SARS’s project AmaBillions brings strong focus on collections & more consumers rely on high-interest loans.

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
And now The Money Show with Stephen credits on seven
oh two.

Speaker 2 (00:06):
Let's walk at all. The Money Show with Stephen Curtis
is brought to you by ABS, the corporate and investment
banking balancing, balancing economic growth with ecosystems. That's how they're
invested in your story. Good evening to you. I'm Stephen Curtis.
Eight minutes after six. Well one of those days where
there's just once again the kind of volatility on markets.

(00:27):
Metal prices were much softer. That had been an impact
on the JAC and quite a lot of corporate news
coming through as well, a bit a bit of a
bad update from SAS. I don't think it had been
well signed posted. Oil prices have been lower, chemical prices
have been softer, Arsenal metal as well. Just explaining how
much money they're still losing, still over three and a

(00:48):
half billion Rand, and that's despite cutting losses by sixty percent,
and that of course is only because of the closure
of the long steel business. I was reminded of the
CEO of the conversation we had with the CEO of
the Industry Development Corporation just two weeks ago, and I
asked specifically how those discussions going. Are we expecting some
kind of result of the conversations around arsenal Mittle And

(01:09):
she said yes, and we haven't heard much since then.
I realized they're all very confidential and we won't hear
anything until they're already that there'll be plenty of workers,
particularly in parts of Newcastle, that will be really just
waiting for some kind of outcome. The President was at
SARS today and he was talking about the size of
the ilicit economy. I don't think we'll ever know how

(01:30):
big it is. I will say though, that just on
your way home today, it's probably all around you. You know,
people sitting individual cigarettes, alcohol here, and something that's been
sort of undervalued there, all of that kind of thing.
And SARS has got to be careful about who it
goes for. I mean, you don't want to crush the
economy in the process. But we'll talk a little bit

(01:52):
about that in a moment. Still waiting as well to
see who might take over from Edward Kissfetter, a SARS
commissioner at this stage. As I talked to you, now,
I might have missed it, but I have not heard
of any kind of public process, and there was last
time there was a series of interviews, but we haven't
had any kind of news of what will happen around
a SARS commissioner this time. As I understand the law,
I think it's still just up to the President to

(02:14):
appoint someone a bit like the head of the NPA.
We'll speak to just Ran Baiju, the partner in the
head of Strategic Engagement and Compliance at Tax Consulting, about
SARS and the ilicit economy. In a moment, I was
slightly surprised to see, despite all of the good news
around the economy, that dead levels still seem to be rising.
And this has been a perennial problem for so long.

(02:36):
You look at the needs in our society. Someone who's
earning money probably looking after so many people, and so
many sort of course for help from members of the family,
and all of that just the nature of our society,
and so debt goes up. We'll speak to the executive
head of Debt Busters, Bene Saga in about ten minutes
after the six thirty news. With pulling the psycho technology,

(02:57):
they've been on a bit of a buying spree. Link
In Marley, their CEO. You'll talk about the interim results
the bank zero deal. I noticed also there in the
prepaid phone course space, and we saw Vodicon yesterday saying
they're selling they're making far less money from that. Are
they having the same issue at Lasaka? And just the
sort of way ahead? And then reforms. We've heard so

(03:18):
much about reforms buss the sewermovs or business leadership. They
say they've got their own reform tracker and we'll hear
a little bit more about that. So lotus to look
forward to this evening. Don't forget dating apps after seven
o'clock as well. Good to hear from you on O
double one, double A three oh seven oh two two
one four four six five six seven.

Speaker 1 (03:37):
The Lonely Show with Stephen krudis live on ninety two
point seven and one six FM, streaming on the Prime
Media Plus NAP and DStv channel eight five.

Speaker 2 (03:47):
Six twelve minutes after six, Well, I see news out
of China that are the makers of a zempeg are flagging,
but they're not expecting their revenues to be quite as high.
And the reason for that is just in tense intense competition.
A zempic, of course is this weight loss drug. And
I sort of look around South Africa for evidence that

(04:08):
people are taking a zempic. And I mean it's very
difficult to know. Hi, excuse me, you're looking very well.
Are you taking a zempic? You know? I mean, go ahead,
I'd like to know how that went for you if
you tried it. And someone I know talking about a
very posh school in a very posh part of a
particular city which is neither Joe Burg Pretorian nor Cape

(04:30):
Town actually said to me he knows a particular school
parking lot that he just caused the parking lot, it's
the ozempic parking lot. He was making a comment about
the parents who are picking up their children there. He said,
you know, clearly o empics all over the place. Have
you bumped into it much? Would you consider using it
for weight loss? I mean, I know plenty of people
who are desperate to lose weight. Are your views? Oh

(04:52):
seven two seven oh two one seven two thirteen minutes
after six.

Speaker 1 (04:56):
The Money Show, I'm seven too, Friday, six to a pm.

Speaker 2 (05:02):
The President Sauramoposa speaking today at the headquarters of SARS.
He was praising the way in which the institution has
been reformed, how its reformed itself, since the state capture era,
also talking about what SARS needs to do now and
specifically the elicit economy.

Speaker 3 (05:17):
We continue to rely on USARS on the ongoing fight
against corruption and malfeasans in both the public and the
private sectors. Now through lifestyle audits, enforcement actions directed the
ilicity economy and other efforts, this organization is playing a

(05:38):
critical role and a leading role for that matter. And
I saw a demonstration of exactly what you do. And
as I looked at all those items that are part
of the elicity economy, there are so many and it
must be hard, but we need to give you all
the support we need. In the past, I used to

(05:59):
think that it is tobacco, it's you know, things that
come in at least said itally. But it's much more
than that. Even toothbrushes. People even bring toothbrushes, and you
and your officials have to be agile enough to look
at it and say, but this should not be coming
in withoutch text.

Speaker 2 (06:18):
The President speaking this morning. J Vanijo is a partner
and head of Strategic Engagement and Compliance. A text consulting essay. J.
Just Frien, good evening. I really do appreciate the time.
Thank you. I mean, we all know about the tobacco economy,
but tooth brushes. I mean, SAS clearly has its work
set out for it.

Speaker 4 (06:37):
Thanks Steven. And look, I mean even if we look
at sausa's modernization plan which they recently released, you know,
modernization three point zero, well, one of their key external
factors that they need to focus on to mitigate threats
is while economic voltilty and I listed activities and the

(06:57):
list of activities you know underscores well the need for
an agile modernization including E invoicing, AI enhannted detection and
as we know, goods crossing the borders. While we need
those international partnerships because if we look at the last
stats on illiicted activities and compliance erosion so to speak,

(07:19):
while there were seizures to the value of six point
seven billion, and that's not just cigarette, that's anything that
has basically going to the country to syndicate a tax
and customs crimes and illicit an illegal trade flow.

Speaker 2 (07:38):
I mean, I can just see a scenario plenty of
people will stand up and cheer of SARS says we're
going to crack down on the illicit economy, and they
go after the illegal cigarettes. The moment that SARS people
arrive and start to investigate, for example, a sparser shop,
will they you see three men in SARS uniforms arresting
someone setting individual cigarettes on the side the road, Society

(08:01):
will turn on that. I mean, the illicit economy is
so entrenched you don't want to sort of crack the
nut too hard.

Speaker 4 (08:09):
Yeah, So that's that's that's correct, and that's why you'll
note that over the last year to eighteen months or so,
what Source have done gradually is implemented a segmentation model,
meaning they have on one side your tax, financial crimes,
your illicit and illegal trade flows. On the other hand,

(08:31):
you've got large international businesses, then you've got your high
wealth individuals, and then you've got most recently probably is
your businesses in the gig shad and social media economies.
So each one has a different compliance strategy because, as
you rightfully said, you know you can't apply this blanket
strategy which may work for you know, high wealth individuals

(08:52):
or businesses that are looking at profit erosion and think
it's going to work the same to the guy that's
selling listed cigarettes on the side.

Speaker 5 (09:01):
Of the road.

Speaker 2 (09:02):
There's been big promises from the SARAS Commissioner Edward keisvetter,
I should really call him the outgoing SACE commissioner. Now
I suppose are those promises are going to be actually
impossible to keep. I mean, I don't know if I
would like to have to be the successor and now
you have to keep live up to someone else's promises
because expectations are very high. We're going to be looking

(09:22):
to SARAS to cover any budget gap.

