Author: Beechie B (Page 2 of 4)

SARS-CoV-2, the virus that can cause COVID-19 (the disease), has provided so much data for modeling purposes. I have been having fun analyzing various data sets relating to COVID-19. That sounds morbid but the reality is that the challenge of extracting huge amounts of data and converting that into potential information is rewarding. This blog post is going to be more about charts than words. Charts can tell a story in a different way to words. Charts can also be manipulated to provide misinformation. I trust that the ones I share with you reflect reality and not some mirage.

I will be sharing eight different charts below. When you review and analyze these, I would urge you to ask yourself three questions:

1. Which of the waves were bigger per country – the first or second wave?
2. Why?
3. Was there any relationship between the peaks and troughs of the waves and lockdown stringencies?

I sourced the data used for the charts from www.ourworldindata.org (OWID). This website is a treasure trove of information and in turn sources its data from various credible sources. When creating charts of 7-day moving average deaths (death reporting by day is often noisy, so moving averages are probably smoother), I tried to compare countries which are adjacent to each other and roughly on the same latitudes. The underlying data is from the start of 2020 to 8 March 2021.

First up, let’s compare Czechia (the country with the worst deaths per capita) to its neighbor Austria.

Clearly, the second waves were far more destructive than the first blips. It would appear to the naked eye that the hard lockdown flattened COVID-19 deaths in Czechia but perhaps at the cost of a brutal second wave. Interestingly, the lockdown measures in Austria appear to mirror the death toll except in January and February 2021?

Okay, let’s compare Germany and its neighbor France.

The virus appeared not to ‘listen’ to German authorities as it ripped through the population irrespective of lockdown measures. France has a steeper first wave and the virus reappears later in 2020, as apparently respiratory viruses are wont to do.

Next up is France versus Italy (sounds like a football match?).

I remember the video footage of hospitals in Northen Italy in March 2020 – it was a horror show. Unfortunately, Italy paid a heavy COVID-19 price, with one the worst per capita deaths globally. Have you noticed how the waves in adjacent countries occur in very similar time periods, albeit that the severity may differ?

The patterns in Croatia and Hungary were intriguing, similar to Austria and Czechia.

Unfortunately, both Croatia and Hungary have had very high mortality rates from COVID-19 by global standards. There seems to be a pattern here? Hard lockdowns initially, small first waves and then mayhem in the second wave.

Boris Johnson reportedly said in January 2020 that the best thing for the UK to do would be to ignore the COVID-19 outbreak in China and that an overreaction to the virus may cause more harm than good. Well, we know how that ended. Bonking Boris landed up in ICU in April 2020 and the UK implemented some of the harshest lockdown restrictions known to mankind. Neighbours were encouraged to spy on each other and police enforcement of lockdown rules was a bit too enthusiastic at times.

Here again, COVID-19 deaths occurred irrespective of the draconian quarantine measures in the UK. Mortality rates from or with COVID-19 in Belgium and the UK were both in the top 5 in the world as at February 2021.

I have some friends based in Turkey and I have followed their social media posts over the past couple of months with great interest. Sadly, they too have experienced quarantine measures and were only recently allowed back out on weekends.

I warned you that charts can sometimes deflect from the real story. Well, Bulgaria got blitzed by COVID-19 and by 8 March 2021, the country had recorded 162 deaths per 100,000 population. Turkey fared far better at 35 deaths per 100,000. Bulgaria has a population of ±7 million whereas Turkey is far more populous at 84 million.

You may be having ‘chart fatigue’ at this stage. Bear with me for two more charts and some explosive economic data.

Some media have been very harsh on the Swedish Public Health Agency’s response to COVID-19, calling them reckless for not imposing harder lockdowns. There has been speculation that the Swedish government’s primary strategy in the midst of the virus was for the population to achieve herd immunity. Sadly, Sweden’s mortality rate was 11 times that of its neighbor as at early March 2021.

Ok, last chart for you.

If the data from the USA and Canada does not convince you to question whether lockdown measures have any impact on halting the SARS-CoV-2 virus spreading through the population, then you may be visually impaired. I know the USA is a vast country comprising 50 different states and hence, it may not be accurate to compare the country as whole to other countries. From the published data I have seen, COVID-19 mortality rates have varied from state to state and without much correlation to lockdown measures.

I was intrigued to research whether there was any correlation between COVID-19 outcomes and economic growth/contraction in 2020. I stumbled upon IMF data about long-term GDP data per country including 2020. I tried not to look at Venezuela’s performance but I could not stop myself. That social paradise’s economy contracted by 25% in 2020 after declining 35% the year before. 2018 was slightly better at negative 19.6%. To put that in perspective, if Venezuela’s economy was US$124 billion at the start of 2018, it would have contracted to US$48.6 billion by the end of 2020. Note to Cyril, perhaps don’t ask your Twitter mate, Nicolas Maduro, for economic advice or any other earthly pearls of wisdom.

My hypothesis when analyzing COVID-19 mortality rates and GDP statistics per country was that harsh lockdowns = poor economic outcomes but better healthcare results.  I selected 55 countries globally from the IMF and from the OWID website. I tried to focus on the major countries from a population perspective and omitted countries where I suspect truth may be an inconvenient distraction (think Russia). Have a look at the data below regarding the 20 worst affected countries.

Oh my goodness, I was questioning whether I had extracted the appropriate data, so I double checked. Yip, the data accords with the original sources. So how do you explain that 11 of the countries with the worst performing economies in 2020 also had some of the highest COVID-19 mortality? It makes no sense at all. It gets worse.

My hypothesis is now completely threaded. 12 countries whose economies escaped relatively unscathed in 2020 also had very low COVID-19 mortality rates. I am calling on all economists, public health officials, epidemiologists, virologists, actuaries and any credible scientist to explain the above data. Using Excel’s CORREL function, the correlation between COVID-10 outcomes and GDP data for the 55 selected countries, was -91%. Countries with high COVID mortality most of the time had poor economic outcomes in 2020 whilst countries that had low COVID-19 mortality achieved better economically. It is inexplicable to me.

PS, South Africa has had the 27th highest number of COVID-19 deaths per capita and the 40th best GDP result out of the aforementioned 55 countries. Pretty awful, me thinks.

All the best from BeechieB.

Stats SA recently published its Quarterly Labour Force Survey for quarter 4 2020, reporting that the unemployment rate amongst 15 to 64 year old South African’s is 32,5%. Yeah right, we know that the data is much worse than that. Stats SA also publishes ‘expanded unemployment rates’ which reflects that 42.6% of South Africans were unemployed during the last 3 months of 2020.  The impact of the COVID-19 lockdowns did not help matters, reducing the number of those with jobs by 1.4 million people during 2020. RSA now has 15 million people of working age with jobs, and 11.1 million without. The trend pre lockdowns was bad but 2020 was horrific. You may notice in the graph below that the number of unemployed individuals has been increasing for the past 12 years, from 5.9 million in 2008 to 11.1 million at the end of 2020. For those of you who are not numerically adept, that’s an increase of 5.2 million people plus their dependents who need to rely on family, friends and the state for support.

