My kids love music but unfortunately as parents we don’t always love their taste. I was introducing them to a jazz singer called Jamie Cullum who sang the above song highlighting how much better life had become after 24 short little hours – go listen – it’s a great song! And like the sun that has remerged in the Western Cape to reveal beautiful mountains and rivers after what has felt like months of torrential cold rain, or the relief of Stage 1 load shedding (although that rapidly changed ☹) allowing for unhindered dinner parties and braais, or the absolute personal and national elation at winning our 4th rugby world cup, sometimes it’s only one event or change that makes us feel hopeful and optimistic again.
It has been a tumultuous few years for most people and we all have our own stories of loss, upheaval, massive changes but also of new ideas, relationships and ways of doing things. GDA has not been immune to this and although most of you will know the stories it is important to stop and acknowledge some of our family news.
- After almost 30 years in the hubbub of Sea Point, GDA moved in mid 2022 to Pinelands. Sea Point and its people served our company so very well for so long with so many wonderful memories and views. This said, Covid revealed that it may be time for a move in the interest of our staff (I feel guilty as our new office is only 700meters from my home) and stakeholders. We have found a lovely new home in Forest Mews, neighboured by Foord Asset management, with loads of excellent restaurants and coffee shops nearby – please feel free to pop in at any time!
- Toward the end of 2021 we bid a well-deserved and celebratory retirement to Priscilla (fondly known as PK) and Les (our Scottish much-loved receptionist). Sadly, PK fell Ill quite early on in her retirement and over the Easter weekend of this year passed away after several bouts in and out of hospital. We had a beautiful memorial service in the garden of her cousin with GDA family, colleagues in the industry and her brother from the UK. It was a fitting farewell to someone who has served her clients and colleagues so loyally over almost half a century of work. We will and do miss her.
- Les has settled in well to retirement and we are happy to say that marriage (yes – you heard it here) suits her very well. We still have the joy of seeing and hearing Les sporadically as she is now a client of GDA and has a standing invite to our annual Christmas party. Les’s great nature and charm with clients is missed.
- Desiree, who has been with us for several years also surprised us all and got married this year! She is now Dee Manuel, and we wish her every joy in her married life.
- Over the past few years, we have also welcomed several new staff members to our team:
- Terry Adams has joined our administration team. She originally joined us to assist in a digital project that took several months to complete. We so enjoyed having her around that she has made a natural fit into our organisation and now helps us an administrator in our Pinelands office. Terry is a Mom of 2 wonderful boys, always first at office, and sounds very similar to Dee on the phone – in case you get confused😊.
- Wesley Junor joined GDA in June 2023 as a Financial Advisor Associate to the business. Wes is a Chartered Accountant by training and brings a wealth of experience in Risk Cover, Investments, Tax planning and Group Schemes. Wes had been doing Financial Advising on a part time basis for a several years and this year took the leap to do it full time! Wes is Somerset West based, Eastern Caper at heart, Dad of 3, great at golf and an all round wonderful addition to our team.
- Debbie Hawtrey joined us just over a year ago to head up our new Foreign Exchange division which we operate over Investec and Capitec systems. Debbie joins us with over 12 years’ experience in the industry (including an 8 year stint at Mastercard ). She is a whizz at getting foreign loans approved, thinking through difficult structures and assisting with corporate payments, Inheritances and ensuring timeous offshore investment payments or receipts. She is also a Mom of 2 kids, the eldest of whom is training to be a chef…..which has pleased our office sweet tooth no end.
If you have any forex related queries – please reach out to Debbie for a chat.
We close out below with some thought from our new colleague Wes around the impact of Interest rates worldwide. He has a great knack of explaining difficult concepts so simply – thank you Wes
SO as the year closes out and the rush for last minute shopping sprees, crazy deadlines or plain busyness ensues we hope that you manage to get some proper time of rest over this very special festive season. Time to enjoy your families, count one’s blessing and see what a difference a day makes….
We look forward to once again working alongside with you in 2024 and remain grateful to you for your support and Trust.
Kindest regards from Jono, Dave and the whole GDA team.
