Following in-depth discussions with 25 of South Africa’s top financial firms, and the Royal Commission of Inquiry’s report on misconduct in the financial industry, it is encouraging to see that initial findings point to a financial services industry that comports well with standards of good conduct. However, gaps remain that need to be overcome.
As part of an assessment of the commitment to conduct standards in the sector, DB & Associates has had over 100 meetings with the executive leadership of the top 25 firms in South Africa’s financial sector over the past 18 months. This culminated in a Royal Commission of Inquiry into misconduct in the financial industry, which delivered its final report earlier this year.
The Commission’s findings were, to say the least, sobering. Initially, the assumption was made that, because South Africa is a developing country with high levels of corruption in government, as bad as things were in Australia, they would be worse in South Africa. This prediction could not have been more wrong.
Learnings from Australia’s mistakes
Forming part of the discussions with leading financial institutions were Dr Andy Schmulow, Senior Advisor at DB & Associates, who has in-depth experience in Australia’s financial industry. His extensive knowledge about the Australian landscape is relevant for two reasons: the financial system regulatory reforms currently underway in South Africa are modelled on Australia’s Twin Peaks regime; and secondly, because Australia’s financial regulation is in crisis – the product of system-wide failure to enforce anything approaching good conduct, pervasively evident for over a decade, with misconduct, and at times serious criminality, perpetrated on an industrial scale.
What was encountered is a financial services industry which, while not perfect by any means, nonetheless comports well with standards of good conduct. The reasons are many and varied. They include a far deeper awareness that the financial industry must serve the community in which it operates, not the other way around. An understanding of the need to contribute to redressing economic inequality embedded by decades of discrimination, for both social justice reasons, and to create the kind of economic prosperity that firms themselves need, in order to grow. But doubtless also the treating customers fairly (TCF) regime has played an important role in readying financial firms for the forthcoming introduction of new conduct legislation: the Conduct of Financial Institutions Act (CoFI).
From process-driven to values-driven
However, gaps remain. These relate chiefly to requirements to transform culture and governance, and the disjuncture between TCF and CoFI. With regards to the former, CoFI will require a shift in corporate governance from what, to how and why. This shifts culture ad governance from being process-driven to becoming values-driven. TCF compliance similarly requires shifts to plug gaps. For example: the six TCF pillars do not map exactly to the nine pillars of CoFI.
The three pillars that will be new under CoFI present significant challenges. In the case of product or service distribution, a regulated entity will be responsible for misconduct committed by brokers, including brokers wholly independent. This will be tricky. How should a firm enforce its obligations on an independent broker – especially a highly successful one – without the risk of that broker ending its relationship with the firm, and henceforth, selling only its competitor’s products? How will a firm impose, if need be, close scrutiny of a broker’s activities, especially one located remotely? There are answers to these questions, but they are imperfect.
Three pillars, three challenges
1. These differences relate primarily to CoFI requirements for distribution, culture and governance, and licensing.
In respect of culture and governance, CoFI will require a whole of entity regeneration of culture; an exercise that will go far deeper than anything encouraged by TCF. The consequences of failure are real: Momentum has recently been slapped with a R100 million fine by the FSCA for governance failures in one of their unit trusts. So, whereas in the past governance issues, like conflicts of interest, could be ticked off on the basis that the firm ‘has a policy’ addressing the issue, this will no longer suffice. Now the enquiry will relate to both the efficacy of the policy itself, and the strength of its implementation.
2. TCF compliance is ascertained by the firm itself. CoFI compliance will be independently judged by the newly established Financial Sector Conduct Authority (FSCA).
To date, TCF compliance has been a matter for the firm to judge, but self-assessment is a complacency trap writ large. For one thing, self-assessment will never be as searching or as critical as an independent review. Unavoidable cognitive biases, with which we are all afflicted, guarantee that. The only credible form of assessment is arms-length (which must preclude, for example, being undertaken by a firm’s auditors; such assessments merely embed leveraged conflicts of interest). Reviews must be grounded in methodologically rigorous, credible, and critical recursive reviews, conducted independently. As such, current TCF assessments present the risk of being a complacency and self-affirming trap.
3. TCF compliance is more superficial in nature and is often addressed as an afterthought, whereas CoFI requires a deeper and more profound treatment, addressed as a forethought.
