Blog - Page 2 of 30 - Dear South Africa

15th November 202015th November 2020

SABC wants to bring in the heavies to collect license fees

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.

click to have your say on the SABC proposal

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.

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.

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.

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)?

click to have your say on the SABC proposal

12th November 2020

EFF wants to expropriate Reserve Bank private shareholders

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.

click here to have your say on the draft bill

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?

click here to have your say on the draft bill

29th October 20201st November 2020

The Medium-Term Budget and the outrage over another SAA bail-out

You can feel the public anger

By Ciaran Ryan

Reaction to Finance Minister Tito Mboweni’s Medium-Term Budget was fast and furious.

The most obvious source of public anger centred around another bail-out for SAA: this time R10.5 billion, on top of the more than R16 billion received earlier this year. And this at a time of lockdowns, business closures and real suffering.

“SAA should not receive R10.5 billion. Give enough for the retrenchment packages and let it close down!” wrote one Dear South Africa commentator, responding to the budget.

“The continued funding of maladministered state-owned enterprises (SOEs) is both perplexing and maddening. Why? These organisations should all be sold-off, privatised or shut down,” noted another.

The IMF, in characteristically polite language, has already warned SA against continuing to subsidise loss-making SOEs like SAA and rather use that money to promote growth or reduce poverty.

One of the more disturbing aspects of the budget is the miserable outlook for growth: 3.3% next year, and between 1.5% and 1.7% for the following two years.

“Is that the extent of our ambitions?” asked Martyn Davies, head of emerging markets at Deloitte Southern Africa: “That’s below our population growth. I cannot understand the lack of ambition. We seem to be stuck in this funk of low growth, we need to be growing 3-4% on a continuous basis.”

If we can look forward to many more years of 1.5% growth, there is virtually no hope of growing the tax base, and the tax base that does exist will be squeezed even harder than it is. Bear in mind that only 13% of SA’s population of 57 million pay any income tax at all (though they do pay VAT).

This is often portrayed as a sign of inequality, the cure for which is even more taxation. Even more shocking is that 1% of the population pay more than 60% of the total income tax.

South Africa has now hit the Laffer Curve peak – a principle that proves you can only increase taxes so long before tax receipts start declining. Any attempt to eek further revenue out of an already bludgeoned population will prove this.

More wealthy South Africans – prompted by talk of introducing a wealth tax – will seriously consider emigration. The South African Wealth Report for 2020 shows a decline of 27% over the last decade. That trend will likely accelerate.

Many people were left scratching their heads once Mboweni presented his budget. “There seems to be no concrete plan to get out of the fiscal mess we are in,” says Mike van der Westhuizen, a portfolio manager with Citadel. And those plans that have been announced – such as reduced spending on wages and increased infrastructure investment – rely on cooperation from trade unions (unlikely) and government’s ability to implement and manage massive spending projects which it has promised for years, but failed to deliver.

Perhaps the most alarming aspect of the budget was the debt: expected to reach 95% of GDP by 2025/6. And even that horrifying prospect rests on some optimistic assumptions:

“Government’s economic recovery plan centres around two key pillars: increasing spending on infrastructure development, and reducing expenditure by cutting back on the public sector wage bill,” says van der Westhuizen. “On the first point, it is positive to see that government wishes to unblock investments into infrastructure, driving productive spending. Possible changes to Regulation 28 (which currently prevents infrastructure spending on behalf of retirement funds) and efforts to ensure good governance could therefore see significant funds flow into bankable infrastructure projects.”

However, this plan carries significant implementation risk, as it does seem to rely heavily on the pockets of the private sector – which will require a dramatic about-turn in sentiment in a very short space of time.

Reducing expenditure through wage cuts relies on the assumption that government will prevail in its ongoing struggle against labour unions. Again, it was positive to see that Mboweni made a firm commitment to the reduction of senior management salaries across the entire public sector.

The SA economy is likely to contract 7.8^% in 2020 before rebounding from a low base to achieve 3.3% growth the following year. The spending deficit this year will likely reach 16%. Other emerging and developing economies are expected to contract 3.3% this year before rebounding to grow 6% in 2021. “In other words, the local economy is expected to drop twice as much as our peers, and bounce back by only half the amount,” says van der Westhuizen.

