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Parliament looses control on government spending

SA’s big black hole in its fiscal galaxy…..

It  looks like the governing party knows even more about the daylight robbery going on in certain provincial and local government structures than was originally disclosed.    A big hole in local givernment spending is still swallowing up millions in taxpayer revenue.    Not good news when an election is happening.

As a result of the disclosures, this is a delicate moment for South Africa waiting to learn the make-up of the parliamentary political balance and who is nominated to Cabinet, and just as important as it is to see the structure of provincial government where most of taxpayer’s money is spent.

With the economy in peril, what happens now in terms of responses with regard to the outcomes on state capture and corruption, and how it is handled, is a matter of dancing on the edge of a financial cliff.  Financial commentators from the around the world are watching.

Gearing up

With Parliament re-opening, the third pillar of the South African democratic structure will again assume its critical role in debating and shaping government policy.    Equally important, it will resume its position as a listening post for business and industry.   We have sharpened our pencil.

Its seems such a short time since 1994 when Parliament started its first five-year government term. Looking back over the five terms, what a roller coast ride it has been.

Watching, waiting

Now, for the sixth time, 400 members on the national political party lists are allocated to the National Assembly (NA) and a further 90, representing provincial interests, go the National Council of Provinces (NCOP) in the form of 10 delegates for each of the nine provinces.

The NCOP has the task of monitoring the NA in fact, therefore representing, somewhat tenuously, the voice of the people in those provinces.

Good start

The home of the NCOP is a building opened in 1884 as the first parliament of the Cape of Good Hope which interestingly enough was multi-racial, condescendingly so some say.  Its good-looking edifice dominates the central portion of the parliamentary precinct, next to the more modern National Assembly building.

With political balance of the 490 MPs on the precinct about to be established and the voice of the people thus represented, there is a shadowy side to Parliament as well which many politicians at national, provincial and local government have learned to use or abuse.

 In reality, the NCOP is the combined voice of the nine legislatures of the provinces acting as a watch-dog and checking that the National Assembly is not disregarding their interests.

The watchers

Only 54 of its 90 seats allocated have voting powers, the balance of 4 members per province having a special status to be heard but who cannot vote.  One of those members with special status is the Premier of each province, all Premiers rarely attending being too busy with their legislatures.

The other three seats allocated as special status are for provincial members assigned for particular reasons, maybe on a specific debate, and who travel from the provinces.  Ordinary citizens cannot be heard unless invited to do so but may watch, unless the meeting is closed for good reason.

Basic work

When legislation is tabled, it goes first to the NA for debate and approval.  If it has strong provincial interests it is “tagged” to go to the NCOP not just for simple “concurring”. In this case, the matter is sent with a special call to all nine provinces for comment Houses_of_Parliament_(Cape_Town)and majority vote or rejection.  This mandate in reply from provincial power bases is then expressed upwards by the NCOP.

In the National Assembly, the 400 members are spread out into “portfolio” committees for debate on national government reporting on policy matters and in accounting terms.  Their main tasks are to approve the budget and allocate same to the nine provinces, also to debate tabled legislation and monitor how all national departments are performing against targets.

Numbers game

In the NCOP there is a problem. There are only 54 members allocated to it and who can vote.   With and far too many government departments to watch, as a result their monitoring brief on national departments is broken into selected groups. (Hence the term used by Parliament of “select” committees.)

In addition to the provincial presence, local government is represented in the NCOP by SALGA who can also attend meetings in the NCOP with a voice but have no voting powers. This really is the only contact Parliament has with local government.

Three-tiered cake

However, the snag with the system now becoming more and more evident is simply that the traffic on money matters is one-way only.  It goes from the top, downwards.    That is not because the system is wrong, since it was designed that way so that the NCOP is fully briefed on budgets and allocations to the provinces.

However, such a system can be easily “worked” to provide an outcome that hides criminal intent or sloppy accounting since no information is coming upwards other than when MPs decide to make personal visits as a committee team on a specific issue and travel themselves “downwards”.

Mushroom club   

Consequently, nobody in the NA has really any idea of what is happening in the nine provincial legislatures or how municipalities and local governments are spending the budget in a reportable audit form other than what is reported by to it by national government entities and departments.

For example, in the Free State, heaven knows what has been going on there for a number of years with past Premier Ace Magashule and his cohorts, who seemingly have only been monitored by AmaBhugane but certainly not properly by the Premier and the Free State legislature.

Nobody seems to have listened the DA in the Free State complain and their accounting experiences with Free State audits investigated, such matters having been brought up in question time in the NA again and again but written off as opposition trouble making. The NCOP, of course, does not come into the equation.

Another world

The net result is that none of the frightful qualified audits on Free State budget spending on infrastructure representing an accounting malaise of epic proportions have come fully before Parliament. At the moment the big black hole in the economy at provincial level appears to have much to do with the distortion in accounting terms between how the money was used for spending and what actually was the value of the work done, if at all.

When the power shortly returns to Parliament the President will only have a very short time to deal with his compatriots who, as Archbishop Tutu put it, have lost their moral compass and taught so many how to steal from the poor.

