Transnet targets mining logistics bottlenecks and Harith set to acquire FlySafair

Episode Transcript
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Speaker 1 (00:01):
And now The Money Show with Stephen's credit on seven.

Speaker 2 (00:05):
Oh two, let's walk little. The Money Show with Stephen
Curtis is brought to you by Absente Corporate and Investment Banking,
Balancing economic growth with ecosystems. That's how they're invested in
your story. Seven minutes after six, good evening, Welcome to
the program. I'm Stephen Curtis today. That'll probably be remembered
for the deal involving fly Herith General Partners buying, not

(00:27):
into it, buying it pretty much the whole deal. We
don't actually have a price that they're paying now at
the moment. I do wonder if that'll come out, and
due course the curious part of me of course would
like to know. I think we all would. But also
just interesting to watch the strategy of at Sepport Mahaula,
who of course is the person who makes most of
the big decisions there where the plan is investing in

(00:49):
the South African economy in a big way, but also
in the aviation economy. They already own a big chunk
of Lance Area, of course, and so you can think
of all of the linkages. I mean, if you go
to Lance Area most days, it kind of looks like
a fly Safe terminal because they use that and there
are all sorts of reasons as to why that is
much of the time, and you just get a sense

(01:10):
that there are all sorts of advantages. I am a
little curious as to whether the people who owned fly
Safe ASL they're based in Ireland, of course, if those
findings about the ownership, the fact that they aren't deemed
to be South African, there's a bit of a complicated
share structure. You've heard arguments about it before on the
Money Show, if that was a factor in their decision

(01:31):
to sell, Because for Hareth, you're taking over a profitable
airline that has two thirds of the domestic market. I mean,
what's not to like about that? So very interesting just
to watch that play out, well, speak more about it,
will speak to fly Safe still hoping to speak to
her general partners, if not today, maybe in the next
day or so, just to get a better understanding of

(01:51):
the deal. The other thing that was very interesting and
just sort of talking about what's coming out of the
mining in Daba Dan, Marikana, the coda saying there's more
than one way to unbundle Eskim and his point of course,
is this huge argument that seems to be not quite
blowing up yet, but heading that way. I fear around
the unbundling of ESCUM. The original plan was that Escum

(02:12):
would be broken into three. It would be a completely
sort of neutral the way in which the grid was operated,
a big business. Very concerned that that's not the way
things are looking now. Maracan is still saying they're worried
about the four hundred billion randsworth of debt, and as
I understand the fear, it would sort of if ESKIM
were broken up, that debt would fall due. Government wouldn't
be able to pay it. There would be what's called

(02:35):
a sort of cascade or a cross default. Everybody who's
owed money by ESCAM would demand all of the money
they owned owed by everyone else in government, all of
the other SOEs and that's where all of the trouble
would really lie. I have to say, all the business
people I've spoken to and heard from say that's not
the case at all, and so it's getting a bit
MESSI I just worry. I just think there's got to

(02:57):
be a way around this. It's got to be a
better way to fix it. And kind of somehow the
communication is not working. We'll talk to doctor Andiles Sancu,
the chair of trans Net in a moment, looking forward
to that conversation about the sort of phase trans nets
in now he's at the mining and Darbor, so many
people are and just sort of where transnet goes. If

(03:18):
you look at mining in the future of South Africa,
and I mean, let me be clear, the future is
kind of hit. So we're looking the next few years.

Speaker 3 (03:24):
You know.

Speaker 2 (03:25):
Gulmbadam, the chief economist at Standard Bank, he's been looking
at what's really changing the global and then the South
African economy, optimistic on some scores, and I was looking
through his presentation today there does seem to be an
uptick in employment numbers for example. All of that's very important.
Still so much to do, but still got to get
things moving. We will speak to fly Saphia about the

(03:48):
fly safe deal. Do you to speak to doctor Guy
Leach about it as well? And then do you remember
I remember so clearly the moment when I realized that Parkhurst,
which is not a million miles away from where I live,
was getting fiber. It was the first suburb in South
Africa to get fiber. Trust me, I get reminded of
this from time to time, and you suddenly realized there

(04:11):
was a way that you could This was twenty fifteen,
twenty sixteen, there about suddenly have streaming music and Netflix
at home for something that you could afford. Before that
wasn't really affordable. You'd have to sort of download it
at work or something. And the way we live now,
so much of that is defined by what Rumor did
a decade ago. They've hit a million subscribers. So if

(04:34):
you look at how many devices are on each of
those Wi Fi terminals, I mean, just an average home
with one teenager, you're probably looking at about fifteen. Never
mind the amount of data that goes through it, and
never mind all the other people who walk through your
house that use the data while they're there without even noticing.
And that's how it's supposed to work. That's what makes
it so sort of wonderful. We'll talk a little bit

(04:55):
about that after seven o'clock. What was the first thing
you did when you got fiber? How did it change
your life? Was it music? Was it was what you
were streaming? Was it something else maybe I hadn't even
thought of. Maybe made you productive in a way you'd
never dreamt of before. Double one, double A three oh
seven O two two one four four six, five six seven.
I'm aware of the irony of this when I say

(05:16):
seven two seven oh two one seven oh two on
WhatsApp as you use your fiber descented to me. So
good to hear from you. Tonight, thirteen after six, The
Lonly Show.

Speaker 3 (05:26):
With Stephen krutis live on ninety two point seven and
one six FM, streaming on the Prime Media Plus.

Speaker 4 (05:33):
NAP and DStv channel eight five six.

Speaker 2 (05:36):
Well the mining and Darbor in the second day, and
of course any conversation about mining in South Africa will
eventually get down to the question of logistics. Anyone who
wants to mind something that's under the ground needs to
get them on trains, onto ships, into factories and eventually
into your phone or bicycle or router, pram whatever it is,
which means we need to see how the logistics chain

(05:57):
is improving. The chair of Tran is doctor and Les Sano,
and of course he's at the Endaba and Dela. Good evening,
Good to chat to you again, and I really do
appreciate the time. Thank you. You've been a big part
of the stabilization of trans Net. Trans Net looks more reliable.
We can see the railway volumes increasing, we can see

(06:19):
some of the volumes of the docks increasing. How is
that process going? Do you believe that you've kind of
righted the ship? So to speak?

Speaker 5 (06:28):
Good evening seven, and it's really wonderful to be on
your show. Just to answer your question, I think that
we've made very good progress in terms of stabilizing their ship,
as it were, but ensuring that we do that in
a manner in which it is sustainable, and also making

(06:54):
sure that the momentum that has been built is even
though it might have still fallen short of what the
customers expect or want. But we think that if you
look at the trajectory, it's promising and that tends to
be unpacked. In terms of the various elements of our business.

(07:19):
For example, we start with the ports. You would recall
that in November twenty twenty three we had a congestion
in terms of our ports where we must have had
over twenty to thirty vessels that we're ready to be
uploaded in terms of the goods that were bringing into

(07:42):
our country, but because of the state and the condition
of our own infrastructure, we were not able to do
that expeditiously and efficiently. I'm happy to say that since then,
we even if we were to go to either Devon
or Capta, there's been significant improvements. And that has been

(08:05):
achieved on the back of strong collaboration with our customers,
with industry players, with our employees, and that's really on
the back of that we've been able to register and
embedge the kind of turnaround that you see. Similarly, if
you look at our rail program, we've been able to

(08:28):
improve the tonnage that we've been transporting. If you start
tracking where we were in twenty twenty three and where
we are now, there's significant improvements in.

Speaker 2 (08:39):
Terms of that.

Speaker 5 (08:41):
At the same time we've been also embarking on structural reforms.
I do think that even though we may not be
where we would like to be, but I think the
kind of crisis that we had in twenty twenty three,
it has been a vetted. The business is now stable,

(09:02):
and the business is now well positioned and well poised
to be able to support the program of economic recovery
of the country. And we are pleased, we are pleased
to be part of those kind of forward looking conversations
about what is in stall for the economy of South Africa.

Speaker 2 (09:25):
Well, I mean it does give you a moment to
kind of plan the transmit of ten years from now
or twenty years from now, perhaps more accurately. I mean,
these are things that you need to sit down and
work out. You know, what are we going to mine
in a quad Zulun hotel the northern Cape? Where do
we need there? I say, another railway line? Where do
I need to make sure that this particular railway line

(09:47):
is upgraded for whatever minerals we think are going to
be in a particular place. I mean there's a lot
of thinking to do.