TCF’s pillars lack the cascading sets of sub-principles included in CoFI’s pillars. As such, TCF is by nature more superficial, more malleable, and easier to demonstrate. As a result, it tends to default to a tick-box approach, in which TCF adherence is demonstrated through the use of leading questions, posed by the firm, to deliver the affirmations the firm seeks. As a result, even under a TCF framework, several firms have acknowledged that they are still product-focused, not client-focused.
A failure to reform such a product-flogging emphasis will serve them poorly under the new regime. CoFI, by contrast, will require compliance as a forethought to product and service design and construction, whereas under TCF, a number of firms continue to check compliance as the product rolls off the production line. Put differently; compliance must be an active participant from conception, not a theatre assistant at birth. Therefore, CoFI requires demonstrable success in promoting financial literacy and financial inclusion and affords protection to sophisticated as well as retail customers.
A journey of change towards compliance
Set against all of this is a conduct authority – the FSCA – whose remit and powers – especially as compared to its progenitor, the Australian Securities and Investments Commission – make it fully weaponised. It can punish, and can do so severely (and has already), whereas the recipients of FSCA sanctions are severely limited in their avenues for appeal. This enables the FSCA to move swiftly, and come down hard. In the process, firms that incur its wrath, even if they mount successful appeals, will be tarnished, and their reputations damaged.
A better and more prudent approach would be to leverage existing TCF adherence, not in a vein of complacency, but rather as a good start to a real and much deeper change journey. A journey in which compliance is reconceptualised, firm values are implemented (not simply articulated), and corporate culture is strengthened and enhanced towards customer centricity, at every level of the organisation.
Ex-South African President Jacob Zuma’s son Duduzane denied wrongdoing at a graft inquiry on Monday, rejecting testimony by an official who said he was offered a bribe and a ministerial post at a meeting where Duduzane was present.
Duduzane Zuma is a key witness at the so-called “state capture” inquiry set up last year to test allegations of high-level corruption during Jacob Zuma’s nine years in power.
He was a business partner of the Guptas, three Indian-born brothers accused of using their friendship with the former president to win state contracts in the years leading up to Zuma’s ousting as head of state in February 2018.
Former deputy finance minister Mcebisi Jonas told the inquiry last year that a Gupta brother offered him a 600 million rand ($40 million) bribe and the position of finance minister at a meeting arranged by Duduzane in 2015, on the condition that Jonas would assist the Guptas with their business ventures.
Duduzane Zuma said on Monday that he did arrange a meeting involving Jonas at a Gupta residence in Johannesburg in 2015 but his testimony about the meeting differed on almost every other detail. He said the meeting was between himself, Jonas and businessman Fana Hlongwane to discuss a rumour that Hlongwane was blackmailing Jonas.
Duduzane Zuma also said a different Gupta brother to the one named by Jonas poked his head into the room where Duduzane and Hlongwane were chatting with Jonas and that the meeting had not ended acrimoniously, as Jonas had said.
“After the meeting everything was cool,” Duduzane Zuma told the inquiry, answering calmly. “As I’ve mentioned in my affidavit, I’ve bumped into Mr Jonas once or twice subsequent to that meeting and my view was there was no hostility.”
He said he had held similar informal meetings at the Gupta residence “all the time”.
The state capture inquiry has shocked ordinary South Africans with revelations about the brazen way in which some people close to Jacob Zuma allegedly tried to plunder state resources and influence policymaking.
But the investigation has struggled to nail down convincing evidence of corruption involving top officials - something analysts say could be a problem for Zuma’s successor Cyril Ramaphosa, who is on a campaign to clean up politics.
Jacob Zuma appeared before the inquiry in July, but he also denied wrongdoing in several days of evasive testimony and said he was the victim of a decades-old plot.
The Guptas, who left South Africa shortly after Zuma’s removal, have not appeared before the inquiry but have submitted an affidavit in which they denied allegations against them.
Zuma still has some loyal followers in the governing African National Congress (ANC) who view him as a champion of policies that seek to address the deep racial inequality that persists more than two decades after the end of white minority rule.
But Zuma’s critics associate his leadership with deeply entrenched corruption and erratic policymaking that deterred investment and held back economic growth.
Nigerian President Muhammadu Buhari ostensibly came to South Africa to boost business ties between the two countries. But he missed a golden opportunity to drum up business by skipping a forum with business leaders because he was worried about security.
President Cyril Ramaphosa attended the forum for several hours, addressing the business people and taking questions. Some of the business people who had been expecting Buhari were disappointed by his no-show, sources said.