Perhaps the new challenge of the Sixth Parliament is to have better contact with provinces, municipalities and local government, since here lies the gaping hole in the economy coupled to lack of service delivery.

 

ends/ editorial /parlyreport/1 May 2019/sent to subscribers

 

 

 

 

 

Posted in cabinet, Finance, economic, Home Page Slider, Special Recent Posts0 Comments

Communal Property Bill part of land reform

From Aug/September ParlyReport….

Communal Property Bill posted 7 10 2018

Posted in Agriculture, Cabinet,Presidential, Finance, economic, Justice, constitutional, public works, Special Recent Posts, Trade & Industry0 Comments

ANC MPs face to face with reality

….SA on world stage for Parliamentary opening

….editorial 27 January 2018

Who is going to be doing what in the ANC as Parliament re-opens for the first session of 2018 is far from clear as the party cogitates over leadership factors.    However, the vessel, the SS Rainbow Nation, may have righted itself and could commence the long and difficult voyage to economic recovery, although the vessel could well be said to be currently in damage control mode.   But at last the glass is half full, not half empty.

For the next few weeks, all eyes will be on Parliament.  The Bard could not have put it better.   “All the world’s a stage: all have their exits and their entrances…”, to paraphrase a little.

Patience called for

Those who feel that injustices have taken place and people must go to jail will just simply have to wait and learn to control the anger and frustration in the coming weeks as we learn of further exposés indicating the real depth of the corruption and mismanagement during the Zuma era.  The wound has been lanced but it took far too long for the doctor to arrive and apply a dressing.

In the meanwhile, somehow, South Africans are going to have to put this ten year period of atrocious governance behind and just simply get on with the job.. The endless denials of who did what to whom and whose hands are clean will go on for a very long time.  Replays of past speeches which are totally contrary to current statements will be the order of the day and prepare for brazen lies about how so many people all miraculously got to stay at the Oberoi Hotel in Dubai, for example.

They told us so

AmaBhungane and Daily Maverick told us about the Vrede Dairy Project theft of R220m as long ago as June 2017, the scam set up by still current Minister Mosebenzi Zwane and ANC Secretary General Ace Magashule, then Free State Premier, and contemptuously planned as a siphon for personal financial gain.   It was almost tiring to see the whole story splurged again in the weekend press. The “I am innocent until proven guilty” answers from Minister Zwana were equally as absurd.

Consequently, for the last six months, it has also been most difficult to watch Zwane strutting about in parliamentary portfolio committee meetings in the confident manner that is his hallmark busily destroying half of the mining industry on behalf of the Guptas knowing that all around him knew what he was up to.

Fortunately, partner Ace Magashule appears rarely Parliament. His time may come, however, once his position at Luthuli House is clarified.

Failure of disciplines

Under Jacob Zuma, the habit of state “fruitless and wasteful” expenditure has become endemic ever since the example had been set by the top with Nkandla. This was probably the first awful display of arrogance in the face of overwhelming knowledge of the truth. Now with Eskom debacle included, we know that that the total of money stolen in the Zuma era is around R700bn. This is according to the Institute of Internal Auditors.

If the “fruitless and wasteful” aspect of bad governance are added to this already frightful figure, then whomsoever said “Every nation gets the Government they deserve” is right, meaning of course that if Parliament and the Auditor General fail in oversight of government expenditure then all are poorer for not having applied consequences.  A private member’s Bill, recently tabled in Parliament to give the AG more teeth, is most welcome.

How low can it get?

If the Sunday press coverage of the Vrede dairy swindle was not enough,  once again we had to watch, with no satisfaction we might add, this same sickening story of corruption and greed repeated by a TV announcer standing outside a sliding gate and a wall located in the back and beyond of the Free State with a few building structures in the distance.  The total sum of assets still technically belonging to the Department of Agriculture from their project from which the R220m had been blatantly diverted.

As had been told to us six months before by Amabhungane and by Jacques Pauw,  Minister Zwane’s son who works for the Gupta family, was the recipient of a good slice of this money.   Even the President’s son is deeply involved as a beneficiary.   One turns one’s head away in shame. All in the name of a few cows and a group of hapless indigent farmers. A line which should not have been crossed.

Parliament is the people

What has been learnt is that Parliament is the people’s place of refuge. That is all we have, however ineffectual it may seem at times.  The proof of this is in the pudding. That creaky old system invented centuries ago won the day and in the end the people spoke. Parliamentary enquiries, whilst not courts of law and cannot judge, have produced the questions which leave the ordinary person, “the people”, to judge for themselves.

It seems pretty common cause, therefore, that  “people say”  that President Jacob Zuma should no longer be allowed to occupy Tuinhuis with a whopping salary and a rather large home and family.  The “people” were supported, brilliantly, by a strong civic voice and whistleblowers who have not benefited.

The stage is set and the play will end where it started.  In  the people’s Parliament.

Fresh start

Time now to forget the past. We must start again. It would be good to rise above the obsession to see these partners in crime and state capture go to jail. The systems, it appears, are back in place to ensure whether this happens or not.

