The future of education look more like Zoom than classroom

Written by Ciaran Ryan. Posted in Journalism

AdvTech and Curro demonstrate remarkable agility during lockdown. From Moneyweb.

A blended model, using face-to-face tuition alongside online delivery, may be more likely. Image: Shutterstock
A blended model, using face-to-face tuition alongside online delivery, may be more likely. Image: Shutterstock

If the Covid-19 pandemic has taught us anything, it’s that online education has a future. How big a future remains to be seen, but private colleges have been able to adapt to lockdown with remarkable speed.

There has been debate among academics about the future of online learning in Africa. All it appeared to need is sufficient content and the ability to reach the farthest flung corners of the continent. Education is the great equaliser, but for that dream to flower, the internet would have to be cheap and ubiquitous.

Read: International study shows where SA’s education system needs more help

In reality, that dream is still some way off, but the alacrity with which private colleges have adapted to the new environment should be studied by our own Department of Education.

AdvTech suprises itself

AdvTech’s results for the six months to June 2020 were better than many expected, in large part due to the speed with which it was able to transition to online learning during lockdown.

“We surprised ourselves. We transitioned to an online format within three weeks of the start of lockdown, and we were able to offer a fully interactive experience which meant minimal disruption to the academic programmes,” says AdvTech CEO Roy Douglas.

Though Covid knocked revenue by R88 million, and added R72.5 million to doubtful debtors, overall student numbers are up 4% over the same period last year – despite losing 8% of pre-primary school enrolments and 1% of primary school enrolments. SA high school student numbers were up 4%, versus 12% for the rest of Africa.

These figures are similar to those of Curro, which last week reported a 5% growth in student numbers over the same period in 2019.

Curro’s student retention was buttressed by discounts amounting to 12.6% of revenue, which compares with 7.5% for the same period in 2019.

Embracing the new age

Private schools have embraced the digital age, with Curro connecting 60 000 devices to its network and dishing out 22 terabytes of data daily during lockdown.

AdvTech started investing in an online learning management system in 2015, then got buy-in from teachers and lecturers, backed by a centralised academic faculty and IT team to ensure students would be able to complete the full academic curriculum for the year.

Does this mean the future of education will look more like Zoom than classroom?

“I don’t think so,” says Douglas. “I see more of a blended model, using face-to-face tuition alongside online delivery. A very large percentage of our students couldn’t wait to get back to school once the lockdown was lifted, and this tells us you cannot displace the classroom environment and the social interaction which is a vital part of education.”

The disruption due to lockdown is evident in the results of both Curro and AdvTech, which eased into online tuition after hard lockdowns in Kenya and Botswana, as well as SA.

In Kenya, the government abandoned the entire academic year for the national Kenyan curriculum schools, and has stopped all schools from having students on site until 2021. AdvTech’s Crawford International School in Kenya was able to offer the Cambridge international curriculum online, while its Makini schools in Kenya had to develop an e-learning curriculum due to the government’s school closure until 2021.

AdvTech’s revenue for the six months to June 2020 was up 13% to R2.9 billion, with tertiary facilities and schools contributing roughly R1.2 billion each. Revenue from the job placement business was R490 million, which was 20% up on the same period a year ago – due mostly to business from the rest of Africa.

Overall, earnings before interest, tax, depreciation and amortisation (Ebitda) was up 5% to R610 million (2019: R580 million). No dividend was declared for the interim period, while the focus shifts to building balance sheet strength to help it ride out the uncertain times ahead. Capex for the year will be around R300 million.

In contrast, Curro’s revenue for the same period went up 7% to R1.59 billion (2019: R1.48 billion), with Ebitda increasing 12% to R466 million (2019: R415 million).


“We expect the socio and macro-economic environment to remain weak in South Africa and have therefore taken the tough but necessary decision to further rationalise the business without harming it or destroying shareholder value,” says Douglas.

“We have considered the business environment, the expected impact of the economy on our stakeholders, on fees and collections, as well as the capital expenditure needs of the group in the short to medium term.”

A year from now we will have a better idea of how permanent online learning has become. But there seems little doubt it will be a crucial part of private education going forward.

Get-rich-quick scheme pulls a crowd, despite regulators calling time-out

Written by Ciaran Ryan. Posted in Journalism

Interest in Mirror Trading International seems undiminished, in spite of three strikes from three different regulators. From Moneyweb.

MTI marketing whizz Cheri Marks and her husband were involved in BTC Global, which went down in a ball of flames in 2018 after the Hawks reported that R854m had been lost in the scam. Image: Luke MacGregor, Bloomberg
MTI marketing whizz Cheri Marks and her husband were involved in BTC Global, which went down in a ball of flames in 2018 after the Hawks reported that R854m had been lost in the scam. Image: Luke MacGregor, Bloomberg

Mirror Trading International’s (MTI’s) promise of 10% monthly returns started getting the attention of crypto traders back in January. For seasoned traders, these claims failed the ‘smell test’, and they started talking about it online on IT news website MyBroadband.

Then two months ago Brandon Topham of the Financial Services Conduct Authority (FSCA) started looking into suspect claims being made on WhatsApp chat groups about the company’s incredible returns.

Read: FSCA investigating Mirror Trading International

As Moneyweb reported last week, the FSCA is investigating MTI and has urged the company’s clients to request their funds back as soon as possible.

That’s pretty blunt advice from the normally circumspect FSCA.

In July, the Texas Securities and Exchange Commission (SEC) issued MTI with a cease and desist order on the basis that its claims were materially misleading. The Quebec Financial Market Authority has also listed MTI as a company that solicits investors illegally.

Happy customers …

The company has reportedly signed up more than 130 000 customers around the world, and its defenders – and there are plenty of them – argue that no one has lost any money with MTI.

The following interaction on MyBroadband is commonplace:

“Anybody who is unhappy can withdraw all their funds immediately and leave, nobody is holding you back! This continued attack is just a reflection of a justifiable Fear Of Missing Out (FOMO)? You are showing your jealousy!” says Bruce, an apparently happy MTI client.

Replies Stevie: “Do you really believe that what you seeing on your [MTI trading] dashboard is as a result of a real trade, that like the vast majority of them somehow managed to beat every statistical law and probability, and have a positive return?”

The words ‘Ponzi scheme’ come up frequently.