He was billed to appear with Ramaphosa but his security people checked out the venue of the forum – the sprawling convention centre of Gallagher Estate in Midrand – and decided on the morning of the event that it was not secure enough for him to attend, according to diplomatic sources.
One said there were no hard feelings from the SA government side – who found Buhari warm and friendly – just a feeling that he had missed a good opportunity to boost commercial ties between the two countries.
These took a knock during the recent eruption of xenophobic violence in South Africa, some of it directed against Nigerians and their businesses. Nigerian mobs retaliated in Nigeria by attacking the premises of South African companies such as Shoprite and MTN.
Agreeing on measures to prevent a recurrence of this violence and building up the commercial relations between the two countries were the major focal points of Buhari’s state visit and the Binational Commission between the two countries which he and Ramaphosa co-chaired on Thursday.
Buhari’s anxiety about security appears to be related more to tensions within the Nigerian diaspora rather than any fear of attack by South Africans.
While he was meeting Ramaphosa at the Union Buildings on Thursday, Tshwane Metro Police reportedly used tear gas and rubber bullets to disperse a handful of Nigerians – calling themselves Biafran nationals – who were demonstrating in front of the building. Some carried placards calling Buhari an imposter and demanding that Ramaphosa send him home.
They claim the “real Buhari” died in 2017, when Buhari was very ill and spent most of the year receiving treatment in London.
Self-styled Biafrans are calling for a separate state in southern Nigeria, trying to revive the movement which lead to the secession of several states to form the Republic of Biafra in 1967 in a region mostly inhabited by Igbo people.
That prompted a long civil war in which between 500,000 and two million Biafran civilians died before Biafra surrendered to Nigeria.
Another grievance of some expatriate Nigerians is the arrest in August this year of Omoyele Sowore, a Nigerian journalist and human rights activist. He ran against Buhari in the February presidential elections and was arrested after rejecting the election as rigged and calling for a protest tagged RevolutionNow.
When Buhari addressed the Nigerian community at a Pretoria hotel on Friday, some of his compatriots refused entry to the meeting were calling for Sowore’s release.
Rather ironically, even some members of Buhari’s own ruling APC party could not gain entry, because they were considered too radical, they told journalists.
A few Nigerians who were allowed into the meeting said Buhari spoke to them for about 10 minutes.
“Let me also call on Nigerians to be law-abiding and respect constituted authorities while you live here,” Buhari said, according to remarks tweeted by his office.
“May I also enjoin the few that sometimes give us a bad name, to desist from such misdemeanours and be our good ambassadors.”
This echoed his reply at a joint press conference with Ramaphosa after their meeting on Thursday to a South African journalist who asked him if he did not think the recent xenophobic violence in South Africa against Nigerians, among other foreign Africans, was partly prompted by the perception that they were involved in so much crime.
He said Nigerians understood the maxim that, “When in Rome do as the Romans do” and therefore obeyed the laws of their host country.
At the Pretoria hotel meeting, Buhari also assured his compatriots that he and the South African government had agreed on measures to tackle the xenophobic violence to ensure it did not recur.
Ramaphosa had told a press conference after meeting Buhari that these measures included establishing an early warning mechanism to pick up any signals of imminent xenophobic violence so steps could be taken to pre-empt it. He and Buhari also said that police and intelligence agencies in both countries would cooperate with each other, share information and raise levels of alertness to forestall such violence.
According to official sources, the Nigerian government is also concerned that Nigerian citizens in South African jails are not prevented from using their cellphones. Many of them continue to mastermind criminal activities in Nigeria from their South African cells, the Nigerians complained.
The South African government promised to look into this. It is not clear if the Nigerian government was referring, among others, to Nigerian oil militant Henry Okah who is serving a 24-year jail sentence in a South African prison after the High Court convicted him in 2013 on 13 terrorism-related charges over twin car bombings in Nigeria during the country’s Independence Day celebrations in 2010.
Ironically, given Buhari’s no-show at the business forum, he and Ramaphosa “welcomed the important role of the Business Forum which took place on the margins of the State Visit,” in a joint communiqué after their Union Building meeting.
They also welcomed the decision of the two governments to establish a Joint Ministerial Advisory Council on Industry, Trade and Investment which is expected to be critical in boosting private sector participation in the economies of both countries.
Ramaphosa said business and investment relations between the two countries were already strong and Nigeria accounted for 64% of SA’s trade with West Africa. The two governments had agreed to further strengthen economic ties by deepening their reforms to ensure their economies were more open to business and encouraging more Nigerian investment in SA.
