“For to be free is not merely to cast off one’s chains, but to live in a way that respects and enhances the freedom of others” Nelson Mandela.
The consequences of South Africa’s self-inflicted, morally corrosive malady of not respecting the separation of powers and blatantly undermining the rule of law (as witness the fact that others are above the law) is manifesting itself dramatically. When others appear exempt from the judicial process, the message sent to career criminals is that if crimes committed by those who hold public office are condoned, there may not be anything morally deterrent or reprehensible about pursuing criminal objectives.
Those of us who subscribe to an articulated vision of a country that all would be proud of are concerned that the essence of a non-racial South Africa is being forgotten in another less noble struggle.  A struggle to utilise political power to do what the apartheid regime did. To illegitimately take property from people and to deprive them of the rights they should enjoy in a “democratic and open society in which government is based on the will of the people and every citizen is equally protected by law” as promised by our constitution.
Many of us subscribe to the vision so eloquently described by Martin Luther King Jr. when he said, “I have a dream that my four little children will one day live in a nation where they will not be judged by the colour of their skin, but by the content of their character.” We also took note of his warning: “But there is something that I must say to my people&#8230;In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred.”
The word “freedom” has unfortunately been interpreted in various ways. In the sense in which most of us understand the word, it means individual liberty. However, to others it means freedom from want, imposing obligations on others to supply whatever is needed. A free society can only exist if we interpret “freedom” to mean individual liberty.
Liberty requires the observance of a single moral imperative, which is intrinsic in human nature, that in pursuit of our ends, our endeavours should not involve force or fraud. All human interaction in a free society should be governed by this principle as underscored by F A Hayek, the late Austrian economist, &#8220;It is only because we are free in the choice of our means that we are also free in the choice of our ends&#8221;.
What evidence is there that South Africa is going astray?
We find young medical graduates being commandeered to work in places that are not of their choosing, while other graduates are not. These people are being deprived of legitimate choices to achieve their ends.
Firms are instructed as to whom they may employ, who their business partners should be, at what prices they may sell their products, and, increasingly, their choices are being limited. We have mass unemployment because the unemployed have been deprived of freedom of contract; they are not entitled to enter into any agreement they wish with employers – it is forbidden.
What kind of society are we creating for future generations? Do we not want a warm, generous, affluent and peaceful nation? If we do, we must choose liberty as the most important human right. In this mission, we must subject to rigorous scrutiny all erroneous assumptions about human rights.
By lowering the barriers to all economic activities and enacting policies that will make South Africa globally competitive in terms of being an attractive destination for investors, the effect would be that of a rising tide that floats ALL ships. The overall impact would be economic growth that would result in the upliftment from poverty of the greatest number of people in the shortest time possible.
Finally, the rule of law, as opposed to the rule of man, means equality before law and contracts being legally enforceable. It also means a fiercely independent judiciary, the precondition of which is a clear separation of executive, legislative and judicial powers.
I know that I have incurred the wrath of some, so be it. My comfort is in the words of an earlier Martin Luther who, in defiance of prevailing religious dogma during his era, uttered the words, “Here I stand, I cannot do otherwise”.
 
Temba A. Nolutshungu is a director of the Free Market Foundation. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.﻿

Op-Ed: The inviolable sanctity of individual liberty

More than seven million people risk starvation in Nigeria&#8217;s insurgency-hit northeastern region and around Lake Chad, a senior U.N. official said on Wednesday ahead of a new funding appeal.
Famine has been ongoing since last year in parts of Nigeria where the government is fighting a seven-year long Boko Haram insurgency.
An international donor conference in Oslo on Friday will aim to raise a chunk of the $1.5 billion the United Nations says it needs to address deepening food insecurity in the region this year.
&#8220;They are living on the edge, barely getting by on one meal a day,&#8221; Toby Lanzer, the U.N. humanitarian coordinator for the Sahel, told Reuters. &#8220;My biggest concern today is starvation.&#8221;
Earlier this week the United Nations said 1.4 million children were at risk of &#8220;imminent death&#8221; in famines in Nigeria, South Sudan, Somalia and Yemen.
Lanzer said he was worried the Boko Haram insurgency would deter farmers from planting their crops after missing the last three planting seasons, and that the number of lives at risk could increase. He also expressed concerns the coming rainy season could harm vulnerable people.
&#8220;Hungry people without shelter when it rains die,&#8221; he said.
Lanzer said the humanitarian response needed to go beyond food aid and include seeds, tools and fishing nets.
Lanzer said he hoped a total $500 million will have been pledged by the end of February, including this week&#8217;s funding round.
Lanzer, who has also worked in South Sudan, Darfur and Chechnya, said it was difficult to estimate how many people would die from hunger in the next few months.
&#8220;If we were to lose another planting season, I dread to think how severe the crisis could get,&#8221; he said.
Some 10.7 million people in northeastern Nigeria and around Lake Chad &#8212; roughly two in every three people &#8212; need humanitarian aid, according to the United Nations.
Boko Haram militants have killed about 15,000 people and forced more than 2 million from their homes, and still launch deadly attacks despite having been pushed out of the vast swathes of territory they controlled in 2014.
Lanzer cautioned that failure to address the deteriorating situation could encourage more Africans to try and flee to Europe.
 