One critic was reportedly served a cease and resist letter by an attorney representing MTI. It’s getting ugly.

Astonishingly, MTI has reportedly pulled in close to R3 billion from investors, using multi-marketing teams who are rewarded with 10% commissions on new sign-ups. It also claims that the 10% commissions are paid out of profits rather than the investors’ capital.

“Empower Thyself financially with the spiritual currency of bitcoin and ensure your future by investing your bitcoin and earning 10% compound interest per month,” says the company’s Facebook page.

Promised returns

Is it possible to make 10% a month with bitcoin?

“Absolutely,” says one trader who asks not to be named. “It’s even happened in a single day that bitcoin has gone up 10%. But when you promise to do that month after month, then it starts to look like [a lie].”

Read: Joining MTI may end in tears

Just prior to the FSCA warning, MTI claimed on its Facebook page to be a legitimate trading company that had been achieving an average 0.5% compounded growth per day, five days a week. But as traders have pointed out, this is virtually impossible.

The same Facebook page goes on to say that it trades with the “monetary value” of bitcoin, not with the actual bitcoin itself. The bitcoin apparently never goes into the trading company “as it is stored in a Triple A-rated insurance company in a cold storage facility in Europe”.

Cold storage in the crypto sphere means the bitcoin is stored on an electronic device not connected to the internet, and is therefore immune from hacking.

‘Profit machine’ powering ahead

Recent adverse publicity appears to have done little to dent enthusiasm for MTI. A recent live MTI webinar capped out at 1 000 attendees, with the host reassuring members that it was fully compliant with the laws in SA, and that the profit machine was powering ahead.

Experienced traders have called rubbish on the claim that out of 200 trading days, only one day was losing. Evidence of this win-lose ratio is rather thin.

MTI supposedly has about 14 000 bitcoin under its control, which would make it one of the top 60 or 70 crypto players in the world – sufficient to move prices should it throw a decent percentage of that firepower at the market.

The company has urged investors to send their bitcoin over so they can start trading an equivalent amount on the forex market. MTI says it uses a proprietary “bot” and artificial intelligence to trigger buy and sells, and trades both cryptos and forex.

Not licensed

You have to be licensed by the FSCA if you’re trading in forex, and MTI has just been stopped from doing that.

Its Belize-based broker FXChoice also recently froze its accounts on the basis that its hyped-up marketing claims are hard to believe. Read its statement here.

Crypto trading falls outside the jurisdiction of the FSCA, though legal amendments currently in the works will bring crypto intermediaries and financial advisors under its watch.

In response to the FSCA statement last week, MTI says it’s complying with the regulator. Topham says this is partially true. “Yes, they are cooperating to an extent, but we want to have sight of where the money is sitting, and that we don’t have yet.”

Moneyweb understands MTI has shifted its trading account to another broker based in St Kitts in the Caribbean.

In response to the FSCA statement, MTI posted the following notice, alerting investors that while it would cease trading forex, MTI’s crypto bot would be fired up on Friday last week (August 21):

“During this break from forex trading, MTI will continue to seek a trading licence so as to be as compliant as possible. Once this has been achieved, MTI will retake our position in the forex space. We anticipate that this will take no longer than four weeks, after which we will then be adding the forex trading as an additional bot for members to benefit from, actively then trading forex and cryptos. The purpose of this change is to offer more to our members and to ensure that MTI continues to help you grow your bitcoin!”

Timeline curiosity

MTI’s marketing whizz Cheri Marks posted trading results for August 20 on Facebook, claiming a 1.73% return for the day – despite MTI telling clients it would cease forex trading days earlier, and a day before the crypto bot was due to start operating.

“How is this even possible?” asks one trader. “By their own statements, they were not trading forex, and had yet to start trading cryptos.”

Marks (née Cheri Ward) and her now-husband Clynton were involved in BTC Global, which went down in a ball of flames in 2018 after the Hawks reported that $50 million (R854 million) had been lost in the scam (when its alleged founding trader Steven Twain disappeared), where investors were offered 14% weekly returns. However, it’s suspected that Twain was a fabricated person used as a scapegoat for the scheme’s collapse.

In a recent MTI presentation, US-based member Joel Santiago said MTI was 100% compliant with regulations in SA. “We execute anywhere from 400 to 800 trades per day, the system does, half of those are losing, half of them are winning.”

Presumably, then, the daily wins are sufficiently large to overwhelm the 50% losses that Santiago claims.

He adds that trading profits are allocated 40% to members, 10% to MTI, and the rest spread between “binary commissions”, leadership fees and traders’ fees.

Over the 11 months to June 2020, the company claims to have generated a 166% profit for members, or an average daily profit of 0.49%.

Playing on fears … 

The FSCA’s Topham says the company appears to have received a surge in inflows as a result of the Covid-19 lockdown, from people understandably concerned about their future source of income.

“Unfortunately, at times like these, some people make misguided investment decisions in the hope of making a killing, and I think this is one of those occasions.”

Bitcoin was conceived more than a decade ago as a kind of financial rebellion against reckless government money printing, and MTI plays on very real fears that governments have lost the plot and will try to print their way out of chaos.

In the last five years, however, the crypto community has worked with regulators around the world to bring a sense of order to what was seen as the financial Wild West.

Smelling off

Crypto and forex brokers are extremely sensitive to the vapours of scandal.

Broker FXChoice explained the reason for blocking MTI’s trading account.

Its statement makes it clear that MTI executed few trades prior to May 2020, and what trades it did execute before the account was blocked were “performed manually, large and incurred substantial losses”.

This starts to smell even worse. “We want to make it clear that the information naming FXChoice as the broker where MTI executes its forex operations is inaccurate,” FXChoice states. “The same can be said about their claims of using artificial intelligence software.”

The following is an extract from its statement:

MTI opened an account declaring that all the funds they were going to trade were their own.

Due to large deposits, and the fact that FXChoice was mentioned in their marketing videos, we had to take a closer look at MTI.

MTI opened a personal account profile in 2017 under the name of its current CEO, but we didn’t notice any suspicious activity with the trading volume and the deposits were small.

Their activity picked up in May 2020; by this time, the account had been converted to corporate status. This was when the deposits and trades were made.