Speaker 4 (09:25):
Dook so I mean addressing the tax gap so to speak.
While what we've seen over Commissioner Keyswati's term is he
has the strategic intent of voluntary compliance and this requires
sustainable investment to increase awareness and the certainty of tax
obligations and anything that's he's kind of alluded to say

(09:48):
while SARS is going to do this as an example,
the implementation and use of AI and data science to
detect non compliance. Five six years ago, we would have
heard that and all thought, wow, this is going to happen.
You know it's false South Africa. But here we are
seeing it, not saying it's perfect, because I mean they're
processing system and one example as well, increase in VAT audits, right,

(10:10):
project Duma billion surge in VAT audits, you know, focus
on on on PAYE and inter but by running that
through some sort of AI model. While it's not perfect,
you know, when they process bank statements as an example
of taxpayers, we often see a number of duplications, including

(10:34):
inter account transfers being classified as income and then en'll
see that two hundred percent being imposed. So it's not
perfect to work in progress, but my my my view
on this is well, if they are promises made, it's
not to say it will you know, come to Frusian
in the next year or two years or three years.
But we see that saus now has a plan. Similarly

(10:56):
with their modernization, they've they've actually got a five year
roll out with milestones every few months. Instead of just
saying we're going to do this and that's that.

Speaker 2 (11:06):
Keys fait to leave sars I think it's in a
couple of weeks. I haven't seen much about the appointment
of a predecessor of a successor rather, do we need
a sort of interview process like we had for kiss Fetter.

Speaker 4 (11:20):
So typically sarsa's internal processes would say, yes, there must
be an interview process, it must be fair, It must
be unbiased, and that is most likely what's going on
in the background and probably just a little bit less
publicized in the last round.

Speaker 2 (11:34):
Joshua and Baju, thanks very much. Indeed, partner and head
of Strategic Engagement and Compliance at Text Consulting. Essay nineteen
after six.

Speaker 1 (11:43):
The Money Show with Stephen Schruit on seven O two
seven O two.

Speaker 2 (11:48):
Well, there's been so much good news about the economy,
lower inflation, lower interest rates, hopefully just around the corner,
more jobs, higher incomes. But despite all of that, we
also it would seem have higher debts, certainly according to
Debt Busters. Bene Saga is the executive headed Debt Busters.
Bene good even good to talk to chat again. I mean,
it seems slightly counterintuitive. Things are supposed to be turning

(12:11):
for the good, and yet how debt levels are so high.
What do you think is really going on?

Speaker 6 (12:16):
Thanks Steven for having me on the show. Yeah, I think,
as they say, two things can be tree at the
same time, we certainly have noted that the wave of
optimism about the future definitely holds when you look at
consumer expenditures, and perhaps that's part of the clue, you know,
in our business we help restructure people's debts in terms

(12:36):
of giving them a longer runway and giving them their
headroom to repay back the debt that they have. So
what we see is of course the byproduct of that.
So I think, as they say, two things can be
true at the same time. I think while many people
have received a lot of relief, particularly with interest rate cuts,
you know, those with asset base, there are also a
lot of people who have borrowed money without that asset protection,

(13:00):
particularly with unsecured that and I think we're seeing some
of that come to the fruition now. And I think
that's why you're seeing some of the debt pressures on
consumers subside.

Speaker 2 (13:11):
There's been a long pressure of debt building up, I
mean the debt crisis, and I suppose I should probably
call it that has a very long running momentum behind it.
I mean, lower interest rates is not going to make
a dent in that momentum rarely. It's been going for
so long. I think there's a few factors.

Speaker 6 (13:31):
I think you know, definitely interest rates play a role
in terms of the composition of debt. And why I
say that is because you know, when you talk about
the time you have to pay off your mortgage is
twenty years. The time to pay off your car is okay,
maybe these days six or seven years, but let's call
it sumher in four to six years. But the time

(13:51):
to pay off your personal learner is generally much shorter
than that. So if the interest rates move against you
or for you, you know, you have a bit longer time
to kind of respond, particularly with a mortgage and so on.

Speaker 2 (14:04):
But I think in.

Speaker 6 (14:04):
This case where we really got caught out is predominantly
because of the lack of increases in take hoompay. And
I think I appreciate the conversation you just had about
tax and what's going to happen with you know, a
next SARS commissioner and so on. I think the tax
is quite topical here in the sense that when we
look at the take home pay over the last ten years,

(14:25):
it hasn't really budged for many people. And I think
there's a bit of pickup in the last twelve months
or so, But structurally, I think what people are able
to take home, adjusting of trax brackets and all of
that haven't really moved in our favor over the last
several years, and that coupled with the lack of increase
in terms of income levels. That's why I think people
have had to borrow essentially to keep themselves afloat. And

(14:47):
I think that's what you're really seeing here.

Speaker 2 (14:49):
Is there a sort of age issue here as well?
I mean I kind of hope that people as you get,
as you sort of get into your mid late fifties,
at the stresses of their ease a little bit more.
You've been able to manage things, you should certainly get
better at managing your money. Although the demands may increase
younger people maybe first car things like that can be

(15:12):
quite stressful, first house, very stressful. What's happening age wise?
It seems that people around the age of forty are
actually more stressed than anyone else else. I mean, I
can understand that in a way, but I was still
a bit surprised.

Speaker 6 (15:25):
Yeah, I think that is that is true. So certainly,
if you look at the overall debt levels compared to income,
certainly younger people that would be on the lower end
of the spectrum. For example, we compare the overall debt
to annual net income ratio and for that for younger
people less call them less than thirty five, that would

(15:47):
be somewhere around seventy five to eighty five percent, whereas
for those over forty it would be one hundred and
twenty two hundred and forty percent. And I think what
you're seeing there is of course accumulation of the assets
that you have to read payback, particularly live with vehicles
and homes, and of course our responsibilities also amplify it.
But I do want to point something else out also

(16:08):
with increased age, generally, we also earn a higher salary.
And what's happened in the South African context over the
last three and a half four years since the if
you can call it the end of the pandemic, if
there is such a thing, since early twenty twenty two,
we've seen that a fewer number of individuals generally with
higher incomes have been the ones borrowing more money. And

(16:30):
as a result, I think that is also linked with
age generally speaking, and I think that's why you're seeing
this correlation between age and income levels and higher levels
of debt. We've certainly seen that change since twenty twenty two,
and I think that dynamic is a bit different.

Speaker 2 (16:46):
I mean, I sometimes wonder if you consider the nature
of our society, by which I mean so many people
coming into the former economy, moving into the suburbs, having
to look after so many people. I mean we always
called a black tax, but you know, there's so many
factors to it that actually we're probably going to be
a heavily in debted society more than many others for

(17:09):
a very very long period of time. I mean, it's
quite disturbing if you consider how long it's been like
this and how difficult it's going to be to change.

Speaker 4 (17:19):
Well.

Speaker 6 (17:19):
I think the two ways of looking at it always
one is that we are we are a young economy,
and I think if you can get a lot a
lot of the young people into the workforce, it may
look very different.

Speaker 2 (17:32):
Right now.

Speaker 6 (17:32):
As part of our challenge is that not enough young
people are entering the workforce with meaningful roles and meaningful salary.
So their contribution is somewhat marginalized, and it's sitting almost
firmly in the informal sector, and it's not really accounted
for when it comes to credits, so I think it
skews the outcome a little bit. And secondly, the National
Credit Act is only and I'm saying only only twenty

(17:54):
years old. That's actually not a very long time. I
think for many many established places, you have to go back,
you know, several decades for things to settle. And I
think it's a very good act and it's really brought
a lot of things together, and we've had to learn
to consolidate a lot of different acts. So we're still
in that teenager period when it comes to it, and
I think as things settle over the next ten years.

Speaker 2 (18:16):
I do believe things will look a little bit.

Speaker 6 (18:18):
Better in terms of debt to income ratios for many
South Africans.

Speaker 2 (18:21):
Ah, I like your optimism, benez Thanks so much, Bene Saga.
Someone who's in child who manages debt and is optimistic.
Good to know. Benet Sega's executive debt of debt bustards
twenty seven after six The Money Show, The Market. Jira
Bill Noniana is a vib Clients manager prime XBT Here,
good evening, Welcome to the Money Show. Sassil had an

(18:43):
update today and they're flagging lower earnings. I mean, we've
watched the oil price, we watched other prices. In a way,
this is no surprise.

Speaker 7 (18:52):
I think there's no surprise. I mean, Sasol remains a
commodity based company, meaning they are price taking any market.
So what management and hasn't in control is the ability
to manage internally. And I think they have not shown
themselves to be credible in managing internal costs and managing
internal operations. And that's kind of come out in the results.

(19:12):
I mean, ageps down about ninety percent on the back
of a very strong rand and a very weak brain
crew price arsalal Mattel.

Speaker 2 (19:20):
I mean, they cut their losses by sixty percent, but still,
you know three what was a three point six billion Rand,
and that's despite at great sort of cost to so
many people closing the long steale business.

