05.22.13
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Sea change for South Africa

English: Fishing boat, Cape Town, South Africa

English: Fishing boat, Cape Town, South Africa (Photo credit: Wikipedia)

It’s a new dawn for small-scale fish farmers and others in rural farming communities as legislation and business practices open markets and improve food security, writes Jackie Cameron.

Amid heated labour protests that have swept the country and made international headlines, it is easy to forget significant progress has been made in empowering many of the country’s poorest. Behind-the-scenes, a small army of community and business leaders have been tackling the unglamorous task of improving life for the disadvantaged who rely on the land and sea for survival.

In what is undoubtedly a major victory for the downtrodden in coastal communities, Parliament recently published a policy for the small scale fisheries sector in South Africa. This is the first time marginalised communities who depend on the sea for their livelihoods and food security have been placed centre stage in legislation. Fishing artisans and sea harvesters have been competing with commercial capital for at least a century over the country’s marine resources.

Recent legislation omitted small-scale fisher folk altogether, making it difficult for them to earn a living legally from the sea because they have only been able to catch fish on recreational permits. But, a court battle in 2005 ultimately led to an order to Parliamentarians to draw up the small-scale fisheries policy in order to allow some 30 000 subsidence fishermen and women to sell their catch.

The policy has taken seven years to reach the Government Gazette. Next is to flesh out implementation plans, expected to be unveiled in the first half of 2013. The National Economic Development and Labour Council, the committee that plays a guiding role in all things economic, is set to meet soon to finalise details.

Artisanal Fisheries Association chairman Andy Johnston, who played a key role in bringing the matter to court in 2005, is optimistic the policy will lead to improvements for fishing communities. He says that, although there are still many challenges ahead, particularly in identifying beneficiaries of the policy, the legislation is generally positive. “Whole communities can benefit if the policy is properly implemented,” notes Johnston.

Naseegh Jaffer of the fishing community-focused Masifundise Development Trust, which has also campaigned for small-scale fishers’ rights, predicts the policy will transform the sector “in a major way”. “Change for the better will be minimal after the first year and will grow exponentially thereafter. It is our view that the policy implementation approach must be gradual as some of the policy provisions are quite complex and require significant cooperation across various government departments and provinces,” he says.

Significant early change, says Jaffer, is that fishers will have the right to go to sea and harvest multiple species. “They can earn a better income and therefore have more money to spend at local level. This, in turn, will have a cascading effect, especially in rural communities.”

What’s more, middle players will be removed, notes Jaffer. “This means more value stays within the fishing community and fishers are less vulnerable to the upfront loan agreements keeping them in debt and exploiting them from their earnings.”

It is not just the people with the rods and nets who will benefit, though. As Jaffer points out: in the medium term value adding at local level  ― through ventures ranging from jewellery creation, tourism, boat-building, retail outlets, fish processing and other related services ― is likely to boost employment levels.

Women, who face the extra battle of patriarchal structures in fishing communities, are expected to benefit considerably as new legislation is put into place. For starters, the policy now enables women to also do harvesting if they so wish, says Jaffer.

Other women, who mostly do pre- and post-harvesting will have their work brought into the mainstream and therefore they will also find legal and economic protection under the legislation, he says. “The policy suggests women should be among the primary beneficiaries from adding value in the post-harvest and marketing processes,” points out Jaffer.

Other features of the policy that acknowledge the critical role of women in this sector include having gender sensitive ablution facilities at harbours and landing sites. Childcare facilities are also set to be developed in order to make it easier for women to work in the small-scale fishing sector.

Not to be overlooked is that the policy isn’t just about allocating fishing rights, but about livelihoods and food security. “It is a development policy for small-scale fishing communities that addresses their dependence on fishing and related activities as well as their broader social and economic situation,” says the community activist.

Opportunistic business operators are in for disappointment if they think the policy will open fresh entrepreneurial avenues. “No new entrants will be allowed in this sector. Already the resource is under serious pressure to accommodate those who meet the criteria. In fact, the policy recognises that supplementary livelihoods must be investigated as the resource is not enough to meet the needs of fishers,” says Jaffer.