(Editing by Richard Lough)﻿

Millions risk starvation in Nigeria & Lake Chad region

The MySchool and Woolworths campaign to ‘Raise R100 million for Education’ ﻿has managed to raise R104.9 million, exceeding the original target of R100 million set in April 2015.
Woolworths says this milestone could only be achieved thanks to the support of customers and active MySchool cardholders who participated in the campaign between April 2015 and December 2016. The campaign is part of Woolworths’ and MySchool’s ongoing commitment to improving the quality of education in South African schools.
The ‘Raise R100 million for Education’ campaign was launched in 2015 when Woolworths pledged to accelerate its efforts to raise R100 million for education in South Africa. This was done through MySchool MyVillage MyPlanet, a leading fundraising platform which contributes more than R1 million per week to over 7 000 schools, charities, animal welfare and environmental organisations across South Africa.
Woolworths CEO, Zyda Rylands, described the achievement as a positive step in ongoing efforts to ensure that every child is given a chance to get good education.
“I am proud to say thank you to our customers and to South Africa as a whole for rising to this challenge – together we did it.  Every swipe of your MySchool card contributed to helping us meet the needs of schools, charities and communities across the country.” 
“While we are delighted to have reached this milestone, the challenge to improve education in South Africa is an ongoing task and we remain committed to playing our part. We would like to use this opportunity to encourage all our customers to get involved and affect real change by simply signing up for a free MySchool card, or by linking their Woolies card to the MySchool programme today”, said Rylands.
Pieter Twine, MySchool’s General Manager, said that over the years the fundraising platform has played a significant part in improving the quality of education in the schools that participate in the programme.
“We work in partnership with schools across South Africa with the aim of improving education at a foundational level. To date, MySchool has funded several thousand educational projects in South Africa – ranging from critical, basic needs in poverty-stricken communities, to more advanced needs such as computer centres, mobile libraries and sporting facilities. The success of the ‘Raise R100 million For Education’ campaign is further evidence of how small efforts by Woolies’ customers are making a big difference in the lives of school children who need it the most,” said Twine.
Since the beginning of the campaign, the funds raised have helped thousands of scholars through various educational initiatives and structured support, including:
<ul>
<li>Upgrades to classrooms and new toilet facilities at Thohoyandou Primary School in Pretoria;</li>
<li>The purchase of over 5 500 Tutudesks for rural schools in the Eastern Cape, so schoolchildren now have something to write and draw on;</li>
<li>The development of a sensory botanical garden at Athlone School For The Blind, Cape Town;</li>
<li>The extension of the Bricklaying Workshop at Westridge High School, a technical skills training college in Durban;</li>
<li>Vissershok Primary School, a rural farm school that services the Du Noon informal settlement, was able to replace their guttering and down pipes;</li>
<li>Hout Bay High School purchased back-to-school stationery packs for all their learners;</li>
<li>Laerskool Elarduspark started a feeding scheme with their MySchool funds for learners who come to school without food;</li>
<li>The Willows Nursery School used their MySchool funds to subsidise school fees for low income families;</li>
<li>Gene Louw Primary School funded occupational therapy for learners who cannot afford it; and,</li>
<li>Emisebeni Primary School repaired their kitchen which had burned down, so they able to provide school meals again.</li>
</ul>
To learn more about the impact of MySchool’s work, click here <a href="http://www.myschool.co.za">www.myschool.co.za﻿</a>

Woolies S.A raises R100-m for education

South African retailer Massmart reported an almost 16 percent rise in full-year profit on Thursday, as the firm controlled costs and closed some of its less profitable stores in a tough economic environment.
Massmart, majority-owned by Wal-Mart Stores Inc, posted diluted headline earnings per share of 587.6 cents for the 12 months to end-December, compared with 508.8 cents a year earlier.
Africa&#8217;s most advanced economy accounts for more than 90 percent of the firm&#8217;s sales, but spending by South African consumers has been constrained by inflation, rising debt levels and an unemployment rate of more than 25 percent.
Food and liquor sales increased by 11.7 percent, outpacing general merchandise sales growth of 1.5 percent, Massmart said.
&#8220;It is clear that general merchandise continues to be negatively impacted by very low discretionary spending by consumers,&#8221; the company said.
Massmart increased its total retail space by 1.2 percent over the period, but closed 10 of its more than 400 stores.
&#8220;We are hopeful that several key economic drivers in South Africa will improve in 2017 &#8211; lower food price inflation, some rand strength and possibly lower interest rates,&#8221; chief executive Guy Hayward said in a statement.
Headline EPS is the main profit measure in South Africa and strips out certain one-off items.
 