Our research leads to the realisation that MTI is a multi-level marketing pool that claims high returns from trading forex for their members using artificial intelligence software.

Additionally, MTI uses a very aggressive multi-level marketing campaign with high rewards to get new investors into the pool.

Due to this new information, we blocked MTI’s account on 10th June.

In a July 2020 report published on Globalcrypto, MTI CEO Johann Steynberg refutes allegations that MTI is a Ponzi scheme, says referral fees are paid out of trading profits and not investors’ capital, and that not a single MTI member has complained or not been able to withdraw their bitcoin when they requested.

Steynberg concludes: “The time has come to, for once and for all, address and reframe the reputational perception issues of regulators, the media and potential members about this industry, through MTI demonstrating that a genuine bona fide business and brand using an innovative business model of integrity can exist and grow sustainably in this sector. I am personally very determined to see this through and together with and supported by MTI’s professional advisors, this process is now underway.”

Read: The FSCA’s Gerhard van Deventer, MTI spokesperson Cheri Marks and Galileo Capital’s Theo Vorster share their standpoints on Mirror Trading International here.

Two municipalities, both ANC-run, tell the story of where it all went wrong

Written by Ciaran Ryan. Posted in Journalism

Steve Tshwete and eMalahleni are neighbouring municipalities in Mpumalanga run by the same party, but with very different financial performances. From Moneyweb.

In one case the old management was tossed out to make way for party political appointees; in the other the original administrators and managers were retained. Image: Getty Images
In one case the old management was tossed out to make way for party political appointees; in the other the original administrators and managers were retained. Image: Getty Images

There’s no question the DA does a better job than the ANC at running municipal finances. This shows up in survey after survey.

Read: Other than in the Western Cape, municipalities are failing miserably

There’s also no question the ANC has infested local governance with cadre deployments and the results have been catastrophic. People with no proven aptitude for management are left to run municipalities into the ground. In any self-respecting country, they would be run out of town with pitchforks.

The latest Ratings Afrika Municipal Financial Sustainability Index (MFSI) survey leaves one with no other conclusion than that the DA is trying to show up the ANC, and is succeeding. The DA-dominated Western Cape is leagues ahead of the ANC-heavy Free State and North West provinces when it comes to local government.

Most municipalities are so crippled with mismanagement that many will now become wards of National Treasury.

Local government was already in need of R30 billion to cover revenue shortfalls before Covid-19 came along, prompting national government to allocate R20 billion on an equitable share basis, roughly half of which will go to Covid-related costs. This won’t be enough. The revenue picture in metros and municipalities has deteriorated sharply since lockdown started in March.

Read: Proposed new taxes to help dysfunctional municipalities

The question of what to do to fix the problem is going to need serious attention. One of the suggestions is to merge successful municipalities with bankrupt ones, but this will be fought tooth and nail by those who have managed to keep their finances in some kind of order. Nor is it true that all ANC-run municipalities are failing.

Analyst Leon Claassen of Ratings Afrika, lead compiler of the MFSI, points to two neighbouring municipalities, Steve Tshwete (formerly Middelburg) and eMalahleni (formerly Witbank), which are both ANC-run. The former is a relative model of financial prudence, the latter is a basket case.

The difference

“What Steve Tshwete has done well is to retain the original administrators and managers, and has largely avoided making party political appointees. This shows up in their financial and operational performance, which has been rather consistently good,” he says.

“The same cannot be said for its neighbour, eMalahleni, which is failing terribly in both operating performance and liquidity management. In this case, the old management was tossed out to make way for cadre deployments, leaving people often with no experience to run a municipality of more than 500 000 people. These two municipalities have very similar economic bases so their financial performance should be very close. But they are not.”

Claassen says it is wrong to think the entire local governance model needs to be reimagined.

“What needs to be done is to look at the successful ones, and there are plenty of them, and adopt those as templates for the ones that are failing. The critical failing is in the area of management skills. We have to get rid of political deployees and put in professional managers if we are going to fix the problem.”

Read: AG: How to improve the state of our municipalities

The Ratings Afrika study takes a broad look at financial sustainability, measured around six components: operating performance, liquidity management, debt governance, budget practices, affordability, and infrastructure development. Municipalities are then given a score out of 100.

The largely DA-run Western Cape comes out on top with an average MFSI score of 59. Down at the bottom is the Free State (mostly ANC) with 21. The national average is 37 (or 31 if the Western Cape is excluded).

But that’s not to say all ANC-run municipalities are shockers. Steve Tshwete is an example of relative excellence.

Source: Ratings Afrika

What’s clear from the Ratings Afrika comparison of these two neighbouring municipalities is that basic financial management is much closer to National Treasury’s ideal at Steve Tshwete than is the case at eMalahleni. For example, the debtors collection rate at Steve Tshwete is an astonishing 98% (the target is 95%), while it has slipped below 65% at eMalahleni.

That in itself can mean the difference between solvency and bankruptcy.

Steve Tshwete has run consistent surpluses, while eMalahleni has clocked up deficits of R823 million for the three years to 2019.

eMalahleni has very little capacity to borrow, so has virtually no long-term liabilities, but its debtors figure has grown nearly four-fold over the two years to 2019 to R2.7 billion. That’s likely no more than a bookkeeping entry since the Municipal Finance Management Act prohibits municipalities from writing down overdue debtors even when there is little chance of recovery.

Staff costs as an indicator

Another useful index of municipal efficiency is staff costs as a percentage of revenue: 27.5% at eMalahleni versus 34.6% at Steve Tshwete (which has a larger area to service, though its population of 336 000 is smaller than eMalahleni’s 526 000). Steve Tshwete spends a larger portion of its total revenue on infrastructure development, which would account for the larger percentage of staff costs.

We previously drew attention to Steve Tshwete municipality and the pay increases it awarded itself during lockdown.

Read: Municipal manager gets 48% increase during lockdown

But in the larger scheme of things, it deserves credit where due.

Cash from operations as a percentage of total income is 8.7% at eMalahleni, compared with 16.2% at Steve Tshwete. This means Steve Tshwete is more efficient at charging for services such as electricity, water and refuse, and collecting property rates from residents.

“It’s not rocket science,” says Claassen. “There are centres of excellence in the municipal government arena, and we have to replicate those.”