Revenge is not the issue, however. The job in hand is to get on speedily repairing the damage. One remembers with warmth the leadership style, vision and courage endowed to us all by Nelson Rolihlahla Mandela, who asked us to rise above the sins of apartheid and focus only upon building a country. Many feel the time has come for the ANC to repeat the exercise.

A long road

Africa is indeed rising again and for the first time, in a long time, we can look forward to newscasts that don’t leave one feeling helpless, as has been the case ever since the Gupta e-mails emerged. In the few days after Cyril Ramaphosa returns from Davos (with whatever title he may have assumed by then) parliamentary business can return to normal.

All eyes in the next few weeks will focus upon the State of Nation Address and the Budget. Why exactly is the glass half full and not half empty? Because the governing party has been given a chance to put things right. Their endeavours to do so will be for all to see on the stage called Parliament.

Previous editorials
Parliamentary start to 2018 will be stormy – ParlyReportSA
Parliament SA: the top half of the iceberg.. – ParlyReportSA

Posted in earlier editorials, Special Recent Posts0 Comments

Marine Spatial Bill targets ocean resources…

Bill to bring order to marine economy…

November 2017 ParlyReport…..

In the light of President Zuma’s emphasis in his recent speeches on oil and gas issues, it is important to couple this in terms of government policy with the tabling of the section 76 Marine Spatial Planning Bill (MSP Bill).  The proposals are targeted at business and industry  to establish “a marine spatial planning system” offshore over South African waters.

The Bill  also says it is aimed at “facilitating good ocean governance, giving effect to South Africa’s international obligations.”

A briefing by the Department of Environmental Affairs (DEA) on their proposals is now awaited in Parliament. The Bill until recently was undergoing controversial hearings in the provinces as is demanded by its section 76 nature.

Water kingdom

The MSP Bill applies to activities within South Africa’s territorial waters known as Exclusive Economic Zones, which are mapped out areas with co-ordinates within South Africa’s continental shelf claim and inclusive of all territorial waters extending the Prince Edward Islands.

The Bill flows, government says, from its Operation Phakisa plan to develop South Africa’s sea resources, notably oil and gas.   The subject has recently been subject to hearings in SA provinces that have coastal activities. This importantly applies to South African and international marine interests operating from ports in Kwa-Zulu Natal and the Eastern and Western Cape but also  involves coastal communities and their activities.

International liaison

Equally as important as maritime governance, is the wish to assist in job creation by letting in work creators.  Accounted for also are international oceanic environmental obligations to preserve nature and life supporting conditions which DEA state can in no way can be ignored if maritime operations and industrial seabed development are to be considered.

South Africa is listed as a UNESCO participant, together with a lengthy list of other oceanic countries, agreements which, whilst not demanding total compliance on who does what, are in place to establish a common approach to be respected by oceanic activity, all to be agreed in the 2016/7 year.  South Africa is running late.

Invasion protection

Whilst the UNESCO discipline covers environmental aspects and commercial exploitation of maritime resources, the MSP Bill now before Parliament states that in acknowledging these international obligations, such must be balanced with the specific needs of communities, many of whom have no voice in an organised sense.

As Operation Phakisa has its sights set on the creation of more jobs from oceanic resources therefore, the MSP Bill becomes a balancing act for the Department of Environmental Affairs (DEA) and the Bill is attracting considerable interest as a result.

The hearings in the Eastern Cape have already exposed the obvious conundrum that exists between protecting small-time fishing interests and community income in the preservation of fishing waters and development of undersea resources.  What has already emerged that the whole question of the creation of future job creation possibilities from seabed-mining, oil and gas exploration and coastal sand mining is not necessarily understood, as has been heard from small communities.

The ever present dwindling supply of fish stocks is not also accepted in many quarters, with fishing quotas accordingly reduced.

Tug of war

All views must be considered nevertheless but from statements made at the political top in Parliament it becomes evident that the potential of developing geological resources far outweigh the needs of a shrinking fishing industry.  At the same time, politicians usually wish to consider votes and at parliamentary committee level, the feedback protestfrom the many localised hearings is being heard quite loudly.

As one traditional fishing person said at the hearings in the Eastern Cape, “The sea is our land but we can only fish in our area to sustain life. The law is stopping us fishing for profit.”

Local calls

The attendees at many hearings have said that the MSP Bill and similar regulations in force restrict families from earning from small local operations such as mining sand; allow only limited fishing licences and call for homes to be far from the sea denying communities the right to benefit from the sea and coastal strips for a living.

Hearings last went to the West Coast and were held with Saldanha Bay communities.

Big opportunities

Conversely, insofar as Operation Phakisa is concerned, President Zuma, as has been stated, said clearly in his latest State of Nation AddressZuma that government has an eye for much more investment into oil and gas exploration.   He has since announced that there are plans afoot to drill at least 30 deep-water oil and gas exploration wells within the next 10 years as part of Operation Phakisa.

Coupled to this is the more recent comment in Parliament that once viable oil and gas reserves are found, the country could possibly extract up to 370 000 barrels of fossil fuels each day within 20 years – the equivalent of 80% of current oil and gas imports.

According to the deadline set by the Operation Phakisa framework, the MSP Bill should have been taken to Parliament at the beginning of December 2016 for promulgation as an Act by the end of June 2017, making it appear that things are running late.