Charts tell stories, and sometimes more effectively than words. Look at the chart below depicting RSA’s expanded unemployment rate over the period 2008 to 2020.

28.7% unemployment back in 2008 was not good but 42.6% in 2020 is inhumane. Talking about humanity and some interesting countries globally, I googled (yes, it is a word) unemployment rates globally. The World Bank had data for most of the 192 odd UN recognized countries although I am not sure about the accuracy of their data. For example, they claim that unemployment in Zimbabwe is 6%. Perhaps most able, work ready Zimbabweans are in South Africa, London or New Zealand and hence, do not rank as unemployed in Zimbabwe? Or perhaps those statisticians up north are beholden to politicians who would hate for news to slip out that economic conditions are far worse there than on Mars.

The World Bank uses the narrow unemployment definition, and according to them, RSA has the worst unemployment rate on the planet. Sports lovers, how about unemployment rates in some of these democratic upstanding countries globally? Argentina is apparently a basket case but its unemployment of 12% is most respectable compared to the Rainbow Nation. Ethopia at 3% would appear to be paradise. Greece is problematic at 17% but that poor country has been in terrible nick since their politicians lied about the extent of government debt. The IMF marched in there in 2010 and it has never been the same. Our neighbors Eswateni and Lesotho are not faring so well either, but are still below our levels. Did you notice Venezuela only has unemployment of 9%. Bollocks.

Stats SA is kind enough to provide an Excel file on its website with all the unemployment and employment data. That makes it easier to work with the data and extract relevant statistics. Thank you! The Department of Basic (sic) Education (DBE) is not as kind, providing only a 96 page report on the most recent National Senior Certificate (NSC) results. Have a look at this table which appeared on page 56 of their report. I suffered a bout of vertigo trying to read this page.

To be fair, the DBE had not yet released the Western Cape’s matric results by the time of publishing the NSC report, so an Excel or Numbers file may in the offing. Talking about NSC results, I was deeply disturbed by the raw data. Perhaps I should not have read the report and examined how poorly our 18 year olds (some may be younger and some may be older) performed in their final written assessments. Approximately 40% of the total cohort took mathematics in grade 12 and wrote the exam. Of those, 22% managed to obtain a mark of 50% or more. Sadly, only 3.2% achieved a distinction. I am not sure how employable you would be in the future smart city around Lanseria and amidst the Fourth Industrial Revolution without a reasonable mathematics foundation.

South Africa increased employment by circa 255,000 over the period 2008 to the end of 2020. President Ramaphosa speaks of creating millions of permanent jobs and 800,000 temporary employment stimulus jobs when the reality is that far too few jobs have been created. I researched which industries created jobs and which destroyed livelihoods.

The manufacturing sector has been a blood bath with a loss of 607,000 jobs over the past 12 years. Employment conditions in the construction and trade (I assume retail) sectors have not been great either. Interestingly, the finance sector has created 543,000 jobs whilst the ‘community and social services’ sector added 720,000 odd jobs. I am guessing that the community and social services jobs entail mostly public sector employment, those fine people in parliament and in education and in healthcare. The latter hare to be applauded for their efforts amidst this pandemic. The educators less so.

I am going to end this blog with a disturbing chart. It displays the horror of all unemployment horrors.

The expanded unemployment rate amongst 15 to 24 year old South Africans was a staggering 74% in the last quarter of 2020. Amongst 25 to 34 year olds, it was 51%. It seems the older are less afflicted. The median age in South Africa is 27 and 54% of our population is under the age of 30. I would opine that we have a humanitarian crisis in South Africa with regards to employment and unemployment levels.

Be safe and all the best from BeechieB.

Do you know who the guy in the picture below is?

Picture courtesy of the New York Times

The guy’s name is Keith Gill and he lives in Wilmington, Massachusetts (close to Boston, USA). He is also known by his nickname on Reddit as DeepF##kingValue (apologies, I can’t use the full nickname since that may offend younger readers). I am not on Reddit but apparently it is frequented by amongst others, day traders – those people who discovered trading on stock markets during hard lockdown. Gill is a chartered financial analyst (CFA) and until recently worked for a life insurance company in marketing. Unbeknown to his employer at the time, he also masqueraded as an investment guru who has his now youtube channel called “Roaring Kitty”. He recently resigned after much success on the stock market. Gill has been trading in all sorts of unpopular shares such as GameStop, the bricks and mortar video games retailer. I have not frequented a GameStop store but there are over 5,500 outlets, mainly in the USA. Apparently, you can find everything you need to embark upon a gaming adventure. You can buy video games hardware, software and accessories in their stores. GameStop has been in decline for some years and has been badly hurt by the lockdown. We know what is happening to the retail industry globally as many larger groups have gone asunder. Companies such as Sears, JCPenny and J.Crew are no more.

I would have thought that GameStop was not a good share to purchase for various reasons. Its business model is being fundamentally challenged by online channels. It has been making losses for the past couple of years. The numbers don’t look good – I have attached an Excel spreadsheet GameStop analysis (Feb 2021) analyzing their numbers if that’s your thing. Mr. Gill has thought otherwise for some time. On 28 July 2020 he posted a rather lengthy rant on youtube about why GameStop is a compelling share to buy. He backed his convictions by apparently investing over US$50,000 of his own money in this unloved share called GameStop. The share price was US$3.94 on 28 July 2020. The GameStop share price doubled in value by 15 September 2020 and then surged in January 2021 reaching a record high of US$481.99 on 28 January 2021. That is a staggering surge in the share price. If we had invested US$50,000 on 28 July 2020 following Mr. Gill’s advice, we would have been up US$23.9 million if we sold out on 28 January 2021. I would have been thinking about retiring and setting up my own foundation called “HowtoWhackthoseHedgeFunds”.

There have been wild gyrations in GameStop’s share price over the past month. After reaching a peak of US$481.99, it declined to US$325.00 a day later. It closed at US$100.00 yesterday. The other remarkable thing about the trading in GameStop’s shares has been the volumes exchanging hands. On 26 January 2021, 178.6 million GameStop shares traded hands. That in itself may be unremarkable to some except when you consider how many GameStop shares are in issue. At 31 January 2020, its latest reported financial year-end, there were 64.5 million shares in issue.

Ordinarly, we would have congratulated Mr. Gill and his followers on Reddit for being brave enough to invest in GameStop and fair change for making many millions. However, the plot thickens. It transpires that there were some hedge funds that had shorted the GameStop shares. Without getting overly technical, short selling involves borrowing GameStop shares from some investment bank and then selling these shares on the stock market. The investment banks would require some collateral from you and would charge you some juicy fees for engaging in this unusual behavior of selling something you do not own. Short sellers would then pray that the GameStop share price would decline as they then could purchase shares at a lower price than they had sold for, making a nice profit. Hedge funds are known for identifying unloved shares such as GameStop or seemingly overpriced shares such as Tesla and engaging in short selling. Imagine that we ran a hedge fund that had engaged in short selling GameStop shares. Let’s say we had sold 1 million GameStop shares that we had borrowed from an investment bank for US$5.00 each in the firm belief that the share price will plummet to zero. The likes of Mr. Gill and his fellow day traders then unfortunately arrived and drove the share price up to US$400 per share. The hypothetical hedge fund would be in a world of pain – some US$395 million of pain since to purchase those 1 million GameStop shares would now cost US$400 million in order for us to honor our promise to return those shares to the investment bank.

