Sunday, 16 February 2014

The South African Flood

South Africa has a number of problems, which are starting to flood and overwhelm the tax payer. President Zuma, in his state of the nation address proudly said that there are 15 million employed people and 16 million people getting grants. Some people say a family needs R30,000 per month just to survive. Perhaps because 70% of our taxes, ie rates, taxes, electricity, water, transport, etc, prices are going to grants, and funding such as free electricity, free rates, free transport, free housing, etc. Under this regime, people get a free house and then say its to small!! If only jobs could be created, South Africans would be so much better off and we would all feel much better off. But how to stop this flood?

1) Eskom can only supply about 30% of South Africa's current electricity demand. So many companies have to move elsewhere to get electricity. Hence the reason why our top 40 companies are doing so well, but the SA economy is doing so badly. Almost all the top 40 are slowly moving operations off shore to get electricity and other benefits.

2) We have an incredibly stringent labour regime, which inhibits employing people. With close to 40% unemployment you would think that SMME's would be able to hire and fire people just like in the USA! But we can't so we don't employ. Also the unions protect employed people whilst doing Nothing for unemployed people. Unfortunately the unemployed people don't see this.

3) We have incredibly high electricity, water, rates, transport and other input costs or overhead costs. Our prices are already higher than in China, India and Texas!! Hence companies are moving their operations to places that are cheaper.

4) 20 years into our "democracy" or perhaps we should call it One Party State, we have to employ people in a BEE regime. BEE was historically used to redress the wrongs caused by minorities not being employed. But here they are used to employ the majority. And in many cases where these people aren't fit for the jobs. Hence the huge spending on consultants.

5) The school system has been changed several times since 1994, and each time standards have been lowered. Have you heard my "joke": Why do we have grades now? Because there are no standards!

6) Having said all this, we still live in the most beautiful place on earth, with an abundance of natural resources including wind, sun, water, wave, sea, minerals, people, etc. If only we could get our act together and make use of all this stuff locally, rather than exporting everything and then wondering why we have to import finished goods and food.

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