Frontline Africa Advisory

Weekly Political and Economic Review 08 March 2019

  1. Priority Bills

1.1 Traditional Courts Bill:

  • Government has finally reached consensus with traditional leaders on various issues, including the contentious Traditional Courts Bill;
  • Government has finally reached consensus with traditional leaders on various issues, including the contentious Traditional Courts Bill
  • The bill will be tabled before Parliaments Portfolio Committee on Justice and Constitutional Development on the 06th of March 2019; with the likelihood of being signed into law in the month to come;
  • Minister of Cooperative Governance and Traditional Affairs Zweli Mkhize together with Dr Vuyo Mahlatsi, who heads up the advisory panel on land reform, assured the public that traditional courts will be in line with the country’s constitution, which emphasises and protects the rights of women;
  • The Traditional Courts Bill provides a uniform legislative framework for the structure and functioning of traditional courts, in line with constitutional imperatives and values.

1.2 Traditional and Khoisan Leadership Bill:

  • The January Royal House of the Khoi and San in Cape Town has described the Traditional and Khoisan Leadership Bill as a step in the right direction;
  • The Bill, which seeks to protect and promote traditional and Khoi-San leadership, has now been sent to the President for signing;
  • Once it becomes an Act, it will repeal the Traditional Leadership Framework Act.

2. Election Manifesto

2.1 Freedom Front(FF) Plus

  • On Saturday 02 March 2019, the FF Plus launched its Election Manifesto at the Rockwood Theatre in the Pretoria Parkview shopping centre;
  • In summary the FF Plus’s Election Manifesto promised the following:
  • To reduce the state’s expenditure by reducing the size of the public service, the salary scale of senior management positions and privatising Eskom and SAA;
  • To revise the local government system to ensure that local municipalities comprise of a single town;
  • To establish autonomous and more “homeish” cultural communities that spearhead conversations on matters like education, elderly care, sport and heritage etc;
  • To combat unemployment by means of amending Labour Legislations to restrict the power of Trade Unions, terminate Black Economic Empowerment and Affirmative Action and promote the youth wage subsidy, implementing it correctly and fairly;
  • FF Plus reiterated its stance on land reform, saying expropriation of land without compensation will not lead to the country’s economic growth.

2.1 Azapo Election Manifesto

  • Azanian People’s Organisation launched its Election Manifesto on the 2nd of March 2019 at Mahwelereng stadium near Mokopane in Limpopo;
  • The 6 priority issues that Azapo committed to addressing include the following:
  • To build Black Power and restore human dignity;
  • To return and redistribute land and its wealth;
  • To improve the quality of public education and invest in Black decolonised National Education;
  • To develop new industries, create job and employ South Africa’s youth;
  • To combat crime and corruption and make Azania gun free;
  • Enforce strict control of immigration.

3. Commission of Enquiry

3.1 Public Investment Corporation (PIC) Commission of InquiryVuyo 3.1.1 Jack testifies at the PIC Inquiry

  • Former PIC board member Vuyo Jack has bought attention to the atmosphere of fear at PIC, stating that workers were poorly managed. He further highlighted what he refers to as a ‘Stalingrad’ approach used by PIC executives within the workplace;
  • Following concerns over the results of a climate survey conducted by Deloitte, a governance review process was led and implemented by KPMG;
  • Jack also bought attention to how gaining many contracts was prioritised over the quality of work and ensuring the smooth-running of operations from a governance point of view;
  • To tackle PIC’s governance challenges, an innovation lab was established for staff to vocalise their main concerns with the PIC and its management. The initiative, however, was short-lived and permanently terminated without clear motivation. Jack attributes the termination of the innovation lab to the displeasure of executive members Dan Matjila and Matshepo More.