It seems as if stock markets have gone mad and the man in the street can now topple the mighty financial giants such as hedge funds. Is it a game changer? Me thinks not. These hedge funds are going to spend some money lobbying Washington to ensure that the rules change to prevent these unfortunate incidents from ever happening again.

Stay safe and all the best for February 2021 – I am now thinking in months as opposed to years given this COVID mayhem. All the best from BeechieB.

I mentioned in a blog post in May 2020 how I was dismayed at how many wannabe epidemiologists and virologists there are commenting on social media platforms about the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and the coronavirus disease 2019 (COVID-19). We are seeing a resurgence of this at a time when the schools are closed for onsite teaching in South Africa. There is little middle ground on the debate – either opening schools is going to kill grannie and the teachers or the other school of thought is that kids rarely develop COVID-19 and are not super-spreaders. Who to believe? It is all very confusing yet you would think the scientists would debate all these topics with open minds, vigor and integrity. There should be plenty of data out there to guide the scientists towards some type of consensus of what we know and don’t know. Instead I notice esteemed scientists holding to their beliefs and ad hominem responses. The WHO is not helping the cause by changing its views on the non-pharmaceutical public health measures for mitigating the risk and impact of epidemic and pandemic influenza. I downloaded their proposals and policy statements in this regard which was published in 2019. Refer below for an excerpt from this document.

Notice that increased ventilation is recommended and not beach closures. Notice that contact tracing and quarantine of exposed individuals (aka lockdowns) are not recommended in any circumstances. And no border closures please! The WHO’s views on school closures in their 2019 document seems balanced and sensible, I quote:

“…school measures (eg. stricter exclusion policies for ill children, increased desk spacing, reducing mixing between classes and staggering recesses and lunch breaks) are conditionally recommended, with gradation of interventions based on severity. Coordinated proactive school closures or class dismissals are suggested during severe epidemic or pandemic. In such cases, the adverse effects on the community should be fully considered (eg. family burden and economic considerations), and the timing and duration should be limited to a period that is judged to be optimal…”

Mike Tyson the ex-heavyweight boxing champion famously said “everybody has a plan until they are punched in the face”. The WHO had clearly thought through plans to fight an influenza pandemic, which have plagued Earth for centuries. However, when the first punch landed in China back in early 2020, the WHO may have lacked the cojones to adhere to its stated recommendations.

Let’s have a look at some COVID numbers in South Africa. I have become obsessed with COVID numbers and have built up a significant database of all sorts of interesting stuff. The deaths per capita per province in South Africa is difficult to fathom.

The deaths per capita in the Eastern Cape and the Western Cape are incredibly high relative to Gauteng and KZN. I wonder why? The second wave of deaths is clearly evident in the chart below.

There has been much speculation about the second wave targeting younger people than the first wave. Fortunately, the data does not support that from a mortality per capita perspective.

South Africa has a youthful population – ±72% of our population is under the age of 39 with a median age of 27. SARS-Cov-2 is particularly severe for the elderly and South Africa’s data supports this. Notice the much higher deaths per 100,000 for 70+ year olds as compared to the 20 to 39 age bracket? Our age based COVID mortality is not great compared to most European countries but that is another blog post on its own. COVID deaths have dramatically increased in the past 4 months. The percentage of total COVID deaths per age profile is very similar to what it was 4 months ago, not supporting the theory of the second wave hitting younger people harder than previously. Over 60% of all deaths from COVID to date in South Africa were people 60 yers or older.

The SAMRC has been scaring me for months now with their ‘excess deaths’ data. They reported on 13 January 2021 that excess deaths in South Africa for the period 6 May 2020 to 5 January 2021 was 83,918. That is a staggering amount of higher than expected deaths in country compared to prior years total deaths. StatsSA is a bit sluggish in publishing mortality data. The latest annual publication (Mortality and causes of death PO309.3 report) about deaths was for the 2017 year and that was only published in March 2020. With a declining budget, heaven knows when the next report will be out. StatSA also publishes a mid-year population report which tables births, deaths and estimate population data. This report contradicts the annual mortality report. For example, it reported that annual deaths from all causes, including those Darwin award ones, totaled 517,909 for the year ended June 2017 in its mid-year population report. The annual deaths for the year ended December 2017 was only 446,544 souls. Inconceivable!

Refer below for death data from 2002 to 2017 per StatsSA and the estimated total deaths in 2020 per the SAMRC reports.

The estimated deaths in 2020 of 912 per 100,00 population is not great compared to the 2017 data but not out of line with 2011 to 2014. The death per capita in 2004 to 2008 was insanely high but that may be due to the ANC’s denial of the HIV epidemic. So until I see more data about deaths in 2018, 2019 and 2020, I am not convinced on ±83,000 excess deaths in 7 months in 2020.

Anyway, I pray the second wave crashes soon and that we can get back to the business of living. Stay safe, follow those sensible WHO guidelines from 2019 and forgive the ANC cadres in government (because they know not what they do). All the best from BeechieB.

Airbnb Inc. listed on the Nasdaq stock exchange on 10 December 2020. I thought it strange that any business associated with travel and accommodation would list amidst the blowout from the COVID-19 pandemic and the associated lockdowns. But Airbnb and its advisers are a brave bunch and forged ahead regardless. I must admit to having a bit of a ‘hit and miss’ experience with bookings we have made using Airbnb. Of the four places we have rented in Cape Town over the past 3 years, one has been a winner and three not so much. I recall the spot in Sea Point we rented that was up three flights of stairs and so small that we were literally bumping into each other in the cupboard sized apartment. The spot we rented in Gardens was an absolute shocker. I hardly slept during our two night stay as the noise from the street was astonishingly loud. A walk around the neighborhood revealed that a risqué club was a couple of blocks down the street and an all night retail store across the street that seemed to attract dubious characters. We rented a lovely spot in Camps Bay but unfortunately the plot next door was a construction site that was rather noisy. We finally stumbled another place in Camps Bay that is as absolute gem. I guess that is the risk of renting accommodation from private property owners which are not accredited by some travel association. I love the idea of Airbnb though and will continue to make use of its platform to find value for money accommodation.