SA’s needs to achieve at least 3% economic growth to escape its current debt spiral. That does not seem anywhere on the horizon. Government is shifting funds away from productive spending in education and healthcare to prop up financially insolvent SOEs.

Mboweni’s budget lacked any sense of urgency, nor any realistic plan on plugging the yawning deficit. He said he would not rely on higher taxes come the February 2021 budget, but that, too, seems unrealistic. The most contentious of these tax increases would be the rumoured “Solidarity Tax”, which would simply place a positive spin on a wealth tax in an attempt to foster goodwill.

Mboweni is one of the better and more competent ministers, but he has a horrible job. This time he seems to have made a royal mess of things. If we are to forgive him anything, it’s that the mess he inherited was more than a decade in the bake. The ANC he is a part of is by no means a reform party. And that is reflected in this budget.

21st October 20208th November 2020

Dlamini-Zuma asked to provide reasons for extending lockdown – or see you in court.

DearSA attorneys Hurter Spies this week sent a letter [view below] to Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma asking her to provide reasons why she extended the lockdown earlier this month and to give an undertaking no further extensions will be given.

click to support the legal challenge

She has also been asked to support her reasons with documents and expert evidence.

The minister has been given until 30 October 2020 to reply, failing which DearSA says it will approach the High Court for relief.

DearSA has run several public participation campaigns showing an overwhelming majority are against any further lockdowns.
The letter to the minister says DearSA believes that the extension published on 14 October 2020 “is irrational, unlawful, unreasonable, and therefore reviewable.”

Says DearSA project leader Rob Hutchinson: “After seven months of lockdown we now have a better understanding of the risks of Covid, and the best evidence tells us that further lockdowns will not materially impact the spread of the virus, but will do far more damage to the livelihoods of South Africans who have suffered a loss of income or jobs. Given the massive response to our public campaigns around various aspects of the lockdown, we are obligated to act in the public interest.”

The letter to the minister spells out why her decision to extend the lockdown is irrational:

The Covid-19 infection rate peaked several months ago, and the additional facilities provided by the health system to cope with the expected surge in traffic have been closed because the “wave has passed”. It is irrational to suggest that the healthcare system is still being prepared for a peak.
SA has conducted about 4.5 million tests is among the world leaders in tracking and tracing the spread of the disease.
Education on sanitisation and social distancing has been successful, with high levels of compliance. The lowering of the lockdown stringency levels has not resulted in any material increase in mortality or infections.
SA had about 50 000 active cases of Covid-19 over the course of the past week, well below the July peak of 173 590 active cases. At its peak, the death rate was about 300 per day. In the five days running up to the extension of the disaster, only 10 deaths per day were recorded. Influenza kills approximately 23 South Africans per day. TB kills more than 300 South Africans per day, AIDS another 300 South Africans per day.
The number of recorded Covid-19 deaths has been far lower than expected and currently totals just over 18 000 deaths.
The modelling relied upon by government have been shown to be wildly inaccurate and have been abandoned. It projected 40 000 deaths by the end of November this year, while the Actuarial Society of South Africa’s model has been trimmed to an estimate of 27 000 deaths from the virus. “PANDA – Pandemics and Data and Analytics, whose model is updated regularly, estimates 20,000 deaths by the end of the year and plots real-world data against the prediction which suggests this number to be accurate,” says the letter to the minister.
The World Health Organisation (WHO) recently published a paper by world-famous epidemiologist John Ioannidis which estimates the Infection Fatality Rate of the virus is less than 0.2%.

“As is evident from the above synopsis, South Africa is no longer faced with the uncertainties that it was confronted with when the initial state of disaster was enacted and declared. Consequently, the circumstances that prompted the declaration have disappeared and therefore the underlying motivation for the national state of disaster has as well,” says the letter.

In terms of Section 37 of the Constitution, a state of emergency may only be maintained for 90 days before its extension must be approved by Parliament. No such parliamentary approval has been obtained for the latest extension.