King Sibiya is an unsung South African hero

Written by Ciaran Ryan. Posted in Journalism

Court to decide how to handle home repossessions
King Sibiya is a South African hero

This is my open letter to President Cyril Ramaphosa:

I am a journalist writing for many South African and overseas publications, including Moneyweb, GroundUp, The Citizen, Daily Maverick, and others.

I would like to endorse the nomination of King Sibiya, founder and President of Lungelo Lethu Human Rights Foundation, for the Order of Luthuli award.

I first came to know King Sibiya about six or seven years ago when I was invited to attend a gathering of perhaps 50 to 70 people in the Joburg CBD. All of them had been evicted from their homes by the banks. I wrote about it here:


This was astonishing news to me. How could this possibly happen? Victor Zuma and his wife Beverly were evicted over a R6,000 outstanding debt to FNB. The late Solomon Nhlapo was evicted from the Soweto home he inherited from his mother Mary, even though she had been paying the mortgage bond for more than 20 years.

Nedbank repossessed the property and onsold it to a new buyer for R100. Yes, R100. What possible benefit could there be to Nedbank to sell his home for such a paltry amount? And the evidence suggests Nhlapo was not in arrears.


But it got worse. Ernest Mashaba’s family was evicted five times from their Katlehong home even though the family insists it was never in default on the mortgage loan. Nedbank repossessed the home and onsold it to a new buyer for R10. That’s right. R10.

A picture began to emerge, that poor, black South Africans were being victimised, not by the apartheid machinery, but by very slick commercial banks and their well-paid lawyers. Behind them, operating through the sheriffs’ offices, criminal syndicates were buying what were in effect stolen properties.

King Sibiya and Lungelo Lethu Human Rights Foundation was the last port of call for these desperate people.

King Sibiya has given his life to representing the poor and the downtrodden. During the apartheid years, he was one of the architects of the Mngomezulu versus City Council of Soweto case in 1986 that prevented tenants being evicted from their homes for non-payment of rent on the grounds that the City Council had not followed the law in setting rentals. The case was won on technical rather than human rights points, but it gave black residents greater security of tenure in their homes.

Fast-forward 30 years and not much has changed, only this time it is the banks doing the evictions.

King Sibiya has been offered bribes to shut his mouth (refusing each one with contempt), had his life threatened, and came within seconds of being rubbed out by a hit team sent from Kwazulu-Natal to eliminate him. When he explained what it was he does, the hit-men left him alone.

Most importantly, he has achieved victory for the people who count on him for support. In a landmark case heard in 2018 in the Johannesburg High Court, the judges ruled that homes cannot be sold at auction without a reserve price – something for which Lungelo Lethu Human Rights Foundation had campaigned for years. The effect of this is to prevent people like Ernest Mashaba and Solomon Nhlapo being evicted and having their homes sold at auction for as little as R10.


But a bigger battle lies ahead: in February 2020, Lungelo Lethu and hundreds of its members filed a roughly R60 billion class action suit in the Johannesburg High Court claiming damages from the major banks for foreclosing and then selling their properties for a fraction of their market value.


The basis of this claim is that tens of thousands of South Africans have lost their homes through foreclosure since the Constitution came into effect in 1994 – in violation of their rights to property, dignity and fair administrative justice.

King Sibiya is an unsung South African hero. He is motivated neither by money nor fame. He performs his work night and day for those with no place else to turn. And he does this for crumbs – without support from government or major donors. If those he has helped can afford a R10 donation, that’s how Lungelo Lethu survives. If any organisation deserves funding from Treasury, this is it. What it has achieved – saving the homes of hundreds if not thousands of people from unfair dispossession – with such meagre resources, is beyond remarkable.

With Sibiya’s Standard 5 education, he can cite chapter and verse of laws and leave judges and lawyers astounded. He can match them clause for clause.

Never, in my opinion, has there been a man more deserving of this great award.

Weekly wrap: Precious metals producers mint profits

Written by Ciaran Ryan. Posted in Journalism

While diversified miner South32 slips into loss. From Moneyweb.

Despite the Covid disruption to operations in April and May, the runaway gold price put smiles on the faces of gold producers everywhere. Image: Waldo Swiegers, Bloomberg
Despite the Covid disruption to operations in April and May, the runaway gold price put smiles on the faces of gold producers everywhere. Image: Waldo Swiegers, Bloomberg

In the week that was, Gold Fields announced it had doubled its interim profits for the period to end June 2020 and paid shareholders a special dividend equivalent to the entire previous year’s dividend. And this despite the Covid-19 shutdown of operations.

Impressive as this is, Impala Platinum (Implats) went one better, stating that it expects a nearly five-fold increase in headline earnings for the full year to June 2020.

In more good news for the platinum group metals (PGM) producer, criminal charges against Mark Munroe, CEO of Impala’s Rustenburg mining operations, were withdrawn. He was charged under the Disaster Management Act for recalling workers in early April during the Covid-19 lockdown; Implats maintained it believed it had exemptions for the return-to-work order.

The company says it is following global best practices in slowing the spread of the virus, though the charges against its senior executive in charge at Rustenburg shocked the business community at the time.

A weak rand and particularly strong palladium and rhodium prices are largely responsible for the improved performance.

“The benefit of a significant increase in the dollar basket price for PGMs, together with rand depreciation, has resulted in a meaningful increase in gross profit, which is expected to increase to R23 billion in the period from R7 billion in the comparative period, despite an expected 5% decline in refined and saleable PGMs to 2.8 million 6E ounces relative to the comparative period,” reads the Implats Sens statement.

It expects headline earnings per share (Heps) to be between R20.07 and R20.84, compared with R4.23 in the 2019 comparative period. Earnings per share (EPS) of between R20.34 and R20.72 are expected for the current year to June (2019: R2.05).

This is substantially better than the 6% contraction in interim Heps (to June 2020) at fellow PGM producer Anglo American Platinum (Amplats), despite a 28% increase in revenue. Amplats suffered a critical failure at a processing plant in March this year, causing it to declare force majeure and announce a drop in palladium and platinum production for the year.

Implats share price

Source: ShareMagic

The Covid-19 lockdown in SA had little impact on Gold Fields, whose sole SA-based operation is South Deep, now in the throes of a turnaround operation. Despite the Covid disruption to operations in April and May, the runaway gold price put smiles on the faces of gold producers everywhere.