3.1.2 Dismissal testimonies heard at the PIC Inquiry

  • Former executive head of IT at the Public Investment Corporation (PIC), Luyanda Ntuane, claims he was suspended under allegations of misconduct following a conflict with then CFO Matshepo More. Ntuane describes More, who is now CEO of the PIC, as being difficult to work with;
  • Ntuane also described an environment in which officials were victimised by the PIC. His statement supports the testimony of Vuyo Jack who brought attention to the atmosphere of fear at PIC;
  • The former executive head also testified of the suspicious manner in which certain employees received bonuses and salary increases. In some instances, employees who were toeing the line ended up earning more than their managers
  • Former head of IT security at the PIC Simphiwe Mayisela claims he was dismissed for working closely with the police on allegations against then-CEO Dan Matjila. Mayisela believes he was dismissed for failing to inform the CEO of the police investigation against him;
  • The allegations, sent by an anonymous sender, prompted a hunt to uncover the identity of the whistle-blower which required a subpoena from the police. Upon opening a case and requesting a subpoena, the police decided to rather focus on investigating the allegations as opposed to uncovering the identity of the sender;
  • Mayisela made the decision to cooperate with the police and withhold information on the investigation to avoid obstructing the ends of justice, a decision he believes led to his dismissal.

3.2 State Capture Commission of Inquiry:

3.2.1 Tageta’s R2.1 billion Eskom fines was reduced to R254 million

  • The Zondo commission has heard claims of Tageta paying only R254 million of the R2.1 billion fine imposed on them by Eskom for poor quality coal;
  • Optimum Coal Mine was previously sold to Tageta by Glencore in late 2015, automatically inhering all its assets including the R2.1 billion fine;
  • Snehal Nagar, head of finance at Eskom’s primary energy division, received a memo from former Eskom head of legal Susan Daniels requiring him to sign off on a recalculated and reduced amount of R254 million;
  • Nagar also revealed details on the signing of an unusually rushed pre-payment to Gupta-linked Tageta amounting to R659 million. The payment, requested by former CFO Anoj Sing, was required to be processed within two to three hours and failed to follow Eskom processes;
  • During this time, Tageta was in the process of purchasing Optimum Holdings from Glencore. The R659 million was meant to cover the shortfall of the full amount of over R2 billion.

3.2.2 Hawks keeping a close eye on Zondo inquiry

  • Head of the Hawks, Godfrey Lebeya, informed the he Portfolio Committee on Police on Wednesday that the Hawks have a close eye on the Zondo inquiry and will make use of the relevant information to assist in an investigation without disturbing the inquiry’s processes;
  • The Hawks are currently leading investigations into alleged Gupta-led state capture. Also being investigated is facilities management company Bosasa, now known as African Global Operations;
  • Portfolio Committee on Police Chairperson, Francois Beukman, has added that the inquiry has been tremendously helpful in providing information for the Hawks to investigate and prosecute the implicated individuals and organisations.

4. Eskom

4.1 NERSA grants Eskom 9.4% electricity hike for 2019

  • Following months of public hearings on a proposed electricity hike, the National Energy Regulator of South Africa (NERSA) announced an increase in electricity tariffs for the next three (3) years;
  • The tariffs, to be implemented from the 1st of April, will be increased by 9.41% for the first year of 2019/20, 8.10% for the year 2020/21, and 5.22% for 2021/22;
  • The power utility, currently remaining R420bn in debt, reports a loss of R20bn for year end March, and has previously warned of further losses in the next financial year, even if the full tariff application of 15% had been granted. In December 2017, NERSA denied an Eskom tariff hike application of 9.9% and instead approved a hike of only 5.23%;
  • Contributions from stakeholders in the business sector throughout the public hearings had expressed concern at the possible consequences for the economy should the hikes be approved. Energy experts have equally expressed their concern, stating that the hikes would not serve in the interests of the economy;
  • The Democratic Alliance (DA) has strongly condemned the decision, stating that the increase will have a detrimental effect on the poor, small businesses, manufacturers and intensive electricity users, ultimately working against economic growth and job creation

4.2 Eskom faces further threat due to illegal electricity syndicates

  • In addition to facing financial threats due to corruption and mismanagement of funds, Eskom faces deeper trouble over illegal electricity syndicates;
  • A Soweto resident claiming to work for the utility has admitted to working with individuals within the company to illegally reconnect customers who had defaulted on their payments;
  • Eskom debt currently stands at R420bn with Soweto accounting for R17bn of this debt due to non-payment of electricity bills;
  • While some residents simply cannot afford to pay, others have admitted to deliberately skipping payment due to frustration over government corruption;
  • Eskom has taken note of the illegal syndicates. Ten employees have been relieved of their duties, while nine others have been suspended.

