South Africa
After an incredible trip to the jungle along with a remote island like Seychelles, I “relaxed” in Cape Town for 2 days and then was off to a safari. To say I made the most of my Africa trip was an understatement. Seeing the extreme poverty in Cape Town was eye-opening. The pessimism in South Africa is apparent with everyone talking about politics and young smart people fleeing the country. The stats are a little all over the place, but 55% of South Africa is in poverty and live off an average of $75/month! Some studies even have poverty closer to 80% of the population in Cape Town.
Unemployment rates are all over the place, but some studies have overall unemployment at 25% with the black population over 35%. Frankly I’ve never been to an area of the world that was so segregated. But in a strange way was openly talked about. The three classes were white, black, and colored. Colored was mixed or mulatto, but the term colored was a compliment. It’s strange to walk back into something like this in what seems like something that would have happens 50 years ago, but still feeling the ramifications from apartheid. The ramifications of apartheid are not something that can simply be overcome in a few years, but South Africa is still feeling the effects 25 years after the fact. We talked with several locals about how the country was going and was continually fascinated by strong takes on the current situation. Some thought that programs to empower blacks where companies were required to have significant black ownership in order to do business with the government were ill advised. Some mentioned that programs that enforced more hiring’s of underrepresented groups were driving educated white people to flee the country in search of better jobs. Some said people just need to buck up. It seemed consistent that the new president has some good ideas but will take years for them to come to fruition.
Jacob Zuma, who was the President from 2009-2018, was bad news and we heard constant ill feelings against him as he awaits trial for corruption charges. Frankly it seems like an interesting investing opportunity with a change in regime and potential righting the ship, but it will take a while. Cyril Ramaphosa seems determined to right the ship, it’s a question of how quickly he can go. South Africa can be a significant rebound candidate with a regime change and something I’m looking at exploring more. Cape Town was a bit bizarre, with beautiful scenery but situations where you could barely walk around anywhere at night. We had several odd encounters, although thankfully nothing bad happened. My friends who went to several different parts of the country mentioned the same dynamic in Johannesburg and Durbin.
I ventured over to Johannesburg where we went over to Kruger National Park for a safari with about 12 people. I had never been on a safari before and it was a new experience and an homage to the great continent of Africa. I hate to even write this, but after the gorilla tracking a standard animal safari seemed rather tame! I was spoiled with one of the crazier trips I’ve done with a more put together “we’re going to ride around in Jeeps and look at animals,” vs. venturing out into the wild jungle. Nonetheless I enjoyed the experience of seeing unique animals, meeting amazing locals, and enjoying the vast wilderness of Africa. We came close to seeing “The Big 5” and saw 4 of them. One of the more interesting highlights were seeing some lions mate and some cheetah brothers fighting/playing. Outside of that some close encounters with elephants were highly enjoyable along with seeing some rhinos and hippos. We stayed at some interesting camps where the lands were given back to some local communities in order to promote more jobs amongst locals. Our tour guides also worked on a co-op farm and it was interesting hearing their perspective on the current climate.
Cape Town was one of the most beautiful towns I’ve come across. The mountains that lead up right to the shore make you want to hike every day. It does seem like many people in fact do it every day. In my brief time in Cape Town I did Table Mountain and Lion’s Head trails. Lion’s Head was an experience getting up at 4 AM and enjoying the sunrise with my fellow hikers.
I tried to do a one-of-a-kind scuba diving trip where I was supposed to dive with seals and in a kelp forest, but unfortunately it got cancelled the day I tried to go from rough seas. Next time! I did get to go paragliding, which was quite the view of Cape Town.
Chile/Argentina
Pretty wild situation. Chile, which has been the pillar of stability and capitalism in relation to other South American countries, started to riot in late last year. We almost changed the trip, but instead we opted to live in another area not near the protests. I was conflicted by Chile. I had high expectations since I hadn’t been to Chile before. Unfortunately, it didn’t live up to the hype for me (can’t win them all). It was a difficult situation. Every local I met apologized immediately for the state of their country. Several stores and areas were essentially ghost towns by sunset since they opted to close since riots could take place at any time. So, what caused the situation?
Chile has a new conservative president and the “trigger” was what equated to a 4 cent (!) increase in their metro fare. The increase struck a chord with locals where incomes had not gone up commiserate with inflation. The retaliation was combating what most of Chile thought was a tax on the poor, who had been neglected. Although Chile has the reputation of being one of the better business climates in South America, I did not realize the wealth inequality. It’s estimated that the top 1% of Chile own 1/3 of the wealth with the average income around $2,000/month but over half living off $550/month or less. This dynamic has resulted in the higher class making 13.6x the lower class and a low Gini coefficient (the world bank’s calculator for income inequality). The lower class has been susceptible to low minimum wage, stagnant wage growth, weak union protections, privatized pension system, stratified education system that leaves poorer students in debt, unaffordable housing, and political corruption. What’s exacerbated the situation is Chile’s reliance on metals/mining with overall weak commodity markets. A weak economy with more punitive punishments on the lower class has a majority of Chile feeling the pain and they got angry.
I did some research on-line and I guess this has gotten more of a following, but one local I met blamed interference by socialists’ governments a la Venezuela in causing the riots. I originally dismissed it, but they brought up the point with how 1 million protestors accumulated quickly over just a 4-cent increase. Who knows but thought it was an interesting point with how political regimes continue to turn over quickly especially across South America. Apparently, Chile has arrested some protestors with socialist ties but hard to say if it’s a political stunt. In this crazy time of political media it hit home the point that it’s hard to identify what is true in the media. The uncertainty makes it hard to be confident investing/starting businesses down in South America. The President has made some changes trying to improve minimum wages and taxing the wealthy, but the riots continue. The riots revolved around the main city square, although would spring up at any time. Walking through the streets you could tell if there had been a riot recently from our eyes burning from tear gas.
I tried to get down to Patagonia but unfortunately, I ran out of time. I figured I’ll save it for my next trip. Chile outside of that was beautiful with the mountains and did several hikes around the area while visiting some hot springs. I jumped over to Mendoza Argentina and explored wine country. Was a great trip although I didn’t get a feel for much of how Argentina is doing considering their own problems. It’s amazing the culture difference you can see with simply a quick flight over to the next country. Had some fun ziplining over some of their rivers.
A couple new countries crossed of my checklist and I then ventured to explore a little more of South America!
Scott
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