Speaker 5 (09:54):
Well, absolutely, and I must say we stand ready to
have those conversation with the rest of the industry players.
And for example, you were to invite us as Transmit
into that conversation two years ago, we'll not have been ready,
willing or prepared to have that conversation because our first

(10:19):
order of business was to stabilize the business, which we
have now done. Incidentally, I mean I must say that
even in the midst of the crisis, we have been
quite forwardlooking in terms of some of the steps that
we have taken to start thinking about the future differently.
Let me give you a couple of touch points. The

(10:42):
first one is that last year we signed an agreement
with a Vallpak and Zululand Energy Terminals in Richard's Bay
to construct and build a LMG guest terminal that will
then in years to come run about twenty twenty nine

(11:05):
twenty thirty, will then be able to bring into South
Africa the new sources of energy that really talks to
the decarbonization gender so inspired. Despite the crisis that we've
been working through, we have, you know, with one eye,
been looking deep into the future and embracing the kind

(11:30):
of a green energy agenda. So that's the first proof
point I want to talk to specifically. The second one
is that as of the fest of January twenty twenty six,
the Debon Container Terminal PEER two in Devon is now
privately operated. It is still owned by government.

Speaker 6 (11:54):
We are in.

Speaker 5 (11:54):
Partnership with the private sector to inject capital to modernize
you know, the infrastructure in the port, to bring in
new technologies, to also bring in new global best practice.
I think that positions the country well in terms of competitiveness,

(12:14):
you know, in terms of saying to investors in terms
of giving certainty, also in terms of saying that we
are ready to do business. Of course, because we have
a number of business segments within one entity, we may
not be moving, you know, at the same speed and pace.
But all I want to say is that our commitment

(12:37):
and our resolves to move forward in terms of driving
all of these critical conversations around strategic minerals and planning
together for the kind of future possibilities and opportunities that
you know are available to the country.

Speaker 2 (12:56):
Doctor Angela Sancoe, thanks so much, the chair at Trance NETS.
We are lots of progress. I think that's undeniable. The
question is where do we go from here? And lots
of thinking to be done about that. Twenty minutes after six.

Speaker 4 (13:09):
The Money Show with Stephen on seven o two seven
o two.

Speaker 2 (13:13):
Release today of the twenty twenty six Outlook for both
the global economy and our Economy by Standard Bank. The
chief economist there is Gulham Balum Gulham, good evening. I mean,
before we start on our economy and I hate to start, yeah,
but we do need to understand what's happening in the
US because so much of that is quite variable and
it still has such a big impact.

Speaker 7 (13:37):
Stephen, Hi, thanks for having me, And you're perfectly correct
in the sense that we take Q from the US.
We've always taken Q from the US, whether it is
with the direction of its financial markets or the federal
reserves interest rates. Now, of course we're taking Q from
the US with respect to geopolitics, and we know it
is at the core of decision making. Geopolitics now is

(13:59):
not more background risk. It is at the core of
influencing economic outcomes and financial outcomes. And Donald Trump, as
we know, over the last year especially, has accelerated this
muscular diplomacy, the sense where rules institutions in multilateralism have
eroded and it's been replaced by leah I say, power

(14:20):
and coersion.

Speaker 2 (14:22):
I mean, if you look at the outlook for our economy,
you lists quite a few things that have been going right,
and some of them we've been talking about the gray
list and the upgrade and all of that sort of thing.
I haven't quite realized how many more people are employed
now than were before the pandemic of all that was important,
but we still have so many problems. You point to

(14:42):
the number of protests we have on a regular basis.
Our politics are still fracturing. I mean, it's a very
complex picture here.

Speaker 7 (14:51):
See then you're right again in highlighting this, because we
can celebrate what happens in the boardroom and it can
be jarring with what's happening on this So twenty five was,
as you rightly highlighted, a year of many milestones, many achievements,
and that can provide good legacy for twenty twenty six. However,

(15:11):
on the street there is deep dismay with public services,
generally dismay at an incapacitated state, and a slow pace
of job creation on the back of so fast to
a teper economy. I think what we highlighting when we
say something like twenty twenty six off is the best year,
the best prospects, the best potential in a decade. What

(15:33):
we're saying is that the reform agenda seems to have
anchored neatly and is continuing to galvanize and hopefully around
water the weight organized around electricity and logistics. And we
also are recognizing that the macroeconomic cycle, meaning the pace
of real wage growth, employment growth, credit conditions in the market,

(15:55):
and the buoyant stock market all coe leads to suggest
that there's a good thrust behind consumer spending, which, as
you know Stephen a Council about two thirds of GDP. Also,
fixed investment we think is going to accelerate this year
after contracting over the last two years. So those are
cyclical developments that are positive. However, it's typical get politics

(16:18):
bed devils a South Africa outlook. We have local government
elections at the end of this year, maybe early twenty
twenty seven when the window allows, but irrespective, within the
year we're going to have local government elections which is
going to again reshape the coalition dynamics at a local level.

Speaker 2 (16:35):
We might I think another upgrade or through this year.
How important are those in the big scheme of things
nowadays when there's so many other factors.

Speaker 7 (16:45):
Steve and I would say the upgrades are plausible, perhaps
within a two year horizon and necessarily over the next
twelve months. Sovereign gratings can be considered to be a
confidence report card. They effectively signal confidence in a nation's
broad policy environment, with emphasis on public finance management. So

(17:09):
further ratings upgrades would imply that there is confidence in
the way public finances are being managed and that the
growth outlook is garnering momentum with all the positive socio
economic benefits that come with it, so upgrades and endorsement
and in a sense a confidence signal in policy choices

(17:31):
and economic direction. If we were to get further upgrades,
of course we will be clawing back the substantial descent
over the last decade. But nonetheless, growth is an incremental concept,
and ratings upgrades affirm that is positive incrementalism.

Speaker 2 (17:47):
You predict some growth next year, and then by twenty
twenty eight you're still only looking at two point one percent,
And I mean, if you consider the need, that's quite
a low number. That really underscores the difficulty of the situation. Yes,
things are better, Yes things are moving around, are moving
in the right direction, but the sort of scale of it,

(18:09):
the complexity of it, the number number of things that
all need to work together, I mean, at two point
one percent is a real reminder.

Speaker 7 (18:16):
Of that, Stephen. We're looking for the elements that is
going to give us the escape velocity to break out
of a say one to two percent band, which seems
favorable when you consider just the other year we were
growing at half a percent. So what takes us to
this escape velocity and into three percent and beyond and

(18:37):
my sense it is over arching governance. Alternatively put the
rule of law. If the President were to harness the
ZiT guist of the moment, his sona, the State of
the Nation address must focus, in my view, on two things,
how we are going to remedy the incapacitated state with
emphasis on municipalities and metros. That would be the first item.

(18:59):
And second item is to deal with the s de
penetrating web of criminalization that is invested in South African
civilian life and certainly the authorities. If he is able
to show resolve out of let's say the triggers coming
out of the Midlanga Commission and the parliamentary inquiry, I
think those interventions can provide the confidence that is needed

(19:25):
for us to get to a higher growth plane where
businesses believe the reform agenda is now leaning into these
critical new areas of resolution.

Speaker 2 (19:35):
Gulham, thanks so much for the thoughts. Ready to appreciate it.
Gulam Balum is the chief economist at the Standard Bank Group.

Speaker 8 (19:41):
The Money Show.

Speaker 2 (19:43):
Marco Staffio is at abs c IRB, a lead specialist
for investment and trading sales market. Good evening, it feels
like September, but happy New Year. Last night after trading
closed on the JAC if we can pay at a
trading update, I mean, they said their losses would increase
by twenty percent. Obviously it was going to be bad

(20:04):
this morning, but it was fifteen percent down at one point.

Speaker 9 (20:08):
Yes, Stephen, thanks very much, ending down nine point nine percent,
so you know, not far off that start at minus fifteen.
I think what really disappointed the market, you know, was
the fact that we saw such a sharp slow down
in life like sales. You know, if they had four
point three percent in the first half down to zero
point nine percent in the latter twenty two weeks of

(20:28):
their reporting period.

Speaker 2 (20:30):
And I mean the market I think just isn't buying
the kind of recovery story, are they, And if you
consider the competition there up against, that's not a surprise,
absolutely right.

Speaker 9 (20:39):
So I mean generally across the competition, we're seeing very
low price inflation coming through, and that's generally bad for
food retailers. Pick and Pay surprisingly had slightly higher internalflation
than those piers, which makes that top line number even worse,
I would say, And I think that's exactly what you're
saying that the market not quite buying that turnaround story
that they were hoping for in the first half.

Speaker 2 (20:59):
You've got to take on shop, right, who's in store?
Inflation is about pointy seven percent, I mean, very very
difficult to do the rand. I mean, is it just
me or is a little bit of volatility leaving some
of the markets that gold seems to be stable. I'm
going to put a huge ish onto that, just about
five thousand the rand, just below sixteen to the dollar.

