Ramaphosa Own Goal
Tonight we had the State President Cyril Ramaphosa perform The State of The Nation which is another fancy term for opening the parliament for the new year. In his speech he announced a R100 billion black business transformation budget. I never watched this one as we all know if you have seen one it is one too many and guaranteed it will feature SA's air force which consists of two jets doing a fly pass.
I am sure many are aware of the comments lately by Trump, Musk and Rubio over the last few days with Rubio stating he will not be attending the G20 summit which is being hosted in SA. I would say this is not all about one particular thing, but more of a combination.
Siding with Hamas against Israel is one and being a fully fledged member of BRICS is another considering how much funding this country has received from the US over the years including a favorable trade agreement called AGOA. SA has always sat on the fence so they play the middleman hoping to score funding and deals from all sides. This is not exactly sitting on the fence and they have been called out for this and now they do not like what is being said.
South Africa with their 30% BEE policy which means white owned businesses have to give away 1/3rd if they want to do business with other companies including vying for government contracts. I know businesses that have a figure head who actually does not play any role in the business and his job is only to have his name as a registered shareholder. This is a work around but clearly should not be part of society 31 years after apartheid was abolished. For the country to function businesses must be free to do business and then they can flourish and hire more people. This is what is holding the economy and investors back for the very few elite to benefit.
The land expropriation act without compensation was what Musk and Trump targeted this week and even though we have not heard of this happening it has still been written into the constitution. Maybe this is not a problem now, but under another State President this could spell big trouble.
We are talking about 31 years since Apartheid was abolished so anyone under 30 would have never experienced those horrors. Sadly the 16 -34 generation is the ones who are unemployed with stats suggesting we are well over over 60%.
What is going to tur the economy around is overseas investment, but not if you have to give away 30% from the start. The problem is it is the same people whoa are helping themselves to the 30% so the money does not get shared out so the poor remain poor and the rich get richer.
I can recall Musk and Ramaphosa having a meeting with regard to Starlink not that long ago that went well according to Ramaphosa. It went so well Musk never went ahead with the deal and you can read between the lines as I would guess Ramaphosa wanted to add Starlink to his expanding portfolio which also includes the likes of McDonalds.
Tonight Ramaphosa announced a transformation budget of R100 billion to black businesses which is a slap in the face to all White, Indian and Colored owned businesses. Businesses already account for 90% of the income tax generated and now they will have another 3% levied to pay for this transformation kitty which is 31 years after the event.
If he was going to offer this payment and then scrap the BEE racist system then I am sure many could come around to a once off and get it over with type attitude. The problem is I do not see that happening an all it is doing is highlighting another racist event in SA giving Trump and co enough ammunition to shoot back at them.
More negative press will continue and those wo were crazy enough to consider investing will find another county with less risk and the Rand is going to tank. An extra 3% business tax on businesses already strained could see more closures resulting in more job losses. This generates even less tax and will result in businesses having to fund even more.
That is the real world and not the political show boating we witnessed today. The R100 billion will be squandered and how much will be spent on companies who could succeed. This is not a lot of money and only comes out to around $5 billion. I am sure everyone had wished he had spent that on fixing and upgrading the electricity supplier because that has been the underlying factor which has shut down most businesses in the last 5 years.