Speaker 7 (19:34):
Yeah, the long steel business remains a good employer. I mean,
if you look at the history of South Africa and
Chance Month set up this company a long time ago.
It was meant to become employer of people. But right
now it's technically insolvent and the material capacity of this
business to operate going forward all depends on if they
find a buyer of this company, and the Industrial Development

(19:57):
Corporation is looking to buy it out. But this result
was not great as a major loss.

Speaker 2 (20:03):
Cumber Iron Ore, I've been watching some of the companies,
the mining companies that rely on the logistics, and it's
just a sort of one two percent kind of pick up.
And it's the same as Cumba. For the quarter their
volumes are up one percent. I think there were up
two percent in terms of what they're actually able to
get to sell Dana over time. That does matter over.

Speaker 7 (20:24):
Time, it does matter the clog up in the real
system and essentially the put public private partnership which need
to come fix the real system. But I think it's
better than a year ago because if you look at
it right now, we were able to get the wet
the wet iron or off to export to China, and
I mean that's resulted in for your profit profit increasing
about twenty three percent on the back of a very

(20:46):
strong iron ore price as well as Chinese demands. So overall, good,
good set of results. I think the market did expected
these results and good for Cumba.

Speaker 2 (20:58):
In the US, still a very very difficult open markets.
They're very I suppose skittish, I don't know that's the
right word. Nervous maybe around AI, around software and people
almost a little afraid to put their money kind of anywhere.
I suppose the argument of the faith doesn't help.

Speaker 7 (21:16):
I was speaking to my team earlier now morning meeting,
and I think I think the markets return into some
sense of normalcy because there was like a lot of
things out of culture in terms of asset prices. And
I think right now, with this fear coming back into
risk assets, I think you're getting more fair pricing and
the market is starting to price risk correctly on the
back of Alpha best results and the big AI spend.

(21:38):
I mean, they proposed to spend about one hundred and
eighty five billion dollars into the AI spend, and looking
at Microsoft results last week, the opportunity cost of investing
so much money into AI and it not being revenue
generating very quickly is really scaring off the market. I
mean right now, even at pre Marketer, we're down about
four to five percent, and I mean Advanced micro Devices

(22:00):
was down about fifteen percent. So overall, just not a
not a good picture on the US this morn this
early morning and on us.

Speaker 2 (22:08):
Open Yo Bill Nonjana, thanks so much, really appreciate that time.
VIP Clients manager at prime XBT.

Speaker 4 (22:15):
Seven O ten with Stephens email him on Stephen at
seven O two dot co DOTZ.

Speaker 2 (22:22):
Eighteen minutes now to seventh the time. Good to have
you along enough of course, how to give in touch
oh seven two, seven oh two one seven oh two
are probably the quickest way. Lis Saka Technologies today saying
it's booked its first profit in the quarter to the
end of December, operating income by up by over two
hundred and sixty percent, also hoping to finish its type
with bank zero in the next couple of months. Lisaka

(22:44):
has been buying tech firms. It provides all sorts of
services billing at some supermarkets prebay their time being sold
through others. Lincoln Mali is the CEO at Lisaka Technologies.
Lincoln good evening, good to chat on the Money show.
So thank you very much. Indeed for your time. You
made a profit of sixty one million round there was
a loss of nearly six hundred million in the previous period.

(23:04):
I mean clearly a lot changed in that period.

Speaker 8 (23:08):
It's been a long James Steven for the last four
and a half years. We've repositioned the business through organic
growth and some inorganic growth, you know activities, and we're
quite happy that we are at this point. We had
signed posted to the market that will end the financial
year in a net in compositive position and this is

(23:32):
the first quarter where that is starting to happen.

Speaker 9 (23:34):
So quite pleased with the results.

Speaker 2 (23:36):
You seem quite optimistic the momentum will continue to grow
quite strongly through the year. Now, is bank zero a
big part of that?

Speaker 8 (23:44):
No, Steven, We have not included bank zero in our
guidance numbers for financial year during twenty six because although
we've got competition comdition approval, competition tidbinal approval, we're still
waiting for the potential authority approval. We think that in
the businesses that we have, both the merchant business, our

(24:07):
consumer business and our enterprise business have got enough momentum
to be able to carry us through to be able
to meet our guidance.

Speaker 2 (24:15):
How are you feeling about the banks here? Business? Obviously, well,
will wait for that approval. But I mean there's a
lot of competition in the banking space. There's so much
going on. You've got to make your money in different ways.
Otherwise you've got to change its name. I mean, you
must be on one level rubbing your hands and on
the other level, you know, how are we going to

(24:36):
do this?

Speaker 9 (24:37):
Yeah?

Speaker 8 (24:37):
We we real like players on the outside waiting for
the ref to get the game started. So hopefully the
the the regulators will be able to give her the
go ahead. But a couple of things that are important
for us. Firstly, the biggest signal was if entrepreneurs like
Michael Judan and Ya Tin could build a business from

(24:59):
the ground up and then when we buy them, the
ninety percent of the transaction is through equity and for
them to be buying into the future of Lisaka is
a big sign for us and the first and out
for a fintech to buy into a bank. The second
thing is that this gives us an opportunity to change
our business models fundamentally.

Speaker 9 (25:21):
Today we borrow.

Speaker 8 (25:22):
Money from commercial banks and on land to consumers and merchants.
But with Bank zero, will be able to fund those
loan books through bank deposits and that will be about
a billion RAN swing positive in our balance seat and
give us a much more efficient way of funding our

(25:43):
loan books and be able to give us the opportunity
to grow that lending even further. And lastly, they built
an amazing text check which is quite.

Speaker 9 (25:54):
Modern and when you combine.

Speaker 8 (25:56):
That text deck with our large distribution in town ships,
and villages with merchants and consumers. I think this is
going to be a nice tech and touch model going forward,
will give us the opportunity to compete.

Speaker 9 (26:10):
Yeah.

Speaker 2 (26:11):
No, I mean I'm very intrigued and looking forward to
see how it all plays out with you and the
other players. One of the things you do, and I
don't need to remind you, but one of the things
you do is that you also sell prepaid airtime. We
saw from Vodcom yesterday they seem to be getting less
revenue from prepaid calls. Are you finding that as well?

Speaker 8 (26:34):
Yes, we think airtime is an area that is going
to see more competitive dynamics with firstly consumers changing the
chunnels where they buy their airtime, and secondly there's mugin
compression in that space. We're facing the same headwinds, but
in the model that we've built, we've built a model

(26:56):
that's not based on one product set. We've built a
model that gives us opportunities with more solutions, and hence
we've bought the different companies that we've bought. That gives
us the oppertionality to give a holistic solution to a client.

Speaker 2 (27:11):
Is it just the competition or is it also about
behavior change and people making calls on WhatsApp.

Speaker 8 (27:19):
Absolutely, the change we'll see. There are also other dynamics,
people sometimes going to you know, Wi Fi hotspots when
they don't need to buy airtime because they can be
able to you know, connect to the network and things
of that sort. So just openly just focusing on airtime

(27:39):
is not the way to go. There are other ways
that we are working on to be able to deal
with the market pressus. Whether it's how we buy the
airtime and how we sell the airtime and what we
bundle with the airtime are all the kinds of things
that we've got cooking, you know a kitten.

Speaker 2 (27:56):
You've also been part of the launch of our first
safe South Africa's first stable coin, a cryptocurrency linked to
the RAND. I mean, so much is changing in that space,
but of a tough time for a lot of cryptocurrencies
at the moment. Linking well, I think, yeah, so yeah,
I was just going to say, what role do you
think our stable coin is going to play?

Speaker 8 (28:15):
I think the stability that's brought by a stable coin
is the fact that it's packed to a fiad currency.
Others are linked to a commodity, but there's ours is
packed to our RAND. We think that all of these
technology are great. Technologies are great when they're solving intactical problems.

(28:36):
Cross border payments is inefficient, cross border payments are expensive.
Cross border payments do not give people a cost effective
ways of doing this. This gives people security and so
we've partnered with Luna some special affect management easier equities
than others in order to be able to enable people

(29:00):
to have twenty four by seven settlements of.

Speaker 9 (29:03):
Their cross boarder pinyons.

Speaker 8 (29:04):
Also, this gives us an opportunity to connect the RAND
to global blockchain economies and also be able to support
fintial inclusion with something we're quite patient about.

Speaker 9 (29:14):
But what makes this unique is that we're building on
global tens.

Speaker 8 (29:18):
But we're tailoring this to local needs and that's why
we're quite proud to be part of this partnership with
the other players to bring Zaru into the market.