The letter asks the minister to provide written reasons for the lockdown extension, backed by supporting documents and expert evidence. It also requests that the minister immediately terminate the national state of disaster and provide an undertaking that there will be no further extensions of the disaster.

The minister has until 30 October 2020 to reply, failing which DearSA will be forced to approach the High Court for relief.

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19th October 2020

New expropriation bill narrows the focus for no compensation

But continues a long-standing disrespect for property rights in South Africa

By Ciaran Ryan

The expropriation without compensation (EWC) debate refuses to die. In 2018, when EWC first entered public debate, the idea was to amend Section 25 of the Constitution which protects South Africans against arbitrary deprivation of property.

Section 25 has been an impediment to those pushing for Expropriation without compensation, but to amend it would require a 75% – or two-thirds – majority in Parliament, depending on which legal advisor you talk to.

The new Expropriation Bill introduced early in October 2020 will replace the 1975 Expropriation Act, and should have an easier passage through Parliament, requiring a majority of just 50% plus one.

However, it still has to go through the public comment stage, which so far has been stridently against any tampering with property rights. So this is your chance to make your voice heard.

Expropriation has been a feature of SA’s legal landscape since the apartheid years, but compensation was always part of the equation (and since 1994, protected by the Constitution).

The new Expropriation Bill will allow Expropriation without compensation when it is in the public interest or for “public purpose”.

The introduction of this new bill does not mean amendment of Section 25 of the Constitution has been buried despite there being very little public support for it (and what support there is, is getting smaller, as the Dear South Africa campaigns demonstrate).

If you’re looking for reasons behind rising capital flight and emigration, Martin van Staden, legal researcher at the Free Market Foundation, reckons he has found the answer: “Even discussing EWC has triggered capital flight,” he says. “This shows up in the Fraser Economic Freedom of the World 2020 report, where there is declining trust in SA’s property rights.”

Going down the EWC road puts us in company with the likes of Zimbabwe and Venezuela, says van Staden, with all that implies: rising emigration, currency debasement and economic collapse. The emigrants are those with the skills and the money.

Those in favour of EWC point to the disproportionate amount of land still in white hands and the lack of restitution for apartheid- and colonial-era land grabs. Despite many surveys attempting to quantify this disparity, there remains doubt as to the actual state of land ownership. Nor do we have much idea of what land is owned by the state, much of which could be made available for distribution to the poor.

EWC has become a racial profiling exercise influenced by political agendas, and that has made it potentially poisonous. Owning 10,000 hectares in the Karoo, compared to five hectares in Stellenbosch, means very little unless we start to look at the economic usefulness of the land.

Van Staden believes the government may be getting ahead of itself in trying to pass the new Expropriation Bill without first amending Section 25 of the Constitution. Any attempt to expropriate property without compensation is sure to end up in the Constitutional Court.

Should the bill get passed into law, the government may simply not enforce it, a way of sterilising its own legislative decisions. But should it enforce it, our descent to a failed state will be virtually assured. Either way, foreign investors – who suspect a government capable of taking land without paying for it might also do the same to other assets – will avoid South Africa, even more so than is currently the case.

The new Expropriation Bill proposes leaving it to the courts to decide on the level of compensation in the case of Expropriation, but defines the following circumstances where nil compensation will be paid:

Where land is unused, and the owner has no intention of developing or using it to generate income, but to hold it for capital appreciation;
State-owned land acquired for “no consideration” that is not being used for its core functions, nor likely to be used for these functions in future;
Where the owner has abandoned the land and exercises no control over it, despite possession of a title deed;
Where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land;
When the nature or condition of the property poses a health, safety or physical risk to persons or other property;
Should a court or arbitrator determine that an amount of compensation in terms of section 23 of the Land Reform (Labour Tenants) Act, “it may be just and equitable for nil compensation to be paid, having regard to all relevant circumstances.”

Public Works and Infrastructure Minister Patricia de Lille explained the new bill had passed Constitutional muster with the Chief State Law Advisor, while the previous Expropriation Act was inconsistent with the Constitution.

Van Staden says one of his chief concerns with the new bill is that it treats government and citizens differently, and that could further eviscerate the rule of law in SA. It follows a long-standing pattern of disrespect for property rights dating back to apartheid and pre-apartheid years.

