vast network of friends, associates and those who simply fear him.

Mr Market has not paid attention to the OpenView challenge. Naspers shares gained 25% in the past three months, adding almost R100bn since news leaked of the new competitor to its pay-TV operation.

Read the full article here for the background on what could be great competition for the digital tv and sports tv market in SA and Africa.

The Slow Decline of Zimbabwean Farming

I’ve just had the following exchange with journalist Tsidi Bishop on twitter. The bit I want to deal with is the claim that Zimbabwean farming “didn’t gradually decline, that it went overnight.”

This is not true. As Jayson Coomer and Dr. Thomas Gstraunthaler explained in a paper published in the Journal of Austrian Economics in fall 2011, titled “The Hyperinflation in Zimbabwe” (download here), the decline of farming in Zimbabwe started soon after independence in 1980. Quoting Coomer and Gstraunthaler:

In the first five years of independence, land resettlement was conducted under government’s “first option to buy” at market prices: resulting in resettlement on some 3 million hectares. Subsequently, the 1992 land Acquisition Act provided for compulsory purchase of farms, as long as the property was derelict, located on underutilized land, owned by absentee landlords, or surrounded by communal areas, and the owner had multiple farms. The act required fair compensation and provided a right of appeal (IMF Staff Report, 2000)…

Following the new pension package, the war veterans expressed discontent with the success of the previous land reform program, and began to press for its acceleration. In November 1997, President Mugabe responded to these pressures, announcing plans for the compulsory acquisition of white-owned commercial farms, again without elaboration on the financing side of the transaction (Kairiza, 2009). Thus, 1,471 commercial farms, representing a
significant portion of Zimbabwe’s commercial farming land, were gazetted for compulsory purchase (IMF Staff Report, 2000)…

At the same time, the government continued its land reform process, issuing acquisition orders in November 1998 to 841 farmers who had contested the 1997 compulsory purchases. The state also reacted to the growing influence of the trade and labor unions by imposing the Presidential Powers (Temporary Measures) labor Regulations of 1998 which imposed heavy penalties on trade unions and employers that incited or facilitated strikes, stay-aways, and other forms of unlawful collective action (Raftopoulos, 2009).

The farm invasions and expropriations continued, creating greater flight of foreign capital and declining foreign exchange earnings, prompting the government to monetise its government deficits at an accelerating rate, causing the ultimate collapse of the Zim dollar. It wasn’t until the mid-2000’s when war veterans were actually seen running around from farm to farm evicting and torching farms and farmers, which I suspect Tsidi refers to as the sudden decline of Zimbabwean farming.

Of course there’s still more to it, the rest can be read here. But to say that Zimbabwean farming declined overnight is not true.

US Sanctions on Zimbabwe Hurt Working Masses the Most

The US State Department said yesterday it will not lift sanctions on Zimbabwean companies, entities and individuals, because the recent presidential elections were flawed. We must bear in mind that the Zimbabwean state will simply continue to extract more resources from the domestic private sector as long as these sanctions are in place, and that this harms the average working class Zimbabwean the most, not the political elites who are under sanction. If the US state cared about the Zimbabwean people it would lift these sanctions so that foreign investment can once again flow into the country – even if to these political elites – that will help uplift the living standards of average Zimbabweans again.

Mike Harris Gives Context To Zim Elections

Political strategist Mike Harris last week provided some great context to Mugabe’s strategy in the Zim elections. As Mike pointed out in this interview, Mugabe’s mistake in the last polls was to allow MDC to declare victory before ZANU-PF. This time, Mugabe gave grave warnings against early declarations of victory, and then declared victory on Saturday, two days ahead of the scheduled announcement today. This election outcome places the SADC in a tricky spot.

Click on the image to watch the interview on

Mike Harris

Anatomy of a crony-government retail development

“Joburg station being transformed into ‘mega commercial space’” declares The Star, because what SA really needs are more “mega” concentrations of food and retail outlets. The Passenger Rail Agency of South Africa (Prasa) seems to think so, and is happy to make use of generous government subsidies to suit such ends. What, you thought taxation was about paying for services and helping the needy? Tut tut. It’s also about speculating in retail real estate ventures! To wit:

Prasa Corporate Real Estate Solutions(Cres) has injected R620 million into the refurbishment of the busy Park Station

According to Prasa’s own website, around 70% of the organisation’s resources are derived from government. Extrapolating that to the figure for their Park Station venture, and you the taxpayer have the privilege of fronting over R400 million for “refurbishing” Park Station. You don’t get shares in it. You don’t get a say in it. If it makes a profit, you won’t be entitled to a portion in return for your investment. Heck, you may even live far away from this development and never have the chance to even use the place, but it doesn’t matter. Government has decided how best to allocate the money capital it has expropriated from you, or gotten into debt for, on your behalf.