Speaker 2 (29:29):
Lincoln Marley, thanks so much for the time. The CEO
at Lesaca Technologies. It's eleven minutes now to seven.

Speaker 10 (29:36):
The Money Show, Stephen Crutchez is brought to you by
Absolve Corporate and Investment Banking balancing economic growth with ecosystems.
That's how they've invested in your story.

Speaker 2 (29:49):
Nine minutes is seven the time. Well, last week you
heard the head of Operation will and Leila Rudy Dix
on The Money Show saying he believes that reform is
making progress. There are some areas who was worried about.
We did have a conversation around electricity Business Leadership essay
today relating its own score on its own reform tracking mechanism.

(30:09):
They say the overall score is now twenty four percent,
but it is worried. I think the word they use
is reversal about certain reforms in the electricity sector. The
CEO Businesses says Samvuso SASA, good evening, as I understand
that the main issue in electricity at the moment seems
to be government's change of heart over whether to properly

(30:30):
break up ESCUM and have an independent system operator. Is
that the big issue for you?

Speaker 11 (30:36):
That is definitely the big issue. We see this as
a reversal, as a U tend as a capitulation, as
a deviation. As a dealer, I can't think of an absynonym.
You know, it's all of those, you know and more
because we're very clear about what we're doing when we're
actually said we're going to unbundled es COM. And I

(30:56):
think that is an electricity regulation at steven is actually
very constructive on this one. It mandates the creation of
an independent transmission system operator and it lists as one
of the TSO's duties being a transmitter. A transmitter is
clearly defined as an entity that owns and operates the
transmission system. This implies control and ownership of the grade.

(31:19):
It also is very clear, you know, in that NASA
has to license the TSO to operate the transmission facilities,
which requires the TSO to demonstrate control over the assets
it intends to operate. Now, what the MILITA is announced
in December is not in line with this mandate actually
as come retaining the ownership of the country's transmission assets

(31:41):
and infrastructure, you know, it represents a significant deviation from
the reform path that has been articulated and committed to,
and it seriously undermines the intent of reform, and it
seriously weakens the independence of the transmission function. And this
is actually an economic consensutive.

Speaker 2 (32:00):
I mean, as I understand the argument, what they're saying,
what government says is if they break up ESCUME, it
could trigger across default from eskam's lenders. In other words,
all the money that these lenders are owned by government
could become due. I mean that seems a bit apocalyptic
to me. Is there something else going on?

Speaker 11 (32:19):
You know? I absolutely agreed, because when you talk to
they only had the engagement with the lenders, by the way,
was it two days ago or what were the cases,
and that actually didn't go well. So I really think
that that is a red herring because when we took
the Transmission Company, the establishment of National Transmission Company of
South Africa out of ESCOM, lenders were engaged because the
same consent you know, actually had to be addressed, you know,

(32:42):
to see whether this is actually going to trigger that covenant.
So lenders knew that after the removing of the NTCSA,
there's now going to be the second part, which is
actually going to be the removal of the assets into
the NTCSA to hold for the Tso, so this is
not a new engagement that they were actually going to
have with the lenders. So when you actually talk to
the lenders, when you talk to the bankers, when you

(33:04):
talk to the asset managers. They will actually tell you
that the issue of the transference of assets, you know,
the issue that is common is li tually raising as
a concern. Here is something that they deal with every day.
Renegotiating that covenance in assetra structuring is neither nay well
nor is a taboo. It happens routinely and daily, and

(33:25):
I think we are better off as a country, they
are better off as lenders. Sitting with a TSO that
has these transmission assets, which can therefore have a strong
balance sheet Steve in a case which they can raise
the four hundred billion rands you know that is required
to build the fourteen thousand kilometers of transmission lines that
this country leads. And without those assets, it puts this
TSO in a very weak position. Because the National Trailer

(33:48):
has been very clear that they're not going to give
government guarantees to this thing. It has to find a
way of operating on its own. And the strength it
was actually going to have is having these transmission assets.
Now this action really undermines all of that. So this
feels for me as if we are actually protecting es common,
we're not driving national interests. And it's very interesting because
the Minister has continuously said that what I'm doing here

(34:11):
in the Spies energy reform is content is not protecting
comp It is about ensuring that this country has energy security.
So we are seeing now the conflation stealing of s
CON's institutional interest with the national interest. So it is
very concerning and I really think that we're going to
have to find, you know, a resolve resolution for this issue.

Speaker 2 (34:31):
I mean, I worry that this dispute. I mean generally speaking,
the business sector, the private sect, many other parts of
society and government have been on the same page. I mean,
could this sort of you know, unravel all of that
the last thing we need at this moment, just as
we're seeing some progress.

Speaker 11 (34:49):
Absolutely, you know, And I think I worry that because
the energy reform has been the first one, you know
to actually show the world, not just South Africa, how
serious we are about from remember the S and P
just that traded us in the last quarter, you know,
saying they're very pleased about the progress that we've made.
Now we have said to investors all over the world

(35:09):
we are opening up, you know, in liberalizing our energy market.
Come and invest you know in South Africa, and come
and bring your mind, and that has brought the money.
Two hundred billion rants west of investments are underway, which
are actually going to need you know, this transmission company
to will their electricity to.

Speaker 9 (35:27):
The end user.

Speaker 11 (35:28):
Now with s com keeping you know, the TSO or
the transmission assets deciding you know, who's actually going to
be given the willing rights or who's actually going to
be prioritized you know, in the willing you know, is
that therefore you know, going to be fair. So I
worry that this capitulation might actually set a very bad
precedence for transport logistics. For instance, you know, there's the

(35:49):
eleven private rail operators that have actually been brought on stree,
you know, based on certain commitments by government. This government
now unilaterally, without engaging all of this stakeholders, decides to capitulate,
decides to therefore remake on their commitments, decide to actually
take a different cost, you know, which seriously undermines what
we intention, what we initially intended to achieve in as

(36:12):
far as reform is content, we're actually going to treading
a very dangerous path as giving and this could actually
be quite yeah, so an economic content.

Speaker 2 (36:23):
Really let's just talk about where there has been progressed
and we do need to reflect this. I mean the
logistics area in particular. We do start to see the
major changes and that is important and some of that
could have an economic impact, if not already very soon.

Speaker 11 (36:38):
So what is very interesting for me is that the
network industry is stiving for us two three years of
the ago business was actually saying network industries is where
we actually need to start for network industries, energy, transport, logistics,
wartime telecoms. Telecoms was the only one that was functioning
as it should. Energy we have see in progress. Now
the other two that have been legging behind are now

(36:58):
feeling progress. More progress in fright you know that we're
actually seeing in water. So I think that is quite
sexually encouraging because it means that the trading environment is conducive.
And if that is condusive, you know, it means it's
easy to trade and operate in this country. That will
increase business confidence. Business confidence going up will mean investment
will come in. If investment comes in, the growth is

(37:20):
going to therefore tickup. And if the growth ticks up,
you're therefore going to see the unemployment being dealt with.
So frighten logistics is actually going ahead very well. Ten
around blends are showing progress. Translates, operations you know, are
actually improving, you know, the product see participation is advancing.
And the one that is actually interesting for me is
the improvements that we're seeing in the passenger rail with

(37:42):
the South African that is seriously under pleasure you know,
from just an economic perspective. Then being able to now
once again access this cheap form of transport therefore means
that they have more funds you know, in their disposal
for them to be able to contribute to consumer spending,
and we might literuly be seeing it, but you're seeing

(38:03):
a little tickup you know in the GDP because consumer
spending is obviously a huge component of the GDP. So
that is aterually quite interesting. The visas we've spoken about
quite a lot, but I think the one that we're
still excited about, you know, is the fact that we're
virtually exited from the first half playlist, and of course
that made headlines last year. But progress in a whole
lot of areas, including water by the way, so we

(38:26):
are really giving real effects, you know to the reform
agender functioning in this country, and it has really produced
good results versus hum.

Speaker 2 (38:36):
I've also thank you so much really to appreciate it,
the see your business leadership South Africa so much to
sort of look at. I mean, we are making progress
with reform. The problem is when you get to these
difficult bits, and I think for ESCOM to be broken
up is almost the epitome of the difficult bits because
it's government giving up power effectively. I do wonder if

(38:56):
that's one of the issues. We will be talking about
dating app in a moment. When was the last time
you looked at the dating app? Just having a quick
look around. It's seven o'clock.

Speaker 1 (39:07):
And now the Money Show with Stephen credits on seven
o two.