(Reporting by TJ Strydom; Editing by Ed Stoddard)﻿

S.Africa's Massmart reports 16 pct jump in FY profit

Barclays Africa Group has agreed terms for operational separation with UK-based Barclays PLC, which is reducing its shareholding in Barclays Africa. The agreement is expected to unlock opportunities for Barclays Africa as an independent pan African bank.
“It is a good outcome that enables us to complete the separation, and to provide continuity and improved service for our customers,” said Maria Ramos, Chief Executive, Barclays Africa.
UK-based Barclays PLC announced on 1 March 2016 that it intends to sell the majority of its shareholding in Barclays Africa over a period of two to three years. Since then, Barclays PLC and Barclays Africa Group have worked jointly to ensure the best outcome for all of our stakeholders.
Barclays PLC has submitted an application to the South African Reserve Bank for approval to reduce its shareholding in Barclays Africa Group to below 50%.  The application, which also requires the approval of the Minister of Finance, includes the terms of the separation payments and transitional services arrangements, which have been agreed between Barclays PLC and Barclays Africa.
The agreement provides for contributions by Barclays PLC totalling GBP765 million (R12.8 billion based on 31 Dec 2016 exchange rate) primarily to fund the investments required for Barclays Africa Group to separate from Barclays PLC as follows: 
<ul>
<li>£515 million (R8.6 billion) for investments required in technology, rebranding and other separation projects;</li>
<li>£55 million (R0.9 billion) to cover separation related expenses, of which £27.5 million was received in December 2016; and</li>
<li>£195 million (R3.3 billion) to terminate the existing service level agreement between Barclays and BAGL, relating to the Rest of Africa operations acquired in 2013.</li>
</ul>
The expectation is that the financial contributions will neutralise the capital and cash flow impact of separation investments on the Group over time. 
Barclays PLC currently owns 50.1% of Barclays Africa.  Following the reduction of Barclays PLC’s shareholding below the 50% mark, Barclays Africa will be able to continue using the Barclays brand at its operations outside of South Africa for three years. Barclays Africa will receive certain services from Barclays PLC on arms’ length basis for a transitional period, typically up to three years.
An important feature of discussions has been the provision for a broad-based black economic empowerment scheme. While the full details are still under consideration, we are pleased to announce that Barclays PLC has agreed to contribute an amount equivalent to 1.5% of Barclays Africa’s market capitalisation, or R2.1 billion (based on a Barclays Africa’s share price of R168.69 on 31 December 2016) towards the establishment of such a scheme.
“Separation has a number of implications for our business,” said Ramos. “It gives us the opportunity to unlock the potential to do things differently and build energy and momentum for our future as a pan-African organisation.” 
Alongside a black economic empowerment scheme, Barclays Africa also wants to create an equity proposition for our staff in the next 12 to 18 months. This will give our people the opportunity to benefit from share ownership, and to share in the future growth of our business.
“Both these schemes will help us to build an ownership-based, entrepreneurial culture that goes to the heart of our commitment to the communities which we serve,” Ramos said.
We remain firmly focused on building a leading standalone Pan African financial institution.﻿

Barclays Africa, Barclays reach terms of separation

S.A's 2017 Budget Speech

South Africa’s Finance Minister Pravin Gordhan in a pre-Budget press conference on Wednesday warned that “it can take many years to build a solid institution but a short time to mess it up”. It does matter who the team is that leads an organisation, how their team works together and generates ideas, he said. Gordhan was responding to questions over whether it matters who leads Treasury for the 2017 Budget Review and Estimates of National Expenditure to be implemented.
Gordhan added that there are certain institutions that shouldn’t be messed with – they include Treasury and revenue collection.
Since Gordhan was reappointed finance minister in December 2015 rumours have been rife over whether he and his Deputy Mcebisi Jonas will retain their jobs as they allegedly are not swayed by the powerful and politically connected Gupta family.
Gordhan argued that treasuries whether in the public or private sector are indispensable to well-functioning organisations.
Jonas weighed in on the discussion saying that all the political noise has an impact on what Treasury does.
Lungisa Fuzile, Director-General of Treasury said he has been in his position for almost six years during which time he has served under four ministers, this he argues has affected morale. It takes time to build chemistry with ministers, when there is high turnover it damages morale, he revealed.﻿

It matters who leads S.A’s Treasury – FinMin Gordhan

The startling reality about South Africa is that wealth remains highly concentrated – 95% of it is in the hands of 10% of the population. The bottom 20% have benefited from social grants and better access to services, the top 20% from the rising demand for skills and pay increases while those in the middle have been left behind. Unless this is urgently dealt with South Africa is facing a severe crisis.
This was the main message of South Africa’s Finance Minister Pravin Gordhan’s 2017 Budget, which repeatedly highlighted the need for radical transformation aka inclusive growth.
Gordhan argued that perhaps “in the face of such intractable economic hardships and disparities” the time has come to supplement the country’s Constitutional Bill of Rights with a ‘Charter of Economic Rights’”.
Something needs to be done to lift the “Missing Middle” to prosperity, poor people need to be given the opportunity to assemble assets &#8211; the status quo cannot continue, he argued. We need to look at how do we grow the economy with a greater sense of urgency?
According to his Budget speech the charter would bind South Africans to an economy which:
- Provides access to decent and well remunerated jobs,
- Facilitates training and retraining of citizens in the face of technological change, and
- Creates a supportive environment for micro, small and medium businesses and cooperatives.﻿