He and Buhari noted the “significant footprint” of SA companies in Nigeria in sectors such as telecommunications, mining, aviation, banking and finance, retail, property, entertainment and fast foods.
By contrast, they also welcomed Nigerian business in SA but noted that it was mostly “small, micro or medium sized – with the exception of the big investment of Dangote Sephaku Cement.
At the press conference after their meeting, Ramaphosa said he would like to see a better balance in the investment relationship and would seek to achieve this by improving the environment for big Nigerian companies to invest here.
“We want to welcome more and more Nigerian businesses to operate in our space,” Ramaphosa said.
He added growing relations between the two countries were evidenced by the 32 cooperation agreements signed between them, covering a wide field including trade and industry, science and technology, defence, agriculture, energy, transport, arts and culture and tourism.
The two governments identified key sectors to boost investment for economic growth and development, including roads, railways, mining, manufacturing and agro-processing.
Credit: Daily Maverick
The Economist Intelligence Unit (EIU) analysts project Angola’s economy will return to growth only in 2021, expecting a rate of 2.5% after consecutive years of economic contraction, including in 2019, when the country is expected to see Gross Domestic Product (GDP) fall by 2.2%.
The latest EIU report on Angola states that when Angola’s economy returns to growth, 2022 and 2023 will be much more positive with expected growth rates of 4.1% and 5.0% respectively due to a gradual rise in oil prices and the non-oil economy improving its performance.
The economic studies department of South Africa’s Standard Bank projected that Angola’s economy would contract this year at a rate of -1.0%, before growing again in 2020 with a 1.4% expansion of GDP.
The EIU said in the statement that the weak economic scenario will continue to weigh heavily on the national currency, the kwanza, which this year is expected to depreciate to 345.6 kwanzas per dollar, which will worsen further towards the end of the period covered by this report to 400.1 kwanzas for every dollar.
The report recalled that oil production fell by almost 10% in 2018 to an average of 1.478 million barrels per day due to the maturity of oil fields and the lack of investment in new exploration and noted that despite the various tax benefits offered Angola has been unable to attract investors to the exploration of deep and ultra-deep wells where costs are highest.
The forthcoming concession of new blocks in two Angolan basins will only bring potential benefits in several years, so EIU analysts predict Angolan oil production will continue to decline in 2019 and 2020 as investment decisions are postponed.
The anticipated economic growth for the 2021-2023 period, with an annual average of 3.9%, is due to the improved performance of the non-oil economy, namely in agriculture, mining, construction, manufacturing and services, as access to credit increases.
The document underscored the efforts being made to attract investment and reduce nepotism and corruption but noted that the fundamental impediment to reform is the control that politicians have of the country’s economy, resisting changes to introduce greater transparency and reduce opportunities for anyone who just wants to have an income.
Declining numbers from key markets has sector concerned.
Forward bookings of trips to South Africa by international tourists are not looking good for the rest of 2019.
In fact, if foreign tourist arrival numbers continue to decline, 2019 will turn out to be even worse than last year for the industry.
That’s the word from Tourism Business Council of South Africa (TBCSA) CEO Tshifhiwa Tshivhengwa, speaking to Moneyweb this week following the latest Statistics SA data showing a decline in foreign arrivals. The council’s own Tourism Business Index (TBI), released last week, also painted a grim picture in terms of the outlook for the rest of the year.
Stats SA reported on Monday in the release of its monthly tourism and migration data that foreign arrivals were down 5% for July, compared to July 2018. The data also reveals that South Africans are travelling less overseas with arrivals by South Africans down 11.8%, while departures were down 11.6%.
The figures speak for themselves, says Tshivhengwa. “We have been saying for some time things are tough and are not looking good in terms of international tourist arrivals into South Africa. Our TBI results from last year predicted this and now it is a reality with international arrivals continuing to decline.”
Tshivhengwa says according to the latest TBI figures, international tourist arrivals for the year to date are down 1.4% compared to 2018. SA Tourism’s research, based on Stats SA data, puts the decline for the first six months of the year at 1.1%.
“The results for July have further negatively affected foreign tourist arrivals for the year, which is really concerning for us as the tourism industry,” he notes. “However, the bigger worry is that it puts our target of doubling tourist arrivals by 2030 at risk. To achieve this, we require a 6% compound growth annually in international tourist arrivals to 2030.”