Speaker 9 (21:19):
Stephen, I think we had a big washout a couple
of weeks ago, and it seemed like a lot of
those speculative positions got taken out of the market. So
we back to more fundamental levels, central bank remaining there
in gold, you know, lots of people continuing to look
at emassets as a place to invest in the longer term.
So I think you're exactly right. We are seeing you know,
a little bit more stability arise, you know, around strength

(21:40):
to say, you know, driven by some dollar weakness, but look,
fundamentals in the country looking pretty decent.

Speaker 2 (21:46):
I mean, difficult to know where to buy currencies at
the moment, but the outlook for the rant is better
than it's been for a very long time. If gold
stays where it is, all of those things help us
as well. And if you go back sort of where
people were making predictions a year ago, they're all wrong. Absolutely.

Speaker 9 (22:01):
I mean, I would say our strategist has got a
little bit more cautious on the rand at these sort
of levels. Looking at some of those you know, valuation metrics,
it looks a little bit overvalued compared to where we
were about a year ago. And also ultimately positioning is
quite stretched.

Speaker 8 (22:15):
At this point.

Speaker 9 (22:15):
You are quite a lot of investors sitting in South
African bonds and the rand.

Speaker 2 (22:20):
Marco thanks very much. Indeed, Marco Pafio is the lead
specialist for Investment and Trading sales at Absolute cib What.

Speaker 4 (22:28):
Apps Stephen on seven to two, seven oh two one
seven o two, looking.

Speaker 2 (22:33):
Forward to your voice notes about how fiber changed your
life at home. So many people I think, just having
those memories of when it arrived where you lived for
the first time. So many more people still waiting for it.
But you do find fiber in many, many different parts
of the country. Lots of financial models. We talk more
about it in about half an hour. I see that

(22:53):
the business rescue practitioners at the Post Office sort of
making the point that they still need money from national government.
They were, as I understand it, before the Communications Committee
in Parliament. The Communications Committee wants to meet the Finance Minister.
I have a sneaking suspicion everyone wants to meet the
Finance minister before the budget. They'll be asking for more money.
Three point eight billion rand is what the Post Office needs,

(23:17):
and the business rescue practitioner is suggesting that if it
doesn't come, they left to shut up shop. I do
think they said this last year. I do think though,
at the same time, that one of the worst things
that can happen, and it happens so often, not just here,
not just to government institutions, but no one has prepared
to either do what it's required to save it or
put it out of its misery. Whatever kind of institution

(23:38):
it is. The Post Office might be an example of that,
and just goes on and on and on. Costs a
huge amount of money, never rarely gets fixed until something
dramatic happens and then it just goes So if you're
going to make a decision to save it, save it.
If you're not, make the decision not to and work
it out from there but sort of leaving it hanging around,

(24:00):
I mean, the poor workers for a start, can you imagine,
but also just get on with it. Make a decision
would be my suggestion. Seven two seven two one seven
two The Lonely.

Speaker 3 (24:10):
Show with Stephen Kruders Live on ninety two point seven
and one o six FM, streaming on the Prime Media Plus.

Speaker 4 (24:17):

Speaker 2 (24:21):
Seventeen minutes now to seven today at that time, well,
obviously the big story today is around the aviation industry,
Hareth General Partners confirming they're buying fly Safair. We don't
yet know the cost of the deal. Hareath has been
interested in the aviation sector for some time. There was
the SAA deal that didn't happen. They also own a
big chunk of Lansia Airport. Kirby Gordon is the chief

(24:45):
marketing officer at fly Asafair. Of fly Safair, I should say, Kirby,
good evening your current owner's asl aviation holdings from what
do you know? I mean, I imagine this is a
decision made in a different room to where you work
every day. What made them agree to this deal with Perith?
Why did they decide to sell now.

Speaker 10 (25:05):
Stiman, you are actually the opportunity asl and the trust
and of course the local bee shareholder that are involved
in Flysafare actually didn't decide to sell now. The transaction
is something that's been in the works for quite a while.
If one or call back as far as twenty nineteen,
there was a proposed deal that didn't go ahead between
Flysafare and Airlink, which was already an indication of the

(25:26):
intention of the shareholders to exit the asset that that
they had created. Obviously, as seed investors that used a
certain amount of money to develop the airline had created
an asset of value and I guess to their benefit
that increased in value quite considerably through COVID, and they
just took some time to find a good buyer locally,
and unfortunately they now have done that.

Speaker 2 (25:47):
I mean, it's been very profitable, hasn't.

Speaker 6 (25:49):
It It has.

Speaker 10 (25:52):
Yes, we've had a good run and long may that last.
So that is obviously, I think part of the attraction
to the new investors is the idea that they've got
this asset of value that hopefully will continue to deliver
against a solid track record.

Speaker 2 (26:05):
I mean, I'm interested that someone would sell an investment
that's beginning to pay back and beginning to pay back
quite handsomely. It's making a profit. Why not keep it?

Speaker 10 (26:15):
Yeah, I think different investors have different stories and have
different approaches that they want to be involved in. So
the reality is those investors had capital tied up in
the CENTERITEE and had a certain objective that they sort
to achieve. They achieved it over the period of time
that they sought to do, so it was then time
to liberate their capital and move.

Speaker 6 (26:31):
Off to other ventures. And equally, it was probably time in.

Speaker 10 (26:35):
The lifespan of the airline to find a value investor
and a portfolio in which to reside. So somebody that
was looking to put some patient capital into the airline
for a long period of time and to see us
over the long run.

Speaker 2 (26:46):
So I accept all of that, and I realized there's
been talks about this for some time. I do need
to ask though the findings yes last year by first
by the domestic and the international Aviation councils that fly
cepher was operating illegally because they deemed the way in
which the shareholding is structured do not meet the requirement
that it would be seventy five percent owned by South

(27:07):
Africans as far as you know, was that a factor
in this decision?

Speaker 10 (27:12):
And that's a very valid question to ask, Steven, and
I think a very logical conclusion to come into.

Speaker 6 (27:16):
It.

Speaker 10 (27:17):
Looks certainly it was a factor in the discussions as
they're commenced, which we're already underway. It would be naive
to say that it wasn't. The reality is that that
question was really never a round ownership. That was a
question that was more to do with control, and it
is still a matter that is under court review at
this stage. The new setup, we hope and we trust,
is one that will be something that the councils will

(27:38):
ultimately agree to and find to their pleasing. Although the
reality is that this is not an automatic remedy to
that situation.

Speaker 8 (27:46):
They're still a process that has.

Speaker 10 (27:47):
To walk out and that's one of the key approvals
that needs to be achieved in order for this transaction
to proceed is approval a boy both the Air Services
Licensing Council, the International Air Services Licensing Council, and then
under standard letters like the Competition Commission.

Speaker 2 (28:01):
Of course, yeah, I mean, obviously there'll be all of that.
The management and the airline. From what I read, it's
going to stay in places that you're understanding. Was there
an email to all staff Kirby that everyone's staying where
they are?

Speaker 6 (28:17):
Yes, absolutely No.

Speaker 10 (28:18):
I think Hereth have been very very intentional about that
in their discussions around it. I think to your point earlier,
you know that there is an asset of value that
has been built, and that is something that they've conceded
and something that they want to work toward. And so
the reality is they wanted to continue to deliver against
its track record, which of course there's no small feat
for the existing management and leadership to continue along that path.

(28:40):
But that is very much what they have put in
place and we hold them to it.

Speaker 2 (28:44):
Do you believe at this stage there's still much scope
for growth? I say that because you're about sixty seven
percent of the domestic market. SAA is doing what it's doing.
It seems to be recovering quite nicely from what I
can see. There are other players, there's air links lived,
but still at two thirds of the market, do you
think there's really that much more room for growth or

(29:05):
you're just going to have to hope the whole industry grows.

Speaker 10 (29:10):
It is more of hoping that the whole industry grows.
I mean, I think if we reflect on the story,
the sort of hockey stick growth that we saw or
for the back of COVID was obviously due to you know,
actenuating circumstances, and that's not necessarily something that one would
find under the normal kind of guise of business on
a day to day basis. I think the growth of
airlines is really closely tracked against what we see in

(29:30):
terms of economic growth. Those two sort of factor really
well together, and we've especially essentially kind of factored in
our world that that means pretty much the addition of
an additional aircraft to our fleet every year as things go,
assuming that they continue to go to the way that
they have been going. So that's the sort of growth
that we're looking at. And then of course there are
the expansion opportunities outside of the domestic borders, looking at

(29:52):
some of those regional routes that are coming online and
that are thickening as they grow, and there's certainly opportunity
for us to spread our wings if you'l excuse the
pan a little further abroad and start to service those
markets with the low cost model as well.

