Several African governments on Sunday closed borders, canceled flights and imposed strict entry and quarantine requirements to contain the spread of the new coronavirus, which has a foothold in at least 26 countries on the continent as cases keep rising.
South African President Cyril Ramaphosa declared a national state of disaster and warned the outbreak could have a “potentially lasting” impact on the continent’s most-developed economy, which is already in recession.
Measures to be taken there include barring travel to and from countries such as Italy, Germany, China and the United States.
“Any foreign national who has visited high-risk countries in the past 20 days will be denied a visa,” he said, adding that South Africans who visited targeted countries would be subjected to testing and quarantine when returning home.
South Africa, which has recorded 61 cases, will also prohibit gatherings of more than 100 people, Ramaphosa said.
Kenyan President Uhuru Kenyatta said his government was suspending travel from any country with reported COVID-19 cases.
“Only Kenyan citizens, and any foreigners with valid residence permits will be allowed to come in, provided they proceed on self-quarantine,” he told the nation in a televised address.
The ban would take effect within 48 hours and remain in place for at least 30 days, he said.
Schools should close immediately and universities by the end of the week, he added. Citizens would be encouraged to make cashless transactions to cut the risk of handling contaminated money.
Kenya and Ethiopia have now recorded three and four cases respectively, authorities in each nation said on Sunday, two days after they both reported their first cases.
In West Africa, Ghana will ban entry from Tuesday to anyone who has been to a country with more than 200 coronavirus cases in the past 14 days, unless they are an official resident or Ghanaian national. Ghana has recorded six cases.
President Nana Akufo-Addo said in a televised Sunday evening address that universities and schools will be closed from Monday until further notice. Public gatherings will be banned for four weeks, he said, though private burials are allowed for groups of less than 25 people.
In southern Africa, Namibia ordered schools to close for a month after recording its first two cases on Saturday.
Djibouti, which has no confirmed case of COVID-19, said on Sunday it was suspending all international flights. Tanzania, which also has no cases yet, canceled flights to India and suspended school games.
Other nations have also shuttered schools, canceled religious festivals and sporting events to minimize the risk of transmission. Some 156,500 people worldwide have been infected and almost 6,000 have died.
The increasing cost of labour and electricity is an increasing challenge for the manufacturing sector in South Africa.
The demand for opportunities to learn from best international practice in order to survive and keep the doors open is bigger than ever. There are, however, opportunities for improvement and learning for local manufacturers.
The world’s longest running benchmarking contest for the international manufacturing sector is now in its 28th year and, for the second year, also be open for manufacturers in South Africa.
The Factory of the Year competition was first initiated in Germany in 1992 by Kearney, a management consultancy that advises manufacturing companies around the world on competitive strategies to improve efficiencies and reduce costs.
Local support for the competition from the Department of Trade and Industry (DTI) shows that the process offers invaluable insight into the South African industrial landscape.
“Globally, manufacturing is becoming increasingly competitive, with automation and robotics transforming manufacturing processes to deliver greater efficiencies and outputs. So, achieving world-class excellence is a priority for any manufacturing concern,” says Igor Hulak, partner at Kearney.
South Africa’s manufacturing sector is facing unprecedented challenges. In the early 1990s, the country’s manufacturing sector contributed 22% to its GDP, while today, its contribution has declined to only 2%. Factories face the challenges of increased labour and electricity costs, while the consumer market has slowed, and global players compete against local pricing.
With its economic challenges and growth pressures, achieving global excellence in South Africa becomes even more important explains Hulak. “We believe that Factory of the Year has a crucial role to play in helping South African companies to understand and analyse their strengths and weaknesses, against global benchmarks, as well as improve their efficiencies and outputs, ensuring that they are not left behind by the Fourth Industrial Revolution.”
He adds that a key incentive for entering the competition is that, following the assessment process, factories will receive feedback against global benchmarks about where they can achieve greater efficiencies, and where their drawbacks lie. “This feedback from is invaluable in helping companies to work towards these benchmarks and continue to target excellence in the years to come.”
“Factory of the Year is much more than a competition, it is bringing about consciousness of future manufacturing in South Africa, trends and examples of Industry 4.0 solutions that work,” says Ilse Karg, chief director of future industrial production technologies at the DTI.
The event is further supported by the Manufacturing Circle, the Manufacturing Indaba and the Council for Scientific and Industrial Research (CSIR).
