Democratically Engaged, Active and Responsible
The TV channel, NEWSROOM AFRICA, had three experts on last night to “solve” ESKOM problems as if they were board members of ESKOM.
6 Points were identified and discussed. Very good insight into ESKOM woes came to the fore in this program.
The contents of this program is sent to the current ESKOM board, the minister and other parties currently in charge of ESKOM.
Please watch and learn.
Finance Minister Tito Mboweni has again put out a call to the public to make proposals on how to achieve equitable economic growth.
National Treasury on Monday issued a statement, calling for ideas, ahead of the National Budget to be tabled by the minister on February 26.
“As usual the budget allocation always aims to strike a balance amongst competing national spending priorities.
“It is in this context that Minister Mboweni invites South Africans to share their views about economic conditions and other issues they would like government to highlight in the Budget on 26 February 2020,” Treasury said.
The minister would particularly like views on what government can do to achieve faster, and more equitable economic growth.
This is separate to an economic paper issued by Treasury last year. The paper included proposals to bolster growth by 3 percentage points per year and to create up to a million jobs.
Over 700 comments were received. It is still under deliberation and is not yet government policy.
Mboweni took to Twitter earlier this month to express frustration with the pace of economic reform in the country, Fin24 previously reported.
“What are critical Economic Strategic Reforms? Read the National Treasury now Government Document! Let us move Forward! Many Steps at the same Time!! Movement!! No time for procrastinating!!,” he tweeted.
South Africans can, in the meantime, share their tips with Treasury via Twitter – at @TreasuryRSA with the hashtag #TipsForMinFin and #Budget2019. Or they can drop their tips at the National Treasury website, under the tab labelled “Tips” on the home page.
The minister this week will lead a delegation at the World Economic Forum meeting in Davos, Switzerland. Each year the meeting sees government officials and business leaders from across the world to discuss economic-related issues. This year’s theme focuses on sustainable development.
The WEF meeting follows the UK-Africa Investment Summit in London, held on Monday, which Mboweni attended along with International Relations and Cooperation Minister Naledi Pandor. This summit seeks to strengthen investment partnerships between the UK and African countries.
Compiled by Lameez Omarjee
Since expropriation without compensation (EWC), regained prominence in government rhetoric, there has been much public concern over the potential implications of nil compensation. There are many calls for concerned citizens to submit their comments to oppose the bill and save South Africa from a Zimbabwe-esque future. Esteemed economist and entrepreneur, Dr Lawrence McCrystal, has already submitted his eight reasons for opposing the amendment. But I propose that we shouldn’t be too hasty to oppose this bill, because it might actually open the door to the very thing we need.
First, let’s look at what the bill entails:
1. The aim of the bill is to allow for land and any improvements thereon to be expropriated for purposes of land reform with nil compensation payable. Some responses to the bill have cautioned that it will allow the government to seize your car, bank account and any other property, but the wording of the amendment clearly indicates that EWC is restricted to land, and improvements thereon (such as buildings). It is also restricted to expropriation for land reform purposes only and will not allow the government to seize your property willy-nilly.
2. The preamble highlights the rationale for the amendment in four “whereas” statements:
a. To accelerate land reform to address the injustices of the past, especially considering that “hunger for land among the dispossessed is palpable and the dispossessed are of the view that very little is being done to redress the skewed land ownership pattern” – I will return to this statement later;
b. To make explicit what is already implicit, ie: that nil compensation is a legitimate option for land reform;
c. To address historic wrongs – this is equivalent to addressing the injustices of the past, the first “whereas” statement, and adds nothing to the bill; and
d. To ensure equitable access to land and empower the majority of South Africans to be productive agricultural citizens.
3. The actual amendments are in two parts:
a. An addition to Section 25(2)(b) to allow a court to determine nil compensation for the expropriation of land and any improvements thereon for the purposes of land reform; and
b. The addition of subsection 3A as follows: “National legislation must … set out specific circumstances where a court may determine that the amount of compensation is nil.”
