Foolish to put a bounty on the golden goose

Public Protector Busisiwe Mkhwebane’s about-turn on her proposed change to the Reserve Bank’s constitutional mandate, while a relief, is infuriating. It was this remedial action, contained in her AbsaBankorp report, that led to the controversial proposal at last week’s ANC national policy conference that the Bank be nationalised. Moreover, as was clear from the arguments for nationalisation, Mkhwebane’s recommendations served only to confuse the public and party members about how the Bank operates and what its mandate means in practice.

Mkhwebane’s instruction to Parliament to institute a process that would result in the Bank’s mandate being changed from its focus on protecting the value of the currency in the interests of balanced economic growth to one that focuses on the socioeconomic wellbeing of citizens creates the false impression that inflation targeting, the tool the Bank uses to protect the currency, does not protect citizens’ socioeconomic wellbeing.

How mistaken she is. Inflation targeting is critical to protecting the purchasing power of all South Africans, particularly the poor, thus protecting their socioeconomic wellbeing. There is no country in the world that has sustained double-digit inflation while enjoying economic growth and job creation. Runaway inflation destroys economies. Just ask Venezuela or Zimbabwe.

And money printing, of the kind Mkhwebane proposes, drives up inflation, raising the prices of basic goods and weakening economic growth.

Apart from overstepping her powers, the public protector revealed her ignorance, twice, with her nonsense pronouncements on economic policy.

Ansys, which listed on AltX in 2007, has been growing in leaps and bounds. Revenue has leapfrogged, almost doubling in the year to March 2017.

The black-owned and controlled technology company specialises in cybersecurity and the development of engineering solutions for the defence, mining, industrial, rail and telecommunications industries.

It operates mainly in SA, making technology work in harsh environments. Despite a slow economy, it massively boosted headline earnings per share, while margins have risen appreciably in recent years.

But after a stellar showing in financial 2017, the outlook is more tempered for 2018 as a result of the economic environment. Revenue for the year was up 70% to R806m, boosted by demand, pushing net profit 239% higher to R67.8m.

Growth came mainly from an accelerated roll-out of fixedline fibre-optic infrastructure, while the mining and industrial business remained healthy in spite of depressed markets. Mine safety and health obligations have played a part, driving efficiencies and automation.

Meanwhile, the defence and cybersecurity segment recorded revenue growth of 108% to R188m, mainly on sales outside SA. Results in financial 2017 also benefited from the recognition of the full benefit of the buyout of Parsec for R93m in mid-2015.

But the group’s rail segment was disappointing. Ansys says despite spending by Transnet and the Passenger Rail Agency of SA, rail is facing big challenges including equipment obsolescence, the loss of skills and lower volumes in line with lower commodity prices.