Mama Mar­cus to the res­cue

CityPress - - Business - Muzi Kuzwayo busi­ness@ city­press. co. za Kuzwayo is the founder of Ig­ni­tive, an ad­ver­tis­ing agency

If the politi­cians can ad­dress us in bor­rowed gowns, why can’t the masses get drunk on bor­rowed money? Af­ter all, Mama Gill Mar­cus will always be there to pick up the tab. Like the mother of an al­co­holic, she’ll do it to cover the shame – in her case to pro­tect the bank­ing sys­tem, the way she picked up the tab for African Bank – or she’ll do it be­cause she loves the “poor”. Ei­ther way, she will do it.

The role of the colum­nist is to be an hon­est bro­ker. It is not to ad­vance the cause of friends or to de­monise those with whom we dis­agree. Our sworn en­e­mies should be ig­no­rance, in­jus­tice and un­re­strained self-in­ter­est.

In this col­umn I have ar­gued against rat­ing agen­cies such as Moody’s, Fitch and Stan­dard & Poor’s. When peo­ple ar­gue against th­ese es­tab­lished bod­ies, of­ten they are dis­missed as be­ing emo­tional and lack­ing an un­der­stand­ing of eco­nom­ics. Such tac­tics are only a de­fence mech­a­nism.

Moody’s down graded Capitec Bank last week, and its share price spi­ralled down­wards. The Re­serve Bank and sym­pa­thetic an­a­lysts were up in arms. Well done on your spin, Capitec, your share price re­cov­ered nicely.

In the past I have ar­gued that the rat­ings agen­cies failed to cau­tion the world against the 2008 fi­nan­cial melt­down. Moody’s didn’t cau­tion in­vestors about the im­mi­nent fail­ure of African Bank. It was only af­ter the event that it down­graded Capitec. A rat­ings agency is like a town­ship am­bu­lance. It is always late.

Sadly, this time, I agree with Moody’s. In my opin­ion, Capitec will fol­low African Bank and Saam­bou. An ar­dent reader, Themba Nh­lapho, re­minded me that on page 84 of my book, Black Man’s Medicine, I pre­dicted the sit­u­a­tion in which African Bank and Capitec find them­selves. I don’t claim to know the future, I only ap­ply gravel eco­nom­ics.

A few years ago, I no­ticed that the staf­fin my shops were mov­ing their bank ac­counts from “tra­di­tional banks” to Capitec. The rea­son, I soon dis­cov­ered, was be­cause they could get loans more eas­ily. Th­ese were what I call “brag­ging loans”, which ba­si­cally means: “I’m hot and I’m monied.”

Sur­pris­ingly, this new-age bank was open­ing old­school branches ev­ery­where. The big banks, on the other hand, were try­ing to re­duce them by mov­ing their cus­tomers on­line, be­cause branches cost money to set up and main­tain. Some­thing didn’t add up.

My be­lief in Capitec’s size and ca­pa­bil­ity ended when some of my staff mem­bers told me they hadn’t been re­ceiv­ing their salaries. This was be­fore the festive sea­son. I be­came wor­ried be­cause I had per­son­ally re­leased the salaries.

It was a bad way to close the year – peo­ple go­ing home to their loved ones with­out their pay. But the next day some told me they had been paid dou­ble.

I called my ac­coun­tant. We dou­ble-checked with our bank and found no mis­take on our side. It turned out the fault was Capitec’s. It cor­rected the mis­take, but by then the beers had been pissed down the toi­let. Sud­denly, my staff were in debt.

Moody’s is watch­ing this drink­ing through the com­fort of its air-con­di­tioned of­fices. I am look­ing at it from the ground. It doesn’t mat­ter which way it will end. Mama Mar­cus is always there for us.

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