Thursday, August 2, 2007

ABSA Should Have Consolidated Barclays' African Operations and Listed Them Separately on the JSE

Why?

  • The growth profile, risk and challenges are different and the management team running ABSA SA versus ABSA Africa need to be aligned to different incentives. Growing a R400bn book by 20% is not the same as lengthening the yield curve in Uganda and doubling a R 2bn loan book. The latter is a more volatile call option and has a longer time to maturity and should command a higher multiple.
  • Injecting equity additional equity holders capital with a warehoused structure should make Mr Kruger and Mr Mboweni more comfortable.
  • Everybody loves a growth story and many would have fantasized that MTN redux was beckoning in this share.
  • The exchange control environment is very forgiving of such arrangements and no sterilization would have occurred.
  • The share would have made a lovely partner to DRD Gold in the value swing stakes, depending on what flavor of chaos was unfolding in a key country. Traders love securities that are hard to value because there is always some profit to be made from fear and greed.

It may be too late now; the time to sell overvalued equity may have passed us by...sigh.

Refugees are People First, Not Problems -So, While Crime Soars...

If South Africa were in the meltdown Zim is facing, the rational normal human being would sooner place himself at extreme risk of humiliation and suffering than feel the sense of helplessness one must feel when unable to feed one's children. It must really hit home for every proud Zimbabwean parent who knew that his country enjoyed higher standards of living than other African countries as recently as 6 years ago that there isn't a hope in hell that his children will see the same quality of life.

The people streaming across the border for a better life are breaking our laws but that doesn't make them below human. President Mbeki is relying on that natural racism and xenophobia so prevalent in our society as a second pillar to his flat-earth diplomacy if he thinks he can pressure Mugabe by saying that South Africans will rebel against the alien invasion at some point. One of the reasons crime has surged in South Africa in the last 18 months is Zimbabwe's meltdown. Hold on! It's not for the reason that naturally and simplistically comes to mind.

Let's assume the average policeman on the beat makes 4000/month risking his life against violent criminals on a daily basis. Then one day this surge of easily identifiable illegal aliens arrives in Johannesburg and he sees walking ATMs that he can extort for R 20 per person with very little effort while looking busy and visible at the same time. It doesn't take a Harvard MBA to figure out that doing this 5 days a week to 10 people per day will net him an extra tax-free salary in a relatively risk free way. Cops are so distracted hunting for these ATMs that normal crime fighting is beginning to suffer visibly.

It's relatively easy to find measurable factors that support this hypothesis. For starters, the going-rate for catching, extorting a bribe and releasing an illegal African alien has fallen by an order of magnitude since last year. Economically speaking, this can only happen in a clearing market that is rapidly re-setting equilibrium as developments unfold. If extortion wasn't a widespread practice and the simple xenophobic crime explanation held, it should be getting more expensive for an illegal to bribe himself out of custody at a roadblock given the worsening situation in Zimbabwe.

I know this is an unpalatable argument for many but we have to face the fact that our cops are underpaid and corrupt and the temptation is proving irresistible to a critical mass of feet-on-the-street officers among them. The market doesn't lie, just like the price of drugs go up after major busts that disrupt the drug trade.

I would hazard a guess that crime would actually fall if police were forbidden from questioning people's immigration status and from arresting prostitutes unless they were in active commission of another crime. Go figure! 98% of our prison population, both awaiting trialists and convicts, is SA native. Either these illegals, who didn't commit much violent crime in Zimbabwe become remarkably good at evading police and hiding in an unfamiliar country the moment they cross the Limpopo or we are kidding ourselves about the true sources of violent crime. Most violent crime is committed by entitled, young black South African men who drop out of school, take drugs and are comfortable intimidating people with violence. Yes, there are many Zimbabwean criminals active in South Africa but the overwhelming majority of crime is home-grown barbarism.

Zim illegals add to urban squalor, live in unhygienic conditions and bottom-feed on casual jobs that should be done by unemployed and unskilled South Africans and unscrupulous employers that hire them should be prosecuted. That said, the visceral reaction emanating from people about the cross-border flows seem to be directed at finding someone to blame for some real home-grown issues.

I can't for the life of me understand how someone can be out on bail for 2 different violent offences simultaneously, or why someone arrested with the use of lethal force deserves a bail hearing. C*** like this contributes to the culture of impunity that is pervasive in South Africa's criminal class.

As long as policemen know they can get free sex and double their salaries without risk to their lives, perverse incentives will continue to dominate a disproportionate amount of police time. The sickening thing is how popular the arrest figures are and the false sense of action and security they give the nation when they are announced. People see roadblocks all around and feel like the police are doing something. Yes they are, but it ain't keeping you safe, far from it.

Thabo Mbeki Has Lost All Credibility on Zimbabwe

Someone much smarter than I am once said, "Governments don't have principles, only interests." Even from this most extreme of viewpoints, I remain confounded by inaction that becomes inimical to South Africa's vital interests. The ANC administration has acted so meekly in constraining the actions of the irresponsible Zimbabwean leadership that they can no longer be trusted to act dispassionately and predictably in protecting South African business interests anywhere else on earth. After all, wasn't Zimbabwe one of those countries within the sphere of our persuasive influence?

This abdication is all the more stinging because only the most subjective analysis of events in Zimbabwe can rule out President Mugabe's despotism as the main political obstacle. President Mugabe is a shame to all objective evaluators of presidential conduct in running national affairs and an embarrassment to black people who are passionate about progress and development. It makes me cringe to hear him applauded by enlightened leaders in the ANC. Protocol requires that he receives the deference given to a Head of State but only with the same bitter taste the Scandinavians reserved for the trains of apartheid leaders. President Mbeki's handling of Zimbabwe could have been much simpler, less costly to South Africa's credibility and his personal political capital; he could simply have condemned the lunatic, stepped away and watched the meltdown without making any further comment. Instead, he has chosen to commit, tie himself in knots, warp reality and engage in flat-earthism on a grand scale.

President Mbeki and South Africa's subjective stance on Zimbabwe is not helping and our President no longer deserves to be taken seriously when he comments on Zimbabwe. It's about time Tony Snow said it. (that way, the State Department can "apologetically clarify" the remark in a low-key manner when the porcupines at the Presidency in Pretoria protest.) President Bush can conveniently remain silent on the matter in a tacit endorsement of his spokesman's comments.) This diplomatic smack-down is long overdue! This is why the world doesn't take Africans seriously, we are unable to be objective even when human lives, livelihoods and standards of living are at stake and being squandered. Unfortunately, the problem is equally bad among black and white South Africans -it's just different things we differ about.

My race has nothing to do with an objective opinion but because I want to see this handled as a mature debate, I'll place it on the record that I am black and proud to be speaking freely in challenging the ANC without fear of being locked up tomorrow. Not all ANC supporters agree with the government's dumb attitude on the Zimbabwean problem. Call "Fire!" when you see a burning house!