DearSA opposes the nationalisation of C-19 vaccines – allowing freedom of choice

Earlier this month DearSA noted with great concern the national government’s purported prohibition on private and provincial procurement of any COVID-19 vaccines.

DearSA-vaccination

From 15 January 2021 until 28 February 2021, DearSA ran a public participation campaign regarding the national government’s COVID-19 vaccine rollout strategy. Over 17 000 South Africans participated in the process and exercised their constitutional rights within our participative constitutional democracy.

DearSA applied to be a friend of the court in the ongoing litigation regarding COVID-19 vaccine procurement in light of the participants’ comments. On 1 March 2021, DearSA’s legal team filed court papers and brought the submissions of 17 000 participants before the court, enabling their voices to be heard.

“The rollout of COVID-19 vaccines is an important issue for all South Africans insisting on a choice. We ensured that their voices are formally heard in this ground-breaking court case. DearSA will continue to ensure the voices of all South Africans are heard through our public participation platform and campaigns.” said Rob Hutchinson, executive director of DearSA.

In the government’s court papers, the Department of Health’s Director-General acknowledged that the government could not have total control over the purchase, rollout, and administering of vaccines. As a result, the private procurement of COVID-19 vaccines is not prohibited.

South Africans who participated on DearSA’s platform voiced the following major concerns regarding the government’s vaccine rollout plan:

Firstly, the government acted outside of its constitutional mandate and without an empowering provision when it prohibited the private and provincial procurement of COVID-19 vaccines. This conduct by the government was consequently ultra vires.

Secondly, centralising the procurement process creates an administrative burden for the government, slowing the rollout of vaccines and, as a consequence leaving the most vulnerable South Africans behind in vaccine distribution.

Thirdly, that allowing for the parallel procurement of vaccines in cooperation with the private sector would ensure safeguards and freedom of choice, to the benefit of all South Africans.

Lastly, a decentralised approach to vaccine procurement is the most efficient, most rapid, and allows less room for corruption.

DearSA will continue to monitor the government’s rollout plan.

Bitcoin and other crypto to be regulated

DearSA-bitcoin

by Louis Nel

Bitcoin and cryptocurrencies have come a long way. From starting out as funny internet money in 2008 to gradually capturing mainstream media attention. Suddenly even my ageing mother wants to know how to buy bitcoin. This is not without its drawbacks, as governments and regulators who wanted nothing to do with crypto also want in on the hype.

In November 2020 the Financial Sector Conduct Authority (FSCA) issued a draft regulation to classify crypto assets like bitcoin as a financial product.

This means that crypto companies will have to be registered as financial service providers (FSPs) just like traditional financial service providers. This will include a whole host of products and services like exchanges, ATMs, raising business capital, investment funds, wallet apps and crypto custody companies. Where cryptocurrency itself is hard to regulate, companies are easier.

According to the FSCA, the consumer should be able to make informed decisions about companies that they choose to deal with. Recently, Mirror Trading International (MTI) made headlines about its run-ins with the FSCA. The company took bitcoin deposits on behalf of investors and promised returns of up to 10% per month. In the aftermath of MTI, the FSCA wants to make it harder for companies like this to exist in the vacuum between legislation and the rapidly advancing field of fintech.

News headlines often paint crypto as the preferred choice of criminals. in reality, the US dollar and the traditional banking system is still very much used. South Africa is part of the Financial Action Task Force (FATF), the global watchdog against money laundering and terrorist financing. Our local legislation needs to be aligned with these international guidelines.

Regulation also forces companies to do proper due diligence on their customers, keep records of the origins of their funds and log all transactions. Where the borders of countries are blurred with crypto, this legislation will seek to carve out digital borders.

Bitcoin’s reason for existing rests on the failed policies of central banks. Existing outside of the traditional financial system is what gives bitcoin power. It is also the biggest obstacle to mass adoption and protection of consumers against scams. Since bitcoin is backed by nothing, it is a free market that decides its value. It is also decentralised so that no government can shut it down or ban it. In this Wild West of financial freedom, there is also ample scope for scammers to set up shop.

Brandon Topham, an executive at the FSCA says it best. “Regulation must be as minimal as possible to protect the public without hindering the market. Ignoring the issue is worse than over-regulating. We need to find the right balance.”

Government wants to track you from cradle to grave

By Ciaran Ryan

The government’s draft official Identity Management Policy was released on 22 December, just before Christmas.

DearSA-ID-trace

Publishing something just before Christmas is a tried and trusted tactic in the news business if you want to bury a potentially acrid story.