Entrants should visit the website, www.safactoryoftheyear.co.za, to download the questionnaire. Due to a number of requests from the industry and the time required to complete the questionnaire that includes production statistics and other metrics, the entry date for the Factory of the Year competition has been extended to 31 March 2020.
The questionnaire covers six categories: customer satisfaction, quality, value creation, economics, agility, and innovation.
Once a factory makes it onto the shortlist, a Factory of the Year representative will conduct a site visit to verify the information provided, observe how the factory is working, and identify possible improvement areas. They take these results to a jury, made up of members of the DTI, CSIR, Manufacturing Circle and Manufacturing Indaba. The 2020 winners will be announced at the Indaba in June.
While it is clear from the GDP contribution of South Africa’s manufacturing sector that there is room for improvement in this sector, Saunders says that there are some standout pockets of excellence in the South African context.
“These star performers are focusing on moving to digital and driving efficiency, and it is these that we want to find and award in Factory of the Year,” he says. “We’re looking forward to celebrating excellence in South African manufacturing for a second year running – and also to continuing to help those facing economic headwinds to overcome obstacles and identify necessary improvements to support their global competitiveness in 2020.”
In the recent State of the Nation address President Cyril Ramaphosa hailed the South African Competition Commission’s ruling to dramatically reduce data prices as
an important step to improve lives, bring people into the digital economy and stimulate online businesses.
Late last year the Commission told dominant operators to reduce their retail prices by between 30% and 50% within two months. But will the proposed interventions produce these outcomes?
South Africans do indeed pay some of the highest prices for data on the continent. The country is ranked 19 out of 46 countries on the RIA African Mobile Pricing (RAMP) Index. The prices of the first-entrant operators – MTN and Vodacom – remain high relative to Cell C and Telkom Mobile, which dropped their prices in the first half of last year.
But the commission’s cuts in retail prices will not fix poor competitive outcomes in the market. That can only be resolved by regulating the underlying bottlenecks in the wholesale market. These include the costs of roaming and facilities leasing.
The bottlenecks are correctly identified in the commission’s summary report. It urges the sector regulator – the Independent Communications Authority of South Africa – to remedy the situation urgently.
Telecommunications regulators around the world define markets and determine dominance to design the appropriate ex-ante regulation to promote competition. Ex-ante regulations are those designed to protect consumers in the retail market by safeguarding fair competition in wholesale markets where the bottlenecks occur. They design regulations in the interest of delivering affordable user prices and efficient investments.
It’s for this reason that South Africa’s 2005 Electronic Communications Act requires the communications regulator to undertake a market review to determine and remedy market dominance. But it has failed to conclude a review for over 10 years. This would have created a more level playing field for late entrants by reducing the negative duopoly effects of MTN and Vodacom on the market. One such effect is high prices.
Prices and profit levels of the incumbents are high, as the benchmarking by the commission correctly shows. This indicates that the operators could accommodate retail price reductions. But the right price for data ought to result from effective regulation and competition in the wholesale market.
The regulator has failed for more than a decade to finalise this critical determination. It has undertaken the market review three times at enormous public expense, twice to completion. Last year it made an interim finding on markets but failed to propose remedies for dominance.
Operators should not be penalised for their business success in a fair competitive market. But the dominance of the incumbents, MTN and Vodacom, in the wholesale market prevents the late entrants, Cell C and Telkom Mobile, from competing fairly and being able to exert pricing pressure.
This is because data quality is as important as price. Probably more so. At the height of the #datamustfall campaign South African’s continue to forgo the far lower prices offered by Cell C and Telkom Mobile for the more expensive, higher quality network of the dominant operators. This while the market share of the dominant players continued to increase at the expense of the late entrants.
Vodacom and MTN’s dominance gives them the liquidity to reinvest in their network infrastructure, extending coverage and improving quality. Vodacom was swift off the mark a few years ago. It used the profits from its successful voice business to invest in its data network. It quickly became the most pervasive and best quality network.
This enabled Vodacom (and later MTN when it had woken up to the fact that it could not milk its voice services anylonger) to attract more customers, and become more profitable. This placed the operators in a better position to enhance the quality of their networks by re-engineering their existing networks to offer competitive 4G services. This was in the absence of the regulator releasing this high-demand spectrum allocated for 4G use for over six years.