Environmental focus

As the legislation is environmentally driven, with commercial interests coming to the surface in a limited manner at this stage, the matter is being handled by the Portfolio Committee on Environmental Affairs.    It is understood that later joint meetings will be held with the Trade and Industry Committee and with Energy Committee members.

Adding to the picture that is now beginning to emerge, is the fact that Minister of Science and Technology, Naledi Pandor, has signed a MOU with the Offshore Petroleum Association of South Africa.

Minister Pandor said at the time of signing, “The South African coastal and marine environment is one of our most important assets.   Currently South Africa is not really deriving much from the ocean’s economy. This is therefore why we want to build a viable gas industry and unlock the country’s vast marine resources.”

Moves afoot

OPASA is now to make more input with offshore oil and gas exploration facts and figures.   Energy publications are now bandying figures around that developments in this sphere will contribute “about R20bn to South Africa’s GDP over a five-year period.”   If this is the case, the Energy Minister might be compromised once again, as she was with renewables, on the future makeup of the planned energy mix.

Amongst the particularly worrying issues raised by opposition parliamentarians and various groupings in agricultural and fishing areas is that there is a proposal in the MSP Bill on circuit states that the Act will trump all other legislation when matters relate to marine spatial planning. DEA will have to answer this claim.

Opposition

Earthlife Africa have also stated at hearings in Richards Bay that in their opinion “Operation Phakisa has very little to do with poverty alleviation and everything to do with profits for corporates, most likely with the familiar kickbacks for well-connected ‘tenderpreneurs’ and their political allies.”

This is obviously no reasoned argument and just a statement but gives an indication of what is to be faced by DEA in the coming months.

Giants enter

With such diverse views being expressed on the Bill, President Zuma and past Minister  of Energy, Mmamaloko Kubayi cannot have missed the announcement that Italy’s Eni and US oil and gas giant, Anadarko, have signed agreements with the Mozambique government to develop gas fields and build two liquefied natural gas terminals on the coast to serve Southern African countries.

Eni says it is spending $8bn to develop the gas fields in Mozambique territorial waters and Anadarko is developing Mozambique’s first onshore LNG plant consisting of two initial LNG trains with a total capacity of 12-million tonnes per annum.  More than $30bn, it has been stated in a joint release by those companies, is expected to be invested in Mozambique’s natural gas sector in the near future.

Impetus gaining

In general, therefore, the importance of a MSP Bill is far greater than most have realized. The vast number of countries called upon to have their MSP legislation in place also indicates international pressure for the Portfolio Committee on Environmental Affairs to move at speed.

This follows a worldwide shift to exploiting maritime resources, an issue not supported by most enviro NGOs and green movements without serious restrictions.  Most parliamentary comments indicate that the trail for oil and gas revenues needs following up and the need to create jobs in this sector is even greater.

Ground rules

Whilst the oil and gas industry and the proponents of Operation Phakisa also recognize that any form of MSP Bill should be approved to provide gateway rules for their operations and framework planning, the weight would seem to be behind the need for clarity in legislation and urgency in implementation of not only eco-friendly but labour creating legislation.

Operation Phakisa, as presented to Parliament particularly specified that the development of MSP legislation was necessary and Sean Lunn, chairperson of OPASA has said that the Bill will “add tangible value to South Africa’s marine infrastructure, protection services and ocean governance.”  He said it will go a long way in mitigating differences between the environmentalists and developers.

Not so nice

On seabed mining, the position with the MSP Bill is not so clear, it seems.    Saul Roux for the Centre for Environmental Rights (CER) says that the Department of Mineral Resources granted a few years ago three rights to prospect for marine phosphates.

He also stated that the marine process “involves an extremely destructive form of mining where the top three metres of the seabed is dredged up and consequently destroys critical, delicate and insufficiently understood sea life in its wake.”   Phosphates are predominantly used for agricultural fertiliser.

“These three rights”, he said “extend over 150,000 km2 or 10% of South Africa’s exclusive economic zone.”

Something happening

One of CER’s objectives, Roux says, is to have in place a moratorium on bulk marine sediment mining in South Africa.   He complains that despite the three mining rights having been gazetted, he cannot get any response from Minister of Mineral Resources, Mosebenzi Zwane, or any access to any documents on the subject.

He stated there were two South African companies involved in mining sea phosphates and one international group, these being Green Flash Trading 251, Green Flash Trading 257 and Diamond Fields International, a Canadian mining company. All appeared to be interested in seabed exploration for phosphates although not necessarily mining itself.

Roux called for the implementation of an MSP Bill which specifically disallowed this activity as is the case in New Zealand, he said.

Coming your way

The MSP Bill was tabled in April 2017 and once provincial hearings are complete it will come to Parliament. The results of these hearings will be debated and briefings commenced when announced shortly.