Time for S.A to consider a “Charter of Economic Rights” – FinMin Gordhan

What you need to know about Budget 2017
South Africa’s Budget 2017 revealed that revenue has lagged behind the economy, leading to R30bn shortfall, to deal with this shortfall several tax changes have been proposed as highlighted below. It also painted an economy in dire need of economic growth. This is also mentioned in this Budget in a nutshell.
New taxes on the way
<ul>
<li>Revenue has lagged behind the economy, leading to R30bn shortfall</li>
<li>Total tax revenue for 2016/17 will be R1.14trn, up 7% on previous year</li>
<li>S.A’s tax proposals will raise an additional R28bn</li>
<li>A wealth tax will be introduced comprising a new top personal income tax rate of 45% for those with taxable incomes above R1.5mn. It is expected to bring in between R3bn-R5bn.</li>
<li>Dividend withholding tax rate to be increased from 15% to 20%</li>
<li>Treasury is looking at share repurchase schemes</li>
<li>Tax free threshold increased from R75 000 to R75 750</li>
<li>Personal tax changes are as follows:<img loading="lazy" decoding="async" src="/media/19338669/personal_tax_598x432.jpg" width="598" height="432" alt="Personal Tax"/>﻿</li>
</ul>
<ul>
<li>Fuel levy to increase 30c/litre and road accident fund levy &#8211; 9c/litre</li>
<li>Excise duties for alcohol and tobacco to increase between 6-10% </li>
<li>Relief will be provided in the affordable housing market</li>
<li>Annual allowance for tax free savings accounts increases from R30 000 to R33 000</li>
<li>Medical tax credit will be increased in line with inflation</li>
<li>Consultations ongoing on tax on sugary beverages </li>
<li>Proposed design of sugar tax has been revised to include both intrinsic and added sugars </li>
<li>Sugar tax will be implemented later this year once details are finalised and legislation passed</li>
<li>Proposed carbon tax &amp; implementation date will be considered in Parliament this year </li>
<li>S.A to sign a multilateral instrument this year</li>
<li>SARS received VDP disclosures totalling R3.8bn in foreign assets</li>
<li>Special VDP will be open until the end of August this year</li>
<li>Multinational companies will be required to file further information with SARS</li>
</ul>
The State of S.A
<ul>
<li>S.A’s income growth has been uneven</li>
<li>95% of S.A’s wealth is in the hands of 10% of the population</li>
<li>35% of the labour force are unemployed</li>
<li>Over half of all children in Grade 5 cannot read adequately in any language</li>
<li>A Charter of Economic Rights needs to be debated to deal with these glaring inequalities </li>
</ul>
The State of S.A’s economy
<ul>
<li>S.A’s growth has been too slow at 1% a yr in real per capita terms</li>
<li>S.A’s transformation will be built through economic participation, partnerships</li>
<li>R28bn to be raised in taxes</li>
<li>S.A’s budget deficit for 2017/18 will be 3.1% of GDP</li>
<li>S.A’s government debt will stabilise at about 48% of GDP over next 3yrs</li>
<li>Spending priorities: Education, health services &amp; municipal functions in rural areas IMF projects world economy to grow by 3.4% in 2017 &amp; 3.6% in 2018 Economic inclusion is being prioritised everywhere S.A’s GDP expected to increase from 0.5% last yr to 1.3% 2017 S.A growth to be spurred by commodity prices rebounding Plans are afoot to get S.A out of the present low growth trap</li>
<li>S.A is finalising legislation relating to mining development &amp; land redistribution</li>
<li>S.A is implementing transition from analogue to digital television</li>
<li>S.A is continuing its independent power producer programme</li>
</ul>
S.A’s 2017 Budget  Allocations:
<ul>
<li>R3.9 billion for small, medium and micro enterprises and cooperatives.</li>
<li>R4.2 billion for industrial infrastructure in special economic zones and industrial parks.</li>
<li>R1.9 billion for broadband implementation.</li>
<li>R3.9 billion for the Council for Scientific and Industrial Research.</li>
<li>An additional R494 million for tourism promotion.</li>
<li>An additional R266m to support the aquaculture sector and realise the goals of the Oceans Economy Phakisa Operation.</li>
<li>Spending on agriculture, rural development and land reform amounting to nearly</li>
<li>R30 billion by 2019/20.</li>
<li>Provincial Roads Maintenance Grant is allocated R10.8 billion in 2017/18</li>
<li>SANRAL receives R15.4 billion over the period</li>
<li>The Department of Telecommunications and Postal Services receives R1.9 billion</li>
<li>The Passenger Rail Agency of South Africa to receive R16.7 billion</li>
<li>Public Transport Network Grant receives R6.2 billion in 2017/18.</li>
<li>R600 million over the medium term is reprioritised to the Social Housing</li>
<li>R18.4 billion over the medium term is allocated to the Regional Bulk Infrastructure Grant</li>
<li>R12.5 billion to the Water Services Infrastructure Grant</li>
<li>R1 billion is added to the local government equitable share in 2018/19</li>
<li>An additional R5bn to the R32bn previously announced has been allocated to higher education</li>
</ul>
The shape of S.A’s finances
<ul>
<li>The proposed expenditure for 2017/18 totals R1.56 trillion</li>
<li>Interest on debt amounts to R169 billion</li>
<li>Projected revenues amount to R1.41 trillion</li>
<li>The balance of R149 billion, or 3.1% of GDP, will be borrowed</li>
<li>S.A’s government debt stands at R2.2 trillion, or 50.7% of GDP</li>
<li>Funds available after providing for debt service costs &amp; contingency reserve up 6.9% to R1.24trn next year; are projected to rise to R1.43 trillion in 2019/20</li>
</ul>
Over the next three years:
<ul>
<li>47.5% of available funds will be allocated to national government</li>
<li>43.4% to provinces and</li>
<li>9.1% to local government</li>
</ul>
Public service wage bill
<ul>
<li>Provincial spending on personnel has declined to just under 60% in 2016/17</li>
</ul>
Social grants
<ul>
<li>Three new conditional grants will take effect in 2017/18</li>
<li>National Treasury &amp; provincial treasuries to focus on four “game changers”</li>
<li>Social assistance grants to be increased in April</li>
</ul>
S.A’s social grant allocations:
<ul>
<li>The old age grant will increase by R90 to R1600 for pensioners over the age of 60, and R1620 for those over 75.</li>
<li>The disability and care dependency grants also increase by R90 to R1600 a month.</li>
<li>Foster care grants increase by R30 to R920 a month.</li>
<li>The child support grant increases by R20 to R380 a month</li>
</ul>
NHI
<ul>
<li>Eleven NHI pilots have yielded valuable insights, on which to build</li>
<li>NHI Fund will be established</li>
</ul>
Education
<ul>
<li>Spending on basic education next year will be over R240bn</li>
<li>The Heher Commission of Inquiry into Higher Education will complete work by June</li>
</ul>
Procurement
<ul>
<li>Public procurement will amount to about R1.5trn over next 3yrs</li>
<li>Further procurement reforms to be introduced this year</li>
<li>Draft Public Procurement Bill to be published shortly</li>
</ul>
Forex collusion among banks
<ul>
<li>Market conduct regulator proposed</li>
<li>Banks need tougher rules to cover financial market abuses</li>
<li>SARB &amp; Treasury have initiated work on a more comprehensive Financial Markets Review Financial Sector Summit to take place in 2017 ﻿</li>
</ul>