The Department of Home Affairs wants a new randomised ID that allows for sex alterations, links you to your parents, captures your biometric information at birth and then later in life, and all this in the interests of serving you better as a governing body.

Is it just me, or is this a tyrant’s wet dream

Reading the sales pitch for this policy document, you might think “fine, okay, I don’t really see how this will help me, but I’ll go with it.”

The document is freighted with roseate buzz words like “international best practice”, “respect for privacy” and “interoperability”.

Let’s pause right there. What is meant by “interoperability”? Essentially, gathering every bit of information possible on everyone in the country and sharing this “between identity subsystems” and other domestic and international jurisdictions.

SA’s ID system is not currently integrated and interoperable with those of other African countries and the EU, and that’s about to be rectified. Even the most venal of sins committed in SA will be shared with other jurisdictions. It’s already happened in the tax sphere, where jurisdictions share information through what is called Common Reporting Standards. In other words, South African expatriates under new rules to be introduced in March 2021 can be hunted down anywhere in the world for taxes owing.

The sharing of data between “jurisdictions” is about to get a lot more fluid. One of the justifications for this is combatting organised crime. The new draft proposal wants to capture facial and other biometrics, like fingerprints – which should make capturing criminals a doddle, right? How’s that worked out so far?

This begins to take on the vague outlines of China’s Social Credit System, where eating or playing loud music on public transit systems earn you demerit points on your social credit score, as do traffic violations, failure to sort your waste, cheating in exams, jaywalking, and cheating in online video games. Making blood donations and volunteering work hours can earn you back points. The list of potential ways to earn demerit points is too long to list here, but you can take a look yourself. It’s pretty frightening. Snitching on religious minorities is encouraged, and there’s an app to track “deadbeat debtors” – those who owe money.

Viewed through this prism, your conduct in life determines the extent to which you are declared a person or a non-person. Consider that as of June 2019, nearly 27 million Chinese citizens were denied high-speed rail tickets based on their social credit score, and by July 2019 2.56 million were denied flight tickets.

Is this what’s in store for us?

There’s been little discussion around this draft ID system – which is in itself a worry. Any proposed change in the law must be subject to rigorous cross-examination from the viewpoint of socio-economic impacts.

Anyone watching the farce of the US election – and the ability of people with no ID to vote and potentially skew an election – may be wondering what’s wrong with our system of national IDs. Americans have resisted the idea of a national ID for decades on the basis this is an infringement of privacy and Constitutional rights, though they have something approximating this in the form of a Social Security Number. Then, of course, they have state drivers’ licences. There are multiple ways to track US citizens, with or without a national ID.

It seems our elections are far more trustworthy, if only because you have to have a national ID and then register to vote.

South Africans long ago accepted the national ID as a fact of life. ID numbers were introduced under the 1950 Population Registration Act as a way of keeping tabs on different racial groups. What was an apartheid contrivance has served the ANC well, which introduced the Identification Act in 1997. The original aim of racial profiling is still very much alive today, but this new ID system will expand it well beyond that.

What’s wrong with the current system?

So, what’s wrong with the current ID system that it needs a complete overhaul?

And what kind of an overhaul is contemplated by the Department of Home Affairs (DHA), the government entity responsible for ID management?

To find this out, we go to “Problem Analysis” in the draft policy document. The Identification Act is now more than 20 years old, needs modernising, will help deliver e-government and e-commerce services to those in need, and all the other motivations that typically accompanies a proposal such as this.

The Identification Act of 1997 was enacted for the purposes of maintaining a population register and to enable government to issue ID cards. Section 7 of the Act obligates the Director-General to issue ID numbers in a way that details date of birth, gender and whether a citizen of resident.

The current ID system and how it works

Here’s how it works. The existing national ID comprises a 13-digit code as follows: YYMMDDSSSSCAZ.

The first six digits represent the date of birth, and the next four digits (SSSS) are based on gender. The next digit “C” shows if you are a South African citizen – 0 being a citizen, 1 being a permanent resident.

The last digit (Z) is what is called a “checksum” which is a statistical check that the number sequence is correct.

Here’s how it will change under the proposed new system

ID numbers will be based on parents: the ID number of a child must be processed on the basis of biographic information and linked to their parents’ ID numbers and mother’s biometric data.

Recognition of other sex/gender categories – The new legislation and population register must make a provision that enables the establishment of a category that is neither male nor female.

Random unique identity number – Another option is to issue a random unique identity number that is not linked to or founded on a person’s sex/gender, date of birth, place of birth or any other marker.

