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Economy

Offering The American Dream

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Gar Lippincott and Daniel Ryan of Atlantic American Partners were in South Africa recently looking for high-net-worth individuals wanting to invest in the US.

It’s a warm spring day in September, and Gar Lippincott and Daniel Ryan have just arrived in South Africa. It is Lippincott’s first time in the country, and he is jet-lagged.

A little over two months ago, he was booked to fly here from the United States (US) but was turned back at immigration.

“At Atlanta airport, the lady looked at Daniel’s visa and let him through and she looked at my visa and she said ‘I am afraid you can’t get on the plane because you have to have a blank page on your passport’. I said ‘I have three blank pages’ and she said ‘no, it’s supposed to be the one that says visa on it’. She said it’s the rules in South Africa so I had to sadly go back home… now when I was coming, I was told that’s not an issue anymore so I am happy they have made traveling into the country easier,” says Lippincott.

With a brand-new passport, he’s here with Ryan looking for people who want to invest in the US in exchange for a green card.

Lippincott, the Managing Partner of Atlantic American Partners, says he has always been keen on South Africa for its growth opportunities and prospects.

“From what I understand, the things that are causing short-term decline in the economy in South Africa are set up to provide long-term growth and hopefully people will understand this,” he says. Ryan, the company’s Managing Director of Emerging Markets – Africa, agrees: “I lived in Malawi for 12 years and South Africa is still considered the shining one throughout the continent. Even with all the problems, everyone still wants to come here because of the opportunities.”

According to an AfrAsia Bank report, South Africa comes second to Mauritius in boasting the highest number of high-net-worth individuals.

These are the kind of people Ryan and Lippincott target through their work at Atlantic American Partners. The company has real estate investors and professional private equity fund managers that manage money for banks, insurance companies, and pension funds. In addition, they help people get US green cards and ultimately US citizenship through the US government’s EB-5 Immigrant Investor Visa Program.

“Basically we look for people who want to move to the United States and we help them do so legally by investing and the nice thing is, with our program, they are also able to get a nice return on investment,” he says.

According to Lippincott, for a $500,000 investment that creates 10 jobs for American workers, you could get a green card in about two years and be a US citizen in about six or seven years. “Twenty seven countries have an investor visa program but with most of them, it’s essentially a fee you pay, or you need to be actively engaged in the day-to-day operation of a business. For example, you invest $1.5 million in Australia, but you need to hire employees and generate a certain amount of revenue. One of the biggest advantages with our program is you actually invest the $500,000 into a fund. We act as a trustee of that money and within five to seven years, they get that money back with a bit of return on investment and you are a permanent citizen in the US.”

Atlantic American Partners invests the money in real estate developments like hotels, apartments and student accommodation.

“What’s nice about the program is it doesn’t only cover the investor; it covers the spouse and children under 21. Our biggest family was a Hungarian family with seven children so they got nine green cards for $500,000,” says Lippincott.

The company says it has had positive response in South Africa. “Two months ago, we were here and we had scheduled six presentations for 100 people and we ended up speaking to 450 people. Most were business people, people worried about the economy, people worried about the political future of South Africa and people concerned about the education future of their children,” says Ryan.

According to Lippincott, despite the news of the clampdown on immigration, the US economy is booming and will perish without immigration. In the era of Donald Trump and his anti-immigrant views, that’s heartening news indeed.

Economy

Cash-strapped South African Airways Expands Emirates Code Sharing

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South African Airways (SAA) said on Tuesday that it had signed a deal with Emirates to expand an existing codeshare agreement, in a rare bright spot for the cash-strapped airline.

The state-owned carrier, which has not made a profit since 2011 and survives on government handouts, said the agreement would see the two airlines leverage each other’s route networks, cargo services and flight schedules to boost passenger flows.

South African President Cyril Ramaphosa has been at pains to stabilize ailing firms like SAA, but the extent of their financial difficulties has meant slow progress.

SAA, which hopes to turn a profit by 2021 by cutting jobs and routes, expects to make another large loss this financial year, despite a recent government cash injection of 5 billion rand ($350 million).

“The expansion of our commercial relationship will further strengthen key focus areas of the implementation of our turnaround plan,” SAA Chief Executive Vuyani Jarana said. -Reuters

– Alexander Winning

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Economy

South Africa’s mining and manufacturing sectors show slight growth

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Report shows positive growth in the mining and manufacturing industry as both sectors  show slight figures of recovery in third quarter


South Africa’s mining and manufacturing industry shows slight growth in production and sales, but could decline in the near future.