Make sure to have your say on the new Expropriation Bill.

16th September 2020

New ‘Internet censorship bill’ open for comment until mid October 2020

Stella Ndabeni-Abrahams, Minister of Communications and Digital Technologies, recently extended the period for comment on the Draft Film and Publications Amendment Regulations, which align with the Films and Publications Amendment Act (FPAA).

Anti-censorship groups have dubbed this the “internet censorship bill” for seeking to regulate what it deems “harmful content” and to corral online content providers under its wing. Many commentators have pointed out the regulations contravene Constitutional rights to freedom of expression.

A campaign by Dear SA attracted nearly 14,000 comments, the overwhelming majority expressing their opinion against the Bill as it stands.

“I did not sign up for fascist, communist tyranny,” says one commentator.

“Gross overreach,” says another.

Yet another: “Freedom of speech should be a basic right and any law that has as its aim the removal of this right should be viewed with great reservation and suspicion, it is one step away from a police state.”

President Cyril Ramaphosa signed the Bill into law on 4 October 2019, though it has yet to come into effect. Defenders of the bill argue that though the clumsily worded document extends itself to everybody distributing content online, in practical terms little will change for most people, if only because regulators are simply unable to deal with the volume of content produced daily. Others. However, have pointed out that this is always a dangerous assumption – that government will not attempt to extend its reach to the literal limit of the law.

click here to have your say on this bill

It is therefore almost certain this Bill will be challenged in the Constitutional Court should it proceed in its present form.

In practical terms, all online distributors of content – whether they intend to make money from it or not – will have to register with the Film and Publications Board (FPB) and submit content for review prior to publication, or apply to the FPB Council for self-classification accreditation. Another alternative is to seek approval for the use of classification ratings issued by a foreign international classifications authority.

Previously, the Film Publications Act limited itself to the regulation of films and games, and only where these were made available for hire or sale. Now its reach extends to all online content.

Once the FPB issues a registration certificate, it can then impose any conditions it deems necessary to achieve its objectives, which are:

“To regulate the creation, production, possession and distribution of certain publications and certain films by means of classification, the imposition of age restrictions and the giving of consumer advice, due regard being had in particular to the protection of children against sexual exploitation or degradation in publications, films and on the Internet; and to

“Make the exploitative use of children in pornographic publications, films or on the Internet, punishable.”

While few people would disagree with the need to have strict laws against the sexual exploitation of children, the reach of the new Regulations goes well beyond this. The state, in the form of the FPB, will now have a say over every piece of online content distributed via the internet.

It seems inconceivable that the drafters of the Bill gave much consideration to the Constitutional protections to freedom of expression, nor to the practical effects of issuing registration certificates to tens of thousands of content producers and each item of content published. Every bit of ‘film” – which means a “sequence of visual images” – is covered by the bill, and will require an age classification from the FPB.

Interestingly, those who are members of the Press Council of SA get a free pass. Those who are not and intend to publish online content “shall submit the publication to the FPB together with the relevant form provided by the FPB, and the prescribed fee, for examination and classification, before it may be distributed or exhibited within the Republic (of SA).”

In other words, the state will now decide who is fit to distribute content (in effect designating who is a journalist) and will require everyone to submit to the registration and classification process.

You will have to apply to the FPB for classification of a film or trailer, and once that film or trailer is reviewed, each member of the classification committee will be expected to express their “opinion” with reference to the Classification Guidelines of the FPB.

A majority decision by the classification members will carry the day.

Similarly, if you are a broadcaster falling under ICASA (Independent Communications Authority of South Africa)

The amended Films and Publications Act makes it a criminal offence to distribute a film as defined above without first registering with the FPB and getting your “sequence of visual images” classified with an age restriction.

Many commentators have expressed alarm at the draconian nature of this regulation and its echoes of the darkest days of apartheid censorship. Though the Bill does not on its face appear to infringe political discourse, it is broad enough to conceivably be used in such a manner under a less benign regime. In other respects, this Bill goes beyond the wildest dreams of apartheid’s information police because of its attempt to extend the arm of the law to virtually anyone expressing an opinion or providing entertainment online.