Previous articles on category subject

Operation Phakisa to develop merchant shipping – ParlyReportSA

Hide and seek over R14.5bn Ikhwezi loss – ParlyReportSA

Green Paper on nautical limits to make SA oceanic nation – ParlyReportSA

Gas undoubtedly on energy back burner – ParlyReportSA

 

Posted in cabinet, Energy, Enviro,Water, Finance, economic, Labour, LinkedIn, Mining, beneficiation, Special Recent Posts, Trade & Industry0 Comments

Credit regulations to squeeze racketeers

Debt relief and credit under microscope

… sent to clients 22 Dec 2016…. Further powers for the National Credit Regulator to regulate against reckless lending have been reaffirmed as necessary and the subject of debt relief for needy persons considered.

This conclusion was the result of a series of hearings conducted by Parliament and criteria are to be developed for the application of debt relief measures and how this could be achieved are now being studied.

Such criteria could include target groups of debtors who would be eligible for the relief; the period in which the measure would apply; the type of debt that would be covered and how the measure could be implemented.

An earlier study, commissioned by the National Credit Regulator (NCR) some months ago, concluded that there was a need for the National Credit Act to make provision for the introduction of some form of national debt relief but the NCR decided to consult Parliament and to involve public input.

Growing debt bubble

Whilst reckless lending and irresponsible borrowing which led to the disastrous housing bubble in the US, Joanna Fubbs, as chairperson of the Portfolio Committee on Trade and Industry, acknowledged that the situation regarding any retail debt bubble is not as bad in SA.   Nevertheless, she said that for some time she has been concerned that the National Credit Amendment Act is not working in the best interests of vulnerable groups.

On the issue of debt relief, whether from reckless lending or not, it was agreed some time ago by the Committee that it was important for stakeholders to be consulted to establish a better picture.  A parliamentary select committee, chaired by MP Eddie Makue of the same Committee, was formed to investigate whether debt relief would be an acceptable policy for SA and to organise parliamentary hearings focusing on banking input and debt control aspects.

The brief

The Portfolio Committee also recommended to this subcommittee that there needed to be a better understanding between the excesses of lending, the plight of borrowers and a view established on regulations which should refrain from fostering any culture of not paying debt in the hope that it might be written off.

Meanwhile, it has been proposed by the Department of Trade and Industry (DTI) to extend the powers of the National Credit Regulator to conduct proactive investigations into reckless lending . They would also be asked to impose administrative fines and to empower the Minister to provide debt relief mechanisms through further regulations, yet to be drafted.

Also, NCR submitted that it had already laid out its own proposals to tighten up existing regulations and penalties for perpetrators of reckless lending which the Regulator was currently entitled to enforce under the Act but the views of the Regulator were to be sought on debt relief by Makue’s Committee.

DTI view

DTI has since confirmed to this Select Committee that it was their view was that the Minister of Trade and Industry, Rob Davies, should be given the power to prescribe debt relief measures, the nature of which must be carefully thought through . At the time, DTI acknowledged that banks and credit providers had to make their views known preferably in a series of hearings now conducted.

NCR view

National Credit Regulator, Nomsa Motshegare, has confirmed to the Select Committee that in their view some form of debt relief is necessary given the reasons of the country’s slow economic growth; retrenchments that were taking place; and rising unemployment figures.

In general, she said, these factors had already diminished household income and led to difficulty for consumers to repay loans.   The NCR had found, they said, that there was a willingness in general amongst banks to find ways to relieve the financial burden of indebted clients, many of them stating that they did this already, but there was considerable doubt on whether this should or could be backed up by any enforcement measures and regulations.

 The banks

In this regard, during further public hearings, Cas Coovadia of the Banking Association of SA (BASA) emphasised that legislated debt relief for all would have negative consequences since this was far too prescriptive. He  called for “a customised debt relief approach that would suite various portfolios” as a better principle to follow.

At the outset of the discussions, Coovadia stated that BASA did not support the principle of debt forgiveness as an objective.  One of the banking system’s foundation principles, he said, was the need to efficiently and legally lend money to borrowers and to collect repayments from borrowers to settle the loans.

He told parliamentarians. “A confluence of pricing, regardless of individual consumer risk, will arise at a portfolio level to offset the inability to price for the risk.    This will mean that consumers who have a good repayment history will no longer be rewarded for such behaviour when they apply for further credit.”

He warned that blanket debt forgiveness would accelerate irresponsible borrowing and said all banks offered means to repay and gauged the circumstances when lending.   Any failure to perform on this principle would have severe consequences for the industry and economy; would increase risk to depositors/savers; would impose a cost on society; and would limit credit providers’ ability to extend credit, he said.

Making a plan

Nedbank said that the option of rehabilitation was always a preferred course rather than hard legal collections and the bank had recently adopted a philosophy in general banking terms that to become proactive in terms of debt relief solutions was the far better solution for those who had over-extended themselves.

They said the situation between credit provider and consumers should remain “mutually beneficial”, which principle bore in mind that the economy of the country was less affected.   Nedbank confirmed that a satisfactory low, in their view, of 4.6% of their clients could be classified as technically in total default without the any possibility of rescue, as at the end of 2015.

Too prescriptive

Individual banks, such as Standard Bank, Absa, First Rand, Capitec and African Bank generally supported BASA’s view that prescriptive laws or regulations regarding lending, collection and debt relief would remove the principle of case by case treatment which in turn, they said, would probably inhibit loans being granted or drive up their cost

Debt and labour

Chamber of Mines was blunter and took the view that employee over-indebtedness was a major problem in labour relations and “fed into unrealistic wage demand” scenarios.  Indebtedness, they said, was one of the major catalysts in recent mining unrest.