Speaker 2 (30:06):
Kirby Gordon, thanks so much, chief marketing officer at fly Safe. Well,
let's get the view from the aviation analyst, doctor Guy Leitch, Guy,
good evening. Does this deal make good business sense for
Hareth General Partners, I mean fly sappha has I think
we can all agree being quite profitable.

Speaker 8 (30:23):
Yeah, Hi, Sepoh, nice to be with you. I'm afraid
I can't answer that question because we don't know how
much they've paid for it. We don't know what warrants
may they may have been given in terms of ongoing
profitability and so on. It would be really nice if
the pics the thirty percent shareholder in this or in
the Hearth Partners would be disclosed a sort of information.

(30:46):
It was called a value proposition. Yeah, when hopes that
they didn't overpay for the whole deal. But I have
to say that personally, I'm the more I look at it,
and you know, Kirby is very very convincing, But the
more I look at it, the more I can find
very little to recommend this deal at all.

Speaker 2 (31:03):
Oh really, why is that?

Speaker 8 (31:07):
Yeah? Well, I mean, let's face it, I mean, in face.

Speaker 11 (31:10):
Value, it's really a massive disinvestment by the Irish holding Company,
regardless of how long they've been trying to maybe sell
the airline, there's a concomitant huge upload of capital.

Speaker 8 (31:24):
You have to as you rightly asked, asked what the
Irish Shareholding Company's confidence was in South Africa. You know,
we're still struggling to get back to pre COVID levels
in terms of flying, and yet we should be thirty
thirty five percent ahead just in terms of the growth
that we've lost. So the potential for growth is really limited.

(31:49):
SA is a shadow of its former self still and
it is taking its time about growing back. There's real
worry about overriding control of this herathin and Kirby ensures
me that Herath will be strictly arms length and that
we don't have to worry about the PIC has been

(32:10):
a government controlled shareholder. Yeah, maybe maybe not. I'm not convinced.
The PIC holds thirty percent of HERAT, as I mentioned,
and with that they can pretty much call the shots
in most respects. So there's a real fear that this
is actually going to become a second state owned airline,
maybe not directly indirectly, but I certainly expect a lot

(32:31):
of opposition from the competition obviously from Airlink, Samra and LIFT.
I expect them to put up a big fight in
the competition commission.

Speaker 2 (32:41):
Sure, I have to say I didn't see that coming.
The use of land Syria, I mean, Hareth owns a
big portion there pic too. I mean there must be
lots of linkages there. The idea that actually they can
work together quite nicely, you could rarely do maybe one
day kind of end to end all in the same
group be quite attractive.

Speaker 8 (33:02):
Yeah, it's too attractive. The reality is that that I
think there should be a law and that the industry
is already over regulated, that airlines can't own airports because
airports are monopolies. I mean, let's let's look not forget
that ACCA made a profit over a billion rand last
year and seven hundred billion, sorry a million the year before.

(33:26):
It's a license to print money. And I made, in
fact a joke just last week to Proflemola that they
should buy Accea because that's where the where the money is.
But if if it suddenly means that there's pressure on
a fly sofare to fly into Lansyria more, because hey,
that's then Syria is struggling and Lanceyria let me note

(33:47):
is struggling. It's lost Mango and it's lost Kalila in
terms of passenger traffic. It's not going to get that
back anytime soon. So again it's it hasn't been a
good aviation investment for for Harris, and as I've liked
to comment, the aviation industry is a terrible industry to
invest in. I mean, Richard Benson is famous for saying

(34:07):
it's made more millionaires millionaires out of billionaires than any other.
It's a tough, tough industry, highly capital intensive, highly skills intensive,
and yet with various and margins. So I really hope
that ultimately the stateholder pension funds are not going to
be affected by this.

Speaker 2 (34:25):
Sure looking forward though, an economy that seems to be growing,
that would lead to a lot more domestic travel. There
would be opportunities to go to other countries in the
region as well.

Speaker 8 (34:38):
You know, yes, Kirby as well said correctly pointed out
that there's a strong correlation between airline growth and the
economic growth. Well, actually, we've seen that the so African
economy is pretty dull or stable if you like. It's
not really growing at the rate it should. And what
we're seeing even worse is that with the COVID loss,

(35:01):
particularly of s a A, where we've lost a lot
of the long haul carriers that came into South Africa. Sorry,
we lost sia's long haul roots and long haul carriers
have come in, but they're doing code shares with with
with many other airlines and the role for Sfair to
so called feed and defeed the major hubs is not

(35:22):
what it used to be. So that's why air has
been looking to expand regionally, you know, and become a
carrier right across Southern Africa that is still where the
growth lies. But then they're taking on stuff in very
competent competition in the form of Airlink and Samer who've
already done a lot in this market.

Speaker 2 (35:41):
Doctor Guileach, thanks very much indeed the aviation and has
ready to appreciate the time well different views of course
on the same deal. Optimistic that we'll actually speak to
Hareth tomorrow and get their understanding and just sort of
explain the rasianale behind the deal. Certainly it seems there's
a lot to talk about within it. It also gets

(36:04):
the sense that aviation is changing quite fundamentally. I'm very
interested in the kind of linkages that we could be
looking at four minutes now to seven.

Speaker 12 (36:12):
The Money Show, Steven Rogers, is brought to you by
Absolve corporate and investment backing balancing economic growth with ecosystems.
That's how they've invested in your story.

Speaker 2 (36:24):
Well, voice notes coming through this evening on seven two
seven two one seven o two.

Speaker 13 (36:30):
Hi, Stephen, I'm hearing your guests talking about how the
airlines have not recovered from covid era. But one of
the biggest contributors is the tickets. The ticket prices is
just too expensive. Like now, I was trying to see
where I can be able to fly to Kimberly but

(36:51):
Way in April, but looks like I cannot afford to.
I remember some routes you could get a ticket for
maybe two thousand. Now those routes minimum is four thousand, which, yeah,
so I think they're shooting themselves in the foot by

(37:12):
having the cost of the tickets being too high.

Speaker 8 (37:17):
Yeah.

Speaker 2 (37:19):
Yeah, It's interesting to see how difficult the problem is
when you talk about thin margins in that industry, you
try to sort of make money out of it and
that it is corrected across the industry. Margins are actually quite thin,
so there isn't much space to cut costs. The other thing,
of course, just to notice that flying is expensive, which
is why most people who do fly, most of us

(37:41):
who do fly flying for work. You do fly for
holidays of course from time to time, but you manage
that very very carefully. Your thoughts and looking forward to
that conversation coming up in a moment Boomer and a
million now subscribers to their fiber service. I do remember
with some excitement that change in the financial model, how

(38:01):
communities were consulted. How would you like your cable underground
or would you prefer it on polls, which was quicker
and cheaper but obviously not as reliable over the longer term.
So interesting to see how that's all played out in
the way in which the finances worked is really what
made it happen. So many sort of lessons for other
things that we're looking at at the moment is rarely

(38:23):
about that. So looking forward to that conversation, we'll talk
to doctor sorry, Professor Rutunderwin Dingui, and we'll also of
course have personal finance with Warren Ingram. You with the
Money show at seven o'clock, and.

Speaker 1 (38:35):
Now the Money Show with Stephen Credits on seven o two,
let's walk at all.

Speaker 2 (38:41):
The Money Show with Stephen Curtis is brought to you
by Absent Corporate and investment banking, balancing economic growth with ecosystems.
That's how they're invested in your story. Well plenty to come.
We'll speak to Duncan McLeod, the founder and editor at
tech Central, about the Woomer's story. So much of that
story is actually about the finances, is actually about the

(39:02):
financial model that was closed, so that's such a big
part of it, and how things have changed so quickly
over the course of just ten years. And then I
suppose the other big question is where Wooma, where fiber
goes from here and how important that is. We'll speak
to Professor Rutundo and Dingui in just a moment as well.

(39:23):
I get an update for you on what's happening across
our continent. Quite a few interesting stories today I noticed.
And then from seven point thirty this evening Personal Finance
with Warren Ingram. Everything you need to know about buying
a home and always think based on previous bitter experience,
not that bitter. I suppose take what you think it's
going to cost in terms of transaction fees and transfer

(39:45):
costs and all the rest, and add at least another third.
It's always just more expensive than you think. And there's
so many unexpected costs cleaning here and moving stuff there,
all of those sorts of things. There's always costs that
you you haven't factored in, that you don't think are
going to happen. So that would be my advice. And

(40:06):
the other thing I would do is whoever you know
who you can trust to is older than you, who've
done it before, get them to look at any of
the legal documents. I mean, really, just do that because
so much of it is so complex and technical. So
if you have a friend who's in that game, take
them along with you. That would be my advice. Your
stories from buying a home, especially for the first time,

(40:28):
oh seven two seven oh two one seven oh two,
what would you suggest people need to look out for
nine minutes after seven, The Money Show.

