Ramaphosa Says Diversify Lol
With the US and Donald Trump sticking to his August 1st 30% tariff increase for South Africa our wise leader has come back and recommended those businesses affected diversify. This man is a proper genius and don't you think if those industries could find new markets elsewhere they would have done that already?
Instead of prioritizing his country and trying to sort a trade deal out which is common sense he is off in Brazil hob knobbing with all the other BRICS nations who are staring at an extra 10% tariff charge for being BRICS members. An extra 10% actually makes no difference if your goods already have a 30% mark up as they are no longer competitive and the profit is not there. The BRICS members have clearly showed whose side they are on and are anti US so when you poke the bear there will be consequences.
Ramaphosa is fixated on the trade deficit figures which we know are not accurate and he cannot read between the lines or chooses to ignore the important part. This is not about the trade deficit, but about negotiating a new deal which removes the BEE (Black Economic Empowerment) racist policy the SA Government has forced on all companies in SA. This is why unemployment is so high and many of SA/s companies have now registered their businesses in Mauritius. No one can invest in SA without having to pay the extra burden of giving away 30% of your company. Yes these are shares that are sold, but we all know this is not the real value as a new business investing in SA is looking for a decent return and is not a start up so has little to no risk.
The likes of Starlink coming to SA would be an overnight success and anyone who had cash would love a 30% chunk of this business. Starlink would not want to hand over 30% of future profits either so why is that a good policy for any investor because it is not.
Ramaphosa himself benefitted immensely from BEE policies as how do you think he is the biggest McDonalds franchise owner in SA? being at the head of the table he has been able to cherry pick the investments and I would not be shocked if he was the 30% BEE partner for Starlink. Ramaphosa rates himself as a businessman, but he has been gifted his wealth as if he was any good he would have negotiated a new tariff deal immediately. This is not difficult and only takes common sense to get over the line.
The citrus industry which employs more than 35 000 people will be decimated come August 1st as the US is one of their top customers and finding a replacement of that volume will not be possible.
In 2023 SA exported around $8.5 billion worth of goods to the US which was made up of Platinum $3 billion, vehicles $2.billion and fruit being around $0.5 billion. Platinum will not be tariffed so we are only talking about roughly $6 billion worth of goods being affected. This is still not great as SA has a huge unemployment problem so if another 50 000 jobs are lost they are permanently lost.
I can see Ramaphosa returning to the US and agreeing with a change in BEE policies for US firms wanting to invest in SA and the trade deals will all be back on track. There are very few markets left available to make up for the trade shortages and leaves a massive hole in SA's GDP. SA needs foreign investment otherwise it will shrink into insignificance and BRICS cannot save SA. The country is at a standstill until the ludicrous BEE policy is removed and unemployment is only going to increase (62%) which could possibly lead to other issues like uprisings.
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Diversify out of business 😆
I am always warry of diversify advice even in investing as it basically guarantees that you will not get outsized returns.
Yes that is true and in this case far less unless they fruit growers who are the big losers change their products making them different. My mind went straight to jams and various other products that they could create instead of throwing the fruit away.
Some politicians forget it is there job to negotiate trade deals, and not to get in the way of their own business owners. I hope that your politicians can come to an agreement without too much fallout that hurts South African businesses.
No this is not going to work with these fools as all of the deals they do are for themselves only and country is secondary.
Unfortunately, this seems to be a common trend with our world leaders