4.3 New Eskom Technical Review Team

  • Public Enterprises Minister Pravin Gordhan, Eskom chair Jabu Mabuza, and Eskom CEO Phakamani Hadebe met with industry experts who were appointed as members of the Eskom Technical Review Team;
  • The appointed members include:        
    • Dr Tskani Mthobeni (Coordinator)
    • Mr Robbie van Heerden
    • Mr Ian Morrison (Coordinator)
    • Mr Sibuyela Sishuba
    • Mr Seeralan Chinaboo                                                           
    • Dr Walter Schmitz
    • Ms Khumo Morolo                                                                  
    • Mr Vitesh Maharaj
    • Mr Gladman Mkwai                                                   
    • Mr Lwazi Goqwana
    • Ms Phindile Mooketsi
  • The Technical Review Team is responsible for conducting a review on the operations, maintenance, and technical environment at Eskom power stations within 4 weeks of their appointment;
  • The review team reports to Minister Pravin Gordhan and a technical sub-committee of the Eskom board;
  • The team is set to meet again on the 8th of March to discuss the methodology and work programme, with their review task formally commencing on the 11th of March.

5. New South African National Energy Association Leadership

  • The South African National Energy Association (SANEA) announced on Tuesday 05 March 2019, that it had appointed Kiren Maharaj and Wendy Poulton as its new Chairperson and Secretary-General, respectively;
  • SANEA, founded in 1924, is the South African Member Committee of the World Energy Council. SANEA represents a hub for objective thought leadership on energy and related matters;
  • Both Maharaj and Poulton, were SANEA directors. Mahaaraj previously worked as a divisional executive at Eskom Holdings, and Poulton as Eskom’s Organisational Strategy GM;
  • Maharaj succeeds SANEA stalwart Brian Statham, who served as the organisation’s founding Secretary-General from 2000 to 2006 and Executive Chairperson from March 2007 to March 2019.

6. New South African Brics Business Council

  • Trade and Industry Minister Rob Davies announced on Tuesday the five newly appointed members of the South African BRICS (Brazil, Russia, India, China and South Africa) Business Council following nominations from Business Unity South Africa and the Black Business Council;
  • The newly appointed members include: Busi Mabuza who is the Chairperson of the Industrial Development Corporation; Dr Ayanda Ntsaluba who is the Group Executive Director of Discovery; Bridgette Radebe who is the Chairperson and Chief Executive of Mmakau Mining; Dr Stavros Nicolaou who is Aspen Pharmacare Executive Director responsible for Strategic Trade Development and Elias Monage who is the Chief Executive of the Afika Group;
  • Mabuza is the Global Chairperson of the BRICS Business Council, a position that will shift to Brazil at the BRICS Business Council Midterm meeting in April in Johannesburg;
  • The BRICS Business Councils was established in 2013 and arose from the recognition that there needed to be more continuity in the business-to-business trade and investment promotion activities in the Brics countries.

7. South Africa’s Private-Sector Activity Expands

  • IHS Markit economist David Owen revealed that activity in South Africa’s private sector expanded for the first time in eight months in February;
  • Owen made this point following a rise in the IHS Markit’s Purchasing Managers’ Index (PMI) from 49.6 in January to 50.2 in February, breaching the 50 mark that separates expansion from contraction for the first time since June 2018;
  • The recorded rise translated into a decrease in South Africa’s unemployment as firms tapped into the pool of unemployed workers;
  • This demonstrates the resilience of South African businesses amid repeated setbacks.