Speaker 2 (39:12):
Let's walk little. The Money Show with Stephen Crutis is
brought to you by abs of corporate and investment banking,
balancing economic growth with ecosystems. That's how they're invested in
your story. At seven after seven the time we will
of course have a your tech feature. In just a
moment you put males Zondie talking about dating apps, they
seem to have run their course a little bit. I mean,

(39:35):
I think for people of my generation, if you ask
the question where did you meet your spouse. The most
common response for a long time was that a wedding,
actually the community was there, your cousin's friends, sister, came along,
whatever it was, and so you would bump into someone
who was kind of from the same strata of society
as you, which is where most people meet their spouse,

(39:58):
and in the end that's how you are meet someone.
I was amazed when about ten years ago I read
that actually in many parts of the world now it
was dating apps, and particularly in places like New York
or London. You know, I know people here in South
Africa who met on Tinder or whoever it was. In
some way it seems that maybe they're not doing as

(40:18):
well to letters. Zondie's been investigating small business focus, you
know for years, I mean literally years. We've had president
after presidents saying that they're going to make sure government
doesn't pay small businesses. Later and we still have that problem.
Trentwe we'll talk to you about that and then and
then an investment school inflation, how to keep your money

(40:40):
working during inflation. Looking forward to speaking to Vincent, Anthony
Raja and asunder.

Speaker 1 (40:45):
Notche Thelney Show with Stephen Krudis Live on ninety two
point seven and one six FM streaming on the Prime
Media plus.

Speaker 4 (40:55):
NAP and DStv channel eight five six.

Speaker 2 (40:58):
I've been keeping half an eye on the various inquiries
in Parliament into the Road Accident Fund and some of
the issues. I mean, you've had the previous board making
claims and trying to defend themselves, and I mean there
are a couple of things that just, you know, stand out.
I mean, the one is the way in which it
is run. It's just no longer feasible. We need a
whole new system. And I get a sense that sort
of political momentum is growing for that. There was a

(41:21):
wonderful quote that explains I think the Road Accident Fund
but many other institutions as well, coming out of the
Inquiryum Colleccor Klangwe he's from the IFP, he's been the
national spokesperson for some time. He's also now the Deputy
Minister of Transport. He was the chair of the Standing
Committee on Public Accounts and he was involved in trying
to sort of curtail some of the worst of the

(41:42):
Road Accident Fund. And he was testifying and he said this,
He said the Road Accident Fund was a playground of
ulterior motives. I love that a playground of ulterior motives.
And actually, when you think about it, there are plenty
of other places that have been like that. There was
a time when the National Lotteries Commission was like that.

(42:03):
You know, people came and basically play to enrich themselves.
Those are the ulterior motives You've seen it in other places.
Sometimes I think you see a council that can look
a bit like that. There's a sort of you know
that sort of just looks like I means Abela, And
it's probably hard to argue it wasn't that a playground
of ulterior motives, And that seems sometimes to be the incentive,

(42:24):
I'm afraid to say, to get into certain positions. We
see it with the police too. Sometimes people want to
get into senior positions not because they get more money
or more sort of legal power, but because of the
power it gets them in other ways. Just wonder how
many places you can think of that are a playground
for ulterior motives. Oh seven two seven two one seven

(42:45):
two The Money Show take Thursday. Well, it might be
that when you wake up in the morning and you
look at your spouse, you think the day that you
swiped the right way to meet your spouse on a
dating and in fact, the mayor of New York or around,
Mam Dany originally from Cape Town, says he met his

(43:06):
wife Mara Douergi, on Bumble, which is one of the
many dating apps. But many people are saying, actually they're
suffering from swipe fatigue. Super Medella Zondi, Good Evening Are
takeare expert? What's wrong with everyone's thumb? Super Meleele.

Speaker 12 (43:23):
Hello Susan. So yes, it seems like people are suffering.
But the thing is a lot of these platforms that
we use on I think about any social media platform,
for example, the build for us to keep on swiping right,
because you have many options where there's many options of content.
In this particular case, you have many possible suitors. So

(43:43):
you'll keep on swiping until you think you're looking for
you're finding the perfect match or the one who is
more perfect than the previous one that you thought was
was perfect because you found a better one. So people
keep on then just keep on swiping, and so that's
what's creating this problem. And you find that someone five
years later, but like one of you know, this app

(44:04):
for about five years, I still haven't found anybody yet.
I haven't reached his zoranmam done. It's luck in finding
a suitor, and so that's basically what it is. And
so they're saying, well, there's a slight fatigue on these
apps where people then possibly start to give up and
to start thinking that they'll probably never find someone they

(44:27):
can spend the rest of their lives with.

Speaker 2 (44:29):
I mean, is there a research and how successful these are?
And I mean, you know, there's the short term success. Well,
I met someone who we've been going out for a month.
There's the long term success. I met someone we've been
going out for two years, or I met someone who
got married, or I met someone who got married, and
over the longer term wasn't great.

Speaker 12 (44:49):
Where As you say, success is measured in different ways,
and for a very long time, a lot of these
platforms are measuring their success by the number of people
that are staying on the app. But it seems like
people go at less and as they go back less
and they start to worry about whether they're still as
successful as as they used to be. And so it

(45:11):
depends on how you measure success. But people are there
to find someone that can possibly spend the rest of
their life with. They're not there to be kept on
for the next five years. And as more people get older,
perhaps than they need to start to appeal to younger
demographics as they get on, because when they started, millennials
where the people who were possibly starting to look for

(45:34):
life partners. But as with glen Z, now gen Z
is competing with so much and so much online, and
they're the ones who are saying that, actually, no, we
don't want to be on these mess anymore.

Speaker 2 (45:46):
I suppose what these apps really need is a proper
turnover reviewsers. I mean, what should happen over the longer terms.
You might use it for a few years, your life
of being a person who is single looking for a
relationship in that way will come name because you meet
someone on the app and so you move on. I mean,
I'm presuming once you've met someone you don't look at
the apps again. But so much has changed, I mean,

(46:08):
maybe I'm wrong, and that's what should happen. What they
don't seem to be doing is sort of regenerating or
getting new users in.

Speaker 12 (46:20):
Well, that's the thing, right, And also the reasons people
are using some of these apps because I also can
found is that there are people who are not there,
who are there as an experiment. They want to test
their flirting skills. For example, some people are faking who
they are. Remember the Tinder swindler for example, They're faking
who they are. So it's the authenticity of what you

(46:43):
can find on these apps as well, which also then
results in people who are possibly thinking that they're not
going to find authentic relationships if they're there, or they're
not going to find the right kind of person who's
possibly the best person for them, or they just are
there to play around them to test whether they can

(47:04):
flirt or not.

Speaker 2 (47:06):
So these appsods they're going to use AI. Now, Super Maleta,
I'm old enough to know this that if you want
something to me to be more authentic, AI is not
where you start.

Speaker 12 (47:18):
So what they're saying is that because of authenticity issues,
AI is going to if you give it permission. And
this is also where privacy issues also might come in.
AI might go through your fossil gallery to find things
that you are interested in, and then it's going to

(47:39):
limit to the search. So instead of constantly showing you
a variety of individuals that you can pick from, it's
going to limit to the search and say, well, maybe
there are these five individuals and one of the five
is your best mate in life as opposed to five
hundred and you the scrolling. But again, it's how much

(48:02):
you are given up to the app itself, because it
needs to go through certain information, It needs to go
through your device in order to figure out who you
actually are in order to or to find the perfect
match for you.

Speaker 2 (48:16):
There's another thing I suppose, which is that I mean
at a lot of people are just a little bit younger,
just a little bit younger than me, so familia, I
have sort of grown up thinking, well, this is how
you find a partner, right, But it is very new
in human history. Now, I must just say different societies
have had different ways of doing this for a very
long time, and the idea of a romantic love and

(48:39):
getting married for that reason is only about maybe three
four hundred years old. In fact, some societies families arrange things.
In some societies, families arrange things after advertising in newspapers.
All of that, I do wonder if maybe apps, well
the dating apps, I think, will always be around. I
mean they've been dating services for you know. Maybe seventy

(49:01):
years that just won't be as prominent, will kind of
lose interest in them. It will be something somebody does
for six months and moves on.

Speaker 12 (49:08):
It also depends on how society evolves because there's also
a safety element right where in the past you could
you use the example of a wedding, whereas people are
now more wary of meeting people in public spaces and
people tend to and also our social skills. Because you
spend a lot of time on digital devices, a lot

(49:31):
of people have lost that human to human interaction that
used to happen easily back in the day. And so
it also depends on how our society evolves because with
this as well, it goes to even where you are
finding that people will have AI boughts being companions for example,

(49:53):
in their lives, and that's being tested in certain parts
of the world where people have machine and opposed to
human companions. So again it really does depend on the
direction that different societies take as they as they evolve,
and how much humans and human interaction actually happens and

(50:14):
how much. I mean, we've actually even been finding out
that the people who prefer spending their their time alone,
so so those people might think that a machine might
be a better companion than using a machine to find
a human. You can spend the rest of your life west.