TBCSA identifies itself as the umbrella body representing the “unified voice of business in the travel and tourism sector”. It also administers the tourism marketing levy, known as Tomsa, which tourists pay on specific services such as accommodation in South Africa.
Recovery unlikely this year
“Forward bookings for the rest of the year are not looking good,” says Tshivhengwa. “We were hoping for a recovery in 2019, but it is looking increasingly unlikely from an international tourism perspective. We are not seeing signs of a recovery.”
Last year foreign tourist arrivals to South Africa grew by a lacklustre 1.8% to 10.5 million. The TBCSA described 2018 as “the most challenging trading year for the tourism sector since the inception of the TBI in 2010”. The index recorded its lowest results in 2018.
Tourists from Africa, mainly the Southern African Development Community (SADC) region, make up the majority of foreign tourists to South Africa (around 7.8 million), according to auditing and professional services group BDO South Africa. Around 2.7 million tourists were from overseas (including Europe, North America, Asia, the Middle East and Australia).
The TBCSA, with support from SA Tourism, has set an ambitious target to double arrivals to the country to 21 million by 2030.
The organisations have secured the support of President Cyril Ramaphosa to grow the tourism industry and have been calling for relaxation of visa regulations and addressing the issue of unabridged birth certificates for travelling minors.
“Domestic tourism is doing better,” says Tshivhengwa. “However, on the international tourism front where tourists spend more, a continued decline in arrivals will mean that this year will be worse than last year for the tourism industry.”
Tshivhengwa concedes that recent xenophobic violence and crime incidents have not helped matters.
“These issues hurt our industry’s growth potential,” he says. “We cannot ignore them as they impact the image of our country as a whole.
“These issues, together with SA’s visa regime and continuing challenges around unabridged birth certificates, were raised by international travel companies in our recent roadshow to Europe.”
Responding to Moneyweb queries, SA Tourism acting CEO Sthembiso Dlamini points out: “South Africa views violence in a serious light and condemns it in the strongest possible terms. While we are unable to quantify the impact from an international arrivals perspective, what is concerning is the negative image the attacks have had on South Africa as a brand.”
She adds: “The recent attacks violate all the values that South Africa embodies. Our country stands firmly against all intolerance.
“We have seen queries from various international tour operators, but we have assured them that our government and safety authorities are urgently addressing the situation and that South Africa remains a warm and welcoming country, and open for business.”
On the recent roadshow and SA Tourism offensive in Europe, Dlamini says Europe is a crucial market for South Africa as it generates significant tourism numbers for the country.
“The roadshow was a great success, providing more insights into some of the barriers and concerns of tourists wanting to travel to South Africa,” she says.
“The concerns coming out of this roadshow such as unabridged birth certificates, marketing of the less popular regions as well new product offerings, will be addressed in order to make sure South Africa is more accessible to travellers from Europe and other parts of the world.”
Credit: Moneyweb South Africa
There are a host of reasons why a country’s economy must be regulated. One of the main ones is to ensure that dominant firms, whether public or private, don’t abuse their market power. When it comes to state-owned enterprises, government has a further obligation – to ensure that they perform in the public interest.
Since state-owned enterprises are owned by government, one option is to hold them directly accountable to a political and administrative head. A popular alternative in recent decades has been to establish economic regulators, mandated to operate at arms-length from the government which acts as shareholder on behalf of society.
South Africa followed this trend after 1994, creating the National Energy Regulator, which regulates electricity and other energy sources. The other regulators are the National Ports Authority and the Independent Communications Authority. Proposals to expand this approach to transport and water have now been endorsed in the draft policy document recently released by the National Treasury.
However, the model has failed dramatically to achieve its objectives in both the energy and communications sectors. In our view, it has also been a wasteful use of scarce expert capacity and institutional resources. This is our conclusion based on an analysis of independent regulation as applied in South Africa.
An important example is how the energy regulator failed to assure a stable pricing path for electricity. This is it’s most basic function. And in trying to perform its function, it is now hindering the resolution of the crisis at the state-owned power utility Eskom by awarding tariffs that offset support from the Treasury – at a time when the country faces serious fiscal and energy threats.
What’s not working
South Africa’s state-owned enterprises are supposed to provide a foundation for the country’s development. Yet many are performing badly, or not at all. In some cases they are doing actual harm by, for example, draining public resources.