GDA Economic update – What about the interest?:
A topic that may be top of mind for many people currently is around interest rates and inflation. Since Covid, interest rates on home loans have risen from historic lows of 7%, to 11.25% in less than 2 years. That equates to roughly R3,500 extra interest monthly for every million of debt. This extra monthly expense in one’s budget can be a bitter pill to swallow, especially seeing as there is no perceived value to this additional debt burden. When times are tough economically, it can lead one to wonder why the reserve bank keeps increasing rates, thus making things more difficult for consumers.
The economics around inflation and interest rates are broad and complex, and there are people far more intelligent that are able to offer insight into the intricacies of the relationship between the two, so we will attempt to offer only a high-level summary that will hopefully be both easy to understand and enlightening.
During Covid, the global economic environment was impacted simultaneously, in that trade between all countries was restricted at the same time. With restrictions on freedom of movement and the other impacts of covid such as job losses and a tough trading environment, governments around the world lowered interest rates to record lows, which was certainly the case in South Africa. This was an attempt to give people (in the form of lower interest rates on their home loans) and businesses access to cash to continue their enterprises and stem employment and trading losses. It became really cheap across the world to borrow money, and the intended consequence of this was that it would create strong demand to buy goods and services, to keep economies going. However, when there is strong demand, inflation rises (price increases).
Within the South African context, and certainly the view of the Reserve Bank, is that inflation is the most dangerous thing to our economy, as it effectively pushes people into poverty. As we have a massive portion of our population earning wages and living hand to mouth, if their wages don’t increase at the same pace as inflation and the cost of essential items like food, water and electricity, increase keep going up, these same people effectively get poorer. The wealthier portion of our population can divert spending from other discretionary items (like entertainment or clothing) to necessities, but the poor don’t have this option. The inflation target in South Africa is in a range between 3-6%, so as soon as prices start to increase by more than this range, the Reserve Bank acts by increasing rates. This has the effect of adding extra interest charges into our daily budgets, meaning less available money to spend, less demand for goods and services, and ultimately in the future, a drop in price.
Now for the South African Reserve Bank, the challenge is that inflation in our country is often set by factors outside of our control, most significantly, the oil price and the dollar price. As oil is a major import for South Africa, as soon as the price increases, we must accept it, and everything starts to become more expensive- think petrol, food (due to cost of transporting it to market) and electricity.
Similarly, we have little influence over the $ exchange rate. The exchange rate does react to our government decisions (good or bad), but typically, there are other factors which influence it much more broadly and impactfully, such as sentiment to emerging markets. In times of uncertainty, people prefer to hold dollars instead of taking risk in other countries and holding investments in that currency. Further, as inflation rears its head in the US, their central bank is also forced to raise interest rates. To remain competitive, the hand of our Reserve Bank is almost forced to also raise rates, otherwise the Rand would weaken further. If we did nothing, more money would leave South Africa in search of better interest rates in the US, weakening the Rand, which would create more inflation locally for us, as we pay for our oil and other goods in dollars. This hopefully explains generally why interest rates have risen so quickly over the last 18 months, with many of the hikes in response to all the hikes happening in the developed nations in their attempts to control inflation.
It may be worthwhile at this point looking for some perspective in the doom and gloom of higher rates. Pre Covid, our prime rate since 2010 has been around 10%, so it is currently only around 1.75% above where it has been for the last almost 15 years. If we compare our Reserve Bank Repo rate to those of other countries, South Africa is in a very secure position. Our emerging market peers are typically Argentina, Turkey, Brazil, Egypt, and India, where the central bank rates are as follows (SA at 8.25%):
- Argentina – 97%
- Turkey – 8.5%
- Brazil – 13.75%
- India- 6.5%
- Egypt – 18.75%
We fall well within range of our peers and have thus far avoided the disaster of hyper-inflation as currently seen in Zimbabwe and Argentina. In truth, we have an extremely independent, competent and ably led Reserve Bank, that has not pandered to political rhetoric around job creation but has applied sound economic and central bank governance. There is also hope that we are close to the end of the hiking cycle, as Central Banks try to balance keeping inflation in check with making sure that the economy is not dipping into recession.
We have taken comfort in the actions of our Reserve Bank, and while higher interest rates are a risk to the majority of our population with mortgage bonds and debt, they also present fantastic opportunities to many of our retired folk with no/low levels of debt who can take advantage of higher returns on some of their lower risk investments.