I had some spare time this week so I downloaded the Airbnb prospectus and had a long read – the document was over 489 pages! Here are some interesting facts about Airbnb:

• Airbnb was founded in 2007 by Brian Chesky and Joe Gebbia, two twenty six year olds. These dudes are worth circa US$11 billion and US$10 billion after yesterday’s listing. Not too shabby!
• Before COVID-19, 54 million active bookers reserved 327 million nights accommodation using the Airbnb platform in 2019
• Airbnb has over 4 million hosts in more than 220 countries and in ±100,000 cities and towns
• The value of gross bookings on the Airbnb platform in 2019 was around US$38 billion
• Sequoia Capital, a Californian based venture capital fund headed by Roelof Botha (Pik Botha’s grandson), was the anchor investor in Airbnb prior to the listing
• Airbnb has not made a profit in any financial year of its 13 year history (cumulative ±US$2 billion losses)

I often value businesses in the course of my professional career. Sometimes these are in friendly circumstances and often not (think shareholder disputes, think merger & acquisition transactions, think court cases). Anyway, I built a basic Excel model (refer attached) Airbnb valuation (Dec 2020) in attempting to value Airbnb. For those of you who are into valuations and financial numbers, this could be an interesting read. For the rest of you, perhaps have a quick peek and move on. Just a warning re the numbers, Airbnb’s year-end is December so the 2020 numbers are an educated guess on my part. I will update the valuation model in March next year when Airbnb releases its final results. Valuations are based on forecasts and hence a guarantee of error – it is more important to minimize the error than to pretend to be Nostradamus.

The investment bankers valued Airbnb at US$68 a share for the purposes of the initial public offering (IPO) – implied value of US$47.5 billion of the business according to my calculations. I follow Professor Aswath Damodaran’s blog and gleefully noted his recent blog on Airbnb. Damodaran is a professor at the Stern School of Business at New York University and a highly regarded valuation academic. Damodaran attached his Excel spreadsheet to the blog post and this revealed a valuation of US$54 per share or US$36.5 billion in total for the group. This valuation was right on the money in terms of the speculation about the IPO pricing until earlier this week when the investment bankers advised an listing price of US$68 per share. Well they were way off – the Airbnb share price closed at US$144.71 on 10 December 2020 valuing the business at ±US$100 billion. How about that sports lovers?

If you had a peek at my valuation model you will have noticed that I derived a valuation range of between US$28 and US$37 per share. I am inherently conservative when it comes to valuations but US$144 a share is in a different galaxy. My model assumed that the gross value of bookings (GBV) on the Airbnb platform would reach US$80 billion by 2030 and revenue may reach US$10.5 billion. Damodaran estimated GBV of US$156 billion, revenue of circa US$22 billion and profit after tax of US$4 billion by 2030. I think those projections are a tad optimistic but it’s in my nature to be skeptical.

I am concerned that US stock markets are over-heating. Apple’s market capitalization (value) has increased by around US1 trillion in 2020. We now have four companies listed on US stock markets which are worth more than a trillion dollars each. Refer below for what has happened to the share prices of some of the tech stocks in 2020 so far.

I understand the hype around increasing online shopping but Amazon’s core business is loss making (AWS makes good money but the rest not so). What has changed with regards to Apple’s business model and products/services over the past 11 months that justifies a 67% increase in its share price? Facebook is facing an existential threat from US authorities who are recommending that it sell off Instagram and WhatsApp.

When companies share prices start disconnecting with economic reality, I fear for the widows and pensioners. I have seen this type of exuberance before in stock markets. I hope I am wrong but I have a foreboding of a lot of pain and suffering coming from over priced financial assets.

All the best from BeechieB.

My interest in the affairs, and particularly the finances, of the SABC has piqued in recent weeks as I read about government’s plans to turnaround this behemoth. The Department of Communications and Digital Technologies published a white paper on audio and audiovisual content services policy framework in October 2020 for public comment. I have no appetite to read this 153 page document and instead relied on media reports of aspects of the white paper. Apparently government want to transfer the responsibility of collecting TV license fees to Multichoice, Netflix, Showmax, Amazon Prime Video and AppleTV+. It suggests that Multichoice and subscription video on demand services (SVODs) such as Netflix should add annual TV license fees to its bills to South African subscribers and pay over collected amounts to the SABC. What an absolutely absurd idea. Imagine Netflix discontinuing your subscription because you failed to pay your SABC TV license?

Let’s talk about the TV licence mess. The SABC disclosed in its 2020 annual report that it had billed 9.5 million television license holders a total of R4.08 billion during the financial year. It only recognized R791 million of this as revenue in its financial statements as it expected that 81% of people owning TVs would not pay annual license fees. The SABC uses strong words such as ‘evasion’ to describe this behavior but I suspect South African citizens are revolting for different reasons. Imagine the collections in the 2021 financial year (FY) given the horrendous consequences of the COVID-19 lockdown? The TV license debacle gets worse when we consider how much the SABC spends on revenue collection and its annual bad debts write offs. The SABC spent R1.089 billion on revenue collection in FY2016. You should know all about that – those irritating text messages and those evening phone calls from debt collectors urging you to pay your TV license fees or else you will be reported to a credit bureau. Fat chance that had any affect on most South Africans. The SABC discontinued disclosing what its spends on revenue collection services after FY2016, presumably to avoid those awkward questions in parliament every now and again. It turns out the SABC is also not good at collecting corporate revenue – it wrote off a cumulative R425 million as bad debts over the 5 year period ended 31 March 2020.

I have attached an Excel spreadsheet SABC analysis (Dec 2020) analyzing the SABC financials over the period FY2012 to FY2020. It is not pleasant reading. The SABC’s financial position and profitability was okay until FY2015. In FY2014 it made a profit of R464 million before tax and had R1.4 million in the bank. Something tilted in FY2015 and it showed in the numbers as the organization incurred an operating loss of R601 million. I will give you a clue as to the causes – recall the mass resignation of the board of directors in 2013 and the reappointment of Hlaudi as Chief Operations Office? Recall Hlaudi’s antics as COO until his removal in late 2016? The SABC seems to have revolving doors at its head office – refer below for a list of its chairpersons and CEOs over the past decade (curtesy of wikipedia).

You may recall Dr Ngubane’s (chairperson from 2010 to 2013) antics at the SABC and subsequently as Eskom chairperson. Ms Suzanne Vos made some damning statements about Dr Nbubane to the Parliamentary Monitoring Group in March 2013 following the mass resignations from the SABC board. She stated that Dr Ngubane was prone to making unilateral decisions without consulting the rest of the board of directors. He attempted to overturn board decisions such as the relieving Hlaudi of his position as acting COO. Dr Ngubane apparently also failed to attend meetings if he was angry or did not get his own way. That type of behavior clearly works as he was then entrusted to chair Eskom through difficult times. He was spectacularly unsuccessful at that and we are all living with the consequences of irregular power and another debt laden SOE (refer an earlier blog about Eskom and its inability to trade out of its debt burden).

The list of cabinet minsters in charge of inter alia the SABC is also quite revealing.

