Latest News Archive

Please select Category, Year, and then Month to display items

Cry “Havoc!”, and let slip the dogs of war

11 March 2022 | Story Prof Frikkie Maré | Photo Supplied

Frikkie copy — Prof Frikkie Maré is from the Department of Agricultural Economics at the University of the Free State (UFS)

Opinion article by Prof Frikkie Maré, Department of Agricultural Economics, University of the Free State.

In William Shakespeare’s play Julius Caesar, Mark Antony utters the words: “Cry ‘Havoc!’, and let slip the dogs of war,” after learning about the murder of Julius Caesar. With these words he meant that chaos would ensue (havoc) to create the opportunity for violence (let slip the dogs of war).

The recent invasion (or military operation, according to Russian President Vladimir Putin) by Russian armed forces into Ukraine brought the famous words of Shakespeare to mind. Putin cried “Havoc!” and his troops created chaos in Ukraine. This is, however, not where it stopped because the dogs of war have been released into the rest of the world.

What is the impact on South Africa?

The day after the invasion we felt the bite of the dogs of war in South Africa. The rand suddenly weakened against the dollar, oil and gold prices increased sharply, and grain and oilseed prices on commodity markets increased

This was before the rest of the world started to implement sanctions against Russia, which could be described as a shock reaction due to uncertainty as to how the situation would unfold. In the days after the initial market reaction we saw the markets actually “cool down” a bit, with most sharp initial reactions starting to change back to former positions. This period was, however, short-lived when the world hit back by closing airspace and borders and refusing to import products from Russia or export to them. The sanctions were in solidarity with Ukraine as an attempt to bring the Russian economy to its knees and force the Russians to withdraw from Ukraine.

Although the sanctions against Russia should certainly be successful over the long term, it does not change much in the short term and we will have to deal with the international effects of this conflict. The question then is, how will this affect South Africa?

Although there are no straightforward answers, as the impact will depend on what one’s role is in the economy. One thing for certain is that the total cost will outnumber the benefits. What affects everyone in South Africa, and the starting point of many secondary effects, is the increase in the price of crude oil. Russia is the second-largest producer of crude oil in the world and if the West is going to ban the import of Russian oil we will have an international shortage. Although the banning of Russian oil is the right thing to do to support Ukraine, it will have devastating effects on all countries in the world, with sharp increases in inflation.

The increase in the price of oil not only drives up the cost of transportation of people and products, but also manufacturing costs. Fertiliser prices are correlated with the oil price, and it will thus drive up the production cost of grain and oilseeds.

Speaking of grain and oilseed prices, the Black Sea region (which includes Russia and Ukraine), are major exporters of wheat and sunflower seed and oil. The prices of these commodities have soared in international and South Africa markets over the past few weeks. Although it might seem like good news for our farmers, the increase in prices are offset by high fertiliser prices and the local shortage of fertiliser. This may lead to fewer hectares of wheat being planted this year in the winter rainfall regions.

Nothing good is coming from this situation

In terms of agricultural commodities, both Russia and Ukraine are important importers of South African products, especially citrus, stone fruit and grapes. Alternative markets now need to be found for these products which will affect prices negatively.

Although one needs to write a thesis to explain all the effects of the Russian-Ukraine conflict, the dogs of war have been slipped, and it is clear from the few examples that nothing good is coming from this situation. In short, we will see higher fuel prices (maybe not R40/litre, but R25 to R30/litre is possible), higher food prices, higher inflation and a higher interest rate.

These factors affect all South-Africans, especially the poor and some in the middle class who will struggle in the short term. The time has come to cut down on luxuries and tighten belts to survive in the short term until there is certainty about how the havoc in Ukraine will play out.

News Archive

The failure of the law

2004-06-04

Written by Lacea Loader

- Call for the protection of consumers’ and tax payers rights against corporate companies

An expert in commercial law has called for reforms to the Companies Act to protect the rights of consumers and investors.

“Consumers and tax payers are lulled into thinking the law protects them when it definitely does not,” said Prof Dines Gihwala this week during his inaugural lecture at the University of the Free State’s (UFS).

Prof Gihwala, vice-chairperson of the UFS Council, was inaugurated as extraordinary professor in commercial law at the UFS’s Faculty of Law.

He said that consumers, tax payers and shareholders think they can look to the law for an effective curb on the enormous power for ill that big business wields.

“Once the public is involved, the activities of big business must be controlled and regulated. It is the responsibility of the law to oversee and supervise such control and regulation,” said Prof Gihwala.

He said that, when undesirable consequences occur despite laws enacted specifically to prevent such results, it must be fair to suggest that the law has failed.

“The actual perpetrators of the undesirable behaviour seldom pay for it in any sense, not even when criminal conduct is involved. If directors of companies are criminally charged and convicted, the penalty is invariably a fine imposed on the company. So, ironically, it is the money of tax payers that is spent on investigating criminal conduct, formulating charges and ultimately prosecuting the culprits involved in corporate malpractice,” said Prof Gihwala.

According to Prof Gihwala the law continuously fails to hold companies meaningfully accountable to good and honest business values.

“Insider trading is a crime and, although legislation was introduced in 1998 to curb it, not a single successful criminal prosecution has taken place. While the law appears to be offering the public protection against unacceptable business behaviour, it does no such thing – the law cannot act as a deterrent if it is inadequate or not being enforced,” he said.

The government believed it was important to facilitate access to the country’s economic resources by those who had been denied it in the past. The Broad Based Economic Empowerment Act of 2003 (BBEE), is legislation to do just that. “We should be asking ourselves whether it is really possible for an individual, handicapped by the inequities of the past, to compete in the real business world even though the BBEE Act is now part of the law?,” said Prof Gihwala.

Prof Gihwala said that judges prefer to follow precedent instead of taking bold initiative. “Following precedent is safe at a personal level. To do so will elicit no outcry of disapproval and one’s professional reputation is protected. The law needs to evolve and it is the responsibility of the judiciary to see that it happens in an orderly fashion. Courts often take the easy way out, and when the opportunity to be bold and creative presents itself, it is ignored,” he said.

“Perhaps we are expecting too much from the courts. If changes are to be made to the level of protection to the investing public by the law, Parliament must play its proper role. It is desirable for Parliament to be proactive. Those tasked with the responsibility of rewriting our Companies Act should be bold and imaginative. They should remove once and for all those parts of our common law which frustrate the ideals of our Constitution, and in particular those which conflict with the principles of the BBEE Act,” said Prof Gihwala.

According to Prof Gihwala, the following reforms are necessary:

• establishing a unit that is part of the office of the Registrar of Companies to bolster a whole inspectorate in regard to companies’ affairs;
• companies who are liable to pay a fine or fines, should have the right to take action to recover that fine from those responsible for the conduct;
• and serious transgression of the law should allow for imprisonment only – there should be no room for the payment of fines.

Prof Gihwala ended the lecture by saying: “If the opportunity to re-work the Companies Act is not grabbed with both hands, we will witness yet another failure in the law. Even more people will come to believe that the law is stupid and that it has made fools of them. And that would be the worst possible news in our developing democracy, where we are struggling to ensure that the Rule of Law prevails and that every one of us has respect for the law”.

Back

Economic and Management Sciences

Education

Health Sciences

The Humanities

Law

Natural and Agricultural Sciences

Theology and Religion

Open Distance Learning

Business School

We use cookies to make interactions with our websites and services easy and meaningful. To better understand how they are used, read more about the UFS cookie policy. By continuing to use this site you are giving us your consent to do this.

Accept