Speaker 3 (40:36):
With Stephen krudis live on ninety two point seven and
one six them streaming on the Prime Media Plus.

Speaker 4 (40:43):

Speaker 2 (40:46):
We'll reports today that the five A supply of woman
now has one million subscribers. If you consider that for
every five or subscription, there must be what at least five,
maybe ten people, probably twenty to thirty to maybe one
hundred devices of each one, you're starting to look at
a very large number of people using these services and
a large number of data flowing through them. Duncan MacLeod

(41:08):
as the founder and editor at tech Central hos of Duncan,
I mean, I remember ADSL for such a long time.
I went to my impression of the beeps again. I
remember I was in joe brig at the time, Parkers
not too far away from me. But the excitement when
suddenly a joe Burg suburb was having fiber installed. What
was different about the UMA financial model to what had

(41:31):
gone before, Yeah.

Speaker 6 (41:32):
It was.

Speaker 14 (41:33):
It was actually quite remarkable that there have been a
lot of talk for years in the market and a
lot of pressure on Telcom to launch fiber services, but
they kept saying, we can't do this. It doesn't make
financial sense to deploy fiber in South Africa. The business
model doesn't stack up. And along came Neil Schumann and
his partner Johan Pretorious, the founders of Vumattal, and they said, well,

(41:56):
actually the business model does stack up, and we're going
to prove it. And they they started in Parkhurst, In fact,
I was there, and they put the first shovel in
the ground and started wiring up parkerst and they signed
up most of the suburbs. And then they spread rapidly
through initially through the Park's suburbs in northern Johannesburg in

(42:20):
the Park Parkhurst, to park Town and all those suburbs
around their victory Park, et cetera, and over time gradually
expanded across past parts of Johannesburg and Cape Town and
other parts of South Africa. And they just kept raising
money and raising capital and and drenching and building fiber.
And Telcom watching this had no choice and they saw

(42:42):
the uptake but to to invest in fiber infrastructure, and
of course they launched their wholesale division, fiber division Open SERF,
and they also poured billions around it into into network
infrastructure and they have hundreds and hundreds of thousands of
fiber customers. But the point is the interesting point is

(43:05):
that Telcom could have owned this market if they'd taken
the initiative early on, and they didn't. They tried to
sweat their copper assets, which is what ADSM is based on.
Consumers didn't like it. It was unreliable, it was expensive,
and it was slow. And an upstart came along and said, well, actually,
we can do this better, and they did, and it
forced the lumbering monopoly that was Telcom to react. And

(43:28):
of course many other fiber network operators have emerged in
the market since then, and it's been fantastic for consumers
because now we have very fast, uncapped, relatively affordable fiber
broadband in home and that's been transformative for the economy.

Speaker 2 (43:42):
I mean, you wonder what the Telcom of today actually
reacted very differently to where Tellium was ten years ago.
I mean, I think absolutely that would have.

Speaker 14 (43:52):
Yeah, so a very different company today. I mean back
back then, when when Bumatov was just getting started, Telcom
was still coming out of its part of its mopoy
period that it's had a very different mentality. The company
probably had three to four times the number of staff
than it has today. But under si Forma Secon and
his leadership particularly, but under some of the other CEOs,

(44:13):
the company has been through an extensive restructuring over the
years and is now a much more nimble organization that's
actually boxing very cleverly and is the second largest player
in the fiber market. It could have been the leader,
but it's squandered that early on. But there are a
significant plan today.

Speaker 2 (44:30):
So what rumor did, if I remember, and I also
lived in one of the early adoptee suburbs, quite proud
of it at the time, duncan yeah, you, yeah, very please,
was that it didn't cost that much for the end consumer.
The way it worked was, I think you paid about
one thousand rand for the sort of installation in your

(44:51):
home that have had to dig past you anyway to
get it there. That to get permission to do that
may seem to manage to sort that out for the
council quite easily. They then after that you actually paid
the service providers, so most people didn't pay woman directly,
they paid an ISP and then the is SP I
presume paid umor so to do all of that, they

(45:12):
would have need quite a lot of needed quite a
lot of capital to start for quite a long time.

Speaker 14 (45:19):
Yes, indeed, indeed it has been a very capital intense
of business and they've bought billions and got tens of
billions around into their into their network, and they have
raised funding for various quarters, and of course most recently
from from the sale of equity to Vodacom has recapitalized
their balance. She's an expensive business and they but you know,

(45:40):
they've raised the capital. They didn't rely on government funding.
It's all been private sector led private money. And and
John Bill Schumann and John Pretorius proved that the model
worked even when there was a big incumbent TALCA out
there saying this doesn't make any financial sense whatsoever.

Speaker 2 (46:00):
Room has grown quite quickly. And you might say, we're
well done, Whomer, but that's not the end of it,
because even in an era of five G and starling,
fiber is still cheaper. It's going to be faster, it's
going to be more reliable in the longer run. If
it's underground. More and more areas still need fiber. It's
moving into township areas, and there's been financial innovation there too.

Speaker 14 (46:21):
That's right, that's actually where the next land grab is
going to happen.

Speaker 6 (46:26):
You know.

Speaker 8 (46:27):
Never mind TELC.

Speaker 14 (46:27):
I'm saying ten or fifteen years ago that this doesn't
make sense to roll out into the leafy suburbs. These
same entrepreneurs these same companies that pioneered the fiber model
in the leafy suburbs and now saying, hey, we think
we can do this in townships and you know, not
just the well to do parts of Soweto. They're talking
about taking us into low LSM poor communities, into shacks

(46:52):
and they started deploying this in places like Alexandra and Johannesburg,
in a KaiA Mundi and Selembosch and further afields, kaile Lecher,
various other places, and boom Ittsell has indicated and other
fiber network providers have indicated that they are going to
be investing huge money in the next few years on

(47:14):
deploying the same uncapped fiber into into into into township communities,
into more rural and outlying parts of the country. They're
obviously using different models here. Some of the fiber is
deployed are early rather than being trenched because it's cheaper.
The connections perhaps not the same, they're more contended than
that sort of thing. But the idea is to bring quality,

(47:35):
uncapped internet to everyone in South Africa over time that
perhaps not the most outlying rural parts of Poising gonna
tell I think those will continue to have to be
served through mobile and maybe starlink will internet cafes and
rural areas that sort of thing. But these same guys,
the same private investors who saw the opportunity in the

(47:57):
leafy services and not saying there's a huge opportunity to
wire up everybody in this country pretty much.

Speaker 2 (48:04):
I mean, there's so much to it. But if you
look at the knock on effects, because yes, streaming had
been around in other countries for a while, but it
was only with fiber that streaming happened and that had
huge knock on effects on the SABC, I would say
we forget that sometimes it's huge.

Speaker 14 (48:19):
And then multi choice multi choice in particular, you know,
I think my multi choice is really reeling from the
introduction of Netflix and then later other competitors like Amazon, Prime,
Apple TV, et cetera, Disney. You know, I think they're
they're under under considerable pressure. So it's it's had a
big impact on on on the distribution of content in

(48:40):
South Africa, and yeah, we're seeing that now multi Choice
s ABC, they're under a motor pressure.

Speaker 2 (48:46):
Thank you very much. Indeed. Duncan McLeod, founder and editor
at tech Central Dot dot what was the first thing
you did when you got fiber at home? Seven two
seven two one seven two seventeen minutes after seven many
show a get business focus doctor. Oh, I'm sorry, Professor
Rotendo and Dengree, good evening, congratulations on the promotion.

Speaker 6 (49:08):
Thanks Steven. And it sounds so much better when you said, but.

Speaker 2 (49:13):
Well, I have to call you a prop from now on.
I mean I would stand out, but you can't see me.

Speaker 10 (49:17):
So.

Speaker 2 (49:19):
Professor Rotundo and Dengue, of course, is the founding director
at Tribe Africa Advisory and author of the book Rumble
in the Jungle Reloaded. I wonder if that book is
certainly more expensive, so.

Speaker 6 (49:30):
I should pull the price.

Speaker 2 (49:33):
You get to write it all in profit to each one.
Ghan is limiting foreign investments by local funds. Why are
they doing that? That's such an interesting thing to do.