The ANC seemed to take the Department of Communications seriously at the start of its rule by appointing heavyweights such as Pallo Jordan to oversee matters. Unfortunately, some of the appointees over the past 10 years had questionable reputations. Dina Pule was apparently adept at lying and cheating to benefit her then boyfriend back in the days. Faith Muthambi has been implicated in state capture given evidence at the Zondo Commission. She must have done some naughty stuff for OUTA to have laid treason and corruption charges against her in 2017.  Mention Nomvula Mokonyane and I think Bosasa and Xmas braai packs. Stella Ndabeni-Abrahams was caught flagrantly disregarding lockdowns regulations earlier in 2020. She is now in the news for overturning the SABC board of directors decision to retrench 400 employees. Perhaps Stella needs to do a Corporate Governance 101 refresher.

Getting back to the SABC numbers, revenue seems to be under enormous pressure. Advertising revenue has declined from a peak of R6 billion in FY2016 to just over R4 billion in FY2020. The SABC records government grants as revenue, a very strange practice indeed. Imagine the creative accounting that could occur in the private sector if we could record monies received from shareholders as revenue? Total revenue at the SABC has been steadily declining in recent years and this trend is likely to continue as corporates and government finances remain under pressure.

The SABC’s largest expense items are content and salaries. I am not a SABC1, SABC2 or SABC3 viewer so I am unable to comment on the quality of the TV programs and shows. However, I do know that the quality of content is a key driver to viewer engagement and numbers. The salary line is troublesome. The average salary dramatically increased from R586,370 pr employee to R726,240 a year later. I do not know of any private sector business in South Africa that could afford to pay average salaries at these levels except for investment banks which operate in a parallel universe. The average salary in FY2020 had crept up to R791,316. The SABC is facing serious challenges to stay afloat and hence, the cry to National Treasury for more bailouts to survive. Revenue is declining and expenditures are rising, a tough predicament.

I recently listened to a podcast interview of Mr Bongumusa Makhathini, the incumbent SABC chairperson. He has had a remarkable ascent from rural KZN to a graduate with a passion to making a difference in South Africa. We need more leaders like Bongumusa in South Africa. Unfortunately, he is going to struggle to steer the SABC ship to safe waters given the challenges it faces. I was gobsmacked when I heard in the interview about how much the SABC pays Sentech on a monthly basis to transmit its analogue TV services and radio station programmes. I fact checked and discovered that the SABC currently pays Sentech R72.5 million per month for signal distribution. This revenue represents ±60% of Sentech’s revenue so now we are talking about contagion effects. If the SABC goes belly up, bye bye Sentech. Apologies for stating earlier that the SABC pays Sentech on a monthly basis  – that’s not true as the SABC currently owes Senetch R340 million and is negotiating extended payment terms.

Stella and her merry crew are apparently also recommending regulations to force Netflix and other SVODs to adhere to a minimum of 30% local content on their streaming platforms. Oh my goodness, that could prove to be the end of my love affair with Netflix. Which global SVOD will allow a country at the tip of Africa to dictate to it on how it spend money on developing content? If I was Netflix, I would ignore the ANC cadres and move onto to other investor friendly destinations. I wonder if Stella and her crew thought about perhaps encouraging Netflix et al to spend money in South Africa developing new documentaries and TV series through promoting the beauty of South Africa, its cost effectiveness and by providing some tax incentives? We live in strange times.

Be safe and happy holidays. All the best from BeeechieB.

Tongaat Hulett has been around for 128 years. It is currently fighting for survival with debt levels of ±R12.4 billion as at 31 March 2020. The story of what went wrong at Tongaat Hulett resurfaced in the media in recent weeks. Rob Rose, a journalist at the Financial Mail, is like a dog with a bone and keeps reporting on Tongaat Hulett. I guess the sub-story of Jenitha John, the chairperson of the Audit Committee of Tongaat Hulett from 2011 until her resignation in 2019, being appointed as CEO of the Independent Regulatory Board for Auditors (IRBA) has also created some angst within the audit profession. To be fair to John, I found it difficult at face value to identify the accounting irregularities upon reviewing Tongaat Hulett’s historical financial statements for the financial years (FY) ended March 2013 to 2018. I know that Magda Wierzycka would have detected these misstatements in 30 minutes but the rest of us mere mortals may be a bit slower in absorbing, analyzing and reflecting on complex financial accounting practices.

Tongaat Hulett’s operations comprise the Sugar division (sugar cane farming and processing), Starch division (manufacturing of starch and glucose products) and the Property division (development and sale of agricultural land on the North coast of KZN). Starch is the most stable of the lot. The other two divisions are rather volatile from an earnings perspective. Imagine preparing budgets for the Sugar and Property divisions – refer below for their performance over the period FY2013 to FY2018 (prior to restatement):

Peter Staude was CEO at Tongaat Hulett for 16 years prior to his retirement in late 2018. Staude had an interesting leadership style according to media reports. For example, Rose reported in 2019 that Tongaat Hulett had not had any group executive committee meetings for a two year period leading up to Staude’s departure. He apparently did not think it would be useful for group executives to formally meet. Imagine trying to run a golf or bowling club without formal committees? It would be a disaster and would create an environment for all sorts of malfeasance.

Gavin Hudson was appointed as Staude’s replacement. The former SAB Miller executive had a rude awakening early on at the helm of Tongaat discovering that things were not as rosy as he was told prior to joining Tongaat. PWC was appointed in May 2019 as forensic auditors to investigate certain of the accounting practices at Tongaat. It certainly has been a lucrative few years for PWC’s forensic division, particularly their work at Steinhoff. Steinhoff paid €40 million in fees relating to the forensic investigation and accounting support in 2018/2019 – yes sports lovers, thats over R732 million! The forensic and other consulting fees cost Tongaat a paltry R156 million in FY2020. Anyway, PWC uncovered various accounting shenanigans according to the Tongaat executives’ results presentation to shareholders and analysts for FY2020.

I have been saying for years now that accounting standards have become far too complicated. It results in very few people understanding how to record transactions and creates an environment where the ethically challenged can report whatever they deem fit. Tongaat is required by International Financial Reporting Standards to revalue their growing sugar cane to estimated fair value every half-year and at financial year-end. Yes, you heard correctly – sugar cane in the fields should be revalued to the value that could be hypothetically realized if sold as a plant prior to processing. It essentially amounts to upfront recording of profits prior to harvesting. Please do not ask me to explain why one should adopt this accounting convention since it appears illogical to me. Anyway, valuing growing plants and other biological products is not a precise science and there is room for professional judgment. Apparently Tongaat were a bit exuberant in their sugar cane valuations. The other thing Tongaat got wrong was to capitalize certain costs of growing sugar cane instead of expensing these through the income statement. The restatement of Tongaat’s FY2018 financial results was a messy and embarrassing affair for all concerned, including the incumbent auditors.

The Sugar division’s operating profit of R837 million descended into a loss of R437 million in FY2020 due to the aforementioned reasons. The Property division was also apparently a bit naughty, recording land sales upon signature of agreements rather than upon transfer. The division also saw fit to occasionally lend money to potential buyers to fund the acquisition of properties from Tongaat. No wonder Hudson and his team were struggling to collect some of their debtors book during 2019.