The October 2018, StatsSA report shows both sectors have had figures of recovery from the start of the first quarter.

The mining production overturned a three-month decline with a 0,5% year-on-year growth in the third quarter, with gold being the lowest contributor.

Senior economist, Elize Kruger from NKC African economics, says despite  growth in the mining sector there is nothing to be excited about.

Protest action that started on gold mines in mid-November added to the pressure that the sector has been under over the past months.

A protected wage strike at Sibanye-Stillwater’s gold operations started when The Association of Mineworkers & Construction Union (AMCU) made a demand of  R1,000 annual increases in wages for mine workers.

The National Union of Mineworkers, Solidarity and United Association of SouthAfrica on  the other hand accepted R700 in the first two years and R825 in the third for most of their members.

The Johanessburg based mine urged striking workers to return to work by December 15, 2018. 

“Novemember and December could be impacted by the strike action that we see in the gold mining industry. The fourth quarter data is likely to remain depressed despite the October numbers,” she says.

Gold is the largest negative contributor at -15,1% thus contributing -2,3%percentage points to the overall figures.

Furthermore, increases in electricity prices that will take effect early 2019, will tighten the pressure on the industry adding to headwins faced on a global scale.

“Alluminum sector is impacted by the US import tarrifs increases and the threat of electricity price increases in the order of 15% ,” says Kruger.

The 15% increase is a strategy put in place by the electricity public utility, Eskom, to settle financial constraints.

The request made to the National Energy Regulator of South  Africa will be effective for three years if approved.

The manufacturing industry grew by 3,0% with eight out of 10 sectors showing positive growth rates over the last three months.

According to Kruger, the strong levels of the rand exchange rate put in a helping hand in the manufacturing production and sales sector.

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Current Affairs

In an African First, a Cannabis Expo…without Cannabis

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Andre Kruger’s stand at Africa’s first ever cannabis exposition displayed an indoor growing tent, complete with state-of-the-art lighting imported from the United States and fittings for a high-tech hydroponic irrigation system.

What it didn’t have, however, was a cannabis plant.

The four-day expo, which opened in South Africa’s capital Pretoria on Thursday, was a stark illustration of the legal grey area the nascent industry occupies in the continent’s most developed economy.

In September, the Constitutional Court decriminalized the use and cultivation of cannabis in private space. But the decision did not legalize its trade or distribution. Even displaying cannabis in public remains legally dubious.

So exhibitors at the expo got creative. Kruger, whose company Sombrero Hydroponics has seen a spike in customer inquiries since September, used two artificial poinsettias as stand-ins.


“People just feel more comfortable now, because they don’t have this added thought in the back of their mind thinking, ‘What if the cops stop at my house?” he said.

“They’re coming out of the closet, in this case the tent.”

Hundreds of expo-goers bought tickets and were already queuing before the event opened, but not everyone agreed with the ground rules.

Cannabis activist Steven Thapelo Khundu handed out cannabis buds from a plastic bag at the expo entrance, encouraging attendees to bring them inside.

“Free Ganga Free! Free Ganga Free!” he shouted as security forcibly removed him.

Under the court decision, lawmakers have two years to amend the country’s cannabis laws, but the industry isn’t waiting.

South Africa recently established a legal framework for licensing growers. The local unit of Canada’s Canopy Growth, which in August received a $4 billion investment pledge from Corona beer maker Constellation Brands, is among the early applicants.

“I don’t think most people realize just how big the cannabis industry is in Africa already, in South Africa already,” said the Cannabis Expo’s co-founder Silas Howarth.

International companies are, for now at least, seeking licenses to produce cannabis for export. But Gerhard Naude, the founder of healthcare company Go Life International, believes a fully legal domestic industry is now only a matter of time.

“I think there will be a few licenses awarded, and very closely regulated. I think in two years we’ll definitely have a license, for the use of medicinal cannabis in any case,” he said.

Itumeleng Tau, who said he’s been growing marijuana for around 20 years, is among a wave of underground cannabis entrepreneurs who are hoping the pending legal changes will allow them to bring their businesses out of the shadows.

The expo was an important first step, he said. But the absence of any actual cannabis was strange.

“It’s something very, very wrong … It’s like we came to a party but there’s no music.” – Reuters

  • Joe Bavier

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