Speaker 15 (49:44):
Yeah, so, Stephen, I mean the starter with Ghana obviously,
the President Muhammad is coming and is trying to implement
some reforms that will just allow them to I mean
his ambition, Steven is by twenty twenty nine, he wants
to have capital reserves of twenty billion US dollars. So
what is implemented as a law in the country that
for local fund managers they are not allowed to exceed

(50:05):
more than twenty percent of assets under foreign investments.

Speaker 6 (50:10):
Whether it's Western, Asian, Eastern, it doesn't matter.

Speaker 15 (50:13):
And the reason is doing this, he just wants to
enforce an encourage investment and obviously the city is which
is the currency of Ghana, is taking a bit of
a knock with regards to the volatility of global dynamics.
As we know, Ghana relies heavily on gold, which with
current gold prices they should go on an up. But
the problem is the same informal sector is a huge leakage.

(50:36):
And obviously last time we talked about the text incentives
that are put in place to waive a text for
those guys so that they don't smuggle. But on the
other hand, they also rely on co or which has
taken a bit of as a knock from a commodity pricing.
So he's put a cap and with regards to current
investments that are there since the massive ex seeds seventy percent,
but he's enforcing these reforms even to encourage law local

(51:00):
investment and to drive the city and obviously reduce the
impact of volatility.

Speaker 2 (51:05):
And I mean to try and sort of reinvest your
own financial resources to invest in your own country basically,
I mean it does work over the longer term. We
know that from the history of development.

Speaker 15 (51:17):
Yeah, I mean we look at countries, you know, shining
emblems that have done it into the past. You look
at your Singapore's, you look at you Japan. You know,
guys who have intentionally made investments of the countries. Obviously Ghana.
The challenge with a Ghana obviously it's it's quite logos
to a number of key countries like Nigeria, which is

(51:37):
I mean has its challenges, but it's stable. But then
you've got those that's the help belt that's in equoas
you know, Mali, Bekina, Faso and Nicia and all of
them are going through quite key changes in terms of
their politics and the economy. And there's a ripple effect
on Ghana, which is quite close to them in terms
of from an equas perspective.

Speaker 6 (51:55):
So hopefully this will bring change and we'll watching C
Steven and Girla.

Speaker 2 (52:00):
They're going to buy a strategic stake twenty to thirty
percent in the world's leading diamond company. I mean interesting
because diamonds are under so much pressure. We heard that
earlier this week.

Speaker 15 (52:11):
Yeah, diamond's had a lot of pleasure. I mean sort
of a combination of a number of factors, but one
the lab diamonds. We know that that impact on the
pricing gold obviously is becoming quite a focus now with
commodities and.

Speaker 6 (52:25):
The positive things.

Speaker 15 (52:26):
But I think from the beer's perspective, Stephen, I think
two key players. Firstly, we have to bring into context
at Botswana on fifteen percent of the beers and what
I actually wanted to buy it, because they're also doing
this drive in terms of diversifying the economy, trying to
to sort of move away from lime on oil. They
wanted to do a total buyout, but they didn't want

(52:49):
to go into a big fight from a shareholder perspective
with with with Botswana, so their focus is on saying
let's buy a part of the So those discussions are
still on the table. The two companies or state owned
companies in Angola that are driving this of the government

(53:09):
is DEMIR and the National Diamond Trading Company h and
they are putting their their stake on the ground with
regards to this, believe it or not, Stephen, most recently
in kimberlite. A field in Kimberlite in Angola was discovered
in terms of a diamond deposit, and it's the first
time in the last thirty years that the business has

(53:31):
has made such a finding. So from an Angola perspective,
it's a great opportunity. I think my only one is, Stephen,
the bigger picture of things is that the price of diamonds,
as you said, is not greater at the moment. Is
this the right strategic decision for sovereign wealth to be
injected in a commodity like diamonds for a country like
Angola that is trying to diversify, And that's for me,

(53:52):
is the is the big concern in terms of the
decision making.

Speaker 2 (53:55):
Sure and Kenya the cocoa bio fuel biofuel firm, I mean,
that's having a big impact. There's no clean cooking option.

Speaker 15 (54:04):
Yes, so, Stephen, I mean the positive story on this
side is that you know, with Africa, the impact of
fossil fuels from a health perspective is quite high.

Speaker 6 (54:15):
So obviously bioethanol is the clean fuel. The cocoa netflix gets.

Speaker 15 (54:21):
The way it's sort of funded and financed itself was
with regards to carbon credits, which is a sophisticated mechanism
of getting credits from a global perspective that allows you
to finance such an initiative. They are probably about one
point five million households that rely on this bioethano fuel

(54:42):
through this framework, Stephen.

Speaker 6 (54:45):
The cost of it is quite affordable.

Speaker 15 (54:46):
It's thirty cents per household, which you can appreciate in
terms of the lower end of the market is quite attractive.

Speaker 6 (54:53):
Government has taken away the permit for.

Speaker 15 (54:55):
One one reason another so they can no longer rely
on these carbon credits and by virgin of that, Steven,
they can't actually now continue this initiated with regards to
with regards to to you know, to supply and bioethnol
because they need to import it and distribute it. So said,
on one side, the bioethnol model absolutely great. This is

(55:15):
what Africa needs. You know, six hundred million people don't
have access to electricity and fuel et cetera, et cetera.
But on the downside is that it brings a reality
to a spotlight Steven that with regards to implementing these
global frameworks with regards to clean energy and the whole
valuit chain around it. It's a bit more complicated and
even a country like like Kina, which is forward thinking,

(55:39):
is battling with regards to this.

Speaker 6 (55:41):
This is a typical example. Hopefully they get out of it.

Speaker 15 (55:44):
But at the moment, one point thillion, one point five
million households at risk of being impacted because of this,
of this permit that has been turned down by the government.

Speaker 2 (55:54):
And then the Africa Eco Race there coming to an end.
In Deckard's quite something.

Speaker 6 (56:00):
Yeah, I mean darka.

Speaker 15 (56:01):
We know that it's a fund seventy five kilometer Ray
Stephen from Mauritannia to Senegal. It's quite it's quite a
well known race. But the business side of is threal
where I want to focus on. I think people take
for granted the actual costs of participating in the race.
You've also got trucks and motorbikes as well as as cars.

(56:24):
But just from a cost perspective, apparently there wass are
not that great. But just from a cost perspective, to
register car, it's about thirty two thousand euros Stephen per car.
For a truck it's forty three thousand euros per car.
And above that you need your mechanics because they need
to make sure the equipment is running smoothly. That on
average is about fifteen thousand euros per mechanic. The funny side,

(56:46):
and obviously this is before sponsors come in and through
big prices. But according to the report, Stephen, you're looking
at about five thousand euros for the winner of the
cart race, but for the motorbike races it's fifty thousand euros.
So I think the when maybe the next talk you
and I get onto a bike, we get somebody to
put fifty thousand euros and tell our wives that we're

(57:07):
going to do some journalist some researching exercise in Senegal
and maybe we can come back with five thousand euros
after driving through the desert.

Speaker 2 (57:16):
Yeah, no, crazy, quite something, Professor Rosendro and DINGLEI thanks
very much. Indeed, founding director at Tribe Africa Advisory and
author of the book Rumble in the Jungle reloaded many.

Speaker 3 (57:27):
Personal finance with Warren Ingram.

Speaker 2 (57:31):
Let's have Warren back with us, cerified financial planner at
Galileo Capital. How's it, Warren? What to think about when
buying a new home. I thought you didn't believe in
buying homes.

Speaker 16 (57:41):
I do, Stephen, I think if you're going to stay
in a house for eight years or longer, probably ten
years or longer as to be safe, then you should
really think about buying a home. But it's something we
always need to talk about because there are a lot
of people in South Africa who just can't get away from.

Speaker 2 (57:58):
Bricks and water.

Speaker 16 (57:59):
It's the thing they want to buy more than anything else,
so we need to help them think about it.

Speaker 2 (58:04):
It's also, I mean, no matter what happens, it's such
a big commitment, a twenty year commitment. There's so many
different factors that can really make a big difference.

Speaker 16 (58:13):
Yeah, I think for most South Africans, but buying your
home is probably the biggest transaction will ever do, biggest
financial transaction will ever do. And so you know, a
lot of the time when you talk to people that
have bought homes, see that they didn't know what they
didn't know, They fell in love with the place, or
rushed the deal, et cetera. And so it's I mean,

(58:37):
for me, it's something where if you're going to make
this kind of a commitment, you should do it. You know,
there will always be motion involved. You have to live
in the place, you have to you know, you have
to enjoy being there, but before you, you know, you
allow yourself to get to get involved emotion you have
to have some pretty good idea of the financial implications
of what you're going to do, and make sure you've
done your homework. You're financially prepared psychologically because there will

(59:01):
be shocks along the way, and make sure that you
can deal with those shocks as they come.