Gold Fields has been investing in its Australian and West African mines to improve costs and extend mine life, and CEO Nick Holland says reserves outside of SA now total about 20 million ounces, equivalent to about 10 years of mining. There’s potential for more upside at its Damang mine in Ghana and new investments over the next three years will focus on increasing production and exploration in Australia, West Africa and the Americas.

The gold producer continues to work on keeping costs under control and is basing its future forecasts on a gold price of $1 300/oz, well short of the current $1 940/oz. Any upside will be for the benefit of shareholders in the next reporting period.

Gold Fields reported that its revenue advanced to $1.75 billion for the six months to June 2020 from $1.38 billion in the 2019 corresponding period. Diluted EPS stood at US 18c, compared with US 8c in 2019.

Net debt stood at $1.24 billion at the end of June 2020, from $1.66 billion just six months ago. “Our approach will continue to be reasonably cautious, as we do not know what challenges await us in the post-Covid world,” said Holland.

Gold Fields share price

Source: ShareMagic

Diversified miner South32 swung into loss for the full year to June 2020 as Covid-19 hit commodity demand. The company is bracing for further fallout from lockdown-related demand disruptions.

South32’s revenue for the year lowered to $6.1 million (2019: $7.3 million) while profit tumbled to $261 million (2019: $887 million). Loss attributable to equity holders came in at $65 million (2019: profit of $389 million). Heps dipped to USD 0.5 cents per share (2019: 17.2 cents per share).

South32’s portfolio of commodities were slammed by the global disruption caused by the pandemic, though the company expects increased production at the majority of its operations in the coming year.

“South32’s portfolio of commodities have been under pressure in terms of price. It hasn’t had exposure to iron ore or precious metals, which have been the stronger performers in the commodity space,” says Seleho Tsatsi, resources analyst at Anchor Capital.

South32 share price

Source: ShareMagic

Lockdown has left South Africa drowning in debt

Written by Ciaran Ryan. Posted in Journalism

Loan repayment holidays offered by banks could cost borrowers more than R20 billion. Posted in GroundUp and News24.

Job losses due to the Covid-19 lockdown have left South Africans drowning in debt, new studies suggest. Archive photo: Ashraf Hendricks

New studies of the impact of lockdown on the economy paint the picture of a country locked in a downward spiral of rising joblessness and debt.

In a recent survey, debt counselling firm DebtBusters found that the debt holiday offered by the banks at the start of the lockdown in late March 2020 had added R20.7 billion to the debt of the estimated 1.6 million South Africans who took advantage of this.

Those who accepted the three month repayment holidays offered by the banks, and suspended their payments on car, mortgage and personal loans, will end up paying on average an extra R30,100 on top of what they already owed, according to the results of the study

“In a country as over-indebted as South Africa, especially at a time when the economy is contracting, this is enough to push people who were just about making ends meet into a situation where their debt-to-income ratio is unsustainable,” says Benay Sager, DebtBusters’ Chief Operating Officer.

Credit bureau TransUnion issued a report in July on the financial impact of Covid-19 on consumers, showing 77% of consumers had been hit, following 84% in June. By August, 21% of those surveyed reported losing their jobs as a result of the pandemic, compared with 10% in April. Nearly nine out of ten of them said they were concerned about their ability to pay loans and bills.

The TransUnion July 2020 survey found that while younger people were hardest hit by job loss, older people were also feeling the pain. Even those who have jobs often find it very hard to save. The average salary in SA is R22,400, according to StatsSA’s Quarterly Employment Survey for the first quarter of 2020 (this counts only people who have jobs). But a July 2020 survey by ADNA Global involving 8,355 adults found that only a third of South Africans are currently saving anything at all.

A representative survey completed in early August of 500 South Africans by PayCurve, a financial technology platform, found many were taking second jobs and expensive short-term loans to make ends meet after three months into the lockdown. This additional funding was needed for emergencies such as medical expenses and car repairs. Some 11% of respondents said they spent more than half their monthly income on short-term debt repayments, with 43% paying more than 20% of their monthly earnings to short-term debt.

In a 2019 study, the National Credit Regulator (NCR), which tracks all forms of debt, found that unsecured debt had quadrupled to more than R220 billion over the last decade. This is one of the key reasons behind the adverse credit ratings accumulated by four out of ten South Africans. The NCR has not done any studies of indebtedness since late last year – the next study will be available only in October – but the situation is likely to have worsened considerably during the lockdown.

As incomes have fallen, many households are trying to make ends meet with unsecured lending, according to DebtBusters’ debt index for the second quarter of 2020.

The current level of consumer debt is unsustainable, says Raeesa Gabriels, founder of fintech company Level Finance. “SA has a poor savings record because of the way the financial industry is structured. It chooses to throw new debt on top of old debt. The worst thing is that many of the poorest people in the country end up in the hands of loan sharks, where the interest rates are exorbitant.”

Curro offers bigger discounts to hang on to students

Written by Ciaran Ryan. Posted in Journalism

It managed to grow student numbers by 5% over the first part of the year. From Moneyweb.

In the past decade, the number of Curro schools has grown from 24 to 177. Image: Supplied
In the past decade, the number of Curro schools has grown from 24 to 177. Image: Supplied

Curro’s half-year results to June 2020 provide a window into the state of private schooling during lockdown, and it’s not as bad as many feared.

Student numbers rose 5% to 59 967, though new sign-ups were up 9% prior to the lockdown.

School fee increases of 15% were softened by discounts amounting to 12.6% of revenue, up from 7.5% for the same period in 2019. Releasing the results on Wednesday, CEO Andries Greyling said this helped reduce student attrition, while a hybrid of face-to-face tuition – for those classes permitted to operate – and technology has allowed the group to prepare students for their year-end exams.

Greyling threw out some impressive tech stats: 60 000 devices connect on Curro’s closed network, 22 terabytes of data is used daily, with 43 703 Microsoft Teams collaborations every day. It’s unclear what shape schooling will take over the next year or two, but Curro is preparing for all eventualities, increasing its investment in robotics, coding, performing arts and sport.

It seems almost certain that online tutoring, combined with face-to-face classes, is the way of the future.

Revenue for the period went up 7% to R1.59 billion (2019: R1.48 billion). Ebitda (earnings before interest, tax, depreciation and amortisation) increased 12% to R466 million (2019: R415 million).