Second, let’s look at some of McCrystal’s objections. His first is that amending the Constitution is unnecessary as existing legislation is already adequate. I agreed with this statement in my June 2018 Daily Maverick article, wherein I referred to the call for EWC as premature. A year-and-a-half later, my position has not changed (by much). It is already implicit in the Constitution (Sections 25(2)-(4)) that nil compensation could be paid for property expropriated in the public interest if it is just and equitable for such to occur. To my knowledge, this has never been tested in court. But note that currently, property is not limited to land, and the purposes of expropriation are not limited to land reform. The amendment bill will impose these limitations on the Constitution. This could be a good thing for property security.
McCrystal goes on to show that people don’t want land – unemployment is a far more pressing concern, as reported by the Institute for Race Relations in 2017. Yet, Chris Williams-Wynn, surveyor-general of the Eastern Cape, notes that in the 2005 Land Summit meetings held throughout South Africa, there was an overwhelming indication that people want to own land. In an article also published in 2017, he reports the results of his own fieldwork investigating the question of what people want. His findings agree with the Land Summit findings: People want land rights. This accords with the first “whereas” in the preamble to the bill: The “palpable hunger” for land among the dispossessed. But, if this is the case, why do the majority of land restitution beneficiaries opt for financial compensation instead of land? It appears that the matter is not as clear-cut as the preamble makes out.
The preamble also suggests that EWC will serve to accelerate the land reform process, but it has already been pointed out by myself among others (including McCrystal and the High Level Panel Report on the Assessment of Key Legislation and the Acceleration of Fundamental Change), that the Constitution is not the main impediment to land reform. It is ineptitude, mismanagement, maladministration, greed and corruption that are at the heart of the slow pace and, in some cases, failure of land reform. This ties in with another of McCrystal’s objections: Amending the Constitution to allow for EWC may create another avenue for exploitation by immoral politicians.
Thus, while the intent of the bill might be good – who can argue that there is still a need to address spatial inequality and the lingering injustices of the past? – the immorality that permeates South African society and is exemplified in many of our leaders could see these good intentions ending up as paving on the road to their own infamy.
In conclusion, I am in two minds about this bill. Firstly, I see it as a good thing because it imposes limitations on the existing expropriation clause in the Constitution. Currently, any of your property (not just land), may be expropriated in the public interest (not limited to land reform), and you may be compensated in a manner that is just and equitable. This doesn’t mean that compensation must be at market value, or even that you have to like the compensation amount. It means that a court will have to decide what “just and equitable” means for your particular case and there is nothing in the Constitution at the moment to stop the court from saying that you get nothing. The bill makes it explicit that EWC may only apply to land and buildings expropriated for the purposes of land reform. Your car and other property would hence be safe.
My main objection to the bill is the assumptions in the preamble that people want land and that this amendment will speed up the land reform process. Both of those assumptions are untested and possibly invalid.
My final concern, which I haven’t raised yet, relates to the addition of subsection 3A: the “specific circumstances” under which a court may determine that nil compensation is valid. This is really where the rubber hits the road and this is where public comment will be crucially important. It is these “specific circumstances”, that will either instil confidence in our government and our property rights, or lead to the kind of economic meltdown that the naysayers are predicting. Yet we are being asked to comment on the bill without seeing any literature pertaining to these “specific circumstances”. Are we to approve the amendment bill in good faith that government will follow it up with “specific circumstances”, that are just and equitable? Experience shows that “good faith” and “government” should not appear in the same sentence. Why are we not being asked to comment on the bill and the “specific circumstances”, simultaneously?
Hence, I’m not convinced that I can support the bill in its current form. There are just too many key questions that remain unanswered. But I will support it eventually, once my concerns about the rationale and the “specific circumstances”, have been laid to rest. And I think you should too. DM
South Africa could lose up to R34bn in export revenue if it loses its eligibility for the Generalised System of Preferences programme under the US Trade Act, says the Copyright Coalition of South Africa.
In a media release CCSA chairman Collen Dlamini says the country’s eligibility for the GSP programme has been called into question as a result of the passing of the Copyright Amendment Bill, an update of the country’s decades-old copyright law, in Parliament last year.