Simon Newcomb (1835 – 1909) is thought to have stumbled upon what is known as ‘Benford’s Law’. Newcomb discovered that the probability of digits (1,2,3 and so forth) occurring as the first digit in a number generally followed a particular pattern. For example, the digit 1 appeared as the first digit in numbers around 30.1% of the time. Similarly, 2 was likely to be the first digit of a number ±17.6% of the time. The length of rivers, height of mountains and populations of cities tend to be a good fit for Benford’s Law. Other data sets do not conform to Benford’s Law for example, pre-numbered invoice numbers or cellphone numbers. It transpires that financial accounting numbers are subject to Benford’s Law. Some forensic auditors swear by it and use it to identify accounting irregularities and fraud. Mischievously, I analyzed Tongaat’s reported income statement, balance sheet and cash flow statement numbers for FY2013 to FY2018 prior to restatement to see whether there was anything amiss.

It would seem as if Tongaat’s numbers were slightly off compared to what Benford’s Law would predict. The digit zero should have occurred as the second digit in Tongaat’s numbers ±12.0% of the time,  instead it appeared on average 15.9% of the time. Similarly, the digit 6 should have occurred as the second digit in Tongaat’s numbers 9.3% of the time – actual result was 14.1%.

As mentioned earlier, I struggled to find anomalies in Tongaat’s historical reported numbers. Two ratios, however, did seem odd. The first is the effective tax rate being normal taxation to be paid to SARS divided by profits before taxation. South Africa’s corporate tax rate is currently 28% and hence, I would expect Tongaat’s effective tax rate to be in that ballpark. It proved not to be. This was also the case when analyzing Steinhoff’s reported income statements. The second ratio was return on equity (ROE) – calculated as profits after taxation divided by shareholder equity. Tongaat’s was way below expectation.

Tongaat’s shareholders should have been furious that the executives were only delivering a 6.9% return on capital employed in the group in FY2018. Tongaat shareholders could obtain a yield of over 11% today if they invested in RSA government bonds maturing in 20 years time. Why allocate capital to executives who can only deliver a return of half that?

The sad part of the Tongaat saga is that the group has agreed to sell the Starch division to Barloworld for R5.35 billion. This division is the only stable profit generator in the group yet Tongaat needs to raise capital to repay debt. Its amazing how often that happens in practice – companies get into trouble and then are forced to sell the crown jewels to save the remainder. The devastating aspect of the Tongaat saga is the R22.6 billion of shareholder value that has been destroyed by management over the past 6 years.

Its day 210 of the lockdown in South Africa, extraordinary times. I have been pondering about Tito Mboweni’s forthcoming medium-term budget. He and his team have an impossible task to present any form of coherent, believable financial plan for the country. Neal Froneman, the enigmatic CEO of Sibanye-Stillwater, was rather forthright in his interview with Alec Hogg on BizNews earlier this week stating that South Africa is bankrupt. Well I guess it depends on your definition of bankrupt. If it means that you have to keep borrowing to pay the bills, then bankrupt you are. Disturbingly, Froneman stated that Sibanye-Stillwater would not be investing any more capital into South Africa for the foreseeable future. He mentioned that it would be a disservice to Sibanye-Stillwater’s shareholders to invest capital in an investor unfriendly environment such as South Africa. Perhaps it is time for the ANC to realize that South Africa is one of many investment destinations competing for global capital.

I downloaded the Global Social Mobility Report 2020 published by the World Economic Forum earlier this year. I thought it would be interesting to review how South Africa compared to other countries in terms of various social and economic metrics. It proved to be a fascinating exercise and slightly depressing. There are truly some international backwaters. How about the Central African Republic, a landlocked country in the middle of the continent. It has the highest deaths from infectious diseases (894 per 100,000 population) and traffic accidents amongst all countries covered by the WEF report. Also, 86% of residents of the Central African Republic use unsafe or unimproved water sources. I suppose it could be worse – 92% of Madagascar residents use unsafe or unimproved sanitation.

Given that South Africa may seem first world compared to some African backwaters, I decided to restrict my analysis to the 82 countries listed in the James Gwartney, Robert Lawson, Joshua Hall, and Ryan Murphy (2020) Economic Freedom of the World 2020 Annual Report published by the Fraser Institute. I have taken the liberty of extracting data from both the Fraser Institute and WEF reports to expand the analysis.

I did not expect the WEF report to include South Africa’s astonishing victory in the 2019 World Cup rugby tournament – we are currently proudly ranked number 1 in the world in this sport. I suspected that we would not do so well in equality and employment statistics. Before I delve into some interesting stats, a quick pop quiz:

1. Which country has the highest GDP per capita? is it United States, Switzerland or Luxembourg?
2. Which country has lowest income Gini score? In other words, which country has the most income equality? Is it Denmark, Iceland or Ukraine?
3. Which country has the worst access to justice? Is it El Salvador, Russia or Turkey?

Answers to the above questions will become evident later in this blog post.Given the COVID-19 pandemic, or rather the lockdown hysteria, let’s start with infectious diseases. Unfortunately, South Africa’s track record here is not great.

To put the above stat into perspective, South Africa has of 21 October 2020, had ±32 deaths per 100,000 population from COVID-19 versus 390 per 100,000 from infectious diseases in 2018 per the WEF report. It transpires that South Africans are not that good on the road but who would have thought that Saudi Arabia would have the highest traffic deaths per capita? It may be all that low cost fuel up North?

I am afraid our scorecards are not that great in homicides and education. It is frightening to think that South Africa may have more murders per capita in a year than from COVID-19 related deaths. I am tempted to digress into “death from” COVID to “death with” COVID to excess deaths according to the SAMRC. I will exercise discipline and stick to the analysis at hand and leave the PANDA people to fight that good fight.

The interesting thing about our education ranking is that it would appear that our education (public) system is very poor in comparison to global standards yet our throughput is quite good – 77% of our kids make it to secondary school. Enough said, its could be worse – only 6% of kids reach high school in Chad! On a positive note, South Africa ranks highly in terms of mobile phone subscriptions – it seems we like to jabber on the phone and send WhatsApp messages. According to the WEF data, South Africans on average have 1.6 subscriptions each. My goodness, that’s a lot. Well I suppose Gigaba may need at least 3 phones given his alleged mistresses and the content of some of his WhatsApp messages.

We know that our public healthcare system is in a shambles. No surprise that we are ranked the 9th worst healthcare system amongst those covered by the Fraser Institute report. And the ANC wants to introduce NHI. According to Leon Louw of the Free Market Foundation, “…the NHI, after all, is fraudulently named – it entails prohibition of health insurance…”. I am not sure where National Treasury or the ANC is going to find the money to fund the NHI. Hopefully, this is yet another pipe dream of the ANC which will never see the light of day. Education and healthcare are very real problems in South Africa and we need solutions. We just don’t need the ANC’s solutions. They are very good at deflecting from the real issues and practical solutions to these problems. Ok, let’s highlight one of those real issues and that’s income inequality. South Africa is ranked the most unequal society on the planet from an income perspective. That is tragic and a massive generational problem. The WEF estimates that it may take 9 generations in South Africa for low income families to reach mean income levels of the greater population.