The question on many people’s minds is the near-term outlook for private schools in a year massively disrupted by the lockdown.

The answer is by no means certain, but the longer-term trends aren’t in doubt: there is an inexorable migration from public to private schools, even among lower middle class and some working class South Africans.

Curro started entering the township market several years ago, offering monthly school fees as low as R1 600 and scaling up to R10 000-plus for the more elite academies.

The gap

Despite the R281 billion budgeted by government for public schools this year, equivalent to 6% of GDP, the academic results are pretty abysmal. This is the gap private schools are diving into. Just 4% of government’s education budget goes to infrastructure and about 80% to payroll, which makes it harder for the 23 000-odd public schools to catch up in terms of new curricula development and online delivery. Using international trends as a guide, Curro sees potential for private schools to grow from having about 5% to as much as 15% of total student numbers in the country.

Read: New evidence supports the belief that South Africa’s education is not all bad

The parent profile of Curro students gives an indication of lockdown-related risks: 21% of parents work for government, 33% for small, medium and micro-sized enterprises, 11% for multinationals, and 9% large corporations – much of which offers relatively secure employment. Therefore these parents are less likely to cut back on school fees. Some 11% are listed as working in entertainment, which is at the riskier end of the spectrum.

“Teaching and learning have not continued in the traditional sense. But by tapping into our digital strength, we innovated more,” said Greyling.

“We will complete the academic year and cover the curriculum in its entirety; all learners will be assessed by the end of the year. I am proud of the way Curro, its staff, parents and teachers were able to adapt and rise above the challenges of the pandemic. We are particularly proud of our learners who have shown resilience and persistence that will undoubtedly pay off as they progress on their education journeys.”


Recurring headline earnings and recurring headline earnings per share increased by 9% from R153 million to R167 million and from 37.1 cents to 40.5 cents respectively.

Headline earnings decreased by 23% from R206 million to R160 million, while headline earnings per share decreased from 50 cents to 38.7 cents, which was predominantly due to a once-off deferred tax reversal recognised in the prior-year interim period.

No interim dividend was declared for the period under review.

A decade ago, Curro comprised 12 campuses, 24 schools and 4 200 students. At the end of June, the portfolio had grown to 76 campuses, 177 schools and 60 000 students.

The focus now is on boosting school occupancy levels. Greyling said that since schools were allowed to reopen in June, new enrolments have exceeded those of the previous comparable period.

Read: Private education offers a compelling investment case

A total of R278 million was spent on completing projects commenced in 2019 , with a further R600 million committed to creating additional capacity, mainly through the development of new schools already planned.

Weekly wrap: Gold shares surge as metal breaks $2,000/oz

Written by Ciaran Ryan. Posted in Journalism

Despite coronavirus disruption, Harmony’s share price has more than doubled so far this year. From Moneyweb.

Unprecedented demand in a year when production is likely to fall could push the gold price up further. Image: Andrey Rudakov, Bloomberg
Unprecedented demand in a year when production is likely to fall could push the gold price up further. Image: Andrey Rudakov, Bloomberg

The gold price cracked $2 000/oz in early August, driving gold shares to the kind of giddy levels last seen in 2012.

SA’s largest gold producer Harmony Gold’s share price has more than doubled since the start of the year, despite the lockdown which curtailed underground operations for two months. Underground operations were allowed to resume at 100% production from June 1.

Harmony’s SA operations managed to achieve nearly 75% of planned production during the last quarter of the financial year, which was higher than initially expected. However, total annual gold production was 15% lower at 37 863kg, or 1.2 million ounces, mainly due to the lockdown.

Costs across all operations are expected to be between 17% and 19% higher at about R645 000/kg to R655 000/kg, but will be less than half this when measured in US dollar terms. Harmony is reaping the benefits of a strong metal price and weak exchange rate.

Anchor Capital resource analyst Seleho Tsatsi says the company has hedged about 20% of its gold production at around R650 000/kg into 2021, which may take a little froth off revenue should the spot gold price continue moving higher.

“The results from Harmony were pretty strong mainly due to the gold price. There were factors beyond their control, such as the lockdown and the complications around restarting production,” says Tsatsi. “It’s always a bit of a gamble when gold miners hedge prices at which they sell gold. This works in their favour when prices are falling, but works against them when they are rising. Harmony still sells the bulk of its production at spot prices, so this will benefit it should the gold price continue going beyond $2 000/oz.”

Source: ShareMagic

Hussein Sayed, chief market strategist at FXTM, says gold’s explosive momentum is approaching full velocity. A weaker US dollar, falling US bond yields, pre-election jitters and rising coronavirus cases has added to gold’s allure.

“The precious metal has gained over 33% since the start of 2020 and is trading at an all-time high above $2 039/oz.”

What might keep the gold price moving up? For one thing, unprecedented demand in a year when production is likely to fall 10% according to the World Gold Council.


Staying with precious metals, Northam Platinum is printing cash as it reported record results despite losing production during the lockdown.

This is reflected in a trading update issued last week: sales volumes amounted to 582 686 ounces, which included ore sales, while total revenue per platinum ounce sold increased by 78.8% to R53 009/oz, resulting in a cash margin per platinum ounce in excess of 40%.

It expects headline earnings per share to be between 562.40c and 621.60c, compared with 15.80c in the previous year. Tsatsi says Northam is one of few platinum companies with a growth story, as it will likely hit one million platinum group metals ounces within the next five years. To increase cash payouts to shareholders it has embarked on a share buyback of Zambezi preference shares (Zambezi is its empowerment partner), which the company believes is the most efficient way of returning value to shareholders.

Platinum price in rands

Source: ShareMagic

Statistics SA reported that mining production shrank further in June, even as the industry ramped up operations after lockdown. It’s expected that mining production will only return to normal in the fourth quarter, which will continue to put pressure on SA miners over the rest of the year.

Kumba shrugs off coronavirus and announces R7bn expansion
Mixed bag for mining stocks as AngloGold CEO says goodbye


Glencore decided to scrap its dividend and instead focus on scaling back debt, which climbed 12% to $19.7 billion for the half year to June 2020. The group reported a $2.6 billion loss for the half year despite record $2 billion operating profit from its trading division. Like its peers in the oil market, Glencore stocked up on cheap oil earlier this year and later sold it back into the market at higher prices.