Existing independent regulators are supposed to:
set fair prices to ensure that users are not ripped off;
ensure that the performance of enterprises meets minimum standards, and ideally keeps improving;
make decisions that reflect government policy goals; and,
at the same time, avoid short-term or otherwise inappropriate political pressures.
There are four main reasons why South African economic regulators are failing to achieve these objectives.
First is policy incoherence. Independent regulators are supposed to protect enterprises from the short-termism, opportunism and the fickleness of politics. But they cannot do that effectively if state owned enterprises must give effect to government policy that is still in flux.
Second is a lack of government support. Regulators can never be entirely free from political influence precisely because they need supportive decisions and actions by the state. And that support often hasn’t been forthcoming.
The National Ports Regulator is a good example. The regulator wanted the Minister of Transport to separate port services from the rest of Transnet’s operations as envisaged by the relevant legislation. But that hasn’t happened because Transnet has been lobbying government to retain the revenue from the profitable port business. And government itself is disinclined to tackle the financial challenges that would arise if the Ports Regulator was allowed to do its job and reduce bloated tariffs.
Third is the issue of performance. Most state owned enterprises are performing badly but in many sectors the primary challenge is poor performance at municipal level that results from weak governance. Whether in the local supply of electricity, water, or sanitation services, municipal failure can either compound the failure of state enterprises, or diminish any benefits they might bring.
In such instances, national-level economic regulation will have limited impact if service delivery mechanisms fail. Fiddling with pricing decisions is of little significance to citizens and firms that don’t have reliable access to water, electricity or transport services.
Part of the problem is that independent regulation was often promoted as a pathway to privatisation. But that has not happened. And in many instances the case for privatisation has not been convincing, meaning that it might just replace public dysfunction with notional accountability mechanisms for private dysfunction with little accountability. If privatisation is not the way forward, at least for now, these entities should be managed differently with a focus on public performance.
The final practical consideration is that independent regulation needs substantial technical capacity. There are various parts to this.
The regulator must have the staff who can evaluate enterprises, challenge them where appropriate but not intervene unnecessarily.
The regulated enterprise must employ people to engage with their regulator.
Government must have the capacity to set up and support the regulator. If more than one department is involved, all must have appropriate capacity.
Policy makers must provide clear policy expectations and resolve uncertainty quickly.
Ideally, other parts of society also need to be able to engage with regulatory issues. Civil society needs to have a voice as do companies that use the services of the state-owned enterprise. And courts need to be capable of dealing with these specialised issues.
The question then is whether further proliferation of regulatory capacity is possible, or even desirable.
We believe the answer is no. And argue that there is a radical, but simple, alternative.
It’s a given that political decision-making will guide the oversight of state enterprises – that’s because the government wants to use them to promote broader development policy. This means that the focus should be on building government’s capacity to guide the process. That way, political heads will be clearly accountable and failures cannot be blamed on other parties.
The water sector has been cited as one where a new regulator might be introduced. But it actually serves as a case study of how public entities can deliver well without an independent regulator. Bulk water prices are set by the national government department, using criteria legislated 20 years ago. The department calculates the tariffs and consults with major stakeholders. These include municipalities, big users such as Eskom and Sasol as well as organised agriculture. Price increases greater than inflation have to be justified.
Unlike the electricity case, this system has worked reasonably well and tariffs have increased smoothly and predictably. User participation keeps government honest in its calculations.
Some organisations still argue that a regulator would reduce mismanagement. But this ignores the lessons of experience and is based on a superficial notion of democratic accountability.
By contrast, in energy a former regulator and sector expert acknowledged that the regulatory agency’s price setting had produced huge fluctuations in the tariff which caused uncertainty. Yet, Treasury inexplicably wants to replace a relatively successful model (in water) with a failed one (in energy).
The way forward
We believe that ending dependence on failed independent regulators will ensure that there’s much more direct accountability. It will also lead to a focused effort to improve governance in both government departments as well as state-owned enterprises. And limited capacity can be integrated from disparate departments, entities and regulators.
There is no getting round the fact that tough action needs to be taken, and soon. If government doesn’t get oversight of public enterprises right, a different form of “regulation” will be imposed on the country by international financial institutions and other lenders. But their focus will be on what’s needed to ensure debt repayment, not the broader national interest.
Seán Mfundza Muller, Senior Lecturer in Economics and Research Associate at the Public and Environmental Economics Research Centre (PEERC), University of Johannesburg and Mike Muller, Visiting Adjunct Professor, University of the Witwatersrand
Former South African President Thabo Mbeki has said former President Robert Mugabe delayed embarking on the land reform programme to allow successful negotiations between the African National Congress (ANC) and the apartheid regime.