Speaker 2 (59:05):
Okay, let's get into some of the costs. And quite
a few costs are upfront and you don't always think
about this when you're looking at a house and you're
looking up the price and you're thinking, well that pull
I could make that bluer than the sky has it.
But the upfront costs are rarely even if you get
a big bond, really more than you than you would expect.

Speaker 16 (59:26):
Yeah, I think it's one of those things where we
we kind of think, you know, if we can convince
the bank, you know, with our first bond the first
time we buy a house, to convince the bank to
give us, you know, one hundred percent bond that that
you know, we scrape together some cash and that'll be
okay to get through whatever the costs are that we need,
and then we'll start, you know, the following month paying

(59:47):
down the bond and everything will be okay. I wish
it was that easy. That that's not really the case.
So we need to prepare for a few costs when
when we're going into buying a hoss and or and
when I say hass could be a house, it could
be an apartment, you know, in an the state, et cetera.
And the first thing is there are always lawyers involved.

Speaker 6 (01:00:07):
In the process.

Speaker 16 (01:00:08):
And and so when you register a bond on a property,
for example, you go to a bank and you say,
will you will you lend me the money to buy
this house? The bank says, sure, no problem. What happens
now is the bank becomes in essence, the real owner
of the property until you've paid it off. And so
what happens is they they appoint a lawyer who registers

(01:00:30):
bond on the property, and that bond says that you know,
you know, yes, Warren Warren is the person that's names
on the title deed, but alongside Bank ABC. And until
such time as Bank ABC says differently, what Warren can't
sell that place without the bank's approval. So there is
a bond registration process, and then that that's not the

(01:00:51):
only thing because we also have to pay some tax.
You know, SORRS is not going to let you buy
and sell properties along the way without trying to claim
some money as well. And so if you've got a
property and it's worth more than one point two million round,
then you're going to pay bond fees and you're going
to pay transfer fees to SARS as well, and so

(01:01:12):
just be careful there because those transfer costs can add
up very quickly. And I did a quick calculation. I'm
not pretending to do this in my head, but for
around a two million round property, these upfront costs are
going to be pretty close to about one hundred and
twenty thousand Rand when you go in, and for a
five million property it's going to jump significantly around five

(01:01:37):
hundred thousand. So that's the lawyer fees, it's the taxes
to SARS, the transfer duties, so all of those costs
are hitting you upfront before you've even paid for the geezer,
which is probably going to burst on the first week
that you can move into your property.

Speaker 2 (01:01:53):
Only if the mother in laws come for tea weren't okay,
you can get one hundred. I mean, there was a
time when you could get one hundred and one one
hundred and two percent mortgage. I think those days, thankfully
are long gone. But even if you get a bond
for one hundred percent, should you still consider putting down
a deposit? I mean, is there a gain to you

(01:02:13):
in doing that?

Speaker 6 (01:02:16):
I think it's.

Speaker 16 (01:02:18):
It's the trade off between you know, what can you
do upfront on a monthly basis? How much have you saved?
Because the moment you put down a deposit, the benefit
to you is that your you're either you keep your
repayments a bit lower.

Speaker 5 (01:02:32):
So you know, if you.

Speaker 16 (01:02:33):
Owed, let's say it was ten thousand a month, but
now you put down a deposit and it's a decent deposit,
you might find that you only need to pay nine
thousand a month. And so that's the one way of
serving yourself some money on a monthly basis and creating
a bit of space in your budget is put down
a big deposit, and the bigger the deposit, the smaller

(01:02:53):
the monthly repayments. The alternative is that you put down
a nice deposit and you don't less. In other words,
you still pay your ten thousand round a month, and
if you do that, you're going to take years off
the life of the bond. So most of the time
when we get a bond in South Africa, the banks
will give it to us for a twenty year period.
And the bigger the deposit on day one, and the

(01:03:15):
more consistent you are and paying a bit extra every month,
you can start to cut off periods of you know,
six to eight years on a bond just by paying
a deposit on day one. And so I mean to me,
you know, I think the other thing around a bond
and maybe paying a bit extras, it becomes a very
nice place to build up an emergency fund, you know,

(01:03:37):
because you're going to need an emergency fund when you
own a property. So if you view nothing else, then
pay the extra money that you would have stored for
your emergency fund as.

Speaker 8 (01:03:45):
Your deposit if you can.

Speaker 16 (01:03:48):
And I think maybe my last comment there on this
Stephen is just make sure with the banks that this
is if you pay the extra money into the bond
as a deposit and it's more than what they're require,
that you can draw out the extra money when when
the world falls apart and you need that money for
an emergency.

Speaker 2 (01:04:07):
Seven two, seven oh two one seven oh two. What
did you learn when you bought a home for the
first time that you didn't know before about finances? I
don't mean check the outside loop. I do mean about finances.
What did you learn through the process. The other thing is,
and I mean I remember going through this, you need
to know how much you can actually pay every month,

(01:04:29):
and sometimes that can be quite hard to work out.

Speaker 16 (01:04:33):
Yeah, I mean certainly as a as a recovering property
by this was the one that caught me out. I
think I did very well understanding the upfront costs are
and I had a nice emergency find out. I did
put down a deposit, and then sort of by the
second or third month of home ownership, I just realized,
you know, that the money is so much tighter than
I thought it would be, and I didn't really understand

(01:04:55):
what was going on.

Speaker 8 (01:04:57):
And so just to think it through.

Speaker 16 (01:05:00):
The first thing is you've paid tax to sorrows on
the transferred us. But now that you're a homeowner, you've
got a new government body that's involved in your life
and they don't go away for the rest of the
time that you own a property, and that's called the
local municipality because they want to charge you something called rates.
And the reason they charge your rates is because they

(01:05:21):
are going to provide services like sewerage access and refuse
collection and all of those things. So for that they're
going to charge you a monthly rate. And in certain areas,
the Western Camp is one of them, those are going
up fairly quickly, and so again you need to know that.
You know, it's not just you know your monthly bond,

(01:05:42):
it's now these rates, and you know year one, once
you've done the homework, you might say, okay, well that's fine,
I can pay the rates as there are now. But
if those rates are going up faster than inflation, then
you need to have an extra amount saved for the
following year because these rates are only ever going to
go up. And in addition to rates, if you live

(01:06:06):
in an apartment or in an a state or a
townhouse and you're part of a complex, then you're going
to pay rates, and you're going to pay a levee,
and that levee goes to the body corporate or the
homeowners association. And the reason you're paying them is because
they will have responsibility for certain parts of the building
on the outside. So, for example, in an apartment block,

(01:06:26):
the body corporate will be responsible for maintaining the roof
and the building on the outside, and so you know
every number of years they're going to paint that, they're
going to have to redo the paving every now and then,
and make sure the roof doesn't leak at all of
those things.

Speaker 8 (01:06:41):
And so you pay.

Speaker 16 (01:06:43):
A levee to them as well. And that's not a
negotiable thing. That's not something you can decide to pay
or not. If you're an owner, that means you're a
part owner of a whole building and you are expected
to pay. And if you don't pay, you're going to
get yourself into even deeper financial struggers than what you thought.
So make sure that you pay these things because you've

(01:07:04):
got to pay these This is not something you can
just avoid or ask for a payment holiday.

Speaker 2 (01:07:09):
And I mean those can even when you've been living
in a place for a little while, suddenly they can
be increases. You know, you can want to boom off
the area or something that can happen, or there's a
regular cost or a community fund or something. Those things
keep coming up. They don't just stop.

Speaker 16 (01:07:27):
Yeah, and it's often at the very worst time. I
remember living in a body corporate where the trustees said, look,
we've run out of money and we need to repaint
the whole of the outside of the buildings, including the
outside boundary walls, etc. They're in desperate need of paint.

(01:07:49):
And so you know, yes, your normal monthly levees two thousand,
but unfortunately for the next three years, we're going to
charge you another two thousand, and that's called a special
levee because they didn't budget for the stuff upront. So
so now we need to paint and build up some
money for those costs. And again it's not a negotiation.
Once once the homeowners have decided and at a trustee

(01:08:13):
level they're voted for this, it's a cost you have
to pay.

Speaker 8 (01:08:16):
You have to share that burden.

Speaker 16 (01:08:18):
And so you know, maybe a good kind of tip
for first time buyers is before you buy into a
body corporate, ask them to give you the financials of
that body corporate. You want to know that it's in
a healthy financial position, that it's got some emergency reserves.
Otherwise you're going to be part of the emergency reserves
problem in the next month or year ahead.

