Inflation is hitting many parts of the world, especially the USA, and is likely to result in increases in interest rates.
In response to these developments, the SA Reserve Bank increased the repo rate by 50 basis points towards the end of May to 4.75 percent.
This saw the prime lending rate by commercial banks jump to 8.25 percent.
Market analysts say this is the largest increase since 2016, fuelled by spiking global inflation.
I don’t expect the interest rate to rise fast but the increases could happen at regular intervals over an extended period of time.
Petrol and food prices have already risen and are likely to continue to rise, partially because of the disruption to food production and exports due to the war in Ukraine.
Although it is thousands of miles away, it does have a negative influence on southern Africa with sunflower oil prices rising sharply.
Availability of cooking oil is already a problem with limits on the number of bottles that can be purchased.
Information received from that region of Europe indicates that at the very least sunflower plantings will be limited for the next three years.
It does offer opportunities and we are already involved with sunflower oil plants in Thaba Nchu and Bethlehem, and looking at a project in Togo.
It could mean that South Africa would be more independent from the European supply.
Local production would result in cheaper product and the possibility of exports, as a number of inquiries have already been received for oil exports to West Africa and India.
Because the production of oil also results in animal feed as a by-product, it has the opportunity to invest in animal food production, stock yards, meat processing and a host of other associated industries.
So, while the Russia-Ukraine war is likely to cause major disruptions across industries, it presents significant opportunities in the property industry, either in the primary sector where you may need vast tracts of land or in the processing and warehousing of the product.
- Mike Spencer is the founder and owner of Platinum Global. He is also a professional associated property valuer and consultant with work across the country as well as Eastern Europe and Australia. You can contact him via email: mike@platinumglobal.co.za