You may have noticed that the Ukraine is the most equal society from an income perspective. That may not reflect reality since Ukrainians are very poor generally, with GDP per capita of US$2,964 per the WEF. So everyone is equally poor. By the way, the highest GDP per capita per WEF is currently Luxembourg at US$114,234 – which is ±18 times South Africa’s average.

Unfortunately, South Africa also has the highest unemployment rate of the countries surveyed. The above 28.5% unemployment is from 2018 data from the World Bank. A further estimated 2.2 million jobs have been lost since lockdown and our unemployment may well be higher than StatsSA’s current estimate of 42% on an expanded basis. Nic Spaull, who spearheads the Nids-Cram National Income Dynamics Study, estimates that there are currently 14.3 million people employed in South Africa versus 16.5 million unemployed. I am too terrified to ask him what youth unemployment rates are.

I am afraid that South Africa’s scorecard is looking bleak at present. We have some incredible mineral reserves. We have the ability to generate so much clean energy. We have some of the most scenic beauty known to mankind. Our weather is conducive to all year round tourism. We have some incredible innovators and entrepreneurs. It is just a pity about our government who are flailing from fantasy to ideological solutions. What South Africa needs now, is a unified approach to tackling unemployment, education and healthcare. The private sector has demonstrated that is can solve the latter two. The ANC should listen carefully to business about solving the jobs crisis.

Stay safe and be kind. All the best from BeechieB.

PS Turkey is regarded as the country with the least access to justice.

Its day 73 of one of the most stringent COVID-19 lockdowns on the planet. Ramaphosa has admitted that the “lockdown has become a blunt tool” and that certain scientists have advised that South Africa could go down to level 1. Anecdotally, I have heard attorneys describing that they have not worked this hard in years. I guess with all these court cases against the government about the validity, rationality and constitutionality of the lockdown measures, it is no surprise that certain attorneys are working around the clock. Talking about court cases, I had the misfortune of reading Judge Tolmay’s 114 page judgment in the matter between OUTA and the SAA Pilot’s Association and the defendants (Dudu Myeni et al) yesterday afternoon. The esteemed judge has some stinging words for Myeni including:

“…Ms Myeni’s dishonesty, breach of fiduciary duty, recklessness and gross negligence…”

“…Ms Myeni not only proved to be dishonest in her dealings at SAA, but she has also been dishonest with this court…”

“…Ms Myeni’s conduct of this litigation also requires condemnation…”

Netflix needs to find a screenwriter soon to read this judgement…could be a fascinating TV series highlighting some of the most ridiculous behavior in a business context.

Anyway, I did not sit down to write this blog bemoaning the state of decline at our SOEs and the ANC’s missteps. I actually wanted to share my gratitude for the unintended consequences for me personally during the lockdown. No, I am not suffering from any form of Stockholm syndrome – I am feeling quite the opposite. However, I am still grateful for many things that I have discovered and developed during lockdown. Here is a list of 10:

1. I have loved waking early and reading online in a predetermined order. Firstly, my emails and then Facebook to see what others have been up to. Then it’s time to browse some sports websites out of habit and fond remembrance of the days when there was live sport. The next list of websites includes BusinessLive, Daily Friend, Daily Maverick and the Financial Times. Over the past 73 days, I have gently rambled into the day, reading slowly and widely. It has been wonderful to have this privilege without the rush of meetings, presentations and consultations etc. Yes, I have had my share of online meetings but working 7 days a week has allowed for lots of time to read. I am grateful.
2. Being forced to exercise between 6am and 9am daily during stage 4 of the lockdown was actually a good thing. It prompted me to walk every day for an hour after my leisurely online browsing. I have enjoyed greeting the usual faces in the neighborhood and feeling a strong sense of community. I have discovered streets in my neighborhood that I did not know existed. I have gotten to know the names of fellow inhabitants in our townhouse complex. Even after the lifting of the ridiculous exercise window, I am still noticing so many people on the streets in the morning. It is as if the lockdown has given birth to a whole new cohort of exercisers.
3. I am grateful that the lockdown has exposed the ANC leaders for who they really are, a bunch of securocrats with a lust for power and limited regard for the governed population. I used to think Ramaphosa was a good guy. He seemed  genuine and a leader early on during the lockdown. That notion soon evaporated and his true colors shone through. Utterances by the ANC cabal have included:

   “…forge a compact for radical economic transformation that ensures that advances the economic position of women, youth and persons with disabilities, and that makes our cities, towns, villages and rural areas vibrant centres of economic activity…”

   “…there are new opportunities as neo-liberalism is on the retreat and the role of the state is on the ascendency and the space for progressive policies is opening up…”

   “…imperative to achieve the goals of the shared strategy of the Alliance, the national democratic revolution…”

   

   Photo courtesy of the SA Institute of Race Relation’s recent report “The ten year lockdown with worse still to come”

4. I have been touched by the goodness of humanity that has come to the fore in many communities. People reaching out to feed the less privileged, people contributing hard earned cash to assist in the fight against COVID-19 and so many community outreach initiatives. My heart has warmed to business people offering products and services free of charge in these unprecedented times.
5. I have relished embracing new online platforms such as Zoom and Microsoft Teams. It has been a good learning curve and may fundamentally change the way we do business and interact over the next decade.
6. I am grateful for the opportunity to have expanded my skill base, particularly in Microsoft Excel and financial modeling generally. I have been facilitating financial modeling courses for years but have never had the chance to just explore with no end goal in mind. I have learnt how to use new functions such as XLOOKUP, explore data analysis and validation techniques. It’s been a godsend.
7. I have been able to read widely in the lockdown – I may be Amazon’s top customer in Johannesburg at the moment! It has been wonderful to discover new authors. It has been awesome to be exposed to different thinking.
8. I am forever grateful for Netflix during this time. There has been some amazing TV shows, movies and documentaries to watch every night in lockdown. Thank you Reed and Marc for persevering at Netflix and for spending billions on content. Keep going!
9. Perversely, I am grateful that South Africa has run out of fiscal runway and that we need to think differently about overcoming our many obstacles. We need greater equality, higher employment, better education and improved healthcare for all. A crisis presents a unique opportunity to reset and rethink. South Africa cannot allow the ANC to lead us into the dystopian future of centralized government control of most things. We have seen what happens when the elected government is allowed to pursue ideological reforms and policies. The fiscus is running out of money (pity Mboweni and National Treasury as they draft the amended budget) and our leaders can no longer proclaim and prevaricate. South Africa is facing a much larger crisis than COVID-19. Think 60% unemployment (extended version), think the forgotten youth who may never experience unemployment in the next 5/10 years. Think about our country’s growing debt burden and the backlash by the global financial community which reflects its beliefs via bond yields and exchange rates. We have to find a social compact to benefit the majority instead of the selected few.
10. Lastly, I am grateful that I ran out of white wine during the lockdown. I have discovered some amazing red wines and am now a convert.

Stay safe, be kind and do the right thing. All the best from BeechieB.