Speaker 2 (01:08:39):
We have a question for you from a Titus. Warren
Titus is asking, I'm thinking of stopping my hospital plan
for health insurance because it's cheaper. Is this a good idea?
It's such a wonderful question. This also what did you
learn buying a home for the first time? Those seven
two seven two one seven o two will no answer
from Warren in just a moment. It's twelve minutes now.

Speaker 12 (01:09:01):
The Money Show still recurs is brought to you by
Absolve Corporate and Investment Banking Balancing economic growth with ecosystems.
That's how they've invested in your story. The Money Show
Personal Finance with Warren Ingram.

Speaker 2 (01:09:18):
Well, your question, Warren from Titi something of stopping my
hospital plan for health insurance because it's cheaper. Is that
a good idea? I mean, people go back and forth
on this question all the time.

Speaker 16 (01:09:29):
It's such a tricky one because I think it's for me,
you know, intuitively, I would say the last thing I'm
going to do is cancel my hospital plan. And the
reason is because if I have an accident, I want
to know that I can get care in a hospital
immediately and that I will be covered for all of

(01:09:50):
the expenses while I'm in the hospital, and you know
that might include having to pay surgeons and specialists and
all of that. And you know, hospital plans are not
famous for all of the costs one hundred percent of
the time.

Speaker 2 (01:10:02):
But what I will know with the hospital.

Speaker 16 (01:10:04):
Plan is that I'm largely covered for most of the expenses,
and so almost my default answer is that I would
be very scared to cancel a hospital plan. But one
of the things to think about is, you know, health
insurance it typically doesn't really cover much of what you
would you know, much of the expenses when you are

(01:10:26):
in hospital itself. What it does do is it helps
you when you're going to the general practitioner and you
know you need to go to the doctor because you're sick,
and it covers you more for the things that happened
to you day to day, when when you're not having
an accident or something like that. So so for people
that you know that maybe are you know, in a
position where they've got a family and they end up
at the doctor reasonably often, that you might find that

(01:10:49):
you know, health insurance covers them a little bit more.
But I think it's it is a tricky one because
you know, those are expenses I mean, obviously you can't
negotiate with the flu if you're if you're sick, you're
sick and you need to go to the doctor. But
at the same time, I think, you know, for me,
I want to know I'm super well protected when I
when I'm end up in real trouble and I need,

(01:11:10):
you know, I need to go to hospital and be
covered for that. So I mean, I almost want to say,
you know, if you if you're looking at canning your
hospital plan just to save money, you know, sometimes the
health insurances or medical insurances are actually a little bit
more expensive than a hospital plan, so so just be
careful that you're making an assumption there titus that the
one is cheaper than the other. And then you know,

(01:11:32):
just be very clear that you know, if you cancel
your hospital plan and you have an accident, you're going
to to to a stat hospital. And there are some
very good staut hospitals, but unfortunately there also lots that
aren't that good. And and you know, is that the
kind of risk you want to take with your potentially
actually with your life without being too dramatic.

Speaker 2 (01:11:51):
No, sure, I mean you really do need to be
very careful. You can have you know, you break a
bone or something, there'll be long term consequences of things
aren't sorted out properly. I wor we've got one or
two questions, one or two comments coming through on seven
two seven two one seven two.

Speaker 13 (01:12:06):
Hi, Stimmy, just ask where in let's say a two
million bond house deposit of five hundred or you sign
up the full two million and put a lamp somem
of five hundred, is there a difference in terms of
saving on the on the interest. Yeah, just wondering, Jimmy Mentra.

Speaker 2 (01:12:33):
Thanks Tomy. Warn't you I think this is about sort
of investing five hundred thousand or is it about putting
it into the bond?

Speaker 16 (01:12:42):
I love the question. So so I think if you're gonna,
if you're gonna take the two million bonds, so you
get one hundred percent bond and then sort of, you know,
day five, you take your extra five hundred thousand and
put it as a as a as a top up
payment into the bond. So now you've got you know,
a very big down payment as an additional amount that
wasn't contractually required. It does give you a huge amount

(01:13:05):
of flexibility. So number one, the amount that you owe
is now only one and a half million, and so
the interest that you're going to have to pay over
the life of the bond is less. And then you
get into that, you know, that position where you can
either maintain the monthly amount on day one. So if
they say to you on two million that it was,
you know, for example, twenty thousand a month, you could say, well,

(01:13:28):
even though I only now one and a half million,
I'm going to keep paying twenty thousand a month. And
you might find that you end up paying that bond
off over a period of eight years or something, you know,
not not twelve or not fifteen. Alternatively, you might put
the five hundred thousand in and then get a lower
interest in a lower payment, and then you decide I'm
going to pay that minimum. So I think it's a

(01:13:50):
nice idea. The one thing I would do is I
would check with the bank. If you say to them,
you know, this is a two million property, I'm willing
to put in half a million upfront, what would be
the interest rate you're going to charge me. Sometimes banks
will actually view you as a better risk, and if
you're a better risk, they might reduce the interest rates.
So instead of charging you prime. They might say to you,

(01:14:12):
will well charge you prime minus one if you put
down a big upfront payment as well. Unfortunately, you can't
access that money, so once it's in, it's in. So
I prefer the flexibility of the first option of getting
the two million bond and then you know, doing a
five hundred thousand payment after that, but not at the
expense of a very nice interest rate from the bank.

Speaker 2 (01:14:33):
You've really got to do a lot of longer term mats,
all right. There's a big debate about deposits. So it
sometimes depends on how where interest rates are. You're going
to have to explain all of that to me because
there are a lot of different variables here.

Speaker 16 (01:14:50):
So you know, I love the stock markets. Even so,
if we use the stock market as the alternative, the
thing you can do, the other thing that you can
do with your money, that sends the ball for growing
your wealth. We would expect the stock market, over long
periods of time, to give us, let's say, ten or
eleven percent a year over a ten or twenty year period.

(01:15:11):
And so if someone says to me, well, I'm just
going to pay the minimum on my bond and I'm
going going to invest the balance. The first question I
would ask as a follow up is what is the
interest that you're paying on that bond, Because if the
interest rate is eleven percent and you can expect to
get a return of ten or eleven percent from the
stock market, then then I'm going to question that decision

(01:15:35):
because you know, if you pay extra money into a bond,
I view that almost as a guaranteed return, which is
tax free. It's almost like a guaranteed tax free investment
because the more money you put into the bond at
eleven percent, you're saving yourself that that interest that you
have to pay, and so you know, if you turn

(01:15:56):
it on its head, it's almost like you know, saying, well,
I'm going to get, you know, a guaranteed saving of
eleven percent, and I'm not paying tax on it. So
I think then, you know, paying a big deposit when
interest rates are very high makes a lot of sense
to me, and paying as much as you can extra
every month would make sense as well. But there are
times that you know that I know, it doesn't feel

(01:16:18):
like it anymore, but there are times when interest rates
might only be eight percent, and then it becomes a
little bit more tricky because you know, if you can
get you know, three or four percent more than the
interest you're paying from a stock market investment, perhaps you
want to balance that to you and say, I'm going
to put some extra into the into the bond, but
the other portion I'm going to put into an investment

(01:16:39):
for the long term.

Speaker 2 (01:16:41):
And I mean what you want to do also, I
mean I know some people who just can't stand that,
and I know some who are very comfortable with it.

Speaker 16 (01:16:50):
Yeah, I'm that guy, Stephen. I don't want to be
told what to do by outsiders, So I don't want
a bank to tell me, you know, that I owe them.
So I'm going to pay off that debt is fast
as I possibly can, so I can sleep at night,
and so irrespectable the interest rate. I'm going to get
that bond to zero as fast as I possibly can,
and then save as much as I can and investments

(01:17:11):
going forward. So that's a personal preference for me. But
there are other people out there that would be very
happy to have a bond for twenty years and would
pay out, you know, pay the minimum or slightly more,
and then invest alongside because they feel that's diversification. And
I think the important thing about money is that you
know there isn't always only one way to do everything.

(01:17:32):
You have to match it to your personality as well.

Speaker 2 (01:17:35):
Warren Ingram, thank you so much, really to appreciate the
co founder and certified financial planner at Galileo Capital.

Speaker 12 (01:17:43):
The Money Show the Encrus is brought to you by
Absolve Corporate and investment backing Balancing economic growth with ecosystems.
That's how they've invested in your story.

Speaker 2 (01:17:56):
Well, US market's turning positive tonight that our jurns up
half of the the Nasty Cup point zero eight p
s and P five hundred up point one P five
Still love data to come through later in the week,
so the story could I'm afraid still turn. We'll be
back with you tomorrow. Good evening, eight o'clock

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