The number of visitors to Cape Town this year is running more than 25 per cent up on a year ago.
Airlines report record demand for seats as the peak summer season gets under way. New hotels are going up across the city and are booked out almost before they open. Game parks are full and every tourist facility is bursting at the seams.
Yet the South African economy is in a mess and diving deeper by the day. On Monday the rating agency Moody’s savagely criticised the finance minister Malusi Gigaba’s recent budget statement, almost certainly heralding a further down-grade of the country’s foreign and local currency – already given junk status by two of the three big rating agencies.
Just when it seemed it couldn’t get worse, it did. Mr Gigaba’s budget statement owned up to a string of disasters – a colossal 51 billion rand (Dh13.32bn) shortfall in tax revenue (and this after a tax increase in 2016), a steep climb in the budget deficit to 4.3 per cent of GDP, a fall in February’s economic growth forecast from 1.3 per cent to 0.7 per cent, and a forecast that government debt would rise to 60 per cent of GDP by 2022 (from less than 30 per cent when Jacob Zuma became president in 2009).
Most unnerving of all is the acknowledgement that Mr Gigaba hasn’t a clue what to do about it and has more or less given up even trying. Economists have focused on his abandonment of the policy of “fiscal consolidation” he promised to pursue when he took over after the sacking of Pravin Gordhan last April. The movement away from fiscal prudence, says the rating agency Fitch, is “occurring faster than we had expected”, while Zuzana Brixiova, Moody’s well-respected sovereign analyst for South Africa, said the statement signalled “a marked credit-negative departure from earlier fiscal consolidation efforts”. South Africa's debt sustainability, he warned, is at risk because revenue collection is under-performing and expenditure will be hard to reduce in the run-up to the 2019 general elections.
South Africa is already paying a penal 9 per cent for its borrowing yet the debt burden is projected to increase by almost 7 per cent a year, raising the interest burden to 15 per cent of revenue by 2020. It is already the single biggest item of governments spending, well ahead of education, health or pensions, all of which are in dire need of more funding.
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Nowhere is the serious state of the country’s finances more visible than in South Africa’s mining industry, traditionally the engine room for what used to be the continent’s strongest economy. A proposed mining charter, which requires higher levels of black ownership than ever before, is seen as so penal that investment in new mines has almost come to a halt. Corruption and favouritism in the awarding of new licences has persuaded the big international mining companies that they have no future in the country, causing them to switch their focus to more friendly climes.
Even more worrying, however, is the plight of the state-owned industries, many of them big loss-makers. South African Airways (SAA) is a basket case, requiring a series of government bail-outs that have simply staved off the crisis for another few months. Successive changes of management and board, driven personally by Mr Zuma who has insisted on installing his friends and cronies into plum jobs, have basically destroyed it as a functioning entity. As with the rest of the economy, no one knows how to resolve it. Mr Gigaba last week said SAA should be retained “in our national interest” rather than “rely exclusively on the profit and scheduling considerations of global airlines”.
His statement that only a state airline can sell “SA’s economy, tourism and culture to every one of its passengers” has met with howls of outrage. “Balderdash,” thundered the veteran commentator Steve Mulholland; “utter nonsense”, said Peter Bruce, perhaps the country’s most respected financial columnist.
Like many other international travellers, I no longer fly SAA, preferring to use the Middle East operators, such as Emirates, Etihad and others who are increasing their share of the market. Any of these airlines would be happy to take on the job of selling South Africa as a tourist destination – and already do.
The national electricity provider, Eskom, is in a more parlous state even than the bankrupt SAA. Its debts now amount to 9.3 per cent of GDP and go on mounting at a terrifying rate. No one knows what to do about that either. The country may be able to manage without a national carrier but it does need to keep the lights on – and no international or private company is prepared to take that on.
The real message of the budget is that the country is rudderless, run – or not run – by a president who seems to care about nothing more than his own personal survival. The ruling ANC is sharply divided as it heads into its electoral conference in December when Mr Zuma’s successor will be decided (the front-runners are the deputy president Cyril Ramaphosa and Nkosazana Dlamini Zuma, the president’s ex-wife), but Mr Zuma still has another two years to serve as president.
Nothing much is going to change in that time.
And the markets, if they weren’t fully aware of it before Mr Gigaba’s budget statement, certainly know it now.
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
UAE currency: the story behind the money in your pockets
The Bloomberg Billionaire Index in full
1 Jeff Bezos $140 billion
2 Bill Gates $98.3 billion
3 Bernard Arnault $83.1 billion
4 Warren Buffett $83 billion
5 Amancio Ortega $67.9 billion
6 Mark Zuckerberg $67.3 billion
7 Larry Page $56.8 billion
8 Larry Ellison $56.1 billion
9 Sergey Brin $55.2 billion
10 Carlos Slim $55.2 billion
The specs: Audi e-tron
Price, base: From Dh325,000 (estimate)
Engine: Twin electric motors and 95kWh battery pack
Transmission: Single-speed auto
Power: 408hp
Torque: 664Nm
Range: 400 kilometres
The specs: 2018 Genesis G70
Price, base / as tested: Dh155,000 / Dh205,000
Engine: 3.3-litre, turbocharged V6
Gearbox: Eight-speed automatic
Power: 370hp @ 6,000rpm
Torque: 510Nm @ 1,300rpm
Fuel economy, combined: 10.6L / 100km
Fire and Fury
By Michael Wolff,
Henry Holt
Ukraine
Capital: Kiev
Population: 44.13 million
Armed conflict in Donbass
Russia-backed fighters control territory
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
TO%20CATCH%20A%20KILLER
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EDamian%20Szifron%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Shailene%20Woodley%2C%20Ben%20Mendelsohn%2C%20Ralph%20Ineson%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%3C%2Fp%3E%0A
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The specs: 2018 Volkswagen Teramont
Price, base / as tested Dh137,000 / Dh189,950
Engine 3.6-litre V6
Gearbox Eight-speed automatic
Power 280hp @ 6,200rpm
Torque 360Nm @ 2,750rpm
Fuel economy, combined 11.7L / 100km
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Killing of Qassem Suleimani
