Retailers Coming Into SA, Miners Pulling Out

International retailers have been expanding operations in SA, while miners are downsizing SA operations, spinning off South African gold mines from core global portfolios. AngloGold Ashanti CEO says they have had similar calls from shareholders to downsize SA operations, in line with what Gold Fields has just done.

I have written before that the average South African has an extremely high time preference, which means they strongly desire consumption over saving and investment.

As an economy, SA needs increasing real savings to sustain production in the mining sectors. Because there isn’t enough real savings being generated in SA, these operations are being downscaled. International retailers are coming in to take advantage of the dis-saving and preference for consumption over production in SA.

For those versed in capital theory and the Hayekian triangle, the SA production structure is shortening and the gradient of the triangle is steepening. It means the South African economy is retrogressing; it is moving backward, not forward.  The aggregate of households in SA are getting poorer, not wealthier.