They were clear that education on family accounts and the implications of over borrowing had to be stepped up, rather than complicated prescriptive measures on relief that would favour one and not the other.  More important they said was that loan sharks should brought under control and whose malpractices were rife amongst the mine working community.

Ms Sue Fritz, speaking for the Chamber, said that any form of debt relief provisions must consider the danger of undermining the basic principle that with the ability to borrow came the understanding such debt had to be repaid or quality lending would cease and debt might increase.

Cosatu view

Cosatu’s Matthew Parks urged that some form of debt relief be provided to a defined base of categories, such as retrenched workers; those only on social grants; the poor; working-class and middle-class students with student loans and borrowers who had paid off a large part of a loan but fallen on hard times. He also appealed to parliamentarians that there was a need to crack down on loan sharks, formal and informal.

Paul Slot, speaking as president of the Debt Counsellors Association, said some form of debt relief was necessary to counter the current high level of household debt, noting that according to the association, 54% of those in financial trouble simply applied for more debt to extricate themselves.

Conclusions in process

The Select Committee has now made a call upon on the National Credit Regulator to tighten regulations further on loan sharks and the registration process.  Chairperson Eddie Makue has now reported back on the hearings to the Portfolio Committee but has noted in Parliament that he was deeply concerned that a large amount of vulnerable people remain exposed to unregulated credit and can become victims purely because of greed alone on the part of the lender.

On reckless lending, it was noted that often ridiculously high repayments from the poor were a weapon used to gain control of assets.    Makue said, “The NCR has to protect poor South Africans against such lending by unregistered and immoral micro-lenders.   In most rural and semi-urban areas people maintain their existence through borrowing and the interest they sometimes get charged is shocking, and interest rates should be capped by law”, Makue said.

State debt relief and debt relief regulations

The “jury is still out” therefore for 2016 on the issue of DTI tabling a Bill and the subject of debt relief generally.

Parliament closed 7 December and will resume this debate early in 2017

 Previous articles on category subject

National Credit Act Bill aims to help consumers – ParlyReport

Treasury proposals on debt control approved – ParlyReportSA

National Credit Amendment Bill changes – ParlyReportSA

 

Posted in Finance, economic, LinkedIn, Special Recent Posts, Trade & Industry0 Comments

Liquor licensing may have impractible conditions

DTI gets tough with age limits

...sent to clients 17 Oct…..   In what will be a tough ask, Minister of Trade and Industry, Robliqour-store Davies has proposed a number of changes to the National Liquor Act, the most contentious being to raise the legal minimum age for purchasing liquor from 18 to 21 years of age. The call for public comment on the draft National Liquor Amendment Bill as gazetted closed on 30 October.

The Department and Trade and Industry (DTI), who deal with liquor licensing at a national level, state that South Africa has globally the worst figures for alcohol related accidents and anti-social incidents involving liquor abuse.

Drastic steps had to be taken to gain control of alcohol related injuries, illnesses and abusive behaviour that were costing the state some R40bn a year, the Minister said.

Younger age groups

The Bill focuses specifically on youth since DTI maintains that alcohol abuse specifically damages the development of the brain making youth vulnerable. Liquor advertising aimed specifically at young persons will be prohibited under the Act and revised rules set down on broadcast times and content. Advertising billboards aimed at youth will be banned from high density urban areas.

Minister Davies called for “robust public engagement on the issues raised in the Bill” as it dealt with matters “that are of significance to South African society.” He noted that South Africans consume alcohol related products at double the world average rate.

On the question of the age threshold proposed in the draft Bill is a minimum purchasing age, not as has been widely reported a “minimum drinking age”. The onus of establishing age will fall upon the supplier who must take “reasonable steps to establish age” when dealing with a young purchaser.

Pressure point

A civil liability will now fall upon the manufacturers and suppliers as well who knowingly breach the new regulations, Minister Davies said, believing that this was the only way to get the problem understood and the new rules adhered to.

sab-youth-beer-adThe draft Bill states that responsibility will also fall upon the seller not only not to supply liquor to a person visibly under the influence of alcohol but that the seller could be in addition asked to show reason why they should not bear costs for damage incurred as a result of a subsequent accident involving that person who made the purchase.

On the problem of community issues, such as tackling foetal alcohol syndrome which is considerably worse in South Africa than elsewhere in the world and alcohol related crime, the onus of proof will shift not only to a supplier but also to manufacturers to show that reasonable steps were taken to ensure that liquor is not sold to illegal or unlicensed outlets. Which brings up the issue of liquor licences.

Distance from community

Licensing is a provincial matter and there are a number of changes that the amending Bill police-raidwill make to the anchor Act which will have to be abided by. Particularly notable is the proposal that licences cannot be granted to an outlet less than 500 metres from any school, recreation facilities and places of worship.

Provinces are stated as “having an obligation” to be far stricter in granting licences in highly urbanised areas, giving due regard for the need for stricter business hours and for the need to deal with noise pollution in stressful living conditions.