Even in the absence of anti-competitive practices, this has created a virtuous business cycle for the dominant operators. And a vicious one for smaller operators.
As welcome – or as politically expedient – as the commission’s decision is for cash strapped consumers there are several possible unintended consequences of the retail price intervention.
If the communications authority doesn’t address the wholesale issues urgently, the outcome could be that Vodacom and MTN, with dramatically reduced prices, will attract price-sensitive users from the late entrant networks. This would leave Cell C and Telkom Mobile unable to compete on either price or quality.
With dominant operators’ prices more attractive, and late entrants unable to address critical quality challenges, this will intensify the factors driving subscribers to the dominant operators networks.
The public focus has been on the mandatory retail price reductions for operators and the immediate relief it would provide to consumers - but policy makers and the regulators should consider possible unintended consequences of this intervention for the critical sector to the new economy.
Undoubtedly, one possible outcome is the inhibition of critical network investment. R70 billion of MTN and Vodacom’s significant surpluses have gone into network investment over the past three years. This is despite not receiving any new spectrum during this time.
Although prices are indeed too high – and the profitability of the dominant operators is excessive – their significant role in the economy has to be recognised and carefully managed. The lack of signalling by the commission of the nature and extent of the remedies imposed hit the share prices of Vodacom and MTN.
There is no benefit in this for anyone, least of all the country’s fragile, zero-growth economy. Of particular concern is that it may result in negative investor sentiment while still failing to address the underlying reasons for the high communication costs in the country.
The commission was at pains to point out that its intervention was a response to the absence of effective regulation by the communications authority in the wholesale market. This included the critical issues of releasing the high demand spectrum that has stifled cost-effective 4G deployment in South Africa..
If Finance Minister Tito Mboweni announces significant changes to individual taxes during his Budget speech on February 26 it could have wide-ranging implications for South Africa’s heavily burdened tax base.
There are numerous actions which the Minister could take to bolster the state’s coffers, including a possible VAT increase, an increase in Personal Income Tax as well as Capital Gains Tax.
Of course, tax increases, while driven by fiscal policy, have weighty economic implications, which I am sure the Minister and his team have considered extensively.
For investors, any increases or changes could have an impact on estate and financial planning moving forward. Here is how any one of these increases could impact you.
Value Added Tax:
In 2018 the tax charged on goods and services was increased from 14% to 15%. It’s uncertain whether another increase would be implemented but if it is it would mean an almost immediate increase in the cost of living which will impact any household’s financial plan.
The point of departure for any financial plan is to determine the living standard of a person and his or her family. The living standard of a household drives a well-prepared budget for the family.
Since VAT is a consumption tax, it will have a direct impact on the budgeting discipline of a household. One should re-visit your priorities, re-arrange, and start making tough decisions between what is necessary to have, and what is nice to have.
Personal Income Tax
I am sure the Minister will have looked at ways to adjust personal income brackets and even weighed up an increase on personal tax across the board. Currently the continuum of income tax ranges from 18% at the lower end to 45% and R532 041 of taxable income at the upper end. It’s difficult to see how government could justify a wholesale income tax increase but it is not impossible to see a rate hike to 46%, or perhaps a once off levy for persons in the top tax bracket.
The marginal rate was much higher in earlier years.
What is more a given, is that the necessary inflationary adjustments will not be made in the income tax brackets. It may also be far too optimistic to hope for an increase in the medical credits, and to a lesser extent age credits.
To neutralise the effect of personal tax increases one must maximise on tax deductions, for instance contributions to retirement funds. These contributions will drastically reduce the effective rate of tax payable.
Currently the taxpayer enjoys generous tax relief for contributions to a retirement fund, and since retirement is a definite goal in our journey through life, the full amount invested in a tax-free growth portfolio, will be of personal benefit one day. It is unlikely that the maximum tax-deductible amount will be increased, given the favourable tax relief we currently enjoy.
Capital Gains Tax
This is probably the one area where there is room for significant change. Government is under pressure from certain quarters to increase tax on the wealthy and taxing the gains made on the sale of assets could be where they make up some ground.
It has been four years since we saw a significant increase in the capital gains inclusion rate. Initially the inclusion rate was 25%, and gradually increased to 40%. It is ironic that the original rate in 2001 was to allow for relief in inflationary growth of capital assets. Increasing the current 40% inclusion rate will pay lip service to the original intent and will be a serious factor to consider.