Minister of Agriculture, Forestry and Fisheries, Tina Joemat-Pettersson MP, includes the small-scale fisheries policy as one of the country’s tools to tackle the “triple challenges of unemployment, inequality and poverty”. Speaking to business leaders at an end-of-year function in Johannesburg, she emphasised that: “Feeding the nation is not just about providing food, but is also about creating a conducive environment for citizens to take part in the production of their own food.”

Roughly a quarter of all South Africans don’t get enough to eat each day and smallholder farmers and co-operatives are seen as playing a key role in increasing food production as well as employment levels. “We need to review the decisions that we took earlier on in our democracy, some of which left us with practically no support to a strategic sector like agriculture, in the face of continuing and in some cases increasing agricultural support in some of our major trading partners,” says Joemat-Pettersson.

She cites low levels of technical ability, low productivity, lack of access to finance and inability to meet quality standards demanded by sophisticated markets as among the obstacles to growth. But, the country’s food security policy aims to tackle many of these challenges and includes a “reprioritisation of government procurement of food to provide markets for community food production”, says the Minister.

Already making an effort to improve access to markets for smallholder farmers are some of the country’s biggest retailers and agro-processing firms. Joemat-Pettersson has singled out the Massmart-Walmart chain for starting to partner smallholder farmers, providing technical assistance and sourcing fresh produce from them for their stores. SAB Miller and Tiger Brands have similar schemes, she notes.

With widespread hunger and at least one-third of under 30-year-olds unemployed, chronic poverty and food insecurity are arguably South Africa’s biggest challenges. As Joemat-Pettersson says: “We cannot wish our problems away..this is not the time for blame. We have a multi-generational problem that will take many years to solve, but the time is ripe for us to do that now.” Policies like that aimed at the small-scale fisheries communities take the nation another step in the right direction.

*  This article was first published in African Leader magazine. The journalist, Jackie Cameron, conducted interviews from her base near Edinburgh, UK. Jackie Cameron writes about business, investment, economics and current affairs for titles around the world.

Contact the writer at: jackiecameron.uk@gmail.com.

Copyright: Jackie Cameron 2013.

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05.14.13
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Property: Should you rent or buy?

English: An icon from the Crystal icon theme. ...

English: An icon from the Crystal icon theme. Nederlands: Een icoontje van het Crystal icon thema (Photo credit: Wikipedia)

For some time, property was the most exciting asset you could buy. But that was when house prices increased dramatically each year.

Is buying always the best option?

No. Only buy if you are confident you will not sell sooner than at least five, but preferably seven, years. It takes time for a property’s value to grow to the extent that it covers the extra costs associated with buying and selling – and gives you some profit to help you put down a deposit on your next home.

Apart from the bricks-and-mortar, expect to pay for costs like transfer duty to the government, the usual bills associated with moving, commission to an estate agent and possibly, tax.

Is renting just subsidising someone else’s path to wealth?

Yes, it is. When you pay rent, you are paying off an asset that will eventually be owned by someone else and generate a steady income for that person. But the flip side of this argument is: your rent will be lower than home loan (mortgage) repayments; you may need the extra cash for other spending, like getting your own business going. Another plus factor of renting is that your landlord pays for maintenance, insurance and other costs associated with homeownership.

Is it better to rent and invest money in shares instead?

Only if you have the discipline to invest the money you are saving by renting rather than buying. Plus, you need to know what you are doing on the stock market so you can generate a consistently high return.

It generally requires more skill and expertise to make good money on the stock market than it does through buying and selling real estate. History has shown that property and shares should produce similar returns that are better than you can expect to enjoy from other asset classes in the long run, so you won’t lose out if you opt for property instead of shares.

There is another, better reason to opt for property: you can borrow money to buy property, but you generally can’t borrow to buy shares.

Should you be working towards your own property?

Yes. For most people, rent or a home loan is the biggest monthly expense. Over time, this home loan repayment reduces to below what you’d pay in the form of a monthly market-related rental. If you can wipe out this bill, you will free up loads of extra cash for other spending and saving elsewhere.

In addition, every cent you spend on the property is going into your asset, not someone else’s, and no one except you can decide whether to move. Landlords can often give tenants nasty surprises, like notice because they have decided to sell.

When is renting preferable?

Renting is usually a better bet if your job is not secure or if you’re expecting big personal changes, like a marriage, divorce or more children. It’s always quicker and cheaper to move from a rented home than one you own.