If you are convicted under this Bill, you face a fine of up to R150,000 and imprisonment for up to eight months.

You have until the end of October to comment on this bill, and you probably should.

10th September 2020

Eskom fails to meet conditions for funding set by National Treasury

In 2019, National Treasury voted an amount of R59 billion in terms of a Special Appropriations Bill to assist Eskom pay interest and capital on its R488 billion debt.

This allocation was based on Eskom meeting certain conditions based on operational, financial, governance and restructuring compliances.

A recent presentation by National Treasury shows while Eskom succeeded in meeting most of these conditions, it failed in certain critical areas. For example, it failed to dispose of Eskom Finance Company by 31 March 2020, and has also failed to implement the remuneration standards required as a condition of loan funding.

In other areas, there was partial compliance, such as information on the full duration of loans taken out by Eskom, and the cost, timing and benefit plans relating to the completion of the new Kusile and Medupi power stations.

It has also failed to provide National Treasury with a full and detailed report on the defects in the new build programme.

“Despite Eskom not complying with two conditions, the information submitted and the weekly progress updates provided were sufficient to allow the disbursement of the approved equity allocation of R 49 billion for 2019/20,” says a statement by National Treasury.

The Department of Public Enterprises (DPE) was also non-compliant on two of four conditions set by National Treasury:

It did not ensure the Eskom board was strengthened by 31 December 2019, and;
It failed to ensure that Eskom’s executive management performance agreement is linked to Key Performance Indicators as previously outlined by the minister of finance and in the shareholder compact.

“DPE has not submitted any progress report or correspondence to National Treasury on the measures they are implementing in order to comply with the remaining unmet conditions,” says National Treasury.

Subsequent to 31 March 2020, Eskom had submitted all outstanding information required by Treasury. As of 27 August 2020, R6 billion of the R56 billion earmarked had been disbursed to Eskom.

In a submission to the Standing Committee on Appropriations (SCOA), Eskom provided details of government support since 2008: a total of R188 billion, of which R60 billion was a loan and the balance equity.

For the financial year ending 31 March 2020, government made R49 billion available to Eskom to ensure that its contractual interest and capital payments were timeously made. This “recapitalisaton” came with conditions in terms of the Special Appropriation Act: it could only be used to settle debt and interest payments and nothing else. This R49 billion was supplemented by R36.2 billion in cash flows from Eskom operations, with a further R32 billion raised in external loans.

For the year ending March 2020, Eskom paid R31.5 billion towards loan principal and R39.1 billion towards interest.

Without government support, Eskom would not have been able to meet its debt obligations as they fell due.

“As Eskom is a critical state-owned enterprise, it is vital that the public are involved in crucial decisions that affect tariffs and the stability of the grid,” says Hutchinson. “We will continue to keep a close eye on developments at Eskom, and involve the public more – particularly where taxpayers are being asked for repeated funding.”

Nearly 15,000 South Africans reject a special appropriation of R59 billion for Eskom

A Dear South Africa campaign seeking public comment on the Special Appropriations Bill awarding an additional R59 billion to Eskom returned a resounding “No” verdict.

Some 89.7% of the nearly 21,000 who commented on the Bill through the Dear South Africa platforms were against the additional funding for Eskom, with just 3% in support. The balance of 7.3% did not fully support the funding appropriation.

It has also become apparent that Eskom has failed to meet certain key conditions set by National Treasury for the disbursement of these funds.

A common theme among those opposing the additional funding was that Eskom was a bottomless pit of endless bailouts and tariff increases, with funds being diverted away from social needs to a entity that had been proven to be corrupt. High salaries, over-staffing, corruption and bonuses were seen as the drivers of the need for continual taxpayer-funded bailouts.

Solutions suggested by commentators (among those voting for and against the additional funding) are unbundling and privatisation; allowing consumers and other producers to sell energy back into the grid; reclaiming stolen funds; reducing the head count and salaries; collecting outstanding debts from municipalities and consumers, to name a few.