Should the effective rate for capital gains be increased the popularity of tax-free investments, where no capital gains are paid upon maturity, will become much more attractive for the long term.
The role of the financial planner and a suitable long-term investment strategy, aligned with a future lifestyle goal, will become important for the investor.
The idea of a Wealth Tax has been bandied since 2018 following the conclusion of the Davis Tax Committee. To date very few recommendations were incorporated, save for the curbing of the use of trust for estate duty saving purposes and an increase in the estate duty rate. However, the collections from estate duty was meagre. It will be interesting to see if some of the other recommendations will be considered, for example the estate duty relief for spousal bequest. Spousal bequests currently escape estate duty.
Whatever the Minister announces on Wednesday South Africans will be impacted in some shape or form. There are immense pressures on his Department to cut costs and demonstrate responsible fiscal spending. This, however, must be weighed against the growing need for income to aid government in meeting its infrastructure, health, education and social welfare responsibilities. Investors, in fact all South Africans, would do well to tune in to the Minister’s speech to gauge the likely impact on themselves and their finances.
Whilst South Africans have until the end of February to share their comment on the draft national policy for beneficiary selection and land allocation, Prof Brian Ganson, Head of the Africa Centre for Dispute Settlement at the University of Stellenbosch Business School (USB) argues that “the land reform debate largely remains a dialogue of the deaf.
Many spend their energy shouting about how they are right and others are wrong.”
He proposes that conflict resolution and problem-solving skills of perspective-taking and bridging principles – proven in other long-entrenched conflicts – be applied in South Africa to shift heated public debate beyond opposing, one-sided arguments to “move the conversation forward and engender real problem solving”.
Prof Ganson says land reform in South Africa is critically important in its own right: an unfinished promise to redress epic historic wrongs on the one hand, and on the other, a project that could easily have unintended negative social and economic consequences – in particular for the poor black South Africans it is most needed to serve – if poorly managed.
“How we all go about land reform is also a bellwether of our ability to engage around the construction of the just, democratic, and united South Africa envisioned by the Constitution,” he said.
Prof Ganson said research had shown that a key skill of people who help find solutions to exceptionally entrenched conflicts is perspective-taking: the capacity to view the world – even if temporarily – through the lens of other people’s fears, hopes, rights, and interests.
“If we want a satisfying meal of positive progress – rather than just the thin gruel of self-righteous indignation that all sides of the land debate seem to be enjoying – a starting point might therefore be to acknowledge where others are right,” he said.
He invited those who react strongly against the phrase, “give back the land”, to consider how there may be nothing remotely radical about such a demand – the principle is already contained in the Constitution.
“The current Constitution – never mind any amendments under consideration – promises restitution to people and communities dispossessed of property as a result of racially discriminatory laws or practices going back to 1913. It gives Government broad latitude to carry this out. Any other proposed solution can and should be measured against ‘giving back the land’ to those who have legitimate expectations that it be returned.”
Prof Ganson urged recognition that the mixing of questions on the principles of restitution of land with those of whether and how people to whom land is returned would put it to productive use, “must be hurtful and angering in the extreme” to former black landholders and their descendants.
“It reeks of the argument in favour of the Natives Land Act of 1913 by the President of the Chamber of Mines, who opined that it would end ‘the surplus of young men … squatting on the land in idleness’ – but in fact provided low wage workers for the mines as it destroyed families and communities for generations to come.”
Prof Ganson suggests that, “In relation to those currently holding land that may be returned in the name of restitution under the provisions of the Constitution, we can concede that many of the issues they raise – even if immaterial to the fundamental right of dispossessed people and communities to land – are real.”
He suggests that it need not be in contention that it would indeed be better for all South Africans if land reform is managed in a way that confronts the realities of the substantial bonds on many properties, minimises corruption, maximises food security, and improves the possibilities for people either to make their livelihoods from the land or to make their transition to urban life, each according to his or her choice.
He believes that such perspective-taking might in the first instance invite parties to let go of one-sided arguments that serve to raise hackles rather than engender any real problem solving.
“Putting tongue in cheek for a moment, the current owners of large plots in Bishopscourt and Sandhurst, or Plettenberg Bay and Umhlanga, might agree that the person to whom land is returned is entitled to do anything with it, or nothing at all – lest universal application of standards of idleness or lack of productive use put their own tenure in question.”