CCSA says the Bill is unconstitutional as it violates the right to property, arbitrarily depriving content creators (artists, writers, musicians etc) of their intellectual property rights. In simple terms, the Bill introduces a broad fair use clause, allowing for works intended ‘for education‘ to be copied without permission or payment.
Two weeks from today, the Office of the United States Trade Representative will hold public hearings in Washington D.C. on South Africa’s eligibility for the Generalised System of Preferences (GSP) under the US Trade Act.
South Africa’s eligibility for the GSP programme has been called into question as a result of the passing of the Copyright Amendment Bill in Parliament last year. If South Africa loses its GSP eligibility, we will potentially lose up to R34bn in export revenue.
The Copyright Coalition of South Africa is calling on President Cyril Ramaphosa to act now before it is too late. Instead of signing the Copyright Amendment Bill into law, he still has the option of sending the Bill back to Parliament for reconsideration.
We urge the President to do so before the public hearings on 30 January 2020. Our country cannot afford the diplomatic stress, loss of export revenue, and the thousands of jobs that these South African exports create.
Our current GSP designation allows South Africa preferential duty-free access to US markets for selected export products. Should the upcoming review find that the Copyright Amendment Bill does not adequately protect US intellectual property, South Africa will lose its GSP designation.
In 2018 alone, the value of South African goods exported to the US under the GSP programme amount to as much as R34bn by some estimates. Under the GSP programme and the African Growth and Opportunity Act (AGOA), sub-Saharan African countries are granted duty-free access to the U.S. market for more than 6,000 products. These include: meat, fruit, vegetables, precious metals, chemicals, iron and steel products, and a range of manufactured goods.
It is critical that President Ramaphosa take action now on the Copyright Amendment Bill to avert catastrophic economic loss. With the World Bank having already revised South Africa’s 2020 economic growth forecast downward from 1.5% to 0.9%, the country cannot afford this unnecessary risk.
The Copyright Amendment Bill has been on President Ramaphosa’s desk for ten months, awaiting assent. The President has a constitutional obligation not to sign the Bill into law, and to send the Bill back to Parliament.
There are both substantive and procedural reasons why the Copyright Bill is unconstitutional:
The Copyright Amendment Bill is unconstitutional as it violates the right to property, arbitrarily depriving content creators (artists, writers, musicians etc) of their intellectual property rights.
As the result of inadequate public consultation, flawed parliamentary processes, and the failure to conduct a socio-economic impact assessment, the Bill is irretrievably procedurally deficient.
In light of these significant constitutional deficiencies, the reasons for the President’s indecision are difficult to fathom. The time to debate them has run out.
By referring the flawed Bill back to Parliament, the President can demonstrate a commitment to the Constitution, the rule of law, and the success of South Africa’s creative and cultural industries.
Moreover, by referring the Bill back to Parliament, the President will assure South Africa’s investors and trade partners of our commitment to abide by our international law obligations.
We as the Copyright Coalition of South Africa, representing a broad consensus within the creative and cultural sector, therefore reiterate our urgent call for President Ramaphosa to refer the Copyright Amendment Bill back to Parliament immediately. Any further delay by the President is courting disaster.
Tax Consulting SA’s Nicolas Botha explains the coming changes to tax exemptions on money earned overseas.
Are you are a South African who earns the bulk of their money abroad?
Currently, a South African tax resident who is an employee and renders services outside the country on behalf of an employer (South African or foreign) for longer than 183 full days in any 12-month period (With 60 consistent days out of the country) can be granted an exemption on their income tax.
But the new rules will give you a break on only the first, R1 million you earn abroad. Thereafter you can be taxed according to South Africa’s own income tax system.
Tax consultant Nicolas Botha talks to Refilwe Moloto about the impending changes that may see the exemption falling away.
South African ex-pats were able to claim Section 10 102 exemption – that’s the 183 60-day rule.