The Dear South Africa campaign was agnostic as to the outcome, merely providing information for South Africans to make their voices heard. Dear South Africa is a non-profit which aims to encourage broader public participation in legislative and policy issues as required under the Constitution. It makes no attempt to influence the outcome of these campaigns.

A suggestion from those not fully supporting the additional R59 billion funding to Eskom was to limit it these new funds to core operational functions (not debt repayment). There is also a desire to see National Treasury take a more hands-on approach to the management of these funds. A common suggestion from those not fully supporting the R59 billion bailout is to sell Eskom shares to the public as a means of raising funds and allowing ordinary South Africans to participate in a restructured enterprise.

Among those commenting in favour of the latest bailout, the solutions do not substantially deviate from those opposed to it. Those in favour want to see privatisation and unbundling, recovery of municipal debt owed to Eskom, management by professionals with proven competence, suspension of staff bonuses and fully transparent coal supply contracts – and a re-examination of Independent Power Producer (IPP) contracts as these are deemed excessively expensive.

Says Dear South Africa programme director Rob Hutchinson: “On both sides of the aisle in this debate, there appear to be no sacred cows as far as Eskom is concerned. A high percentage of commentators say all contracts must be subject to brutal transparency and the rush to solar and wind power appears to have fewer friends in light of the high costs of purchasing energy which does not flow when the sun does not shine, nor when the wind does not blow. That’s according to a large number of comments received.

“But the level of engagement on this campaign was high, which shows there is deep concern about Eskom and what it means to the wellbeing of the country.”

10th September 202010th September 2020

New cannabis bill allows you to grow your own – within limits

The Cannabis for Private Purposes Bill, published for comment in August 2020, proposes allowing adults to grow up to four plants (per adult) at home, and exchange up to 100 grams of dry cannabis, provided no money changes hands.

The bill will also expunge any criminal records for those previously convicted of the possession or use of cannabis.

At the core of the Cannabis for Private Purposes Bill is the right to privacy embodied in Section 14 of the Constitution.

Have your say on the Cannabis Bill

The release of the bill for comment follows the September 2018 Constitutional Court ruling that the prohibition on the personal use and cultivation of cannabis by adults in their own homes was unconstitutional. The government was given two years to amend the offending legislation.

Dear South Africa is calling for public comment on the bill. There has been considerable comment around the bill, both for and against. Some have argued that cannabis is a gateway to more harmful drugs, and that children and non-consenting adults may be exposed to potential harm. There are also concerns over the police’s ability to enforce violations of the proposed law.

Though the new bill allows for limited cultivation and use of cannabis in one’s own home, there are severe penalties for those violating the proposed new law: 15 years maximum jail for anyone dealing in cannabis or provides it to a child under 18. Smoking cannabis around children can also land you four years in jail, or two years if you smoke in public or too close to a non-consenting adult.

Cannabis is defined as anything containing the psychoactive cannabinoid THC (including vaping of cannabis-derived liquids).

The proposed legal limits for personal, legal use of cannabis at home are:

unlimited for seeds and seedlings
four flowering plants for those living alone, or eight for homes with two adults or more
600 grams of dried cannabis if you live alone, or 1.2 kilograms in homes with two or more adults.
In public places, possession is set to 100 grams of cannabis or one flowering plant.

The bill proposes allowing private adults to carry up to 100 grams of cannabis in public, though it must be concealed from public view.

Those previously convicted of cannabis-related offences under the Abuse of Dependence-producing Substances and Rehabilitation Centres Act, or the Drugs and Drug Trafficking Act, will automatically have their criminal convictions expunged.

While the bill proposes relaxing possession, cultivation and use of cannabis, the following will be deemed to be in violation of the new law:

Any person who exceeds possession limits in a public place;
Any person who exceeds possession limits in a private place;
Any person who smokes cannabis in a public place;
Any person who smokes cannabis in the immediate presence of any non-consenting adult person;
Any person who smokes cannabis in the immediate presence of a child;
Any person who smokes cannabis in a private place near a window, ventilation inlet or doorway to or entrance into another place;
Any person who consumes cannabis in a vehicle on a public road.

Have your say on this bill. Does it go far enough in protecting the rights of children and non-consenting adults? Are the penalties for over-stepping the bill too severe? Will it encourage greater use of cannabis and act as a gateway to other, potentially more harmful drugs?