Budget highlights 2017: How it affects you

All South Africans, especially the wealthy, had best tighten their belts.
“Slow economic growth has held us back and so decisive steps are needed to strengthen confidence, investment and growth.”
This was one of the key messages on tax given by Pravin Gordhan, Minister of Finance, during his 2017 Budget Speech in Parliament, in Cape Town today.
This year’s budget has to tackle a pesky problem &#8211; economic growth has shown ‘green roots’, with a 1,3% estimated growth in 2017, but it is not sufficient to address unemployment and poverty. 
“Government debt now stands at R2, 2 trillion, or 50.7% of GDP, interest payments are a rising share of expenditure. By acting now to stabilize debt we will ensure that future generations will not pay for today’s expenses, 20 or 30 years from now.”
It means Gordhan needed to raise R28 billion as well as reduce expenditure by R10 billion over the next year to ensure a sustainable recovery.  The concern of those in the streets was how government intended to raise it.
Those who will be hardest hit are the wealthy. People earning more than R1, 5million will now pay 45% personal tax. There will also be a 5% increase in dividends paid out to owners of companies to 20%, up from 15%.
“Wealth remains highly concentrated – 95% of wealth is in the hands of 10% of the population.” 
South Africans driving fuel guzzler vehicles will also be digging deeper into their wallets. Petrol will rise by 30c/liter under the general fuel levy, as well as an increase of 9c/liter will go towards the road accidents fund.    
Sin taxes, like alcohol and tobacco, also took a hit with increases of between 6% and 10%.
Two new levies will also be rolled out once they have been finalized in Parliament. A levy on sugary beverages will charge 2.1c per gram of sugar content above 4g per 100ml. While a proposed carbon tax, is still undergoing consideration.  
There is some relief. Medical tax credit rose with inflation. For the low income earner the tax free threshold was raised from R75,000 to R75,750. Those looking to invest their money in tax free savings accounts now have an annual allowance of R33,000, with no increase to their limits,  and the affordable housing threshold above which transfer duty is paid was moved from R750,000 to R900,000.
“For many years we have enjoyed the benefit of tax revenue collections outstripping economic growth. This contributed to expand public service delivery. This year, revenue has lagged behind the economy, leading to a R30 billion shortfall” says Gordhan.
The government has a tough budgetary juggling task ahead of them. High on their agenda is bailing out state owned enterprise South African Airways and the post office.  Financial management of Provinces have also undergone reviews, to eliminate ‘duplication of activities’; reduce spending on non-core goods and non-essential services.
“Though the fiscal envelope is constrained, billions of rands have been shifted to meet new needs. A substantial additional allocation to higher education is again proposed, adding R5 billion to the R32 billion previously announced.”
Government plans to clamp down on tax avoidance. This year government intends to sign a multilateral instrument to reduce the scope of aggressive tax avoidance activities. This includes automatic exchange of information between tax authorities and requiring multinational companies file detailed information with SARS on cross border activities.
“We rely on global cooperation to address trade imbalances, the abuse of tax havens and the coordination of financial stabilization efforts.”  
Gordhan says that SARS received disclosures of R3,8 billion in foreign assets, which will yield about R600 million, under the Special Voluntary Disclosure Programme which ends in August.
“Across all three spheres of government, and in state owned companies and public entities, those responsible for deciding how money is spent have to do so with scrupulous rigor and care. It is only right that is households and firms face tough choices in balancing their income and expenses; the same disciplines must be applied in public expenditure,” says Gordhan.
“…we face immense transformation challenges – we must overcome the inequalities and divisions of our societies. All South Africans must share in a more prosperous future.”
Tough times ahead for state and citizen alike.  ﻿