Records of persons throughout their lifespan – Every birth that takes place in the country must be registered. If possible, the biometrics of children must be captured at birth. Where impossible, the biometrics of a parent must be linked to the birth certificate of a child.

Re-registration – Children must be reregistered when they reach age five with 10 fingerprints and iris and facial photographs. A combination of different biometric data for children should be considered with options such as the photograph of the ear.

The capturing and management of this data will fall under the National Identity System, or NIS, which will link with both government and non-government databases, such as banks and retailers. On the government side, health and education data will round off a near full picture of the citizen.

It’s not hard to see how the Chinese credit scoring system is but a hop, skip and a jump away for South Africans. Also linked to the NIS data are the issue of passports, immigration and refugee data. As some have remarked, it’s almost as if the Chinese government wrote the policy document for us.

The government plans to hoover up every bit of data it can on you and your children yet to be born. What’s also clear from the document is that government plans to monetise (sell) this data. This should concern us on several front: state security agencies have been implicated in extrajudicial surveillance against SA citizens, while law enforcement bodies appear to have an extremely wide interpretation of their powers under the Criminal Procedure Act to gather up cell phone subscriber records (having obtained 70,000 such records, according to Right to Know).

Where does privacy fit into this?

Section 14 of the Constitutes guarantees the right to privacy, which includes the right not to have your person or home searched; your property searched; possessions seized; or privacy of communications infringed.

Though the draft ID document makes multiple mentions of privacy, most of these relate to data privacy – but even that must be regarded with suspicion, as we have seen a number of devastating breaches of data security (and privacy) at the hands of companies like Experian. There may be severe penalties for mishandling of private data under the Protection of Personal Information (POPI) Act, but that’s no guarantee of anything placed in the custody of a new, and massive, government bureaucracy.

All this is being sold to us as a way to afford rights to non-traditional gender groups, and to accelerate transformation and government services to those in need. It ticks all the right boxes. But we had better know what we are signing on to.

Have your say

Have your say on this police document here.

Disaster Management Act – new regulations download

President Cyril Ramaphosa has moved South Africa back to Lockdown Level 3.

“We are at an extremely dangerous point in our fight against the pandemic.”
Ramaphosa said on Monday, Cabinet has decided to put the country on an adjusted Level 3 from Level 1 with immediate effect.

Under the adjusted level 3 regulations:

  • All indoor and outdoor gatherings will be prohibited for 14 days from the date hereof, except for funerals
  • Funerals may not be attended by more than 50 people with social distancing.
  • Every business premises must determine the maximum number of staff and customers permitted at any one time based on our social-distancing guidelines and may not exceed that limit.
  • The nationwide curfew will be extended from 9pm to 6am. Apart from permitted workers and for medical and security emergencies, nobody is allowed outside their place of residence during curfew.
  • Non-essential establishments – including shops, restaurants, bars and all cultural venues – must close at 8pm. The list of these establishments will be released shortly.
  • From now on it is compulsory for every person to wear a mask in a public space. A person who does not wear a cloth mask covering over the nose and mouth in a public place will be committing an offence.
  • A person who does not wear a mask could be arrested and prosecuted. On conviction, they will be liable to a fine or to imprisonment for a period not exceeding six months or to both a fine and imprisonment.

Under the strengthened regulations:

  • The sale of alcohol from retail outlets and the on-site consumption of alcohol will not be permitted.
  • The prohibition on consuming alcohol in public spaces like parks and beaches remains.
  • Distribution and transportation will be prohibited with exceptions that will be explained by the minister.
  • These regulations may be reviewed within the next few weeks if we see a sustained decline in infections and hospital admissions.
  • In effect, the adjusted Level 3 regulations will keep the economy open while strengthening measures to reduce transmission.
  • With a few exceptions, businesses may continue to operate as long as all relevant health protocols and social distancing measures are adhered to.
  • Night clubs and businesses engaged in the sale and transportation of liquor will not be allowed to operate.

The Level 3 restrictions will remain in place until 15 January 2021.

DearSA’s lockdown court action postponed

… to allow Ministers Dlamini-Zuma and Zweli Mkhize an opportunity to file adequate responses.

DearSA-lockdown-court-action

The Minister of Cooperative Governance and Traditional Affairs (COGTA), Nkosazana Dlamini-Zuma, was served papers three weeks ago and has failed to submit a response, although she intends opposing the matter.