Speaker 2 (50:30):
With every instinct and every fiber of my being. I
know that's wrong, it has to be wrong.

Speaker 7 (50:36):
But you need humans.

Speaker 12 (50:37):
You need humans in your life. You need humans to
point communicates with Unit, you need humans to divan up
as a human. So you need humans.

Speaker 2 (50:46):
I agree with you. There, Oh, super Malaenna, we need
to have a beer. Supermellernis experts in person, Thank you
very much. Indeed, nineteen after seven.

Speaker 1 (50:57):
The money shows small business focus.

Speaker 2 (51:00):
So often when I speak to small businesses, speak to
the people who run them, and hear them here and
something that comes through is such a consistent thread is
this complaint about late payments. You just can't get the
money your own. Now, if you're a bigger company, you
have a whole department that does it, You outsource it,
You get an oak, you put them in a big suit,
and off he goes and gets you the money. You're

(51:20):
a small business. The oak you've got to send us
the owner and she's busy, she's got other things to do.
On Twente is the managing director advantage at Viountary, Lord Clado,
good to see you, Thanks so much for coming in.
I mean, we hear this complaint all the time. It
must have such a big impact.

Speaker 5 (51:36):
That's the good evening, yes, But on one of the
biggest risks that we are picking up now when it
comes to smb is. It's not that there's no business
so that they kind of get seen, but the biggest
risk they're feeling, especially for thosem is that do business
with government, you find that most of them they'll complain
about the fact that the issue of the late payments

(51:59):
and it's something that it's impact has a very very
you know impact when it comes to one cash flow.
You know, it can get to a point where you
find that rental is not paid, salaries are not paid
because one would have really you know, got this particular project,
you know, and that's the hope that listen. Business is

(52:19):
growing things that in a round you spend a lot
of money for like a month.

Speaker 2 (52:23):
Or two to deliver that particular project.

Speaker 5 (52:25):
Then you send your inversity to a particular department, to
a municipality, you find that instead of you know, the
normal what inational Treasury says that it should take at
least thirty days for you to get paid. But on
average it takes about turn righteen eighty six days just
for municipalities to pay their inverses. And that's what audited

(52:45):
you know said actually to say about forty seven percent
of the municipalities don't pay their invoices on time. And
and and again that's not only municipalities, but even national
and provincial departments are some of the biggest cultures.

Speaker 2 (53:00):
Relation to that. In my article I know about but
the five billion rants that.

Speaker 5 (53:03):
Are not paid to sms who have delivered work, submitted
the inverses on time. However, because of the bureaucracy that
you will have, and therefore that's a very important aspect.
I believe that in twenty twenty six we really have
to bring it out out there, especially to government, to say, look,
public precummend is very important.

Speaker 2 (53:23):
It does assist sm is.

Speaker 5 (53:25):
By the way, government is one of the biggest finders,
you know, the expeditions of over two trillion. So therefore all
of these goods and services that are buying SMS do
participate in terms of that. However, even though that sm
is assumed that okay, things are going to get better,
but if you don't get paid on time. You find
that your business now you need to scale down a
little bit. So therefore these are the issues that government

(53:47):
has to take it very seriously.

Speaker 2 (53:48):
But more than important is to say how do we.

Speaker 5 (53:51):
Implement consequence manishment Because the policies are clear, the regulations
are clear till BEPFMA is clear that pays suppliers within
thirty days. How Ever the officials don't realistic to that
and the impact, you know, it becomes pretty much layer.

Speaker 2 (54:06):
So, I mean, the reasons why this happens. In some councils,
they don't have the money. In some councils, they are
processes that have been put there for quite a few reasons,
for quite a few very important reasons, because of situations
around the fact that they've had problems with misspending in
the past and things like that. Those are all very important.

Speaker 5 (54:29):
It's wrong, but at the end of the day, it
all boils down to the controls that should be implemented
at a garbine level because it's not justified.

Speaker 2 (54:39):
You know, the fact that tender has been awarded. Then
you find that at the end.

Speaker 5 (54:45):
Of the day someone says, look, the budget is not
there for that so these are the controls that have
to be implemented. These are the controls have to be
monitored before you allow suppliers to come in into the
business and then to find that they deliver the product right.
And then once the product is delivered, then it takes
all of this number of days and some of those issues,
you find that it will be submitted on time right,

(55:08):
either a particular manager is not available to sign off
on that particular po or either particular CFO is not
around to sign off all of those pios. So these
are the solutions that I think some somehow we need
to bring to the fault to say, look, it shouldn't
affect the business owner because the impact at the end
of the day, we always talk about a job creation

(55:29):
and the moment and all of a sudden, you're not
coming to the platy.

Speaker 2 (55:31):
You're destroying the same thing that we always talk about. So,
I mean, we've had three presidents promised that this will
sorted out right and it hasn't been done. Now, now
I would like to think that they were they meant
what they said. Yeah, the reason it didn't happen wasause
it's actually very hard. Now, I mean, government generally, and

(55:52):
I look at the testimony we're seeing with the SAPs.
I mean it's someone again, someone uncument And I can
see a situation where the moment is easier to pay someone,
people are going to say hold on, hold on, hold on.
That means it's also easier for the money to go
to the wrong person. I must just say, though, that
with the procedures we have now, the money still sometimes
to get to the wrong person. So I don't know

(56:13):
if that's an argument.

Speaker 5 (56:14):
Yeah, and and and and what we've picked up is
to say, yes, this has been such so many times,
to say let's prioritize early payments. And policies have been there,
regulations have been there. But what is laking heesterevin is
consequence management.

Speaker 2 (56:32):
At the end of the day, government you've been reading
in order to General's report again exactly.

Speaker 5 (56:36):
That's only if we can get to a point where
consequence management, public officials are held accountable and someone has
to answer, someone has to lose a job, or someone
has to pay for all of this interest and penalties,
because government is really incurring huge amounts of interest and
penalties abou footing bill on rands in the Detentioneneral Report
twenty and four that municipality. Municipality is incurred the result

(57:00):
of lead papers, but at the end of the day,
who's accountable for that and there's no one. So the
moment we solve that issue of consequence management and we implement,
then we'll have it burrow way. But we've noticed that
so somehow corruption also clips in because you find a
sequestion now that if you don't have the relationships inside

(57:21):
to push your inverses, you end up having what we're
picking up during the day, that you will have internal
stateholders or prioritizing certain inverses.

Speaker 2 (57:30):
Other inverses are not prioritized. And it's not supplys like
that at all, not at all. John Claido, good to see.
Thanks so much for coming in and really do appreciate it.
Clado on Twentwest Managing Director, Advantage Advisory, The Money Show,
Investment School. Well, in Investment School, we're talking tonight about inflation.
There was a time when there was a politician. His
name was Ronald Reagan. He was the President of the

(57:51):
United States in the nineteen eighties, and he came to
office at a time of very high inflation. And he
said one or two things about inflation that have kind
of rung out a time. One of them was inflation
is the quiet thief was stealing our future. And then
the one that stuck in my mind. I did look
for this on video and YouTube, but I couldn't find
any video of him saying it. He said, inflation is

(58:14):
as violent as a mugger, as frightening as an armed robber,
and as deadly as a hitman. All of the violent
crime imautry is so republican in the nineteen eighties. But
that's a different story tonight. We're talking about inflation, how
to protect your investments during inflation, and particularly with all
of the changes matene around the inflation target. What it

(58:35):
means for you. Vincent Anthony Rajer's the CEO and co
founder of a differential Capital A Sunder Notches, the chief
investment officer at Marsi Asset Management GENS. Thanks so much
for coming in, ready to appreciate it, and I really
do appreciate the time. Someday, let me start with you.
Perhaps the recent change to the inflation target, so it
was three to six percent, which meant it could go

(58:57):
quite high compared to other places. What it's three percent
what does that kind of mean for interest rates over
the longer term, It would presumably mean they're going to
be lower, but it'll take a while. Yeah, thanks Stephen,
and good evening to the listeners. So it is an
interesting one, and I think the concept that we start
with here is the setting of inflation expectations. And so

(59:20):
maybe jumping straight into it, if you think about wage negotiations,
and now we at the high heart of those negotiations
when you're talking about what are the increase is going
to look like? So when inflation expectations get anchored around
a certain level, that's kind of where you're then starting
those conversations. What it then does, It then feeds into

(59:43):
what we see in terms of actual realized inflation in
the economy. So if we do, indeed find that wage
negotiations anchor or around those levels, then you'll find that
maybe inflation sort of realizes at those levels, which means
perhaps the interest rates level becomes maybe more predictable, less

(01:00:04):
there's probably less likely to be let's say, violent increases
or swings as it were. But of course the risk
is that to the extent that that inflation expectation is
not anchored and set then you would have a reserve
bank that needs to hold interest rates higher in order
to then contain inflation and stay true to this target

(01:00:27):
that they've set, and therefore be you know, there's that
word credibility of the central bank, and so move expectations
back towards this target that they've set. Vincent, the credibility
of the central bank is everything, as I think America
is about to be reminded. But you also have to
meet the target, otherwise you lose your credibility. And when

(01:00:50):
you have such a broad target range of three to
six percent, it's actually relatively easy to hit your target.
They'll hardly ever out of the band. When you have
to hit three percent, it's much harder to hit the target,
not just because it's lower, but because it's a much
more specific figure.