The expected result is a “streamlined station-cum-retail centre”, said spokesman Tumisho Makofane, the executive manager of strategic portfolio programme management.

Translation: We’re in possession of a transport hub that gets a lot of foot traffic and we want to buy into SA’s retail boom. With government funds. It’s for the good of the nation, of course.

The first phase will see the construction of an “easy-to-the eye” landscape and a new upper food court.

Translation: We’re going to turf out any informal vendors who may be currently serving the  needs of the people who pass through the station. They’re disorganized, unsightly and will be competition for our corporate partners in the upper food court.

The construction of the new upper food court will be completed in October.

Translation: When it comes to speculative retail investments, shit gets done really fast. Medupi, eat your heart out.

Coming from the Gautrain precinct, which is adjacent to the upper food court, bus and train commuters – who make up the majority of people passing through Park Station – can expect to be greeted by a beautiful water feature decorating the landscape that leads to the new upper food court.

Translation: Yes, millions of  tax funds are going towards constructing a “beautiful water feature”. No new retail development in SA is complete without one.

McDonald’s, King Pie, Debonairs, Anat, Old Fashioned Fish and Chips, and Sweets from Heaven will open in the new food court.

Translation: Some of our corporate partners.

Makofane said they hoped to lease out space to one more client, preferably a restaurant offering African cuisine.

Translation: The existing offerings of cuisine by other vendors, many of them Africans, will be either forcibly removed or out-competed by state-subsidized corporations. This last restaurant is a transparent ruse to boost our credibility. We’re still deciding which crony will get the lease.

Operating hours will be extended and restaurants will be open until midnight.

Translation: We don’t care if it makes more sense to only be open during the times when, you know, many people are actually using the station to get around. We have delusions of grandeur as to the nature and scope of this whole project. Luckily, we’re “investing” public money.

The upper food court will lead to the banking mall, which is costing Prasa Cres about R14m.

Translation: What, you didn’t seriously think we’d leave them out of this boondoggle? Who do you think did all the financing stuff for us?

“All the retail shops will be in one space, all the restaurants in one space, all the banks in one space.”

Translation: You can see we’re really central planners at heart. This development will be inorganically and disparately arranged without much consideration for the needs of the commuters.

Bidvest Bank, Rennies Foreign Exchange and MoneyGram Money Transfer will be moved from where they currently are to form part of the banking mall.

Translation: This will help generate foot traffic and spur competition for our more preferential banking partners. Our lesser partners didn’t have much of a choice.

Makofane said Prasa Cres wants to take Park Station to where OR Tambo International Airport is today.

Translation: Yes, this is the breadth of our delusions of grandeur.

Within four years, the station will have an office centre where queries can be made, and where passengers can report things such as missing children.

Translation: Yup, there’s a grandiose 4 year plan to this whole endeavour. It will need more capital. Have you done your SARS e-filing yet?

Makofane also said they were exploring “uniforming everybody” for easy identification, from the cleaners to the porters at the station.

Translation: Well, having our subjects march around in uniform does kind of flow quite seamlessly from the whole central planning/delusions of grandeur stuff.

The project manager of the Park Station precinct, Andrew Nxumalo, said the landscaping was designed to discourage loitering.

Translation: While this stated aim may seem completely inimical to the whole point of such a public space/transportation hub, what we really mean is that we want commuters to loiter near our corporate partners’ operations. Naturally, any existing vendors will be classified as loiterers.

“We will have tight security. We will start recording buses which pass through the station. Park Station will be a stand-alone business unit,” he said.

Translation: We will micro-manage which public transport providers get to have access to this ostensibly public space. It’s for security, you know, it has nothing to do with rent-seeking or cronyism or anything like that.

Nxumalo also said Park Station would remain a heritage site and that they would not interfere with the façade of the building.

Translation: We couldn’t get enough capital from the government to pull off a full blown make-over, but our corporate partners don’t mind and if we call it a heritage site we can get access to other kinds of endowments and subsidies.

Nxumalo and Makofane said the station would be environmentally friendly and would rely mostly on natural lighting.

Translation: Eco-platitudes are always mandatory for this kind of thing. “Natural lighting” doesn’t speak to our confidence in Eskom, it just means we’ll be predominantly providing lighting for our corporate partners.

Makofane said that by the festive season, the station’s exciting new look would be apparent.

Translation: Our corporate partners want to be operational in time for all the Christmas shopping/traveling.

Park Station was first built in 1897 and rebuilt in 1946, but never had a major refurbishment until now.

“It’s going to be a complete overhaul,” said Moffet Mofokeng, the head of communication at Prasa Cres.

This is what SA’s credit-fueled consumption binge has morphed the “developmental state” into.