Furthermore, the Minister of Health, Zweli Mkhize has belatedly launched an application to intervene in the matter. DearSA will call on the Minister for his reasons to persist with the State of Disaster and ongoing health precautions, despite conflicting evidence and opinions regarding the effectiveness.

No formal responses in court papers have so far been received from either party.

DearSA intends refiling its court action challenging lockdown extensions early in the New Year to allow the government sufficient time to prepare their responses.

“We decided it would avoid a lot of time-wasting technical arguments to refile the case in January 2021, after the court’s break, by which time the two relevant ministries will have had time to formulate their responses,” says DearSA director Rob Hutchinson. “This is a case that must be brought before the courts, as this is something that we know has huge public support, given the responses to the various campaigns where we canvassed public opinions on the lockdowns and the impact they are having on the country.”

“It is likely that had we gone to court on 1 December, denying the ministers an opportunity to respond, the court would have kicked us out with costs – putting an end to any further challenges from anyone. Furthermore, our bank account was frozen for reasons unknown. However, the delay places us in a far stronger position in Jan as there will be substantially more data in our favour.”

DearSA is working closely together with Liberty Fighters Network and PANDA to ensure a successful approach in Jan.

On Monday 16 November, DearSA served papers on the Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma. DearSA asked the Pretoria High Court to declare unlawful and set aside the lockdown extension declared by the Minister on 14 November 2020. Several groups plan to join DearSA as friends of the court, including Pandemic Data and Analytics (PANDA) and Liberty Fighters Network (LFN). Other groups have also indicated their desire to join the court action.

Given the delay in having the court action heard, there is a likelihood that the government will extend the lockdown yet again over the Christmas period.

The tool being used by the government to impose these lockdowns is the Disaster Management Act, which is intended for disasters of a temporary nature, and should not be used as a blunt instrument with which to severely restrict the Constitutional rights of South Africans, such as the right to earn a living, move around, and assemble.

Hutchinson says DearSA is obligated to bring this court challenge to determine the limits of government power and prevent further infringements of human rights.

The overwhelming majority of respondents to various DearSA participation campaigns believe the government has overstepped its powers and that the lockdowns represent an abuse of power.

The rationale behind the DearSA court action is that the original purpose for imposing lockdowns – to prevent the health system being overwhelmed by a virus about which we knew little at the start of the lockdowns – has been achieved. Evidence of this is the fact that the government has closed down temporary health facilities that were hastily assembled for this purpose. The health system has not been overwhelmed, notwithstanding a rise in infections in the Eastern Cape and Western Cape.

DearSA’s court papers argue that lockdown measures have had a devastating impact on the SA economy. In the first three months of lockdown, GDP contracted by more than 16%, giving an annualised decline of -51%. In the second quarter of 2020 alone, SA shed 2.2 million jobs, according to Statistics SA.

The court action challenges the rationality of government’s catastrophic actions on the economic welfare of the country, in the name of saving South Africans from a virus which the World Health Organisation (WHO) calculates has had a global infection fatality rate of less than 0.2%.

“We have decided to give Minister Dlamini-Zuma and Health Minister Mkhize time to formulate their responses to our court papers. This is a case that we believe is vital to the future wellbeing of the country as it will determine the limits of state power no and in the future when it comes to disasters of this nature,” says Hutchinson. “Our case is not going away. It must, and will, be heard early in the New Year.”

DearSA campaign helps avert a potentially disruptive change in voting methods

Thanks largely to a robust campaign by participative democracy group DearSA, the government has decided to ditch two clauses in the Electoral Laws Amendment Bill – which would have allowed a change in voting methods.

DearSA-electronic-vote

These clauses would have allowed a switch from the current paper ballots to electronic voting – potentially sparking the kind of controversy and allegations of fraud now surrounding the recent US Presidential election.

Cybersecurity experts and lawyers have warned of the potential for hacking such electronic systems, and many have cautioned against adopting systems prone to abuse by malign actors.

On Wednesday, 2 December 2020, the Portfolio Committee on Home Affairs approved the Electoral Laws Amendment Bill and said will recommend to the National Assembly to adopt it – but without the disputed clauses 14 and 21 which would have empowered the Electoral Commission of South Africa (IEC) to prescribe a different voting method.

“The committee agreed that voting method is a policy matter that cannot be left to the IEC alone to decide, even though the IEC had mentioned that the intention was to only allow for testing of such alternatives,” says a press release issued by Parliament this week.

Parliament acknowledges the role played by DearSA in having these clauses removed from the Bill. It notes the concerns raised by members of the public in the 12,305 submissions received.