Have your say on the Cannabis Bill

7th September 20207th September 2020

South Africans say “No!” to exporting meat from endangered species

More than 45 000 people reacted to Dear SA’s campaign inviting comment on draft legislation allowing meat from endangered species to be added to the list of animals allowed to be slaughtered, consumed and traded.

Click the link at the end of this article to view a report and public comments.

The overwhelming majority of those participating in the campaign objected to government’s plan to expand the list of animals for slaughter and trade to include endangered species such as rhino, elephant, hippos and more. The proposed list would also include undefined birds, reptiles and fish too.

Why did most of the public participants object to these amendments? Here is a sample of some of the comments:

“It is unconscionable to slaughter and trade wild animals, especially endangered and near-extinct species like rhino and elephant.”

“The sale of any products derived from endangered species should be strictly prohibited. The sale of products creates a market for those products and if there is a market there will be poaching and exploitation.”

“Ban the wildlife trade. Consuming wildlife increases the very real risk of zoonotic disease.”

Dear South Africa’s Enviro Expert Coalition was formed earlier this year to provide expert input and guidance on policy and legislative matters relating to the environment and wildlife. One of its first tasks was to bring public attention to the proposed amendments to the Meat Safety Act, 2000 (Act No 4 of 2000) published in February 2020.

The number of comments received and the strength of views expressed far exceeded what Dear SA anticipated for an otherwise routine legislative amendment that could have passed unnoticed, says Chloe Roberts, spokesperson of Enviro Expert Coalition.

“As a non-profit, the objective of the Enviro Expert Coalition is to enable public participation on environmental matters relating to legislation on a local, municipal or regional level. The scope of this coalition will cover all matters related to environmental affairs currently managed under the Department of Environmental Affairs,” adds Roberts.

“With the successful launch of our first campaign, we opened our platform to participants and received around 45 000 submissions which was an outstanding response. Our aim was to inform the public of the changes that were being proposed while supplying a platform where they could have their say and freely express their views around the suggested changes.”

Roberts adds that many of the comments from the public were informed and passionate. Of particular concern to most, is the proposal to add species such as elephant and rhino to the list of animals suitable for human meat consumption. Not only were some of the “new species” listed already endangered, but they are already considered highly commercialised in a conservation sense.

The Enviro Expert Coalition serves in a non-partisan capacity, seeking to inform public opinion rather than mount a petition. The feedback from the campaign has been compiled into a report which has been be submitted to the relevant parliamentary committee for consideration. (available here)

Dear SA is a public participation platform enabled by Sections 59 and 72 of the Constitution, which compel the facilitation of public involvement in legislative processes.

It monitors legislative developments on a continuing basis to ensure that Parliament is held to the standards of public involvement written into the Constitution.

Unlike petitions where citizens sign on to a particular demand or pleas, Dear SA makes no attempt to influence the outcome of its campaigns. Its process of inviting and collating public comments ensures that the individuality of each submission is maintained, compiled and delivered to Parliament.

“Our group is eager to expand its network to include other organisations seeking to effect change for the better within our society by updating legislative procedures and ensuring that transparency prevails,” says Roberts. “We will be looking into new legislative amendments going forward as our focal point and will continue inviting the public and other organisations to get involved on matters close to their hearts.

“The environment should be preserved for future generations and the responsibility to preserve rests on our shoulders.”

view campaign report and public comments

28th August 20201st September 2020

A massive live sheep export from SA to Kuwait was just greenlit – now to see if farmers regret it

Phillip de Wet , Business Insider SA

A huge shipment of live sheep is now cleared to depart a feedlot in the Eastern Cape, be loaded onto a waiting ship in East London, and then likely to be transported to the Middle East for slaughter.

That, says exporting company Al Mawashi, will be to the considerable economic benefit of that province, and eventually more of the country as it builds a pipeline of live animals to Kuwait and beyond.

But the farmers and meat industry that are now so enthusiastic about the prospect of a new market will come to regret it, one animal-rights advocacy group warns – and will eventually feel it in their pockets.