“Others might begin to realise that ‘expropriation without compensation’ is a wonderful rallying cry in the international press but fairly empty here at home. Property returned to its rightful owner is hardly being expropriated; and thus, the fundamental question that cannot be bypassed is not one of compensation, but one of just and rightful ownership consistent with the mandates of the Constitution for restoration and transformation.”
He argued that those who currently weaponise the concept of ‘give back the land’ to exclude any discussion at all might admit that the phrase might usefully be continued: ‘… in ways that protect the poor and vulnerable from corrupt officials, dishonest businesses, and an economic system that makes it difficult for the person to whom land is returned to benefit from it or even keep it’.
He says that such perspective thinking might therefore remind each and all of us of our responsibilities.
“As neither land claimants nor substantial landholders under threat, we may be happy to sit on the side lines of the land reform debate when in fact we are in a privileged position to help move the conversation forward. We can do so with another skill of exceptional problem solvers: that of constructing bridging principles, or the power of AND.”
He argues that at every available juncture, “we can be impatient with the failure to implement the land reform envisioned by our Constitution – AND be advocates for land reform that addresses the broadest possible array of social and economic interests.”
“We can insist that the interests of the poor, vulnerable, and dispossessed in land restitution and land distribution be put first – AND readily agree that we must have answers for those whose lives and businesses will be inevitably be disrupted.”
“We can state that no one should be asked to compromise their rights, values, or dreams around land reform or any other issue in a constitutional democracy – AND point out that endless posturing without reference to Constitutional principles or viable and just solutions is making the situation worse rather than better.”
He says that such perspective-taking and bridging principles had proven in other conflicts to provide a starting point for transforming hearts, minds, and civic discourse. “No less is required to move forward land reform, and the country.”
Standard Chartered Bank’s Chief Economist for Africa and Middle East, Ms. Razia Khan, has projected a three per cent economic growth for Nigeria in 2020.
Khan, also projected that for the first time the Sub Saharan Africa (SSA) would witness accelerated growth even as the global growth was predicted to decelerate. She also said that SSA growth would be powered by Nigeria and South Africa’s economies.
She said this during her presentation of Nigeria’s 2020 economic outlook, held in Lagos, yesterday.
Khan’s projected economic growth for Nigeria was slightly above the 2.9 percent growth rate President Mohammadu Buhari proposed in the 2020 budget.
According to her, “2020 is a year we might see SSA economies growing faster in the face of slowing global economy. Growth in the SSA will be driven by the two largest economies in Africa, namely Nigeria and South Africa.”
She predicted that oil price stability and increased crude oil production would power Nigeria’s economic growth 2020.
“We have positive view on Nigeria’s growth because of developments in the fiscal and monetary sectors that will drive more expansion in the Nigerian economy. We have not lowered our Nigeria’s GDP and oil price projection.”
One of the monetary policy stance of the Central Bank of Nigeria (CBN) that would bolster the economy in 2020, according to Khan, was the push for increased private sector lending, which has since unlocked N2 trillion in to the economy.
She also noted that the return of Nigeria’s budget cycle to January-December and early implementation of the fiscal policy tool would enhance the execution of capital projects.
“The difference in 2020 is that Nigeria has reverted to normal budget cycle as early implementation of capital projects will add stimulus to the economy.”
Other developments she identified that would encourage economic growth in 2020 were the enactments of Petroleum Sharing Contract Act of 2019 and the Finance Act 2019 that increased the Value Added Tax by 50 per cent, from five to 7.5 per cent.
However, Khan warned that the ability to ensure compliance to the above legislations would be where the challenge lies for the federal government, adding that previous VAT collection did not meet government’s projected revenue earning from it.
The Standard Chartered Bank’s chief economist also warned Nigeria to do away with the its age-long sharing of oil revenue every month during FAAC, and focus on diversifying the economy so as to earn more revenue from other sources.
She also noted that Nigeria’s problem was not high debt burden, but low revenue mobilisation.
She also projected that a prolonged case of the coronavirus would affect demand for oil and might add pressure on Nigeria’s foreign exchange market.
She, however, noted that the expectation of better GDP performance in 2020 would also depend on return of positive momentum capable of building confidence and attracting private sector investments to make Nigeria economy grow by offering them higher rate on return.
The launch of the Africa Scotland Business Network in November 2019 highlighted one thing – there’s a great deal of positivity about South Africa’s business prospects. The Scots certainly think so.