By Jackie Cameron. This article was first published in Fairlady magazine. Jackie Cameron is a freelance business and financial journalist, who lives in Scotland. She is the author of personal finance books, including one on property, and award-winning former editor of South African property news site Realestateweb.co.za (Moneyweb Holdings).

Write to Jackie Cameron: jackiecameron.uk@gmail.com

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05.12.13
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5 ways to beat your bank at its own game

Photo of a RBC Visa taken under a UV light to ...

Photo of a RBC Visa taken under a UV light to show the florescent Visa Bird. (Photo credit: Wikipedia)

Ways to work your credit card, so you win – not the bank. 5 tips.

Your credit card can make or break your financial well-being. If you take on too much debt, you won’t have capacity to borrow money for important stuff like buying a home.

And, if you don’t keep up with your repayments, you can easily generate a poor credit history. That, in turn, will mean the bank manager is likely to show you the door next time you ask for a loan, rather than enthusiastically writing you a cheque.

Easier said than done, you may think, as your statement arrives in the post, showing a never-ending stream of purchases, and a budget facility that seems to chew through an ever-increasing amount of your salary.

The bad news is that, just as it is a challenge to get physically fit so too is it hard work to trim down a credit card that’s bulging with debt. But the good news is: it can be done!

Here are some things you should know about credit cards:

1. Pay off more than the bank expects. You may have agreed to repay, say, 5% of what you owe. Pay more than this, and better still pay off the full amount. If you do the latter each month, you won’t owe the bank interest for spending money that was never yours.

2. Pay off your budget facility with the help of your credit card. If you owe money on your budget facility, ask the bank to pay this off with the other side of your card. This shifts your debt to a place where you will effectively repay less.

3. Don’t ever draw cash if you owe money on your card. You don’t pay interest for goods and services immediately, but cash attracts punitive interest payments for you from the day you have it in your hands if your account is even one cent in the red. Rather draw cash from another account, where you have a positive balance – or one where you do not owe the bank money.

4. You must stick to the bank’s deadlines. Banks often seem to be generous in granting credit limits, so you may find you could spend much more than the total income you expect from your salary at the end of the month on a credit card. Don’t be fooled into thinking the bank is lenient. It expects you to repay the minimum you owe on time, or it can freeze your facility, leaving you red-faced at a till next time you are out shopping. Remember, too, it can cost money to get your card going once again.

5. They’re not all the same, so shop around. There’s lots of competition for your credit card business, so find the card that charges you less – or gives you something extra. Some cards have loyalty programmes attached to them, though bear in mind the rewards aren’t worth it if you have lots of credit card debt. This is because the interest you are charged for credit card debt is very high.

If you’re not very good at managing your money within your means, it’s probably best to stay away from a credit card. It’s very easy to spend money with a plastic card because it’s so removed from the hard labour you put into earning that money in the first place.

When you pay with cash, counting out each note brings home the cost of what you are buying.

If you decide to cut up your credit card altogether, don’t forget to repay what you owe in full, or you’ll earn a poor credit repayment record. And that is a particularly bad mark to have against your name if you want to improve your financial well-being by borrowing to buy an asset like property.

BY JACKIE CAMERON. This is an edited version of an article first published by Moneyweb’s Personal Finance newsletter. Write to freelance personal finance writer Jackie Cameron at jackiecameron.uk@gmail.com.

04.25.13
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Diamonds are a (Chinese) boy’s best friend

English: The Qianmen Street in Beijing, China.

English: The Qianmen Street in Beijing, China. (Photo credit: Wikipedia)

BEIJING: It’s early Saturday evening and the shops are buzzing on central Beijing’s upmarket Qianmen shopping street.  Standing out among the designer boutiques and Chinese tea shops is the four-storey flagship store of the Chow Tai Fook jewellery chain, which draws in passers-by before the towering red-brick entrance to Tiananmen Square can bring them to their communist senses.

The shop is a glittering, enchanted palace, where browsers are politely, but deftly, ushered to the next available counter attendant as they step inside. Each precious gem has its own section, and every floor carries progressively more expensive stock surrounded by added layers of protection.