Speaker 13 (01:01:04):
Yeah, that's true, Stephen, And personally sometimes I just wonder
about the wisdom of that.

Speaker 2 (01:01:10):
To your point, it's very difficult too.

Speaker 13 (01:01:13):
In South Africa's case, we have a lot of exogenous
factors that drive our inflation. So it makes interest rates
by themselves sometimes a blunt tool. And if you just
think about the oil price and how much that infects affects.

Speaker 2 (01:01:27):
Transport costs and things like that.

Speaker 13 (01:01:29):
So you know, sometimes I'm not sure sure how effective
the Reserve Bank will be in certain instances, but that's
the route that they've taken, and certainly to asunders point,
at least on the demand side of inflation or the
expectation side, hopefully that dampens that. But there's the money

(01:01:50):
supply side, which is yeah, that's that's the tricky part.
That's a tricky beast to tame.

Speaker 2 (01:01:56):
I mean, I would have phone in now one double
A three h seven two as the Reserve Bank governor.
Wouldn't he say, remember what it was like before two thousand,
Remember what it was like before that inflation target was
brought in and before we did it in this way,
I mean, Vincent, wouldn't he remind us of of how
high inflation and interest rates were? Then?

Speaker 13 (01:02:17):
Sure, and you would be spot on, and certainly there's
no argument against the policy. I think sometimes one should
also realize that policy itself has limits.

Speaker 2 (01:02:28):
Yeah, and I guess that's the only point that I'm
trying to make.

Speaker 13 (01:02:30):
When you try and tie it down to such a
hard and fast target like three percent, you know, you
have to be wary that you could you're under risk
of your your credibility lapsing asunder.

Speaker 2 (01:02:44):
There's I hadn't heard this phrase before. A hurdle rate
for people who are trying to grow your wealth in
real terms, so you're obviously trying to make yourself richer.
What's the hurdle rate?

Speaker 14 (01:02:55):
So if I've got andro drand well, let's say billion rate,
let's be init So I've got a billion rand and
I'm investing that on behalf of somebody who wants to
retire in twenty years time, fifty years time. Now, the inflation.
Inflation is your biggest enemy in that sense, because with
every passing year, that billion rand left untouched and without

(01:03:21):
growing ahead of inflation, loses its purchasing power, which means
that that pension or that person when they get to pension,
the purchasing power of their money is gone. So as
an investor then and investing on behalf of that particular client,
you would then say that there's a hurdle that I
need to meet, above which I'm then achieving a real return.

Speaker 2 (01:03:42):
So that hurdle would then be whatever that inflation level is.

Speaker 14 (01:03:45):
Because if I've got that billion rand and I needed
to beat inflation, if I'm just beating inflation or not. Actually,
then I'm not meeting the very basic in terms of
being able to keep the purchasing power of the money
of that particular individual with reference to the erosion of inflation.

Speaker 2 (01:04:03):
Okay, so Vincent, if inflation comes down, this would mean
the hurdle rate is lower. Yeah, the hurdle rate is lower.
It should, in theory be in theory be easier to achieve,
at least in nominal terms. So in nominal terms, as.

Speaker 13 (01:04:19):
In it's easier to beat three percent than it is
to be three to six percent. But there's an interesting
dynamic and that as inflation itself comes down, the growth
in asset prices also.

Speaker 2 (01:04:32):
Tends to come down. So you know, it's what investment
managers often focus on.

Speaker 13 (01:04:37):
Those that are focused on the hurdle rate that you
speak of is the what we call the real rate,
which is the rate above inflation. That's essentially what you
want to ensure, so you want to When investors say
in real terms, I want to achieve two to three percent,
it's saying whatever the inflation rate is, I'd like to
achieve two to three percent more than that, And that's

(01:04:59):
generally where the focus is.

Speaker 2 (01:05:02):
Why do asset prices come down when inflation goes down?

Speaker 13 (01:05:05):
Okay, So if we take the equity market, which is
probably the most recognizable form of that most people would
be aware of, at the heart of what drives an
equity price or its increase is the rate at which
its profits increase, and the primary driver of that is
its own revenue. So if a system has very high inflation,

(01:05:27):
like a couple of years ago where Turkey had inflation
of massive numbers and their stock market went up like
a bullet, because what happens is the revenue of those
underlying companies is also going up very quickly, probably faster
than their cost, and then you have equity markets exploding.
What you can have on the other side is when
inflation gets way too low, as you can see now

(01:05:51):
as what's happened in China, where you actually have deflation,
it's very difficult to grow your revenue, and so that
means that asset prices themselves grow at a slower pace.

Speaker 2 (01:06:02):
Okay, that makes sense to me now asunder, So inflation
across last year was three point two percent, the lowest
and what was it twenty years I think people were
lots of patting on the back and all the rest.
It was three point six percent in December. We expect
a new figure in about two and a half two
weeks time. There's specific things that keep inflation up. Now.

(01:06:23):
I'm going to start off with electricity going to move
to a beef prices and that's that's foot and mouth disease.
So in a year that should be eased out, but
electricity prices will probably still be with us. I mean,
what other things are keeping inflation up at the moment? Coffee?

Speaker 9 (01:06:38):
Would you?

Speaker 2 (01:06:38):
Would you imagine?

Speaker 14 (01:06:40):
I think it goes back also to what Evince was
saying around exogenous factors. So we've been fortunate with oil,
so that's gone in our favor because that's been a
bit subdued as well as the strength of the end.
But also I think on the upside or on the
on the higher or increasing or higher inflation. Higher side
is municipal prices, so that's rates and Texas. You know

(01:07:05):
you mentioned electricity. Water is another issue that's coming up now,
and I think that's why they also big outcry in
the country around infrastructure and making sure we reduce those losses.
I think, as you say, you know, we we also
at the whim sometimes off commodity prices as they move
up and down, so soft commodities, maze, wheat and these

(01:07:27):
types of things in terms of those prices as well,
I think some.

Speaker 2 (01:07:31):
Of the the the.

Speaker 14 (01:07:33):
In the baskets, as you mentioned, you know, food transports
has been an issue in the past, less so now
I think it's it's a bit subdued given what's happened
with with with oil. So I'd say those are probably
some of the main ones. And I think, again, just
to emphasize Vince's point, some of these factors are actually
a little bit out of control, and that's that's really

(01:07:54):
why I think, you know, sentiments around the target being
quite low and you know, maybe posing somewhat of a
challenge in terms of maintaining its given exog aspectors.

Speaker 2 (01:08:05):
Seven two seven two one seven o two Your questions
tonight for Investments School, we're talking about inflation and how
to beat at Vincent Anthony Raja, CEO and co founder
at Differential Capital, asunder Notchez, chief investment officer at Marsi
Acid Management. It's twelve minutes now to eight.

Speaker 10 (01:08:22):
The Money Show Step Encroachers is brought to you by
Absolve Corporate and investment banking, balancing economic growth with ecosystems.

Speaker 2 (01:08:30):
That's how they've invested. In your story The Money Show
Investment School ten minutes to the time, we're speaking to
Vincent Anthony Raja, co and co founder at Differential Capital
as under not a chief investment officer at Marsi Acid Management.
We're talking about inflation as under the the JCU all

(01:08:52):
share last year, everyone was talking about how well it did.
Remember in September thirty thirty percent ended up thirty five percent,
mainly because of gold. What kind of issues, what kind
of opportunities now offer sort of inflation beating value? You're
looking for something that you know is going to appreciate
it better than three percent, but rarely better than five percent.

Speaker 14 (01:09:15):
Correct, And I think you know it's it's a very
very good point around the performance of the JC because
it always you know, you had gold and the and
the other precious metals PGMs, platinum group medals also doing
quite well.

Speaker 9 (01:09:29):
You know.