According to Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape, 13 foreign direct investment (FDI) projects were recorded from South Africa to Scotland (in the period January 2003 and June 2019). These represented a total capex value of £40.40 million, and 529 Jobs.
Over the same period, there were 16 FDI projects recorded from Scotland to South Africa worth £164.96 million creating 1,024 jobs. The same period also saw 3 FDI projects being recorded into the Western Cape from Scotland, representing a total capex value of £66.62 million, creating 196 Jobs. One project worth £10.60 million was recorded from the Western Cape to Scotland creating 20 Jobs.
To support this burgeoning trade relationship, business partner duo Claire Alexander, a Scottish entrepreneur living in South Africa, and Nicola Probyn, a local South African, collaborated with the Scottish Government to launch the Africa Scotland Business Network (ASBN), to support, educate and provide opportunities for businesses from both nations.
Alexander and Probyn put together a board with a mix of dynamic Scottish and African business people and then pitched their idea to start an Africa Scottish business network to the Scottish government.
In July 2019, they were given the thumbs-up and all-important funding from Scotland, which they augmented with their own investment and a sponsorship secured from Craig International - a Scottish oil and gas service who recently set up their Africa Head Office head of Africa in Cape Town.
Steven Craig, director of Africa at Craig International, says that he is hoping to support Scottish companies looking to do more business in Africa, as well as South African companies wanting to invest in Scotland. “We’ve got expertise in a lot of different industries, so we’re confident that we can hopefully increase trade and employment.”
Stephanie McDonald, a Scottish global infrastructure lawyer, has come on board as a non-executive director. “There is so much opportunity here. The Scottish government is very focused on trade relations with Europe, China, India and the United States, but has little coverage in Africa.”
McDonald adds that, other than a focus on oil and gas in West Africa, there is a huge opportunity gap. “From a risk profile point of view, Africa can be a difficult place to do business. So, understandably, there has been limited attention and focus from Scotland.”
Having identified the gap, she says, the founders of ASBN came together in the hopes of fostering closer collaboration between business, networks and government organisations.
“As a network, we’ve started the wheel turning to attract investment into South Africa from Scotland, and vice versa.”
Since the network’s launch in Cape Town during Africa Oil and Gas Week in November, it has grown organically to a membership of 86 and counting.
In collaboration with the Scottish government, ASBN is assisting a Scottish-owned training business expand operations in Cape Town, to train and upskill a local labour force for the oil and gas industry. Currently, Africa is spending huge amounts on foreign expertise to service such industries.
Through direct engagement, ASBN is already facilitating a possible deal for a start-up food tech company; a Johannesburg based Veagent and the Pineapple Growers Association to export fruit to Scotland. In addition to business ventures, ASBN is liaising with a global Scottish charity, looking to increase its footprint in South Africa.
“This is all within two weeks of launching, which is extremely exciting and promising. Our aim is to have 200 businesses on board in our marketplace by the end of 2020,” says Alexander.
Wesgro is an enthusiastic supporter of the network. The organisation had already sought to bed down positive trade relations with Scotland, with a 2017 visit to Edinburgh with now Premier Alan Winde to discuss ongoing collaboration and opportunities between the two nations. Wesgro and ASBN are currently working on a possible trade delegation to Scotland in the first half of 2020.
Alexander believes that there is a great deal of synergy between the economies of Scotland and Africa, They are both strong in technology, renewable energy, agriculture and agri-tech, food and beverages, manufacturing and education.
As Scotland is a global leader in renewable energy, with targets to be carbon neutral by 2050, and is already a net producer of clean energy, many nations are turning to Scotland for expertise. This is one of the industries that Alexander believes is ripe for collaboration.
“The network also has a mission to ensure skills transfer and is investigating opportunities for Scottish universities to provide bursaries for disadvantaged students from South Africa. At the same time, it is collaborating with the Scotland Africa Business Association in Edinburgh to help us match African businesses to commercial opportunities in Scotland,” she adds.
The union of Scotland and South Africa appears to have great potential, as early interest and deals are already indicating. It is likely that the organisation will go from strength to strength, creating international trade, as well as knowledge and skills sharing opportunities for both nations.
South African President Cyril Ramaphosa has announced plans to reduce his administration’s fiscal distress, with a decision to cut thousands of telecommunications jobs.