He said this at Durban City Hall on Tuesday during an ANC memorial service for Cde Mugabe in KwaZulu-Natal.
"As we began the process of negotiations here in South Africa in 1990, the 10-year period of the Constitution of Zimbabwe negotiated at the Lancaster House came to an end," said Cde Mbeki.
"Zimbabwe could now redo its Constitution, including addressing this matter of the land question, particularly as it related to the principle of willing buyer-willing seller.
"The then secretary-general of the Commonwealth, Chief Emeka Anyaoku from Nigeria, then approached President Mugabe to plead with him not to change the Lancaster House provisions related to the land question.
"His (Chief Anyaoku) argument was that if Zimbabwe did something like that to address the land issue, correctly as they needed to address it, it would frighten the white population in South Africa and make it difficult for ANC to negotiate with them."
Cde Mbeki said Cde Mugabe then acceded to Chief Anyaoku's plea.
"That is why the land reform process was delayed in Zimbabwe for at least a decade," he said.
"It was done in order to give us a space here in order to succeed in our negotiations with the apartheid regime."
Cde Mbeki said he went to the UK and spoke to Prime Minister Tony Blair and urged the British government to honour its Lancaster House agreement.
"As South African government we told Prime Minister Blair that we think you must honour your promise on the land question that particular year UK, Canada and Australia and New Zealand, the so called white Commonwealth, all of them for some reasons had budget surpluses and so we said to him (Prime Minister Blair) that if he committed himself to raising the money, we will talk to other Commonwealth countries to support him and he agreed," he said.
"A donor conference was held in Zimbabwe in 1998 to address this matter and it was agreed, but dishonoured in the first instance by the UK.
"The matter came up again a bit later when the war veterans started occupying some of the farms and at that particular time there were 115 farms that were available for sale and they would have cost 9 million.
"Zimbabwe sent a delegation to the UK to ask that they be given the money to buy those farms to take the war veterans onto these farms that would have owned away from these commercial ones and the British government said they had no money."
Credit: The Herald
In spite of the peace initiative, a number of travel agents told one of our correspondents that Nigerians were not buying tickets to South Africa, except for special reasons.
I haven’t sold tickets to Johannesburg for two weeks – Agent
“I have not booked a single ticket to Johannesburg in the last two weeks,” a travel agent, who did not want to be named revealed.
“Nobody is going there at the moment. It is as if there is a total boycott except it is extremely important. Since the problem between Nigeria and South Africa began, the only people travelling are those that had booked their flights long before now and students that need to return to school and have no choice but to resume,” the agent said.
Another Lagos-based agent said the situation had degenerated to the point that special travel packages that were put together for tourists to the country had either been cancelled or diverted to some other destinations as people were no longer interested.
Nigerian tourists changing destinations from SA to Dubai
According to the agent, Nigerian tourists are changing their vacation destinations to Dubai, Mauritius and other places.
“There are people with pending tickets that have requested change of airline or destination. Even people scheduled to travel; some have said they no longer want to travel to South Africa,” he said.
Findings show that South African Airways, which operates daily flights between Lagos and Johannesburg, has been affected.
South African Airways enjoys a near monopoly on the route being the only airline that offers direct flights from Lagos to Johannesburg; other airlines on that route such as Kenyan Airway and Rwandair have to get to Nairobi and Kigali respectively, before taking off to Johannesburg. The airline, when contacted, declined to comment on the issue.
I left SA when attacks became frequent – Mother of two
Meanwhile, a woman who was among those evacuated on Wednesday shared her experience, saying that she decided to leave South Africa when the attacks became frequent.
The single mother of two, Ololade Atere, from Oyo State, said her nail studio was destroyed in the recent xenophobic attacks.
Atere said, “My experience was bad. I was into fixing of nails and one day I got a call that my shop had been destroyed. I decided to come home because the violence became too much and I couldn’t keep running with my two kids.
“I lived in South Africa for five years, but I have no plans of going back. I am tired of the violence. I have to be safe. I am home now. I have to find a job or business.
“I left Nigeria when I was pregnant. The intention was to have my baby, have some travel experience and return. I wanted to come back after I had my first baby but people convinced me to stay. But now, I have had enough.”