Previous articles on category subject
New health regulations in place soon: DoH – ParlyReportSA
Licensing of Businesses Bill re-emerges – ParlyReportSA
Medicines Bill : focus on foodstuffs – ParlyReportSA

Posted in Justice, constitutional, Security,police,defence, Special Recent Posts, Trade & Industry, Transport0 Comments

Communal Property Bill assists land reform

Reform assisted on communal property 

communal-land-4…sent to clients 21 Oct….The tabling of the Communal Property Associations Amendment Bill could represent a major advance in bringing order to many aspects of government’s land reform policy. In essence, the Bill will ensure that householders have security of tenure and thus have the ability to raise capital before they enter into any agreement on the management of communal land.

The new Bill focuses on developing the practical and legal aspects of ownership of communal land by a communal property association (CPA) whilst at the same time providing security of tenure with a new initial procedure of naming householders to benefit. The draft has now been approved by Cabinet.

Whilst the thrust of government policy on land reform has always been to bring ownership ofland-reform self-sustaining agricultural land to previously disadvantaged communities, the process has been much bedeviled by conflict over land falling under the control of traditional chiefs; the inability of small farmers to raise finance without title and, most important, for households able to enjoy security of tenure.

Communal confusion

An unintended consequence of the original CPA programme launched by government has been that government has not wished to involve itself, nor has any investing entity for that matter, in the community strife and argument over communal land, a feature of many CPAs. Consequently, the CPA system has demonstrated its inability to involve itself in loans, any state support, or receive the support of agricultural assistance programmes.

community-farmIt might be said that CPAs as a structural system is “off the banking radar”, a fact which MPs in parliamentary committee meetings have complained of a number of times.

As a result, expensive trusts have become the order of the day, banks preferring to deal with such entities and even government itself having to use them because of the informality of a CPA and the inability of loan applicant to show security.

The objective of the Act when it was signed into law was to create a new form of juristic person to allow disadvantaged communities to acquire, hold and manage property in common. A community that qualifies in terms of the Act can therefore, on the basis of agreement contained in a written constitution, form a legal entity (the CPA) and thereby become owners of property, including land, via the CPA.

Agricultural reform

A CPA as it currently stands allows its members to become owners of land which has been “prioritised for the provision of infrastructural support to land reform farmers to enable them to create sustainable jobs and alleviate poverty.”

However, over the few years since CPAs were established, it appears from parliamentary Lesedi traditionalportfolio committee meetings, that things have not gone well. In some cases, traditional chiefs had intervened and gained control of land previously under the aegis of the members of a CPA. Meanwhile, traditional chiefs had complained that CPAs were acting like “chiefdoms” in themselves, the department told parliamentarians.

Tweaking and compromising

Some attempts were made by the Department of Rural Development and Land Reform to persuade CPA members to appoint traditional chiefs on an “ex-officio basis” but the situation remained untenable, not necessarily just because of the problem of traditional control but because, due to shortage of staff, they said, had no ability to monitor the situation and no picture of what land was under CPA control, where CPAs were, and their needs.

In addition, no measurement of outcome of any schemes appeared possible, Opposition members complained. Quite clearly, they said, the NDP land reform programme has not been successful to date. Whilst the idea had been along the right tracks, it seemed the system was patently in trouble.

Green Paper study

After two years of investigation, in 2014 the Ministry, produced a Green Paper on the subject. After creating communal property ownership rights, the new proposal in the Paper was to secure individual tenure to each household beforehand, be it a farm-dweller or tenant, and for each household to own its rights at law before the CPA was formed to lock into this.

land-reform-5As per the Act in force, it would be possible for a community or group of persons to have access to a registered title to land through common or joint ownership with every name included (in a deed of transfer) or through a trust (with title vesting in the trustees) or a juristic person (with title vesting in that legal entity). Once registered, the CPA would become a juristic person – that can sue and be sued. It could acquire rights and incur obligations in its own name, in accordance with a CPA constitution.

In a policy statement, a Bill was proposed along these lines with a CPA constitution as before dealing with sub-divisions, servitudes, the right to encumber with a mortgage, deal with leases and settle disputes – all essential to the development of the area concerned but in respect of nominated persons giving those persons therefore security of ownership.

The bigger picture

The new Bill therefore speaks to a process to align a CPA to the broader land reform mandate in terms of the policy statement. The Bill also says a Communal Propertyland-claims-court Associations Office is to be established which is headed by a Registrar of Communal Property Associations. As a result, CPAs will be better equipped, it is felt, to take part in development; its status is recognised and is known to government; and has a secure system of tenure established as a base for ownership.

DHA said the plan was to clearly establish the connection between the land itself and those who live on it and depend on it for agricultural income. With more clearly established security and a need to register for compliance, it is hoped that a CPA structure will present a more viable face to the investing world.
Previous articles on category subject
New approach to land reform – ParlyReportSA
Restitution of Land Rights Act reversed – ParlyReportSA
Land Holdings Bill joins state acquisition trend – ParlyReportSA

Posted in human settlements, Justice, constitutional, Land,Agriculture, LinkedIn, Special Recent Posts0 Comments

PIC comes under pressure to disclose

Unlisted investments of PIC queried….

matjilaWhen asked for information on how the Public Investment Corporation (PIC) had invested its funds, Dr  Daniel Matjila, Chief Executive Officer, told parliamentarians that the most he could do, even with ‘listed’ investments, was to give only names. Any terms and condition of any investment agreement could not be made public. On ‘unlisted’ investments, he held back completely.