The Electoral Laws Amendment Bill seeks to amend three pieces of legislation:
· the Electoral Commission Act, 1996;
· the Electoral Act, 1998; and,
· the Local Government: Municipal Electoral Act, 2000.

These amendments were deemed necessary to prepare for the forthcoming general local government elections in 2021.

DearSA director Rob Hutchinson says removal of the concerning clauses is as a direct result of the work done by DearSA and the IRR – who brought attention to potentially disruptive changes that could lead to future disputes in election outcomes.

“The last thing we want in SA is to have election results disputed, such as we are currently seeing in the US. There are grave concerns over electronic voting methods”.

While all voting methods have potential for fraud and error, the view comments on the DearSA platform around this campaign, is the existing paper ballot method is the most reliable method we have, since it leaves a paper trail and auditing the results is therefore easier.

“This is a great victory for participative democracy in SA, and we want to thank the thousands of people who took the time to understand and comment on the proposed changes to the law.”

Crypto assets to be declared financial products

more crypto assets DearSA

The Financial Sector Conduct Authority (FSCA) last week issued a ”draft declaration” that will bring crypto assets such as bitcoin under its regulatory watch. The public has until 28 January 2021 to comment.

The burgeoning crypto market has been largely unregulated until now, though purchasing crypto assets does fall under several other laws, notably exchange control, Pension Funds Act (limiting the amount of “alternative assets” that may be held in a pension fund) and the Collective Investment Schemes Act.

What was missing from this arsenal of regulation is what to do about crypto assets, which have the potential to evade regulatory authorities worldwide. As economist Dawie Roodt points out in a Moneyweb Crypto podcast, “private monies” such as bitcoin are easy to hide from authorities and this means they can also be hidden from tax agencies. That potentially poses an existential threat to governments and nation states everywhere.

Regulations such as those proposed by the FSCA rely on public honesty. Crypto exchanges such as Luno and VALR are largely supportive of regulation where these provide better protection for consumers and help week out the many scams proliferating around bitcoin.

Authorities and crypto industry players have been debating for years how to define and regulate this market.

With bitcoin now sailing back towards its 2017 peak of about $20,000, it’s become clear that some form of regulation was on its way.

The draft declaration by the FSCA means crypto assets such as bitcoin and Ethereum will henceforth be classified as financial products under the Financial Advisory and Intermediary Services (Fais) Act.

Crypto operators must now give unbiased advice

This means that anyone giving advice or acting as an intermediary – such as a crypto exchange – would have to register as a financial services provider and comply with the requirements of the Fais Act.

One of the key aims of the FSCA declaration is to emphasise the high risks of investing in crypto assets, and intermediaries involved in this market -0 such as crypto exchanges – will have to do proper risk assessments and give unbiased information when advising clients.

Virtually all exchanges, anticipating that such rules were on the way, long ago implemented Know Your Customer (KYC) and Anti-Money Laundering (AML) rules (as required by the Financial Intelligence Centre Act, or FICA). This means you have to prove where your funds originated before investing in crypto assets.

What the FSCA draft declaration also means is that crypto exchanges and other crypto intermediaries will henceforth be licensed as financial services providers. The licensing and reporting requirements will allow authorities to build a richer database of information around this emerging asset class.

Crypto scam detection

Crypto intermediaries have been broadly supportive of regulation since it brings credibility to this emerging asset class and will help snuff out scams (of which there re many). A general rule of thumb for scam detection is don’t answer a too-good-to-be-true invitation that comes to you via WhatsApp.

The Intergovernmental Fintech Working Group, involving government, regulators and industry players, published a position paper in May 2020 to develop a regulatory framework for crypto assets, focusing on areas such as:

  • The implementation of an anti-money laundering and counter-terrorism financing regime,
  • A licensing and supervisory regime from a conduct of business perspective, and
  • A regulatory regime for the monitoring of cross-border financial flows.

But…there are a few problem areas

The FAIS Act imposes strict rules on how intermediaries market to clients, and the manner in which advice is given. Also covered under this Act is how client data is stored.

Responsible exchanges have invested large amounts of money in securing the crypto assets of clients using “cold storage” (disconnected from the internet) and multi-person authorisations (to prevent any one or two people in an exchange legging it with your crypto – which is, after all, nothing more than information in bits and bytes). These are the type of security questions you would need to ask an exchange before investing with them.

Farzam Ehsani, co-founder of crypto exchange VALR, notes that the FSCA declaration is not one of the 30 recommendations in the Position Paper on Crypto Assets that was published by the regulators in April 2020.