Security in the form of attractive young men and women dressed in smart suits and bearing tell-tale wires on one ear, cameras trained on every imaginable area and the rigorous key hand-over procedures all help create an atmosphere that this is a place where very expensive things are kept.

Attendants on the first floor don’t touch the merchandise with their bare hands; they apply black gloves and keep the goods visible on black velvet trays. From the second floor up, you need to look like a serious buyer before a shop assistant calls in the reinforcements to unlock the cases  –  which is not surprising when you learn the prices of the rings, pendants, necklaces and earrings on offer.

Diamonds, diamonds everywhere

Although this is the heart of China’s wealth belt, it is not jade - highly valued for thousands of years and an integral part of the cultural heritage – that dominates displays. Instead it is gold, platinum and diamonds, in particular, being held in front of the noses of the world’s newly rich.

Most surprising of all is that it is not just women who are hankering after the diamonds here. Men, macho-looking men, are salivating over them in equal numbers.

Until that Saturday I had assumed diamonds, as diamond giant De Beers has told the world for decades, are a girl’s best friend. But, that’s clearly not the case in China, as I witnessed. Their appeal here is not restricted to the female gender.

Several young couples were dotted around the diamond section,trying on wedding bands. Of five I saw, not a single couple opted for a simple, yellow-gold band. Every one of them was engrossed in choosing white-gold or platinum bands with diamond insets – that’s a diamond in the man’s ring as well as the women’s.

It was fascinating, too, to watch the speed at which major purchasing decisions were made. The couples couldn’t have been in the shop for more than half-an-hour each. I saw a middle-aged women come in and have a cursory look at a necklace bearing a large emerald-and-diamond pendant before marching to the till with her partner in tow.

Diamonds are “forever”

Wondering whether the excitement around diamonds was a Chow Tai Fook phenomenon or whether the international diamond industry was responsible for an amazing marketing feat in the world’s most exciting luxury goods consumer market, I visited several other jewellery stores in Beijing.  I soon found myself humming the “Diamonds are forever” James Bond theme tune and wishing that I had money to invest in diamond-related stocks.

Shop assistants at two other upmarket jewellery stories in the Qianmen area told me that men were not only buying diamond rings for wedding purposes, but also as adornments for themselves. They showed me chunky rings with big diamonds, each claiming to sell one three- or four-carat diamond ring, for at least RMB 1,5m once-a-week (about the same  price in South African rands; click here to convert to your currency).

I visited two other shopping districts in Beijing’s downtown area, and saw a similar story playing out in jewellery stores dominated by diamonds, gold and silver. Couples were huddled over trays of rings and holding up their diamond rings next to their faces – much like the pictures of the Caucasian demi-gods in the display posters around them.

Marketing messages attached to the merchandise included lines like: “With a perfect metaphor – this is your abiding love”; “Navigate the seasons of your life”; and, “The Love Diamond.” In evidence throughout was the marketing hand of South African favourite De Beers, its Forevermark brochures, in Chinese, dotted on counters and its in-store video inserts repeating takes of dreamy western models looking into the distance with the wind blowing through their hair.

Diamonds are a relatively new attraction in China as are wedding bands. You don’t see many people wearing rings to indicate commitment in a relationship, let alone diamond rings. However, if diamonds are becoming a hit among China’s male and female elite, as they clearly are in Beijing, it seems inevitable that their popularity will continue to soar.

This is an enormous nation of copycat shoppers. The diamond industry appears to have pulled off a major coup – not only engraining the sparkling gem in the consciousness of China’s women, but by gaining its acceptance among men.

By Jackie Cameron

Copyright: Jackie Cameron (2012 – ). This article was first published by South Africa’s business and financial news content provider, Moneyweb.co.za. Write to jackiecameron.uk@gmail.com.

Also read Jackie Cameron’s magazine feature about investing in diamonds through a share portfolio: Stocks and stones.

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04.15.13
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Why property beats retirement annuity fund investments

Buying a House From Savings

Buying a House From Savings (Photo credit: Images_of_Money)

Thinking of putting money into an RA? Here’s a reason I invest in property instead.
 

Every year, taxpayers are besieged with calls and letters from life assurers and other financial service providers encouraging last-minute investments in RAs (Retirement Annuities) as the tax year draws to a close. However, your financial wellbeing is likely to be better served by spending what you have available on property.