A R28-billion taxing problem

In his 2017 Budget speech, South Africa’s Finance Minister, Pravin Gordhan, highlighted the importance of reforming troubled State Owned Companies (SOCs) in the restructuring and strengthening of the country’s economy.
In recent times, many of South Africa’s SOCs have been struggling financial, often turning to National Treasury for billions in bailouts.
Speaking in parliament on Wednesday, Gordhan stated that the country’s Cabinet has endorsed a series of measures to reinforce governance and accountability in these SOCs.
“This imposes substantial obligations and responsibilities on boards and senior managers. We expect the highest standards of ethical leadership and understanding,” says Gordhan.
The Finance Minister says he met with members of the board of South African Airways, which has been on the spotlight in recent times for their alleged mismanagement of finances.
In a media briefing hours before Gordhan tabled the budget to parliament, he told journalist in attendance that the South African Airways chairperson, Dudu Myeni, couldn’t avail herself for the meeting.
“I met some board members nonetheless and I am positive about the turnaround strategy of SAA. They are now in the process of finding a suitable CEO and CFO for the company,” says Gordhan.
The director General of National Treasury stated that both the Post Office and SAA needed “substantial” capital injections which will have to be paid out in installments over a certain period. He further stated that the amount will be determined by October when the minister tables the mid-term budget.
In his budget speech, Gordhan stated that with a combined asset base of R1.2 trillion, the SOC’s are well-placed to partner with private sector investors in growing the productive capacity and infrastructure of South Africa.
“But they must be financially strong, governance must be sound, and boards and executives must have the necessary competencies to run complex business enterprises,” says Gordhan.﻿

S.A’s Finance Minister emphasises the importance of reforming troubled SOCs

Finance Minister Pravin Gordhan asks that reckless culture that led to the financial crisis must be prevented﻿.
South Africa’s National Treasury has proposed a dedicated market conduct regulator to deal with the abuses of banks.
In a press conference hosted by Treasury on Wednesday, South Africa’s Finance Minister said the 17 banks which have been referred to the Competition Tribunal for colluding in forex price fixing must be dealt with. Financial institutions must act responsibly to prevent the reckless culture that led to the financial crisis, he urged.
In his Budget speech he said the Competition Commission investigation into the banks, which led it to refer them to the Tribunal, is evidence “of a collusive culture at trading desks in banks. It is precisely to deal with such abuses that we have proposed a dedicated market conduct regulator, and we hope Parliament will pass this Bill as soon as possible”.
His speech also revealed that the Reserve Bank and National Treasury have initiated work on a more comprehensive Financial Markets Review under the leadership of former Deputy Governor James Cross.﻿

Market conduct regulator being considered for S.A’s banks

The relationship between labour and capital, rich and poor, black and white, still reflect the entrenched legacy of colonialism.
This was the word from South Africa’s Finance Minister, Pravin Gordhan, as he tabled the 2017 budget in parliament, Cape Town. A large portion of Gordhan’s speech addressed the lack of transformation in South Africa.
“Wealth is produced and allocated along the lines that remain fundamentally unjust. The ownership of assets and the distribution of income is captured by a minority of the population, a situation that is morally wrong and economically unsustainable,” says Gordhan.
The lack of transformation in South Africa has been a thorn on the side of the country for the last 23 democratic years with almost all the country’s industries still owned by a minority of the population.
The Finance Minister highlighted the importance of bridging the inequality gap in South Africa. He went on to agree with President Jacob Zuma on finding a new perspective for economic transformation.
“The litmus test for our programmes must be what they do to create jobs, eliminate poverty and narrow the inequality gap. Transformation must be mass-based, benefitting the most disadvantaged South Africans through the creation of new assets, capabilities and opportunities to build livelihoods,” says Gordhan.
Gordhan acknowledged the need to mobilize both private and public investment in social and economic infrastructure, new technologies and new activities that help build a modern and diversified economy.
“Our growth challenge is intertwined with our transformation imperative. We need to transform in order to grow, we need to grow in order to trandsform. Without transformation, growth will reinforce inequality and without growth, transformation will be distorted by patronage.” ﻿

S.A’s lack of transformation is morally wrong and economically unsustainable-Fin Min

