Farmers Review Africa Sept/Oct 2018 FRA - September - October 2018 digital 5 | Page 31

FEATURE
OFFSHORE INVESTMENTS FOR FARMERS
Farmers Review Africa speakes to Investec around current offshore
market sentiments?
A
s far as agriculture is concerned,
policy uncertainty in a number
of critical areas seriously
hampers real positive development.
As the new season in the summer
rainfall approaches and a new cycle of
production finance, it is opportune to
take stock of the past season, as well
as to consider the coming season.
From a macroeconomic perspective,
pending investment downgrades by
the international rating agencies and
depressed consumer spending will
further weigh on the agro-food market.
While agriculture is often a leap of
faith, good solid planning together with
the financier and/or agribusiness is of
paramount importance for the farmer
to achieve success.
The decision by South Africa’s
ruling African National Congress
(ANC) to push to amend South
Africa’s Constitution and allow land
expropriation without compensation
highlights the need for investors to
have a diversified, global investment portfolio.
If you take a step back as an investor
and look at South Africa globally,
it represents a tiny fraction of the
investable opportunities out there.
Up to July 1997, South Africans were
largely confined to saving locally. In
March 1997, the Minister of finance
announced that up-to-date tax-paying
individuals over the age of 18 were
allowed to invest up to R200 000 offshore.
Many South African investors agonize
over whether they should invest
offshore and, if so, when the right time
would be to do so.
Japie Lubbe, Structured Products
at Investec assures that there is no
harm in broadening your horizons
by asking your financial adviser or
portfolio manager what options are
available to you in terms of offshore
investments outside the South African
boarders, especially since it has now
become so easy.
SA makes up a small part of the
global economy (less than 1% by
gross domestic product and consumer
size). Furthermore, the local economy
is growing at a much slower pace
than the rest of the world; restricting
ourselves to local investments
means that we will miss out on the
opportunity to invest in some of the
world’s biggest and most successful
businesses and markets. Add to that
the volatile currency and uncertain
political climate, and the need for
diversification is clear.
Benefits of offshore investments
According to Japie, the principal
reason for investing a portion of your
A global portfolio comes with
the added benefits of being
able to invest in a far broader
opportunity set, and having
unrestricted access to your
funds from anywhere in the
world”, concludes Japie.
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