It has been the strangest of times. Catching up on Facebook twice a day provides evidence of widespread wannabe epidemiologists and virologists sharing their views and other experts’ views on the SARS CoV2 virus. The feedback vacillates between the virus being the next big killer of mankind to those who believe that it is a bad strain of seasonal flu. Reference is made to ‘excess deaths’ being recorded in Europe with rather alarming graphs and charts of this excess mortality. Careful scrutiny of the scales of the axes however, allows me to breathe and reach for my cup of coffee instead of the hard tack (non-existent since day 31 of the lockdown, unfortunately).

I have been reading more than ever, I mean what else is there to do between 5.30am and 8am whilst I wait to escape for a morning walk before curfew? I have been watching webinars and interviews with many esteemed scientists and some not so. I have discovered a whole world out there that I did not know existed. Professor Glenda Gray, the chairperson of the SA Medical Research Council and world renowned HIV and vaccine expert, is seriously intelligent and well spoken. Way above my pay grade, but I got the gist of some of what she was saying. Professor Gray also sits on the Ministerial Advisory Committee (MAC) advising government on COVID-19. The esteemed professor Karim chairs MAC and Professor Madhi of Wits is also a member. Professor Madhi speaks with quiet confidence and is not rattled by distracting questions such as when Judge Dennis Davis interviewed him earlier this week. I am not sure how much longer Gray and Madhi will remain members of MAC given their outspoken criticism of the continued effectiveness of the lockdown.

There have been some baffling, confusing and disturbing things that I have read and seen over the past week or so. Some of them include:

• President Ramaphosa tweeting that had spoken to ‘his brother’ President Nicolas Maduro of Venezuela and reminded us that our two countries shared a deep historical bond based on friendship, solidarity and co-operation ( I should not be too perturbed since they say you should keep your friends close and your enemies closer);
• Dr. Dlamini Zuma calling for “…more sacrifices and – if needs be – what Amilcar Cabral called  ‘class suicide’…” in her address at a media briefing on 25 April 2020 ( I quickly googled Amilcar Cabral and read some of his apparent work in which he refers to the triumph over the colonialists and then for the liberators to commit figurative suicide as a class to be reborn as revolutionary workers);
• Minister Lindiwe Zulu addressing the media whilst wearing either a beret with the Cuban flag emblazoned on it or the infamous red 5-pointed red star, which Che Guevara used to wear. Zulu has also been seen wearing military fatigues with similar epaulettes;
• The general secretaries of the ANC, SACP and Cosatu making a joint press statement stating inter alia, “…government should consider increasing publicly-held stakes in strategic sectors of the economy. The history of the Great Depression shows strategic intervention, including well-managed SOEs, have a crucial role to play in achieving economic turnarounds…”;
• Minister Pillay’s proclamations about what clothing we may and may not purchase during lockdown including the ban on the sale of T-shirts (unless used as undergarments) and open toe shoes;
• President Ramaphosa proclaiming “…the speedy implementation of economic reforms, and the transformation of our economy and embarking upon other steps that will ignite inclusive economic growth…”; and
• That the State of Disaster can continue indefinitely without limit ,seemingly at the discretion of the Minister of Cooperative Governance and Traditional Affairs aka Dr Dlamini Zuma.

The above image of Lindiwe Zulu is courtesy of GCIS as found on Google

At this stage I made the mistake of reading Dr Anthea Jeffrey’s report “Keeping liberty alive through COVID-19 and beyond” published in April/May 2020. Terrifying stuff in that report, which I pray is not true, including:

• “…Health Minister Zweli Mkhize published a slide with some of the relevant numbers. According to this slide, the government expected 12-million Covid-19 cases without lockdown, but the number has now fallen to 8-million with lockdown in place. It expects 6-million people to be asymptomatic and 2-million people to fall ill. Assuming an infection fatality rate of 1%, it anticipates that 20 000 out of those 2-million people will die…”
• “…indicates that the ruling ANC/SACP alliance is determined to use the Covid-19 crisis to press ahead with the Soviet-inspired national democratic revolution (NDR) to which it has been committed since at least the 1960s. The alliance wants to use the crisis to weaken the private sector, build dependency on the government, introduce prescribed assets for pension funds and other financial institutions, induce the Reserve Bank to print money needed to maintain state spending, overcome resistance to the nationalization of private healthcare under the NHI, and open the way to the uncompensated expropriation of land and other assets…”

On my goodness, this is going to interrupt my sleep patterns. If Mkhize anticipated 20 000 deaths from COVID-19 in South Africa, why lockdown people (and the economy) for more than necessary to allow healthcare facilities and practitioners to be ready for the onslaught of the virus? By the way, 20 000 deaths from COVID-19 would be very good news since it is way less deadly than most global experts thought back in March 2020. In comparison, 18 837 passed away due to flu in 2017 and 25,336 from diabetes according to StatsSA.

I must profess to being naive about the NDR. I hastily purchased Frans Cronje’s new book “The rise or fall of South Africa” and read it from cover to cover. It is not yet available in hard copy in South Africa due to the shutdown of our printing presses during lockdown but is available in a Kindle version. For those of you who don’t know, Cronje is the CEO of the SA Institute of Race Relations (IRR). The book was drafted in 2019 so some parts of it are completely out of date given the impact of COVID-19 on our economy and the world in general. Other parts were interesting and others scary. I did hone in on this NDR thing and I quote from Cronje’s book:

“… The NDR’s objective is to shift the country’s economy from a predominantly free-market or capitalist one to a socialist and then communist one. This is to be achieved by slow and incremental steps and over a period of at least 40 years. NDR aims are often openly acknowledged in ANC and SACP documents, yet most South Africans have little or no knowledge of the revolution…because a transition to socialism would be difficult to achieve if South Africa’s free-market economy was thriving, if unemployment was low, and if most of people’s incomes and living standards were rising…a shift to socialism is far more likely to occur if joblessness is growing, inequality is worsening…many NDR interventions are therefore aimed at deterring investment, limiting growth, adding to unemployment, and bringing business under even greater state control…”

I must admit that back in December 2017 I thought some of the ANC decisions taken at its Nasrec national conference were a bit daft, but I was more interested in the presidential election outcome than the conference agenda items. With hindsight, the recommendations of expropriation of land without compensation, the speedy introduction of the NHI, the nationalization of the Reserve Bank and an investigation into how pension surpluses could be deployed for developmental purposes make a bit more sense given the ANC’s reported communist leanings.

I don’t easily buy into conspiracy theories. I believe our elected government has acted swiftly and decisively to address the COVID-19 pandemic and have been ably advised by esteemed experts such as Professors Karim, Gray and Madhi. Prolonging the lockdown and imposing sometimes petty and irrational measures such as 3-hour exercise windows, tobacco and alcohol bans, and curfews, is much more understandable given the views of the likes of Jeffreys and Cronje about the ANC’s desire to control everything.

Listen to the advice of healthcare professionals and the government about non-pharmaceutical interventions and be safe out there. All the best from BeechieB.