I DO not always agree with Stephen Mulholland but his latest suggestion strikes me as both ingenious and creative. Not because I believe in "gifts" or "hand-outs" but because this trust or fund he suggests can assist the millions of our compatriots who are unemployed and starving.The fund should be controlled and administered by men and women with a deep understanding of financial matters and business. I just wish to complement Mulholland's thinking by adding that the emphasis should be on encouraging an entrepreneurial spirit among those who seek assistance from the fund.
Clem Sunter and other leading human resource experts have long been advocating this kind of development. These new entrepreneurs will need to be managed in a humane, nurturing and caring style, taking into consideration where they come from.
Learning to save, however little, helps prevent one from falling back into poverty.
idea fires the imagination of our leading entrepreneurs and financial experts who, I believe, can translate his vision to reality for the betterment of our country. - Mthuthuzeli Khaye, Thorton
THE late Chris Hani suggested the same idea, so the concept is not new, and I believe this will not create but take away jobs.The amount of R14-billion is currently productively employed in an environment in which it is put to work. For those not economically schooled this means that the amount (1% of each listed company) is monitored just like the other 99% of the companies' capital and it has to achieve a market-related return. In a few years, the amount would double and could even treble in the market.
By making the listed companies contribute to a fund controlled by government, semi-government or a socialist-orientated committee, the funds - given corruption and inefficiency - would disappear over a similar period and no employment would benefit.
On the other hand, the funds staying put could grow to R42-billion and imagine the jobs that would have been created!
Mulholland has not considered the maths of the proposal. Assuming a tax rate of 40% and a net return on capital before tax of 10%, it means the charge in the year it is taken would effectively increase the tax by 25%, a massive increase which would surely lead to some disinvestment, thereby reducing jobs further.
Finally, why always the listed companies? They are the guys who have the most scrutiny, disclosure and transparency. Give listed companies a break - they are already doing their thing. After all, they are taking the risks while others are moving on and selling up. Why not try the following, all of which would improve employment and or productivity:
Perhaps a cutting of governments expenditure: reflect on Mpumalanga (the province should be called Pumamali!).
Making Unions pay for property they damage and or levy a charge per man-hour lost to illegal strikes.
Penalising ministers and government officials for corruption in their own departments.
Just get on with a national lottery - R14-billion over a period would be chicken feed. - Ernie Alexander, Houghton
I FIND the idea most intriguing. Quite obvious, really. I could not work out if you were writing the article tongue-in-cheek, but I like it. I would be interested to know if you intend to take the idea further. I think you should.I wonder what the effect on the economy would be? Would it unlock money, spread it to consumers and fuel a mini boom? Or would it suppress the ability of the companies involved to generate wealth?
How would it differ if it were done only by half the companies on the JSE? The top half? The top 10%? The top 10? A lot of research would have to be done.
Also, what are the political ramifications of the existence of a R14-billion trust run by the private sector? That sort of money can topple governments. Imagine what could be done . . .
Thanks for the idea. I hope it gets some serious attention. - Lloyd Rubidge