“Furthermore, all of the products in the FAIS Act have a central issuer and crypto assets such as bitcoin do not. Gold, for instance, is not classified as a financial product under the FAIS Act. We look forward to engaging fully with the FSCA during the comment period to ensure a fair, relevant and appropriate regulatory position for the benefit of all South Africans.”

Rocelo Lopes of crypto company Stratum says there are some benefits to the FSCA proposed regulation in that it would allow customers to weed out bad actors in the crypto space by establishing a hierarchy of credibility around responsible players, but the FSCA needs to take great care how it stores and secures the information it proposes gathering so as not to expose clients’ crypto portfolios to hacking or other intrusions.

“The FSCA would need to realise the enormous responsibility that comes with this appointed task and know that the crypto industry leaders will be keeping a close watch as it all unfolds,” says Lopes.

It is clear from the FSCA statement that this is the first of several regulatory steps affecting crypto assets that we can expect going forward.

What’s your view?  Is regulating crypto assets a good thing?

Dear South Africa asks high court to set aside latest lockdown

Intro: The lockdown restrictions are illogical and are done without Parliamentary oversight

Participative democracy group Dear South Africa has filed an urgent application in the Pretoria High Court to set aside the lockdown extension imposed on 13 November 2020.

The court application says the lockdown extensions are illogical and are being done without Parliamentary oversight, as required by the Constitution.

NDZ-state of disaster - DearSA

The only respondent in the case is the Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma. She has until 18 November 2020 to oppose the matter.

Dear South Africa is also asking the court to declare the latest lockdown extension under the Disaster Management Act unlawful.

“South Africa is no longer faced with the uncertainties that it was confronted with when the initial state of disaster was enacted,” says Daniel Eloff of Hurter Spies, the attorneys representing Dear South Africa. “Consequently, government cannot continue to piggyback on a state of disaster for which the underlying and motivating reason has largely dispersed eight months since the initial declaration of the national state of disaster.”

In an affidavit before the court, Dear South Africa director Rob Hutchinson argues that Constitutional rights have been curtailed by the disaster regulations, including the rights to freedom of movement, residence, assembly, economic activity and education.

Businesses were shut down at the start of the Covid lockdown, schools were closed, and citizens’ rights to move and practice their professions and trades were severely curtailed.

“While many of these restrictions on fundamental rights have been lifted, the (minister) has imposed these restrictions without parliamentary oversight and may reimpose them. The (minister) is empowered to extend the state of disaster monthly ad infinitum without such oversight,” says the court application.

Regulations under the act may only be made to: protect or provide relief to the public; protect property; prevent or combat disruption; deal with the destructive and other effects of the disaster.

The original purpose of the lockdowns which commenced in March 2020 was to “flatten the curve” and slow the spread of the Covid-19 virus. Little was known about the virus at the time. Now we know much more.

Lockdowns will not save the lives of those who contract COVID-19 and do not require hospitalisation, according to Dear South Africa. Expert analysis by medical experts and epidemiologists conclude that the case fatality rate from the virus is 0% for those under 19, and for adults under 50 it is 0.5%.

The case fatality rate for SA is 2.7%. The World Health Organisation (WHO) noted on 22 October 2020 that 10% of the world’s population were reckoned to have been infected with the virus. Of these, 1.3 million people have died as of 14 November 2020, an infection fatality rate of 0.17%.

The lockdown measures have had a devastating impact on the SA economy. During April, May and June, when the most severe lockdown restrictions were in place, gross domestic product contracted by more than 16% giving an annualised decline of -51%. By comparison, in 2009, during the global financial crisis, the annualised decline was -6.1%. In the second quarter of 2020 alone, SA shed 2.2 million jobs, according to StatSA.

The South African Centre for Epidemiological Modelling and Analysis (SACEMA) provided models to the National Institute for Communicable Diseases (NICD), though it was not aware that these models were being used to inform policy. SACEMA abandoned its model soon after it was published and advised that it was not a tool for decision-making. That model’s replacement, the NICD’s “Epi Model” has not been updated since June 2020 and also appears to have been abandoned. When last updated, it forecast 40 000 deaths by the end of November 2020 – which has also proven to be wildly inaccurate. The actual number of fatalities currently sits at just above 20 000.

South Africans appear to have a high level of compliance with recommended rules regarding sanitation, wearing of masks and social distancing.

Dear South Africa says the recent extension of the lockdown is an “administrative act” which is reviewable by a court in terms of the Promotion of Administrative Justice Act (PAJA). Reasons given for seeking to set aside and declare the extension unlawful include:

  • They were not rationally connected to the purpose for which they were taken
  • Irrelevant considerations were taken into account, or relevant considerations ignored
  • The extension is unconstitutional and unlawful.