The financial services industry marketing machinery is hard at work, emphasising how you can save. I’ve fallen for this hype before.

Several times in fact, so I have money tied up in the RAs of various life assurers and private investment company Allan Gray. Years of watching how my investment returns in these RAs have fared over the years have converted me to an RA sceptic. I would rather ignore the tax deduction and invest any money I have for long-term savings requirements in property.

Barring my Allan Gray RAs, the returns have been abysmal. This is because of the obscene costs life assurers deduct from your savings when you invest with them and during the life of your investments. My Allan Gray RAs have benefited partly from the fact it did not deduct any intermediary commissions when I entered the investments directly.

Life assurer Sanlam deducted the maximum commission amounts, even though there was no adviser, and pocketed that difference for itself. My R10 000 and R40 000 RAs created in the early 2000s with Sanlam are still worth less than what I put into them today.

Not even the investment skills of Sanlam’s highly qualified, highly-paid asset managers have been enough to bring the amounts back to the R50 000 that I invested a decade ago.

Maybe those RAs will turn positive by the end of the next decade or the one after, when I might like to retire? Certainly I’ve lost faith in those RAs being anything more than dud investments.

My only consolation is that I’ve discovered this rip-off approach by the companies who set themselves up as the custodians of our nation’s savings, the people who tell us they know better than we do how we should invest our own money, early enough in my working years to come up with a fresh strategy to, hopefully, build enough money for my retirement.

At a property auction, I was reminded, yet again, of why property – particularly do-it-yourself investing in bricks-and-mortar- can be so rewarding. There, I saw a friend cash in his R50 000 or investment (deposit plus costs) in an Atlantic Seaboard, Cape Town rental flat he bought in the early 2000s.

He walked away with about R2m in his back pocket, after tax was paid and the remaining mortgage settled. During the course of his investment, a tenant effectively paid the costs for him.

There are many more residential property investment success stories like this among my circle of friends. Provided you buy at the right price, in the right area, hold property for at least five years and don’t dip into the equity by remortgaging for things other than property, it seems it is very difficult to go wrong. You can do it yourself, probably better than any highly-paid investment professional could do any investing for you.

The RA tax perk is probably well-intentioned. With South Africa’s poor savings rate and most people impoverished in their retirement, it may be the responsible thing for policymakers to keep this tax benefit in place. Unfortunately for the nation’s savers, the financial services industry has on the whole abused this perk and turned it into an advantage only for its managers and operators rather than its clients.

Maybe the finance minister should consider revising the RA perk this year, allowing others who save outside the financial services industry – like in property – to benefit from such tax perks too. Or, perhaps he should somehow penalise the life assurers, asset managers and other intermediaries who wipe out any of the tax perk’s benefits through their hefty charges? After all, it is not in the nation’s interests for ordinary South Africans to be falsely lured into thinking that offerings like RAs will massage their savings and keep them comfortable in retirement.

By Jackie Cameron.

This is an edited version of an article published by South African media company Moneyweb.co.za three years ago. My Sanlam RAs still aren’t looking any prettier today. I was inspired to republish this piece after I received a marketing e-mail from Sanlam today, urging me to invest with them. 

Do you have a happier RA investment tale to share? Or an angle on property you think deserves a thorough airing? Write to me, a business and financial journalist, at jackiecameron.uk@gmail.com, or comment on this article.

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04.04.13
by

Move over Master Chef

How to cook a frog. Demo of 3-minute storytelling using iPhone (video and editing on the phone). By Jackie Cameron (Hadland).

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04.02.13
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Does Africa need a China-style One Child policy?

A better-educated workforce, economic growth, reducing HIV-Aids, but an emotional price.

As China considers easing its One Child Policy, African countries should consider versions of their own. After all, the controversial policy has played a major role in lifting millions of people from poverty.

baby with grandmother

baby with grandmother (Photo credit: monsterboox)

China’s aging population as a proportion of its total is around 9%, up sharply from 12 years ago when it was 7%. The government is concerned that, with an inadequate social system and increasingly more old people to feed than breadwinners in families, the One Child Policy could have laid the foundations for unrest.

China still has the largest population in the world, at 1.37bn, and it has continued to grow, even though the state limits most urban families to one child. The National Bureau of Statistics said recently there are about 73m people more than there were a decade ago.