Nicolas Botha, Senior Financial Emigration Specialist -Tax Consulting SA
In the past that has allowed you to fully exempt your income he explains.
What’s happened now is that that has been amended to only allow for exemption of the first million rand. The surplus after the one million rand thereafter will then be taxable according to South Africa’s normal tax brackets which places a lot of ex-pats in a predicament.
Nicolas Botha, Senior Financial Emigration Specialist -Tax Consulting SA
Why is this change being implemented?
Botha says Treasury cross-referenced SA ex-pats and immigration statistics and compared it with tax compliance returns.
What Treasury noticed was there was a vast difference between the two…so it was almost a bit of a scare tactic to wake up South Africans and get compliant.
Nicolas Botha, Senior Financial Emigration Specialist -Tax Consulting SA
Make sure you are tax compliant, he advises, adding South Africans who are living overseas permanently would not be affected by double taxation.
Warnings that proposals to amend South Africa’s Constitution to facilitate land expropriation and transfer wealth to the have-nots will damage the country have fallen on deaf ears. One after the other, South Africa’s pre-eminent scholars, thought leaders and business strategists have tried to highlight that South Africa will head down the same path Zimbabwe has taken into ruin if we press ahead with the same laws and policies instituted in the Mugabe era. But, there has continued to be a strong push for the legislation by individuals within the ANC and the Economic Freedom Fighters. In this sobering piece, entrepreneur and economist Lawrence McCrystal distils the problems with the proposal into eight simple, compelling reasons why South Africa should ditch the idea of land grabs – and fast. – Jackie Cameron
By Dr Lawrence McCrystal*
I lodge my objection to this proposed amendment to the Constitution on the following grounds:
It is unnecessary as existing legislation is adequate for land restitution.
It will undermine the very investment we desperately need in SA to get our economy going. Investors will not invest here if there is a threat of the government expropriating, without compensation, the property on which they have built their projects.
It could well put SA on the same path as Zimbabwe with equally catastrophic results.
It will be wide open to abuse as we have seen in Zimbabwe where people with influence got land which they could not use productively, while chasing productive farmers away, resulting in famine.
91% of the people offered land or money for restitution purposes have chosen the money. So this new proposal is not going to achieve anything in terms of helping the people, in their view. Furthermore the vast majority of those who did take the farm land have left it devastated. If that is what happened to farm land what will happen if this government, armed with this proposed amendment, were to start expropriating our urban properties. It will be catastrophic, given the poor track record of this government over the past 10 years.
The priority in SA right now is to get the economy growing so that the 10 million, or more, people who are unemployed can get work and so be helped out of their poverty. This proposed amendment to the Constitution is coming at exactly the wrong time. In fact the timing could not be worse. It will, as just one example, cause the loss of our preferential access to US markets in terms of the AGOA agreement. That will add hugely to the unemployed work force.
In a survey of the needs of our people, by the Institute of Race Relations, the highest proportion saw unemployment as the most pressing issue facing the country. Only a tiny fraction (1%) mentioned land. It is NOT an important issue in the eyes of the vast majority of our people. So where is the pressure for this proposed change in the Constitution coming from other than from self-centred politicians? A high proportion of SA’s politicians already have a poor reputation in thinking circles of the public both in SA and overseas. This proposal is, as a result, viewed with deep suspicion that the main motivation is not the interests of the people of SA. If it was then measures to stimulate economic growth, which were announced earlier this year by President Ramaphosa, would have been implemented by now and priority would not have been given to this unnecessary proposal. This in itself makes the motivation suspect. Priority is being given to something which is not a priority in the view of the vast majority of our people, at the expense of what is the priority namely economic growth and increased employment. Deregulation of small and medium enterprises, mentioned in the President’s earlier speech, will be hugely stimulative. That’s a priority. Yet nothing has been done, but they find time and energy for this amendment to our excellent Constitution.
Should this proposed amendment become law, this nation will live to regret it was ever proposed. In fact this government that has proposed it will be cursed for generations to come as favouring selfish, greedy interests instead of righteously serving the people and helping a huge proportion of them out of their poverty.