8. South African Institute of Race Relations February 2019 Election Poll

  • Contrary to the second election “Snap Poll” conducted in December 2018, the banner headline findings in the IRR’s February 2019 Election Poll into the electoral landscape revealed that the number of registered voters who intended to vote for the ANC nationally had decreased from 56% in December to 54.7%;
  • This is a 7.4% decrease from the 62.1% it secured in 2014;
  • The DA voting intentions statistics have increased from 18% in December 2018 to 21.8%. This is a 0.4 % decrease from the 22.2% it secured in 2014;
  • While the EFF’s voting intention statistics currently stands at 12.2% nationally, a 1.2% increase from 11% the December;
  • The ANC general decline in voters can be almost exclusively attributed to the EFF. The ANC and the EFF have been locked in a battle for between 5% an 10% of alienated black ANC voters;
  • Though the ANC was able to claw a few voters back in the last 2 months of 2018, reducing the EFF to 11% in December and increasing its own standing to 56%, the VBS looting scandal, Bosasa and stage four load shedding are some of the many attributes that have startled voters back to the EFF.

9.   Draft regulations for Party Funding Act

  • The Electoral Commission has published the Draft Political Party Funding Regulations 2019;
  • The Political Party Funding Act provides for and regulates the public and private funding of political parties, in particular:
    • the establishment and management of Represented Political Parties’ Fund and the Multiparty Democracy Fund,
    • to prohibit certain donations made directly to political parties,
    • to regulate disclosure of donations accepted,
    • to determine the duties of political parties in respect of funding,
    • to provide for powers and duties of the Commission,
    • to provide for administrative fines,
    • to repeal the Public Funding of Represented Political Parties Act, 1997; and
    • provide for transitional matters;
  • The Act is to be phased in over a period of three years in line with the availability of funding and capacity in the Electoral Commission;
  • First to come into effect will be Chapters 1 – 4 which deal with the establishment of the Represented Political Party Fund (RPPF) and the Multiparty Democracy Fund (MDF), direct funding of political parties and disclosure of such funding, and the duties of political parties respectively;
  • It will be followed by Chapter 6 which deals with general provisions;
  • Chapter 5 which deals with enforcement will be implemented later.

10. President Ramaphosa’s Question and Answer Session in the National Assembly

  • The President held a question and answer session in parliament on the 7th of March. This was the President’s final session before the 2019 General Elections to be held on the 8th of May.
  • When questioned about the unbundling of Eskom, the President assured MP’s that Eskom would not be privatised. The main objective of the unbundling, he said, was to ensure that Eskom runs more efficiently, thus improving its dire financial condition. “The process will enable greater management attention to be focused on turning around the different parts of the business and enhance accountability,” said Ramaphosa;
  • The President also touched on the nationalisation of SARB, a move he believes will strengthen the sovereignty of the state. He also assured MP’s that there are no hidden agendas attached to the decision and that all due processes will be observed;
  • Ramaphosa informed MP’s that foreign investments will not be expropriated. “At the same time, we cannot tell foreign investors that they must come and invest here in SA to help us grow the economy and then we say we will expropriate their investment,” said Ramaphosa;
  • The President has recently activated a law from the Zuma-era, referred to as the Protection of Investment Act, stating that investors have the right to property in terms of Section 25 of the constitution.
  ELECTION WATCH  

Voters abroad have one week left to apply to cast their vote
https://www.news24.com/SouthAfrica/News/2019-elections-voters-abroad-have-one-week-left-to-apply-to-cast-their-vote-20190307  

An Estimated 34 and 35 parties are likely to contest the upcoming General Elections
https://citizen.co.za/news/south-africa/elections/2096016/iec-rolls-up-sleeves-ahead-of-may-8-elections/      
  AFRICA WATCH  

Nigeria Elections: More than 300 arrested for Voting Offense
https://www.news24.com/Africa/News/nigeria-police-say-more-than-300-held-for-voting-offences-20190305

Senegal Election News: Senegalese President Macky Sall easily won re-election to a   second term
https://panow.com/2019/03/02/senegal-president-gets-election-win-rivals-wont-challenge/                

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