Indirectly employed by the government through one of its many state-owned enterprises (SOEs), cutting 3,000 jobs represents the beginning of promised steps to return South Africa to economic sustainability.
Two decades ago, Telkom, South Africa’s state-owned giant, was the largest by infrastructure development and most sophisticated on the continent.
Like power-producer Eskom and many others, Telkom is a shadow of its former self and struggling to make ends meet.
The cause has been a combination of prescribed “black economic empowerment” through the deliberate preference for formerly disadvantaged people and of the ruling African National Congress’ (ANC) leftist policy of cadre deployment.
Often these two processes have overlapped but they have meant that highly skilled people have had to give way to replacements.
While a fair number of such appointments have worked out, many have not.
This has affected national, provincial and local governance — and is one of the reasons there has been mounting unhappiness in communities lacking basic services, leading to protests.
In the vital SOEs, which dominate the economy and which are effective monopolies, the governance failure and accompanying corruption have run rampant and caused collapses or near-collapses requiring state bailouts.
But there is no more money for such bailouts and South Africa cannot borrow any more without the entire sovereign debt of the country falling into ‘junk’ status.
In an address to the ANC rank and file last weekend, Ramaphosa made it plain that in providing service directly or indirectly through employment in SOEs, accountability would be the watch word.
According to international ratings like the World Bank and IMF, the government and its SOEs are around 10-15 per cent overstaffed.
However, Ramaphosa’s union allies hate the idea of retrenchment.
Combined with residual elements involved in former president Jacob Zuma’s “state capture” project of looting, the unions say they will not let Ramaphosa do what he must.
They are trying, through the Congress of South African Trade Unions, to halt any retrenchments. They also want Eskom removed from SOE minister Pravin Gordhan’s control.
However, the unions have the recent experience of South African Airways (SAA) to consider.
Strike action by ANC-aligned unions grounded planes for days — long enough to win the pay increase the unions were demanding, but also to throw the broke airline into a terminal crisis.
SAA is in business rescue at Ramaphosa’s insistence. With a deadline this weekend for it to find $139 million to remain operational, the airline may be liquidated.
If so, thousands of jobs will be lost, rather than perhaps hundreds if rescued.
The unions, having won the battle for an increase, pushed the airline to the edge and may have lost the war in terms of jobs.
SOUL OF ANC
At the core of ANC’s internal disputes about what to do to rescue the economy are divergent views.
The issue lies between the business-friendly lobby in ANC led by Ramaphosa, and those inclined to a hardline socialist agenda.
The result is a war over jobs which has become the proxy battlefield for the real struggle under way, being that for the heart and soul of the ANC — and therefore of the future of South Africa.
This week, Gwede Mantashe — once a leading unionist and currently ANC chairman and a minister — has been saying things directly contrary to Ramaphosa about getting South Africa out of the power-generation crisis.
The country is broke and faces costly ratings downgrades if it does not cut government jobs.
Consequently, Ramaphosa and his team are acting. Some 129 cases related to corruption have emerged from Eskom alone, and have gone for prosecution.
More than 1,000 internal disciplinary cases are in the process within the power producer.
The question is whether Ramaphosa can do enough against the backdrop of a weakening global economy to prevent a meltdown.
And then there is a crucial local government election a little more than a year out.
How the struggle for power and for control over ANC — and therefore over South Africa’s destiny — plays out will tell if the country becomes a failed state or emerges as a shining example of a modern developing nation, as Ramaphosa promised.
On the eve of the statement marking the 108th birthday of the governing African National Congress (ANC), South Africa’s finance minister Tito Mboweni tweeted:
If you cannot effect deep structural economic reforms, then game over! Stay as you are and you are downgraded to Junk Status! The consequences are dire. Your choice…
Similar sentiments have been voiced by many well respected commentators concerned about the state of South Africa’s economy as well as its politics – and the ability of the ANC to provide effective leadership to address the major challenges it faces.
South Africa faces perhaps many more challenges than it did in the build up to the new constitution of 1994. These include a moribund economy and a governing party that is faction-ridden and ideologically disorientated. This is blamed for enabling much of the massive corruption and nepotism in the country best described as “state capture”.
What South Africa needs is a reformer who can redirect its politics to address issues related to economic growth and development, political stability, social cohesion, service delivery and several issues related to governance, management and administration.
