It’s all about the flow of capital ! Volumes, velocity, trajectory, cadence … and then also, into and out of asset classes.
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The permutations are innumerable, well almost. In our hyper-connected, hi-tech age, the tongue-in-cheek saying of decades ago is now a reality: a reindeer farts on the tundra, and a hurricane builds in Bermuda ! The depth and complexity of this connectedness means that timing becomes THE priority in the planning and rollout of a mega-project such as our Southern Cape Corridor (S.C.C.).
The scope (complexity/breadth) and scale (size) of the US markets, coupled with the fact that the US$ remains the only viable, global, reserve currency for international trade, means that we need to be attentively watching the decisions taken there as well as those at home. Over the next two years, the collapsing Eurozone Nightmare, to be followed by loss of confidence in the Japanese economy, will result in even greater flows of capital into the US. The 0.25% interest rate increase by the US Federal Reserve of 15 March 2017 has seen the US$ Index consolidate above 100 points. Inflationary dynamics have been baked into our SA cake, and will now gather steam and speed.
The private sector of the Southern Cape must drive the process of gathering steam and speed for the conceptualising and planning of our S.C.C. Delegating the process to provincial or national politicians, consultants and other business politicians, always sidelines the hardcore traders and entrepreneurs so desperately needed to make the economic developments work. Abdication of our rights and duties must not be entertained, and we would do well to remind ourselves of the sad lessons and wasted capital of the World Cup 2010 Stadia – surely a painful illustration of capital flowing from ‘weak hands to strong hands’. Once the fanfare is over and the novelty value has worn off, the Garden Route community will be left to build the sustainability and profitability of the S.C.C. so let’s take ownership from the word “GO”.
(Aside: Politicians and consultancies will not make up any short-falls between projected revenues and actual incomes, rather regional tax and rate-payers will all ‘bail-in’ whether they like it or not – this is achieved primarily through municipal and district council revenues.)
If it’s all about capital flows, then let’s think of the best available way to keep our region’s capital working in and for our region ! Community bonds are tried and tested instruments for achieving this. These interest-bearing bonds are purpose-designed for small scale, community-based investors, and need to be secured against the value of an asset that would form the foundation of the S.C.C. A non-profit, limited-term business would need to be established to issue and administer the bonds, and distribute interest payments to the bondholders. Why should we not start small and grow the project organically ? Private sector players who would, on a pro bono basis, set the capital ball rolling, would conservatively manage the start-up phases of the project. Here is a reference to a current example of how community bonds can be employed –