While it may have been rational to have declared a state of disaster in March, much has changed since then. It is no longer rational to have the declaration in place and it should not have been extended.

The state of disaster grants the executive the power to pass draconian legislation which weakens the rights of all those who live in South Africa. The state of disaster can be extended ad infinitum by the minister without a requirement of parliamentary oversight. This has occurred, and continues to occur, which undermines our constitutional democracy, premised on a genuine separation of powers, says the court application.

If a second wave of infections occurs, the state has had ample time to prepare for this and a new state of disaster could be declared based on new circumstances that may arise. “It is improper to keep the current state of disaster perpetually in force on the basis that some new disaster may occur on some unknown date,” says the application.

Letter to Minister Dlamini-Zuma (current challenge)

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SABC wants to bring in the heavies to collect license fees

SABC-licence-DearSA

As compliance levels, already at just 30%, are tanking.

By Ciaran Ryan

The SA Broadcasting Corporation (SABC) is in a financial pickle. Revenue has been in steady decline since 2016, and the broadcaster has made profits in just four of the last 12 years.

We recently learned from an SABC presentation to Parliament that license fee collections have been in decline during the Covid lockdown. Collection rates are already low at about 30% – or just short of R1 billion out of the R3.3 billion billed to TV viewers annually.

The SABC’s apparent solution to this is to bring in the heavies – the debt collectors (including getting Multichoice and Netflix to collect on its behalf). That will require a change to the Broadcasting Act and, of course, with that will come heavier penalties for non-payment.

Its revenue comes from advertising for the most part, sponsorships, license fees and government grants.

Ten years ago, license fees accounted for more than 18% of total revenue. Today it is about 15%, having been as low as 12% in 2016 during the dark days of Hlaudi Motsoeneng’s bizarre rampage through the corporation (he lied about his qualifications, awarded himself a fat salary increase and insisted on covering cuddly stories about ANC ministers attending luncheons).

The SABC finally sacked Motsoeneng as chief operating officer in 2017, but the damage was done. The graph below paints a picture of a state-owned broadcaster in the throes of state capture.

SABC-graph1 DearSA

During the Covid lockdown, levels of compliance in license fee payments has deteriorated below the already weak 31% reported in 2019. The Department of Communications and Digital Technologies, under which the SABC falls, wants to overhaul the Broadcasting Act to beef up the broadcaster’s powers to collect TV licenses and impose tougher penalties for non-payment.

Among the ways it plans to do this is by handing over accounts that are 60 days overdue to debt collection agencies to collect the R265 annual license fee. This has drawn robust comment from South Africans fatigued by stories of yet another distressed state-owned company in search of rescue. This time, however, the state broadcaster sees a way to use the law to enforce not so much its monopoly – which has long since been eaten away by competitors – but its right to claim a fee whether you watch SABC or not.

During the presentation to Parliament’s Portfolio Committee in October 2020, the SABC proposed using service provides such as Multichoice and content providers like Netflix to collect on its behalf. This will require a change in regulations to broaden the definition of a TV license to embrace newer platforms where people consume SABC content. It remains to be seen whether Multichoice and Netflix customers will comply with what may be seen as a cunning shake-down by the SABC.

SABC-graph2 DearSA

The SABC provides 18 radio stations, five television channels as well as a digital media offering. Channel Africa is an additional radio station managed by the SABC on behalf of the government. Two other channels are delivered through DStv.

The three terrestrial television channels (SABC 1, 2 and 3) attract, on average, 28 million South Africans in a typical month. Seventeen of the nation’s top 20 television programmes are broadcast by the SABC’s television channels

It’s not hard to see why license fee delinquency is on the up. The annual fee is R265 but the fine for non-compliance may not exceed R500. Many people choose to take that rather low financial risk. Others prefer to get their content outside of the SABC and, certainly until recently, believe that they were paying for political propaganda.

SABC-graph3 DearSA

Should the government decide in the middle of a Covid crisis, when income levels have collapsed, to take a battering ram to TV viewers in the hope of improving collection rates, there may well be a Constitutional Court challenge on the matter. After all, many South Africans long ago tuned out of SABC in favour of content more to their liking elsewhere.

What do you think? Should we support tougher enforcement of TV license fee collections? Or should the SABC ditch the license fees altogether and start finding more creative and less expensive ways to make up the revenue shortfall (such as through better, more targeted content)?