I submit this with great sadness, as an 83 year old citizen of this wonderful country who has dedicated his life to promoting its economic development and helping our people to become self-sustainable, because I foresee clearly, and have a deep sense of foreboding, that nothing but serious trouble and even evil will come of this amendment should it become law.
For the last half a century Lawrence McCrystal has played a part, as an entrepreneur and economist, promoting industrial and business development, both as a member of the IDC Board (for 18 years) and in numerous other public and private sector roles.
Economist Dawie Roodt says that the state of government’s finances means that further tax increases can be expected in 2020.
Roodt noted in an interview with eNCA that the state’s debt is at record levels, meaning “there will be tax hikes”.
“The question is which one of the taxes will be increased? I am pretty sure that things like the fuel levy will be increased, and sin taxes.”
The economist said that the two taxes that can make a difference to the country’s finances are personal income tax, and value-added tax (VAT) and that February’s Budget will reveal all.
“I think personally personal income tax will be increased,” Roodt said.
Roodt said that a positive indicator going into the new year, is the strength of the rand, trading at around R14.00 against the dollar on Thursday (2 January).
A stronger rand, he said, is an indication that foreigners are interested in investing in South Africa, especially in financial markets.
He added that a stronger rand could also lead to interest rate cuts, which would benefit under pressure consumers.
Roodt’s comments align with Treasury’s revenue concerns which it outlined in its medium-term budget policy statement released at the end of October.
“Significant tax increases over the past several years leave only moderate scope to boost tax revenue at this time,” the Treasury said.
However, despite this limited scope, Treasury said that additional tax measures are under consideration to raise an extra R10 billion in fiscal 2021 – but did not provide any further details.
“Given the fiscal position we find ourselves in, all tax options need to be on the table,” said Chris Axelson, chief director for economic tax analysis in the Treasury.”
Recession fears
With the economy shrinking, unemployment at an all-time high and yet another downgrade almost certainly waiting for us in January from ratings agency Moody’s, Roodt warned of the likelihood of a recession.
“I am fearful that we are heading towards a full-blown recession and in fact may already be in one in the fourth quarter.
“Given the devastation wrought by load shedding and the government’s rapidly growing debt burden, I cannot help but to think that things are going to get a lot worse before they get better,” Roodt said.
He said that with the fiscal deficit at an all-time high, it will make it increasingly difficult for the government to borrow money abroad to keep the economy going.
Neil Roets, chief executive officer of debt counselling company, Debt Rescue, said they were gearing up for one of the busiest periods in January, February and March in the history of the company.
“We see more new clients seeking help with the repayment of their outstanding debt in January and February than during any other months of the year because of additional debts that had been stacked up during the holiday season.
“Parents suddenly realise that they have to pay school fees that had not been budgeted for and with credit cards maxed out on luxuries in November and December many have no choice other than to seek relief by going under debt review to prevent debt collectors from seizing their property.”
“With gross consumer debt at around R1.8-trillion and the government’s gross loan debt at R2.2 trillion in 2016/17 financial year, it is clear that South Africans are in for a very rough ride,” Roets said.
He said almost half of all consumers were three months or more behind in their payments. The major culprits are credit and store cards followed closely by unsecured debt.
Article by Business Tech
This probably didn’t come out as the compliment Health Minister Zweli Mkhize was hoping for. The ANC cabinet member triumphantly announced on Wednesday that there would be “no distinction” between public and private hospitals once the National Health Insurance (NHI) is rolled out.
The much-maligned plans would ensure that all citizens received free healthcare upon entering any hospital in South Africa. While the intentions are good, the execution may be lacking. Critics have slammed NHI for threatening to cripple private health programmes, and point to its enormous costing and logistical challenges.
However, Mkhize and his team remain undeterred. Speaking during a visit to a hospital in KwaZulu-Natal on New Year’s Day, the minister said that NHI would “bridge the gap” between public and private care.
“We are starting a new decade in which we will be instituting decisive actions in implementation of NHI. When it is fully implemented, there will be no distinction between public and private hospitals. We believe we are going to be seeing changes and improvements in the quality.”