The group plans to reduce debt to about $16 billion, which would strengthen the balance sheet heading into the second half of the year. Copper production was down 11% to 588 000 tons in the first half, and is expected to reach 1.225 million tons for the full year. Cobalt production was down 33% in the first half, while zinc output at 550 000 tons was in line with the same period in 2019. Nickel production likewise held steady at 55 200 tons, though coal output was down 15% to 10.1mt due largely to Covid-related disruptions in Colombia.

Tsatsi says investors were clearly disappointed with Glencore’s decision to hold back on dividends, while concerns remain about regulatory investigations in the US, UK, Brazil and, most recently, Switzerland, relating to claims of corruption and bribery, principally in Congo, Venezuela and Nigeria. The company has announced a change in senior management in its zinc and coal businesses within the last two months, most likely related to the multiple investigations it is facing.


Diversified miner Exxaro, which supplies coal to Eskom, has opted to pay an interim dividend, saying it fared well amid SA’s lockdown due to record coal exports and a weaker rand. Revenue for the half year to June increased to R14 billion from the R11.96 billion posted in the corresponding period in 2019. Its diluted earnings per share increased to R17.13, and it chose to pay out an interim dividend of 643c a share.

Exxaro is a tale of two different businesses, one doing well (iron ore) and the other rather poorly (coal).

Export coal demand is likely to remain weak in the second half of the year, while domestic coal supplied to Eskom should be fairly stable as industries return to normal production.

Chinese demand for iron ore is benefiting from a modest rebound in ex-China steel output. China’s iron ore port inventories will likely rise towards the end of this year, leading to a softening in the iron ore market.

Government’s miserable small business assistance put to shame by private sector

Written by Ciaran Ryan. Posted in Journalism

Since April, developmental micro-financers have made more than 180 000 loans – 18 times more than government. From Moneyweb.

It was about economic survival, but government’s approach was to use the promise of loans to get informal operators over to the formal sector. Image: Shutterstock
It was about economic survival, but government’s approach was to use the promise of loans to get informal operators over to the formal sector. Image: Shutterstock

When the lockdown was announced in late March, government seemed to have matters in hand. Small businesses faced with ruin were promised R200 billion in loan support to tide them through the crisis.

How differently things have turned out.

Business Day reported this week that the government has assisted just 10 000 businesses, a fraction of the 700 000 promised by President Cyril Ramaphosa in April. Of the roughly 40 000 businesses that applied for assistance, only 23% were granted loan relief by government – which is 1.3% of the number promised by Ramaphosa.

The amount lent by government so far is more R13 billion, out of R200 billion set aside for business assistance.

Compare this performance with the 184 000 loans made by developmental (pro-poor) microfinance groups since April, worth R733.6 million. The loan amounts are far smaller, but no one can fault them for stepping in where government has failed.

Loans where needed (and when needed)

These loans went to the country’s poorest entrepreneurs to keep them afloat, says Evans Maphenduka, executive coordinator of the Development Microfinance Association (DMA).

“We’re quite proud of the fact that our member organisations got funding to those entrepreneurs who need it most, and for many it made the difference between being able to eat or go hungry.”

Developmental microfinance loans are typically just a few thousand rands, sufficient to purchase stock and basic equipment. Microfinance organisations have made an outstanding success of lending into a market that banks avoid. These entrepreneurs do not have the kind of collateral banks demand as a precondition for lending, yet microfinancers such as Small Enterprise Foundation (SEF) have a bad debt ratio of just 0.22% – well below that of the commercial banks.

Read: No thanks, say informal-sector entrepreneurs to easy loans offer

In addition to opening up their cheque books during lockdown, microfinance lenders have also offered repayment holidays.

Active DMA member institutions include SEF, the Phakamani Foundation, Thuthukani Finance, and Siyakula Financial Services.


Says Maphenduka: “Our members have established channels in reaching informal and micro enterprises. These informal and micro enterprises are not typically reached by the commercial banks, which typically focus on larger business and do not have a track record in the micro enterprise market. The informal and micro enterprises are vulnerable businesses, and particularly sensitive to economic shocks such as Covid-19 and lockdown.“

The 184 000 loans disbursed by DMA members went entirely to women, with 18% being taken up by youth aged between 18 and 35.

About 97% of the loans were disbursed to rural based informal and micro enterprises, with the balance of 3% going to township entrepreneurs.

SEF founder John de Wit says those operating at the bottom rung of the entrepreneurial ladder are generally women.

According to a study published by HSRC Press – The South African Informal Sector: Creating Jobs, Reducing Poverty – the informal sector provides employment and income for 2.5 million people, or about one in six of all jobs in the country, and contributes an estimated 6% of national GDP. The size of the informal sector will likely have ballooned in the last three months, given the estimated three million people impacted by the lockdown.

“If we don’t provide assistance to this segment of the market then we face an unprecedented socio-economic crisis,” says De Wit.

“It’s a pity that the government didn’t make a more concerted effort to help this segment of the market. In fact, it could have used our networks since we have the systems in place to handle this.

“Instead, they chose to go it alone and the result has been rather underwhelming.”

Read: The SA lender you’ve never heard of with almost no bad debt

Government’s poor response to small businesses in need is a result of unnecessary red tape and lack of capacity to deal with applications, adds De Wit.

Red tape, a whole lot of it …

As Moneyweb previously reported, government’s promise of assistance to micro entrepreneurs was contingent on their:

  • Obtaining a licence to operate from the local municipality,
  • Registering with the Companies and Intellectual Properties Commission (CIPC),
  • Registering with the South African Revenue Service (Sars), and
  • Registering with the Unemployment Insurance Fund (UIF).

This went down like a damp squib.

“The last thing most of these entrepreneurs want is to be hounded by the taxman and other regulatory agencies when they are merely trying to put food on the table,” says De Wit.

“This was very ill-considered. The government was using financial aid as a way to migrate informal sector operators over to the formal sector, and it’s pretty safe to say they failed.”

A survey by the SEF, which has 216 000 informal sector entrepreneurs on its loan books, found that only 12% had applied for business permits. It’s likely that far fewer than 12% applied for any kind of financial assistance from the government.