He was then formally asked by David Maynier (DA) if the PIC had invested, directly or indirectly, any funds in any Gupta-owned enterprise. He was also asked for details of any financial implications upon the Government Employee Pension Fund (GEPF) and other pension fund assets resulting from the dismissal by the President of former Finance Minister Nene.

Confidentiality

Dr Matjila responded that the fund “could not cross the line of disclosing private information” and the members ofPIC logo.2 the Standing Committee on Finance, before whom he was appearing “should not read into his statements any insinuation that the PIC was protecting information.” He noted that he was totally aware of the fact that the PIC was under investigation for passing funds to the ANC and any such idea “was totally false”.

As far as funds to any Gupta owned business was concerned, Dr Matjila replied that the organisation stood by its earlier answers to the media that it had not invested directly in any Gupta owned enterprise. Following this remark, ANC MPs stood by Dr Matjila and told Opposition members that the PIC could not become “entangled” in such questions which were veiled with gossip and insinuation. It was the word “directly” used by Dr Matjila that caused the question.

Sub-judice

yunus carrimThis point was emphasised by Yunus Carrim, Chairman of the Committee, that most of the questions that were concerning Mr David Maynier should only be dealt with after the investigation of the possibility of ANC funding by the PIC had completed its course. He said that Dr Matjila was bound by circumstances to say nothing.

Present at the standing committee meeting was Deputy Minister of Finance, Mcebisi Jonas, who said the reporting process of h a pension fund to the committee should not get side-tracked with politically motivated questions. Maynier had asked this time about the possibility of “indirect” investments by PIC of any Gupta businesses.

On the issue of the effect of the ‘9/12 issue’, as referred to by Dr Matjila when Nhlanhla Nene was fired, he reported that the impact of this event had caused “significant losses” to the PIC portfolio. The GEPF lost R95bn, the Unemployment Insurance Fund lost R7bn and the Compensation Fund had lost R3bn – all managed by PIC and the event had been most worrying.

However, he said that the performance of all the funds had been subsequently excellent in the sense that recovery was achieved quite quickly – in fact “the recovery represented more than all the PIC funds lost within those two days of crisis.”

Information withheld

David Maynier (DA) remarked that funding was still shrouded in mystery and that he was “extremelydavid maynier uncomfortable” that the PIC would give no information at all on the “unlisted” investments of PIC.

Reporting generally, Dr Matjila said the fund had benchmarked itself and its operations compared favourably with “top private sector investment companies”. The GEP Fund “had shown over five years a 14.3% interest factor compared, he said, to a global median of 9.9% and a local investor median of 10.1%.” It had invested approximately R33.9bn in numerous portfolios aimed to drive transformation and create jobs, he said.

He told parliamentarians that the PIC “had invested approximately R33.9bn in numerous portfolios aimed to drive transformation and create jobs.” He said any risk taking was carefully managed and remained on the conservative side. Furthermore, he assured MPs that PIC did not take any risk that could not be “managed”.

Listed investments growing

Dr Matjila said that for all investments, the total allocation was now R400bn and “partners were always sought that would make positive returns”. ‘Listed’ investments in the last five years had grown from R495bn to R892bn recording a growth factor of 12.5% per annum.

vodacom logoThe PIC always held to principle, he said, that there was always a need for BEE compliant businesses to be considered so that it attracted a portion of government expenditure. ‘Unlisted’ investments, nevertheless, had large share of the market holdings, he said, with roughly R55 billion allocated to this form of investment. The total allocation for PIC investments, including GEPF and UIF, was approximately R400bn.

On investment policy, Dr Matjila said that his team liked to look at partnering with other stakeholders that added value and knowledge to make sure that maximum benefits and input from any arrangement were received.

Downstream SMME outlets

On SMME development, Dr Matjila said that PIC was “in discussion with groups such as Spar and Woolworths to ensure that small business was represented in their current growth patterns.” He said it would seem important for PIC to participate further in the Barclays Africa “sell down”. PIC, he noted, had invested in many international and local companies with assets within South Africa “in order to drive economic growth and increase job creation.”

Dr Matjila turned finally to ‘unlisted’ investments and said PIC had a slate of roughly R55bn to work from. Such investments were usually international, he said, and were not necessarily BEE compliant. David Maynier (DA) asked whether the GEP Fund management was “comfortable with the fact that a confidentiality clause existed on so many investments and the fact that disclosure to Parliament was denied.” Some ANC members also mentioned disquiet on this issue. Maynier said he intended to pursue the issue of non-disclosure of “unlisted” investments further.

Previous articles on category subject
Retirement savings subject of treasury probe – ParlyReport
Treasury calls for “Twin Peak System” with two financial bills – ParlyReportSA

 

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