“Our message to South Africans is to encourage good healthy living, particularly now when non-communicable diseases are on the rise. Individuals and communities are encouraged to take full responsibility of their health in partnership with the healthcare.”
Zweli Mkhize
The rollout of the much-anticipated National Health Insurance (NHI) will require an additional R33-billion annually. This was revealed in the National Treasury’s adjusted estimates of the national expenditure document released at the tabling of the 2019 Medium Term Budget Policy Statement (MTBPS) in October.
With the New Year just a few hours away, economists have painted a bleak commercial picture for 2020.
Dawie Roodt, chief economist at Efficient Group, said he feared South Africa was heading towards a full-blown recession. “Given the devastation wrought by load shedding and the government’s rapidly growing debt burden, I think things are going to get a lot worse before they get better,” he said.
The high fiscal deficit was his biggest concern, making it difficult for the government to borrow money to keep the economy going, Roodt said.
Miyelani Mkhabela, economist and director at Antswisa Transaction Advisory, said he doubted South Africa would get itself out of trouble next year if there was no clear vision from President Cyril Ramaphosa.
He expected the fuel price would go down in the first few months of the year, and then up in subsequent months, following international trends. He said he had not seen any reason to make the Organisation of Petroleum Exporting Countries (Opec) raise oil prices so far.
He said the transport industry would get relief with the lower fuel prices, but was not sure if this would spill over to the food industry.
He said people should save money in the weak economy, as consumers were using their credit cards to their limits. A culture of investment should be created.
Neil Roets, chief executive of Debt Rescue, said the prices of goods went up but salaries stayed the same and there was nothing indicating 2020 would be better than 2019. Roets said that even though the situation looked dire, people were still spending money.
“In December, people max their credit cards out,” he said.
Mervyn Abrahams, programme co-ordinator at NGO Pietermaritzburg Economic Justice and Dignity Group, said they always lived in hope that things would get better and wanted people to work towards improving their situations. But 2020 would likely be worse than 2019 and he did not see things getting better on the job creation front. Eskom wanting a 17% tariff increase would not make things any easier, Abrahams said.
“The poor have tightened their belts to the point where there is no belt to tighten.” he said. The government needed to create a sense of optimism by arresting people for corruption.
Political Bureau
The importance of official comments on amending the constitution
The public has until 31 January to have a say on what is quite possibly the most critical amendment yet to emerge from the South African parliament – the Constitution Eighteenth Amendment Bill which seeks to enable expropriation of property (not limited to land) without compensation.
Several organisations have launched petitions in opposition to the amendment. However, Dear South Africa, a registered non-profit, has provided a direct government interface which enables the public to have a say in favour of or opposition to the bill.
“This is not a one-sided petition”, says Rob Hutchinson, MD of DearSA”. “Government treats petitions as a single submission, no matter how many signatories, whereas our official system ensures that each public comment is individually delivered, registered, acknowledged and considered in parliament’s decision-making process.”
Along with immediately delivering your comment to government, DearSA’s system keeps an accurate record of all participation and enables the organisation to present a report directly to parliament. This process ensures that civil society holds a precise unbiased, publically available live record of all input.
The AdHoc Committee on Amending the Constitution opened the first call for comment to produce a report for parliament in June 2018, a process which resulted in over 700,000 South Africans voicing their opinion. In December 2019, this final call for comment on the new Draft Amendment Bill requires significantly greater participation from South Africans.
Whether in favour of or opposed to an amendment of the Constitution of South Africa, to create effective impact, the public must have a say through an official unbiased platform, not only a petition.
Have your say on the Constitution Amendment by using DearSA’s platform before 31 January at this link; https://dearsouthafrica.co.za/constitution-eighteenth-amendment-bill/
DearSA has also provided all the Parliamentary Committee meeting notes, documents, audio recordings and minutes at the link above.
ENDS..
Media enquiries; Rob Hutchinson, DearSA
rob@dearsouthafrica.co.za
0845574828