Speaker 14 (01:09:29):
Generally, though to your question, you'd be looking for assets
and companies that have got the ability to pass price increases.
So so you know, put differently, if I sell a
product and that product is in demand for whatever reason,
and you know, it's a really good product, and I'm
therefore able to push through the price increase that I desire.

(01:09:52):
So I can say, look, I you know, I want
to push through a ten percent price increase, and because
of the the cacteristics of that product, I'm able to
do that. So if I if I look at it,
then from that sort of basic economics, you're looking for
those companies that if we're talking equities, the companies have
got the ability to do that because they then have

(01:10:13):
the ability to grow ahead of inflation and ahead of peers.
I think if you look more broadly in other asset classes,
you know, bond market did very very well as well,
and I mean you could argue on a risk adjusted
basis it's probably done, you know, quite comparatively to to equities,
if not better. But even there so you you then

(01:10:33):
evaluate and say, look, if I'm getting you know, eight
eight eight and a half percent from from in the
bond markets as eels, even if have come down, it's
not too bad relative to three percent in terms of
so I think you've got a rail rate that's quite
attractive in that environment. So so I think those are
the characteristics of assets that you'd be looking at and

(01:10:55):
the kind of things that can then exhibit those characteristics
in terms of beating inflation consistently vincent.

Speaker 2 (01:11:01):
There was a time when you would say, well, invest
in property, but I did in Joeburg. What options are there?
Just sort of you know, I mean, I mean property
must be an option.

Speaker 13 (01:11:13):
Yeah, property is definitely an option. And you know, actually
looking around if you drive into Santin now, I don't
think you see much cranes building, any offices. And I
looked at the interesting stat not too long ago showing
the vacancy rates within the office sector in joe Burg

(01:11:34):
and surrounds, and it's dropping quickly for a number of reasons,
many of the older officers being converted to residential. There
are certain times where there's a supply factor that also
comes into your favor. So all of a sudden, when
there's not enough office space, and even when office space
vacancies are low, you know, it doesn't mean all companies
can just fit into that space. You know, it might

(01:11:56):
be just uncomfortable enough that it actually allows the existing landlords.

Speaker 2 (01:12:00):
Start pushing up their prices. And I suspect that's where
we could be.

Speaker 13 (01:12:05):
So yeah, typically through through you know, over long periods
of time, real estate, you know, if you look at
the name real estate, you know, real real implies that
it protects you against inflation. It certainly South African real
estate has been a good inflation edge.

Speaker 2 (01:12:22):
The question though, to ask is if.

Speaker 13 (01:12:26):
Inflation is being managed much much lower, you know, inflation
protection is probably not as big a risk as it
was when inflation was higher and volatile. So it can
then completely change the dynamics of the market. Because another
impact of low and stable interest rates and let's let's
really hope that the governor gets this right, what tends

(01:12:50):
to happen is borrowing rates and rates of banks charge
forget about what the reserve bank charges. The rest of
that also goes down because investors themselves expect lower and
lower returns because they don't.

Speaker 2 (01:13:03):
Need that inflation protection.

Speaker 13 (01:13:06):
Long story short, what happens is companies that are really
good at taking capital, deploying it and generating excess returns
let's call it the growth stocks can become very interesting
places to invest, you know, so companies that are very
good at capital allocation. So that's another thing to look at.
If your view is that inflation is going to be
lower and contained. That might not be the case though,

(01:13:27):
but yeah, if that is your view, then there might
be another set of assets that you don't typically look at,
which you could you could look at.

Speaker 2 (01:13:35):
So I mean Sunda, I mean you would think then
Willworths has I mean I sometimes think Willworths has us
all captive and we never We're never going to get
away from them. I shop right too. Actually, would retailers
be a place where you know, you might get inflation
beating returns no matter what the inflation rate is? Okay,
So that's an interesting one.

Speaker 14 (01:13:54):
So you know inflation higher inflation is actually good for
retailers because when you think about increasing your your prices
every year, if the inflation number is higher, your revenue number,
your actual random amount that you're making crows. So let's
just say I was selling a ton of coup bake

(01:14:16):
beans or no name or whatever for X amount. I'm
sad to say I don't actually know what the price
is of coup bake beans, but let's just say X.
Then I can increase that price by ten percent. So
now it's one point one x. But actually my costs
my shop, the people that I pay, that cost maybe
goes up by five percent, So all of a sudden,

(01:14:36):
I'm actually making more profit. So in declining inflation, that
does present a problem for retailers because all of a sudden,
you know, you can't as a shoprite, for instance, keep
that higher inflation when everybody else is going lower, because
then all the shoppers are going to go elsewhere, so
you need to be competitive. But of course, in fact
it was quite interesting because the retailers have just come

(01:14:58):
out with some updates.

Speaker 2 (01:15:00):
In one words, if I recall was.

Speaker 14 (01:15:03):
Able to pass some inflation relative to the other retailers,
so you know your shop rights boxes.

Speaker 2 (01:15:09):
Boxer was was was one percent deflationary for over the
course of last Yeah, yeah.

Speaker 14 (01:15:14):
Now I just contrast that with a Willi's, which I
think was around four five percent. You know, So to
your point, and maybe to the point earlier, if you've
got price in power in terms of the product, you
then have some lever to pull as far as your
ability to beat inflation.

Speaker 2 (01:15:28):
We've literally got two minutes left. And I mean different
parts of the economy get impacted by different by change,
by by lower interest rates in very different ways.

Speaker 13 (01:15:36):
Obviously, Yeah, so so definitely, and maybe a sector we
haven't spoken about too much today is the banking sector.
So banks sit on lots of let's call it equity
and cash, and when interest rates become low and drop,
that impacts them negatively and hopefully sort of starts to
trigger them to lend more to try and make up

(01:15:58):
for that. So that's an area to watch in that,
you know, let's call it banking stocks might have a
bit of a headwind, but there are other reasons why
I think, you know, there'll be good investments, but I
think this is called the direct impact of inflation is
going to hurt them. Maybe another a quick sector to
just focus on. I know you mentioned gold, but generally

(01:16:19):
resources stocks they are the let's call it engines of inflation.
And you know, you can find that in certain commodities
when inflation does get high and volatile, they do protect
you against it. But again in environments where inflation is contained,
then you've got to look at the metal specific demands,

(01:16:39):
which is which is different. So those are maybe two
extremely different sectors, but just something to watch. When inflation
gets as low as it can get right.

Speaker 2 (01:16:49):
Now thirty seconds at Sunday, is it easier or harder
to invest in a time of lower inflation? If you've
got lower inflation but one target just three percent, it
should be more stable all over the longer term.

Speaker 14 (01:17:01):
Theoretically it should be just because you know the meths
the number is lower, I guess to some of the
things I've spoken about here. It's then identifying those investments
company sectors that have got the ability to sort of
beat inflation.

Speaker 2 (01:17:17):
And I think, as Vinces said.

Speaker 14 (01:17:19):
You know you, the low inflation is not good for
every not not for everybody, So you do need to
be selective. So I'd say maybe easier in theory, but
just shoppens the mind in terms of selecting the right things.

Speaker 2 (01:17:32):
So why we pay you not thank you? See Chief
investment Officer at Marsi Asset Management, Vincent Anthony Rajas here
and co found a differential capital on investment school.

Speaker 10 (01:17:46):
The money show is still encouragers. Is brought to you
by Absolve Corporate and Investment Banking, balancing economic growth with ecosystems.
That's how they've invested in your story.

Speaker 2 (01:17:59):
Well, no inflation beating returns in the US tonight that
our Jones is down point sixty three, the Nasdaq is
down point sixty seven, and the S and P five
hundred is down point sixty two. Tonight's still concerns around software,
is still concerns around spending on AI as well, and
all of that of course having plenty of impact. I
don't forget. We'll be back with you tomorrow the Friday

(01:18:21):
edition of The Money Show. Lots to look forward to,
and don't forget the Cricket World Cup, the T twenty
World Cup starting on Sunday as well. We're back tomorrow,
good evening at eight o'clock

All Episodes

Episode Transcript

Popular Podcasts

Stuff You Should Know

Dateline NBC

Betrayal Season 5

.css-15opob5{left:0;position:absolute;top:0.8rem;} All Episodes

.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}SARS’s project AmaBillions brings strong focus on collections & more consumers rely on high-interest loans.

Episode Transcript

Popular Podcasts

.css-r6mb8g{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:1;overflow:hidden;}Stuff You Should Know

Dateline NBC

Betrayal Season 5

All Episodes

SARS’s project AmaBillions brings strong focus on collections & more consumers rely on high-interest loans.

Stuff You Should Know