Only couples who are both single children can apply to have a second child, but this policy may be fine-tuned as the government takes notice of the effect of having a population that, in terms of age, is an inverted pyramid. There is pressure on health services and many of its 118m people over the age of 65 are struggling to get by.

Money, education, jobs vs loneliness

Tales of lonely suicidal elderly people are clearly tugging at government policymakers’ heart strings. And then, there is that big, and growing, number of men who will not find women to marry – a result of couples opting to only give birth to sons.

But, China has a lot to be grateful for from an economic perspective in its One Child Policy. With one child in a family, the parents are doting, pouring all their hard-earned savings into giving that child the best education possible.

That is, no doubt, why so many Chinese youngsters are able to study for degrees at expensive universities around the world. Tens of thousands of young Chinese adults from all walks of life are graduating every year.

The results are showing in the increasingly sophisticated technology being produced in China – like ultra-fast trains, space-craft and military hardware. And, Chinese business players are becoming increasingly prominent in global terms.

Then, because there is only one child rather than several to feed, clothe and educate, these doting parents have money left over for themselves – hence the nation’s famously high savings rate. Instead of wallowing in debt, the Chinese have surplus cash to spend on themselves and abroad. And, that in turn is good for domestic consumer spending and economic growth.

Protecting reproductive rights vs economic benefits

From the perspective of other cultures, having your reproductive system controlled by the state is an appalling prospect.  In Africa, we generally celebrate each new child, and it is generally the case of the more the merrier. When we fall pregnant “accidentally”, we tend to resign ourselves to having another one as the will of a higher being.

In countries like South Africa, reproductive rights are enshrined in the Constitution. No one has a right to tamper with the most personal aspects of our bodies at any cost.

We would get angry, very angry, if we were fired from our jobs, lost our homes or were handed down fines that could bankrupt us because we had another child - as happens in China. We would resent the state forbidding us from trying again, for another gender.

Yet, ask a professional Chinese person what they think about the One Child Policy and they are likely to pledge support for the programme. Towing the Communist Party line, which is essential to survive and thrive in the workplace, they will tell you it is good for the country.

Few individuals will admit to harbouring the desire for a second child. It is socially unacceptable to admit to wanting another, though there are also many people who are clearly very comfortable with the prospect of only ever having one child.

Where are all the old people?

Despite all the reproductive freedom that we have and use in Africa, we don’t have a huge aging population. Quite the opposite.

In China, wherever you go, you see elderly people watching life go by in parks and on pavements; you see them taking their birds out of their cages for a flutter in the fresh air; you see them exercising and meditating; you see them looking after grandchildren. In Africa, you are hard-pressed to find a grey-haired person as a result of the HIV-Aids scourge.

Harsh as it sounds, a strict reproductive policy would enforce more attention to detail when it comes to contraception. With everyone more keenly attuned to the risk of pregnancy, more people would presumably bother with condoms.

China has admitted to an HIV/Aids problem, but it is nowhere near the scale of Africa’s where people in their economically productive prime are being wiped out en masse. In South Africa, you can expect your life to be over by 51 if you are man and 56 if you are a woman. In Zimbabwe, for example, the average life expectancy is believed to be a tragic 37 for men and 34 for women.

Ironically, a One Child – or even limited child – policy could help deal with the population problem that this devastating sexually-transmitted diseases has caused across the continent.

With fewer children in a family, those children would presumably be nurtured more.  There would be more at stake for the parents from an emotional and a financial perspective.

So far, nothing has worked in lifting Africa out of poverty and onto a comfortable developmental trajectory. Yet, China 30 years ago was in the same state as Africa.

Africa’s politicians have been cosying up to their Chinese counterparts to learn more about how to pull off a modern economic miracle. They should spend some time examining the One Child Policy and consider ways to adapt it for the continent’s local conditions.

By Jackie Cameron. This is an edited version of an article first published by The Citizen newspaper in Johannesburg, South Africa.

* Jackie Cameron is a freelance financial and business journalist. She has a Master of Arts degree in Contemporary Chinese Studies from The University of Nottingham. Write to her at jackiecameron.uk@gmail.com. Or share your views, by commenting about this article.

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