EFF wants to expropriate Reserve Bank private shareholders

DearSA-reserve bank amendment bill

The EFF has introduced the South African Reserve Bank Amendment Bill which seeks effectively to nationalise the SA Reserve Bank (SARB) by removing private ownership of shares in SARB and vesting these with the state.

The EFF bill has the explicit aim of expropriating the shares of 802 private shareholders, who include finance minister Tito Mboweni (10,000 shares), DA shadow finance minister Hill Lewis, the Anton Rupert Trust, Discovery, Absa, Nedcor, FirstRand Bank and Nedcor.

These shares would be expropriated without compensation and vested in the state on behalf of 57 million South Africans. “For true sovereignty and autonomy, the SA Reserve Bank must be transferred to the state,” says the EFF in a Parliamentary presentation. “The next debate will be on its mandate.”

While it would cost billions of rands to nationalise the Reserve Bank, the EFF sees a more expedient solution as the expropriation of private shareholders. The share capital of the Reserve Bank is set at R20 million, and the dividend per share at R1,000. Hence, the party says the financial loss to shareholders is limited.

Parliament’s Standing Committee on Finance and Select Committee was given a briefing on the proposed bill on 25 August 2020, when the DA questioned its constitutionality, particularly Section 25 which prohibits arbitrary deprivation of property. At the presentation to Parliament, the EFF’s Floyd Shivambu said the majority of the Reserve Bank’s existing shareholders were white and non-South African citizens, and that the aim of the proposed amendments was to protect the Bank from the abuse suffered by many state-owned companies.

Parliament’s legal services unit has also raised concerns over the constitutionality of the proposed amendments. The law as it stands – underpinned by Constitutional Court findings – require expropriation to be accompanied by compensation. Adv Noluthando Mpikashe, the Parliamentary Legal Advisor, told the Standing Committee that the law is vague as to what is considered just and equitable compensation, and that the EFF bill may not pass constitutional muster.

The EFF bill seeks to give the minister of finance powers to regulate the appointment of directors to the SARB, and to further regulate the tenure of these directors and how they are to be appointed.

The bill further proposes allowing the minister of finance to appoint the SARB auditors.

The EFF bill proposes amending several sections of the South African Reserve Bank Act of 1989:

Section 4 of the SARB Act, particularly that section which allows shareholders to elect directors. The EFF wants the minister of finance to perform this function.

Section 4A, which requires the SARB to submit annual financial statements to shareholders (as well as the minister of finance and Parliament). The EFF wants this section amended to exclude private shareholders.

Sections 5, 6 and 9, which deal with the appointment of directors, their tenure and conditions of appointment. The EFF wants the state to step into the shoes of the private shareholders when it comes to directorial issues. Section 9 deals with the validity of board decisions. The current SARB Act deems board decisions invalid only when there are insufficient board members or when a disqualified person sits on the board. The current Act requires shareholders to elect seven directors from candidates confirmed by a panel, though the Act also allows any member of the public to nominate directors for selection. It is uncertain whether the EFF wants this function to be performed by the state, or whether SA citizens should be allowed to continue nominating their preferred directors.

The EFF wants Section 10, which deals with the powers of the SARB, to be amended to remove its power to “form shares” for issue to private owners, as these will henceforth be owned by the state.

Section 13 of the SARB outlines certain prohibited businesses, such as the purchase of its own shares, or the purchase of shares in a bank (without the minister of finance’s approval). The bill seeks to remove these prohibitions, which would allow the Reserve Bank to purchase it own shares, buy shares in a bank, would remove limitations on the SARB’s ability to purchase government bonds from Treasury.

Section 21 of the Act sets the share capital of the Reserve Bank at two million ordinary shares of R1 each. The Bank is allowed to increase its capital with board approval. The EFF proposal would make the state the owner of these shares.

Section 30 authorises the appointment of two firms of public accountants by shareholders to act as auditors of the Bank. The bill proposes vesting this authority with the state.

At a recent presentation, the EFF outlined the motivation behind the proposed amendments: “The South African Reserve Bank as one of the apex of the financial system in the country should be democratically owned by the people as a whole as a necessary and important building block towards complete overhaul of the currently white-owned financial sectors.

“A state owned SARB must pursue decisive transformation of the financial sector in a manner that will change its current dominance of descendants of colonial settlers.”

What’s your opinion on the EFF’s South African Reserve Bank Amendment Bill? Is it time to place ownership of the bank in state hands? Or would this open the door to the possibility of state meddling in the economic life of the country?