S’Africa said my children were its citizens – Mother
Atere said she was supposed to be among the first batch of Nigerians to return, but was stopped at the airport.
“They said I couldn’t travel with my kids because I gave birth to them in South Africa and they are citizens,” she said.
She added that she was made to swear an affidavit before she was allowed to bring the children with her to Nigeria.
‘I left my child in S’Africa’
Another returnee, who identified himself as Uchenbi, told the News Agency of Nigeria that South Africans harboured hostility towards Nigerians.
He stated, “South Africans are angry at Nigerians for no reason and would blame them for whatever reason they deem fit.”
Uchenbi, who was in South Africa for 12 years before he returned to Nigeria on Wednesday, said he left his child in South Africa, while she was sleeping.
The man, who is married to a South African, said his wife would have suffered, if he had been killed in South Africa.
S’African police didn’t probe my husband killing – Woman
Another returnee, Blessing Chioma, accused the South African police of inaction when her husband was killed in 2012.
Chioma said, ”I’m coming from South Africa, Johannesburg; I was married to a Nigerian, but South Africans killed him during the xenophobic attacks. I reported the case to the police, they know about it; they look for the guys, but you won’t know them because they come in groups, so nothing was done; the case is closed,” she said.
”Since then I’ve been coping with the children, but I returned them to Nigeria because I was no more meeting up in training them. So they’re here now in Nigeria; I came back to take care of them, but we came with nothing because they burnt our shops.”
Source: Nigerian Eye
South Africa's main opposition parthy The Democratic Alliance (DA) can reveal that almost 70% of PRASA controlled train stations do not have CCTV cameras.
A response to a DA Parliamentary Question has revealed that of the 585 train stations under PRASA’s control, only 181 stations have at least one CCTV camera. This means that only 30.9% of stations in the country have at least one CCTV cameras.
In the Western Cape, where rail safety has been particularly out of hand, only 42 out of 122 stations in the province have CCTV cameras. This means only 34.4% of the province’s stations have at least one CCTV camera.
These are alarming figures considering the fact that crime is on the increase. In 2018 alone, an estimated 495 people lost their lives while making use of our trains and 2079 were injured. Clearly the ANC government cannot be trusted to keep commuters safe.
To make matters worse, around 26.8% of all the cameras installed nationally are not working.
How can we have effective policing at train stations when most stations do not have cameras, and those that do are not guaranteed to have operational ones?
PRASA’s old, outdated and stoic infrastructure places many commuters across the country under constant threat of being attacked by criminals, due to the state of lawlessness and lack of law enforcement at PRASA stations.
The table below shows a total of installed CCTV cameras at PRASA managed railway stations per region:
The DA is of the view that policing and train services should be handed over to competent provinces such as the Western Cape, as the national government is incapable and clearly unwilling to keep our people safe.
Unlike the ANC, the DA has a rail plan that will create a safe and well-managed railway system which put commuters first and will ensure job security. The plan is based on four aspects:
Stabilising and modernising the current rail system;
Merging Transnet and PRASA under the Department of Transport;
Ceding control of Metrorail services to Metros; and,
Poor railway infrastructure and mismanagement makes it hard for South Africans to reliably depend on trains to deliver them to their destinations safely and on time.
South Africa's economic growth is unlikely to reach the treasury's target of 1.5% in 2019 because conditions have changed and the country is facing increasing headwinds, Finance Minister Tito Mboweni said on Friday.
This week ratings agency Moody's, the last of the top three credit firms to rate South Africa’s debt at investment level, said it had lowered its growth forecast to 0.7% from 1%.
The central bank sees gross domestic product at 0.6% this year. Both have cited slow economic reforms as the key drag on economic activity, and massive bailouts to state-owned companies, including 59 billion rand ($4.05 billion) to power firm Eskom.
This has limited the government's scope for stimulus and raised debt while the resultant uncertainty has kept investment subdued.
"The assumptions underlying the forecasts have clearly changed ... the actual deficit now is probably much higher," Mboweni told a banking conference in Johannesburg.
He said that increasing calls for the treasury to bail out state firms was putting pressure on growth and spending.
"We must re-focus our economy on agriculture …but we also have to continue to support Eskom, because without electricity there is no growth," Mboweni said.
A Reuters poll of economists this week forecast South African economic growth at 0.7% this year, up from 0.6% in the previous forecast. Second quarter growth bounced back 3.1% after a revised contraction of 3.1% in the first quarter.
($1 = 14.5521 rand)