It should all start with President Cyril Ramaphosa and the ANC, which he leads. He had the opportunity to set the tone this weekend when he delivered the ANC national executive committee’s January 8 statement to mark the party’s birthday. Such statements are viewed as being important because they provide direction for cabinet discussions ahead of the new legislative sitting of parliament as well as the state of the nation address delivered in February every year by the President.
Ramaphosa was expected to lay out the political direction for South Africa during 2020. Unfortunately, his speech failed to hit the mark. It didn’t offer any radical new ideas on the structural reforms hinted at by Mboweni. Ramaphosa showed a complete lack of party as well as political leadership. His inability to be bold and decisive about what needs to be done suggests that he is increasingly becoming a victim of his own party’s inability to deal with the difficult circumstances of the current negative state of affairs in the country.
What was missing
There was nothing new in the speech outside of the existing policy and strategy of the ANC. The core of his presentation were the usual talking points about rebuilding the state, reinforcing the state-owned enterprises, the battle against corruption and state capture, social cohesion, and economic growth and development.
Despite an emphasis on making state companies, specifically the power utility Eskom work, and making progress with land reform, no fresh proposals were made. More rhetoric, a lack of strategic vision and political survival at all costs seems to be the name of the game.
This is a far cry from what’s needed.
Even more difficult times lie ahead for Ramaphosa. His promise that this year will see decisive action against those implicated in widespread corruption – among them influential party leaders – will no doubt add to his precarious position in the party.
The ANC’s 108th birthday bash provided fresh evidence that Ramaphosa faces a very difficult political environment in the party. There were expectations that about 35 000 people would turn up. In the event only 11 500 arrived to hear him deliver his speech. Some party leaders bemoaned the poor attendance.
This shows that, beyond any doubt, 2020 is going to be dominated by the battle for control of the ANC. That battle will gain a lot of momentum towards the party’s national general conference which is due to be held in the middle of this year. The national general conference is held midway between party conferences, to debate the “strategic organisational and political issues facing the movement”.
There are already those who are already beginning to shows signs of mounting a challenge against him. These include those implicated in state capture, among them ANC secretary-general Ace Magashule, as well as other disgruntled members of the ANC presenting themselves as a “coalition of the wounded”.
The outcome of this battle will have far reaching implications for the future for South Africa, and its ability to deal with its numerous challenges.
Decisive year ahead
The year ahead promises to be a very difficult but also a very decisive year for South Africa. Is Ramaphosa the man to take the country into a new dawn, or is he going to be the victim of a well-organised campaign to disrupt his intended initiatives?
This year will provide the perspective on the way forward. If strong forces within the ANC get their way, someone other than Ramaphosa will present the January 8 statement in 2021.
For ordinary South Africans, this presents a very difficult scenario, with the strong possibility that the economy will slide into recession.
This, plus amending article 25 of the constitution to enable the expropriation of land without compensation, will result in even lower investment levels, higher levels of political instability and bigger challenges in terms of food security.
This does does not augur well for the future of the country and the well-being of its citizens.
Ethiopian Prime Minister Abiy Ahmed on Sunday said he has asked South African President Cyril Ramaphosa to intervene in an ongoing dispute with Egypt and Sudan over Ethiopia's Renaissance Dam.
The filling of the dam has been a source of tension between the Nile countries. Egypt and Sudan argue that Ethiopia has not provided sufficient guarantees to their water supply, which is highly dependent on the Nile River.
All three countries were expected to have finished negotiations ahead of signing a deal later this week. But negotiators say significant issues remain.
"As (Ramaphosa) is a good friend for both Ethiopia and Egypt and also as incoming AU chair, he can make a discussion between both parties to solve the issue peacefully," Abiy said at a press conference in the South African capital Pretoria.
'A solution can be found'
For his part, Ramaphosa said he had accepted the task and that he had already reached out to Egyptian President Abdel Fattah el-Sissi.
"The Nile River is important to both countries and there must be a way in which both their interests can be addressed," said Ramaphosa. "There must be a way in which a solution can be found."
Concerns over the Renaissance Dam on the Blue Nile, one of the main sources of the Nile River, have dogged relations between the African nations for years. At times, Egyptian officials have threatened military action against the dam, including airstrikes, saying its existence poses an existential risk to Egypt.
For Ethiopia though, the dam is a much-needed source of power to energize what has become one of Africa's fastest growing economies.
Ethiopia and South Africa also signed several trade agreements spanning health, tourism and telecommunications industries during Abiy's visit.