What information asymmetry means in this case is where there is gross difference in knowledge. We learned a lot of things at schooling institutions but we still lack much more. I had a struggle putting together a business proposal recently. When I arrived at the meeting we had a chat not a proposal review. I discovered I did not need the proposal. But this opened a Pandora’s box for me. I felt that that was what we lacked as Africans. We are gradually becoming aware of academic information but lack the practical side of things.

We lack knowledge of where to buy financial products like shares, investment products,bonds and so on. We lack knowledge of how to start up a billion rand company from scratch. We are beginning to get exposure to these areas, but only a handful are fully aware of some of these. We are yet to see a vehicle maker started by one of us. We are proud of Mr Patrice Motsepe and pray for many more like him from among us. More people who dare to dream.

Phuthuma Nhleko, CEO of MTN Group, could receive R300m from the group’s takeover of a structure that was set up to boost black ownership of the company, Business Report said on Wednesday last week. Earning 300 Million may seem out of reach for the rest of us, that is not the case with Zimbabwe. What I am trying to preach is that earning a big sum like that is not out of our reach here in South Africa. What may be out of our reach is something more subtle. I have a business idea that I shared with my family and the advise I got was that I should get a good job and earn my starting capital. This is fine if you are starting a corner shop,barber shop or butchery. But think of a bank, who would start a bank with their salary, Bill gates and Warren Buffet might struggle to start a small one so what are your chances. The big companies are started by “going out to the MARKET”.

I am afraid most of us colourful Africans are not yet aware what the market is and we do not participate fully yet.  What I mean by the “market” is a place to get funding in order to make big business. Most individuals do not have the knowledge of who to approach. The South African government has done well in initiating programs that we can source funding for company growth and start ups of new companies. To earn the big pay cheque an individual has to come up with a brilliant business idea, then source funding and start it. The rest will be details. When you have the idea, the Internet is a powerful tool, use it to find who to approach and learn material on how to present and what to present. You can also find out exactly what legal compliance you need and so on. I encourage us (black) colourful people to learn from our (white) colourless who have made cars, banks, shoe companies, tissue companies and so on which we all use. Each of the big companies be they makers of toilets or tissue, perhaps even scrap metal. Most of these guys earn it, we should also earn it.

On Thursday the Reserve Bank Governor Tito Mboweni announced a 50 basis point cut in the repo rate. The repo rate is the rate the South Africa reserve Bank lends money to banks which is now 11,5%.The banks lend to the general public at the prime rate which is 15% plus or minus depending on your relationship with the bank. Both the prime lending rate and the repo rate were reduced 50 basis points, this is a fancy way of saying the rates were reduced by half a percent.

The Reserve Bank Governor further commented that ,”South Africa was not in recession and was unlikely to slide into one”. I believe that it was the consumers who went into a recession. This meaning the South African consumers struggled to balance their finances. We are grateful and welcome the rate cut as consumers just before Christmas. The good news kept coming economist expect consecutive rate cuts next year. The Reserve Bank Governor Tito Mboweni also said that inflation will fall into their target (between 3% and 6%). This is good and means they don’t have to keep raising rates and all our repayments will start going down. Hopefully we the public were not all blacklisted yet and can get credit enough to buy Christmas presence and share in the spirit of Christmas.

Today there are many people interested in the interest rate decision of the Monetary Policy Committee (MPC). An important question is “who makes this decision (about interest rates) and what are their interest”. Many South Africans have higher repayments on loans that are choking their personal cash-flows. Some people may be hoping for a Christmas present, but is Tito Mboweni father Christmas? Many of the fundamental functions of the economy are linked to the interest rate and it is in government’s best interest to control this function of the countries economy. Government does this by providing a mandate for the reserve bank.

The South African reserve bank (Governor Tito Mboweni) has a mandate to keep inflation lower (between 3 and 6 percent). An average man would think that the mandate should be changed to “lower interest rates” or think that the reserve bank is against them. Certainly the bank looks out for the interest of the economy. They do this by a number of functions which can be found on their website. These include determining the interest repurchase rate. This is a tool that controls consumer spending, because the lower the interest rates the more consumers borrow and spend. This spending is money coming into companies and impacting the economy. As inflation has risen the MPC has raised rates since April 2005. WE EAGERLY AWAIT TODAYS VERDICT.