Too little, too late, too restrictive

A report by market research group Intellidex into the reasons for the poor take-up of government-backed assistance suggests it was too little too late, coming seven weeks after the start of lockdown, and the restrictions imposed on how the funds could be used (mainly rent and salaries). Those restrictions have since been eased to allow for a wider range of business spending, and this should prompt more businesses to apply for loans.

Meanwhile, demand for assistance from developmental micro-lenders has never been more brisk. Maphenduka says demand for lending is pouring in from almost every type of informal sector trade, from spaza shops to hawkers, vendors, tailors, metal fabricators, carpenters, hair salons, and even for room rentals.

Other than in the Western Cape, municipalities are failing miserably

Written by Ciaran Ryan. Posted in Journalism

And this was before the pandemic. It’s time to rethink local government in its entirety. From Moneyweb.

The majority of municipalities are ‘seriously unsustainable’. Image: Waldo Swiegers, Bloomberg
The majority of municipalities are ‘seriously unsustainable’. Image: Waldo Swiegers, Bloomberg

Even before the coronavirus struck, SA’s municipalities were withering on the vine.

It comes as no surprise that Ratings Afrika’s latest Municipal Financial Sustainability Index (MFSI) outlines the ongoing deterioration at local government level.

It’s as if we have heard this story before. In fact, we have heard it before: Municipal sector faces collapse – Ratings Afrika

The 2019 Municipal Report by the Auditor-General (AG) suggests that 60% of revenue reflected on the books of municipalities will never be paid. Only 8% of the 257 municipalities received clean audits in the 2017/8 financial year, and half of them had financial statements deemed “quality”. Irregular expenditure totalled R32 billion and the likely financial loss from material irregularities came to R24 billion.

Read: Auditor-General speaking into the void on local government corruption

The Ratings Afrika study takes a broader look at financial sustainability, measured around six components: operating performance, liquidity management, debt governance, budget practices, affordability and infrastructure development. Municipalities are then given a score out of 100.

Two reasons for Western Cape performance

The Western Cape yet again comes out head and shoulders above the rest.

Ratings Afrika analyst Leon Claassen identifies two primary reasons for this outperformance: “Most of the Western Cape municipalities are under DA control, and the party has taken a firm political decision to impose strict financial control and good governance. The second reason, flowing from this, is the Western Cape’s quality of management is overall better than rest of the country.”

The next best province for municipal governance is KwaZulu-Natal, followed by Northern Cape. But if we take the Western Cape (overall score of 59) out of the picture, the rest of the country scores an average of 31, according to Ratings Afrika.

The majority, comprising 63 municipalities out of the top 100, achieved a score of less than 40, “rendering them seriously unsustainable and perhaps even dysfunctional in terms of normal service delivery”.

Average Municipal Financial Sustainability Index scores by province
Eastern Cape3432312829
Free State2424232121
Northern Cape5146403535
North West2729242925
Western Cape5657595859
National average4240403837
Source: Ratings Afrika

“The weakest provinces are Free State and North West, with average scores in 2019 of 21 and 25 respectively. It is very clear that the majority of the municipalities in these provinces are in serious financial trouble and probably dysfunctional in key service delivery aspects,” says the Ratings Afrika survey.

Oversight ‘totally ineffective’

Claassen says it’s clear that the councils of these municipalities have failed miserably in their governance responsibilities by allowing them to sink into this desperate, unsustainable financial situation.

Furthermore, it seems that the oversight role by the respective provincial administrations, except the Western Cape, has so far been totally ineffective to improve the financial sustainability at municipal level, as the situation has been continuing over the last five years.

Best performing by province in 2019
Eastern CapeSenqu (Lady Grey)57
Free StateMetsimaholo (Sasolburg)31
GautengMidvaal (Meyerton)66
KwaZulu-NatalKwaDukuza (Stanger/Ballito)66
LimpopoLephalale (Ellisras)46
MpumalangaSteve Tshwete (Middelburg)64
Northern CapeSol Plaatje (Kimberley)59
North WestJB Marks (Potchefstroom)50
Western CapeMossel Bay76
Source: Ratings Afrika

Only the Western Cape and KwaZulu-Natal have anything approaching decent operating surpluses.

Most municipalities are commercially bankrupt (current liabilities exceed current assets), with insufficient liquidity to cover operating expenses.

Just 19 of 100 municipalities measured have operating surpluses. This is due in large part to an average collection rate of 82%, well short of the benchmark of 95%. Only the Western Cape, at 94%, is close to this target. The Western Cape municipalities have demonstrated that they can be sustainable entities.

Governance … and corruption

Narius Moloto, secretary-general of the National Council of Trade Unions (Nactu), says it is time to relook the entire system of local governance, but warns that any reforms will be defeated so long as corruption remains rife.

“It’s clear there are a number of reasons for poor governance at the municipal level. The first reason is lack of capacity of the elected people. The second reason is corruption.

“Most councils collect enough revenues to run their operations and provide decent services, but just don’t do so,” says Moloto.

“Most councillors want to run shady businesses on the side.”

The adverse effects of the lockdown will have further worsened municipal finances.

Covid-19 impact

The South African Local Government Association has warned that municipalities could see a drop in revenue of up to 5%. Aggregate billings in 2019 for property rates and service charges in the 100-municipality sample amounted to about R85 billion. If the 5% decline in revenue is sustained for a year, the combined loss of revenue to them would amount to R4.25 billion.

National government has allocated additional funding of R20 billion to the municipal sector, of which R11 billion comprises an equitable share grant to cover the cost of free basic services and additional Covid-19-related costs to municipalities.

This additional funding is for the municipal sector as a whole. “It is clear that this additional funding for the municipalities will be hopelessly inadequate to cover the loss of revenue by the municipal sector, since the local municipalities needed R30 billion before any adverse effects of the Covid-19 catastrophe. In addition, the metropolitan municipalities might need R10 billion to cover their losses in revenue caused by the lockdown,” says Ratings Afrika.

The hole the municipal sector finds itself in is about R45 billion deep.

The full impact of the lockdown will only become visible in a year or two. As it stands, only the Western Cape has any capacity to absorb the financial shock of the lockdown.

Consolidating municipalities to strengthen finance is one suggestion that has been proposed, but this will be resisted by those that are well-run.