In his 2017 budget estimate of national expenditure, South Africa’s Finance Minister, Pravin Gordhan, allocated the following to prioritise both national and provincial economic infrastructure:
&#8211;          The Provincial Road Maintenance Grant is allocated R10.8 billion in 2017/18, taking into account the increase in road traffic volumes.
&#8211;          SANRAL receives R15.4 billion over the period ahead for strengthening and maintenance of the national road network, which now stands at 21 946 kilometers.
&#8211;          The Department of Telecommunications and Postal Services receives R1.9 billion over the medium term to invest in high-speed internet connections in public buildings and schools in eight NHI pilot districts.
&#8211;          The Passenger Rail Agency of South Africa continues to implement its modernization and rolling stock renewal programme. Over the medium term, R16.7 billion is allocated for 70 new train-sets for Metrorail.
&#8211;          The development and operation of integrated public transport network, funded through the Public Transport Network Grant receives R6.2 billion in 2017/18.
&#8211;          To support higher density housing, subsidies for social housing have been rationalized and R600 million over the medium term is reprioritized to Social Housing Regulatory Authority for investment in rental housing units.﻿

R51.6 billion to fund national and provincial economic infrastructure requirements; S.A Treasury

South Africa’s National Treasury is set to allocate over R44 billion in the Medium Term Economic Framework (MTEF) to support economic growth in various programmes.
This was In Finance Minister Pravin Gordhan’s speech, tabled to parliament in Cape Town on Wednesday where he urged co-operation from society as a whole.
 “Progress in engagements between government, the business sector and social stakeholders is imperative,” says Gordhan.
The funds allocated to the MTEF period are as follows:
&#8211;          R3.9 billion for small, medium and micro enterprises and cooperatives.
&#8211;          R4.2 billion for industrial infrastructure in special economic zones and industrial parks.
&#8211;          R1.9 billion for broadband implementation.
&#8211;          R3.9 billion for Scientific and Industrial Research.
&#8211;          An additional R494 million for tourism promotion.
&#8211;          An additional R266 million to support the aquaculture sector and realise the goals of the Oceans Economy Phakisa Operation.
&#8211;          Spending on agriculture, rural development and land reform amounting to nearly R30 billion by 2019/20.
“Effective implementation of these and other programmes and initiatives will set us on a higher growth trajectory than currently projected,” says Gordhan.
The Finance Minister expects higher growth in the coming year. He went on to highlight South Africa’s current economic state and challenges:
&#8211;          The services sector was the main contributor to growth in 2016, bringing nearly 120 000 new working opportunities.
&#8211;          Mining continued to underperform while manufacturing output was supported by buoyant sales in petrochemicals, food and beverages and motor vehicles. Mining and manufacturing employment declined by 8 000 jobs in 2016.
&#8211;          Weak business confidence and low levels of profitability weighed on investment across all sectors.
&#8211;          Though the policy interest rate has increased by 2 percentage points since 2014, inflation ended the year above the target, with food prices continuing to reflect the impact on agriculture of poor rainfall.
&#8211;          Lower growth in our trading partners in Africa and elsewhere has contributed to sluggish export earnings.﻿

Over R44 billion allocated to fund South Africa’s MTEF

The South African economy is expected to grow by 1.3 per cent in 2017 and 2 per cent in 2018 as economic conditions strengthen.
This is the estimate from South Africa’s Finance Minister, Pravin Gordhan, as he tabled the country’s budget for 2017 in parliament Wednesday afternoon.
South Africa’s economy grew by an estimated 0.5 per cent in the previous year.
Factors supporting the projected 1.3 per cent growth include marginally higher global growth, stabilizing commodity prices, greater reliability of the electricity network, favourable weather conditions, recovering business and consumer confidence, and improved labour relations says the minister.
“But the projected rate of growth is not sufficient to reduce unemployment or impact significantly on poverty and inequality. It falls well short of our NDP goals,” says Gordhan.
The Finance Minister went on to highlight the following imperatives needed to boost investment in the short term:
&#8211;          Finalising legislation relating to mining development and land redistribution.
&#8211;          Implementing the transition from analogue to digital television, which will release spectrum for broadband services.
&#8211;          Continuing the independent power producer programme, both in renewable and to take advantage of gas investment opportunities.
&#8211;          Further strengthening of economic regulatory functions and streamlining investment approval processes.
&#8211;          Production-friendly industrial relations and prompt resolution of disputes.
&#8211;          An enabling environment for small enterprises and support through leveraging both public and private sector procurement budgets.
&#8211;          Focused support on labour-intensive sectors =, including agriculture, agro-processing and tourism-related services.
&#8211;          Strengthening regional ties and trade links.
&#8211;          Safeguarding South Africa’s investment-grade credit rating.
Minister Gordhan further added that Treasury knows what to do to get out of the present low growth trap.
“If lions work as a team they will bring down even a buffalo.”﻿

A steady 1.3%  GDP growth projected for S.A, but still not sufficient says Finance Minister

While you need to consider the impact of tax when planning your retirement saving strategy, it shouldn’t be yourprimaryconcern. Tax is certain, and there’s no avoiding it. That said, it needs to be factored in both while saving for retirement, and also during retirement, given the different tax treatment of those two scenarios.
Broadly speaking, the taxation process can be summed up as “exempt-exempt-tax”, consistent with regulations in many countries globally. You areexemptfrom tax on contributions made while saving for retirement (up to certain limits), you areexemptfrom gains on the investment(s) while you are saving, but you are subject toincome taxupon retirement as you draw down your savings.
Retirement savings vehicles
The key retirement-savings vehicles are Retirement Annuities and pension or provident funds. The main difference between these products is that the latter are employer-provided and are typically mandated in most large businesses. Retirement Annuities are typically used by self-employed individuals, employees in organisations that don’t offer a pension or provident fund, and those who want to increase their retirement savings.
The main benefits of retirement annuities are that you are able to contribute to as many of them as you wish, you can stop contributing whenever you want, and they are transferable. There is additional flexibility in that single-premium retirement annuities are available. This is a tax-efficient way to house any excess savings, as you are able to use the lump-sum amount to reduce your income-tax liability in that year.
The new Taxation Laws Amendment Act
The signing into law of the Taxation Laws Amendment Act (2015) and Tax Administration Laws Amendment Act (2015) by President Jacob Zuma, came into effect in March 2016 and has promted many questions from those who are saving for retirement via Retirement Annuities, pensions or provident funds.
In short, the act ensures that the tax benefits of contributions to provident funds, pension funds and Retirement Annuities are now on an equal footing. (See our Q&amp;A for more detail on how the new act will affect you.)
It is also important to note that most people currently saving for retirement will be unaffected or better off under the changes. High-income earners are likely to be the most affected by the changes.
How the act affects you: Before retirement
The tax deduction increases from 15% of non-retirement funding income to 27.5% of the higher of remuneration or taxable income, up to a maximum of R350 000 annually, on contributions made towards structured retirement savings. This deduction now applies across the board, i.e. to provident fund contributions, pension fund contributions and retirement annuity fund contributions.
The distinction between retirement funding and non-retirement funding income has also been removed. That means all clients who were members of a pension/provident fund, and therefore unable to benefit further from the deductibility of contributions to a retirement annuity since their income was defined as retirement funding income, can now “top up” to the limit of 27.5% as described in the paragraph above.
How the act affects you: After retirement
In simple terms, without considering retirement fund lump sum withdrawal benefits, retirement fund lump sum benefits, or severance benefits received or accrued to an individual, any lump sum withdrawn at retirement above a minimum threshold (currently R500 000) is taxable. The table below illustrates the taxation applicable:
How is your annuity taxed?
The remaining two-thirds of your savings received in the form of an annuity (“pension”) is taxable. But this would only be for the amounts that exceed certain thresholds published by the South African Revenue Service. For the current tax year (to end-February 2017, these thresholds are:
<ul>
<li>Under 65: R75 000 per annum</li>
<li>Between 65 and 74: R116 150 per annum</li>
<li>75 and above: R129 850 per annum</li>
</ul>
Are early withdrawls still possible?
The withdrawal of the entire amount of a pension or provident fund is still possiblebeforeretirement, although this is in many instances very ill-advised due to the adverse tax consequences for the withdrawing individual. (For retirement annuity funds, withdrawals are only possible on early retirement due to ill-health or on emigration.)
Tax-free savings accounts
Lastly, tax-free savings account (TFSA) are another element those saving for retirement need to consider. The TFSA structure, introduced last year, offers an interesting way to supplement structured retirement savings. It would be difficult to argue that a TFSA is an absolute alternative to products like Retirement Annuities and pension funds. TFSAs allow the investment of R30 000 a year (up to a lifetime limit of R500 000, likely to be revised upward in future). These investments can be made in a number of different asset classes and all gains on these investments (capital gains, dividends and interest) are completely tax-free.
However, contributions are not tax deductible, which is why TFSAs should only be considered as a way to supplement whatever retirement savings an individual already has, especially if they are at (or near) the contribution limit of 27.5% of the higher of remuneration or taxable income.
With so many complex factors to consider and a very long time horizon, it is critical to get professional investment advice for your retirement saving, as well as the tax impact of choices you will need to make.
For more information on investing for retirement, speak to your financial adviser.
This article is part of an investment series by Discovery Invest. Click <a href="https://www.discovery.co.za/investments/your-guide-to-investing/?utm_source=cnbc_website&amp;utm_medium=web&amp;utm_campaign=cnbc_page_jun2017&amp;utm_content=discovery_invest_guide_to_investing">here</a> to read the rest of the articles.
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CNBC Africa

Op-Ed: The inviolable sanctity of individual liberty

Millions risk starvation in Nigeria & Lake Chad region

Woolies S.A raises R100-m for education

S.Africa's Massmart reports 16 pct jump in FY profit

Barclays Africa, Barclays reach terms of separation

S.A's 2017 Budget Speech

It matters who leads S.A’s Treasury – FinMin Gordhan

Time for S.A to consider a “Charter of Economic Rights” – FinMin Gordhan

Budget highlights 2017: How it affects you

A R28-billion taxing problem

S.A’s Finance Minister emphasises the importance of reforming troubled SOCs

Market conduct regulator being considered for S.A’s banks

S.A’s lack of transformation is morally wrong and economically unsustainable-Fin Min

R51.6 billion to fund national and provincial economic infrastructure requirements; S.A Treasury

Over R44 billion allocated to fund South Africa’s MTEF

A steady 1.3% GDP growth projected for S.A, but still not sufficient says Finance Minister

Retirement and tax: what you need to know

News Tips

Advertise With Us

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