By Chris Bishop 
Most mines in South Africa – one of the world’s mining capitals – are either shut down or working at reduced output as COVID-19 takes its toll. All but those mines digging vital minerals – like coal for power generation – closed their shafts for fear the disease may spread in the often difficult hot and wet conditions deep underground. 
South African mines have proved resilient since George Harrison first uncovered gold in 1886 in open bush that is now the heart of Johannesburg. They hummed through two world wars and yet a war closer to home and a violent revolt in Johannesburg, the city that gold built, saw the mine shafts shut down. 
The current lockdown for 21 days will be the joint longest for nearly a century. The last time the mines shut down for three weeks was during the 1987 strike when 230,000 miners downed tools between August 10 and 31. One of the architects of the 1987 strike – seen as a kick against apartheid – was a young lawyer by the name of Cyril Ramaphosa. He led the fledging National Union of Mineworkers, which he founded in 1982, after being seconded to the mining industry by the African National Congress. The shutdown saw deaths and hundreds of thousands of dismissals. 
More peaceful was the more recent shut down in January 2008 when Eskom simply ran out of electricity. The gold and platinum mines closed for at least five days; Eskom declared force majeure and production resumed – under 10 to 20% power reductions &#8211; early in February. 
Surprisingly the mining industry survived both world wars. As thousands of black and white South Africans marched off to battle fields across the continent and in Europe the miners went underground to help finance the allied war effort. Britain struck a deal for cut price gold from the Witwatersrand to fund the First World War and was miffed, to say the least, when South Africa demanded full price again after the armistice in 1918. 
This signalled hard times for South African mines.When many white the soldiers returned to South Africa, many complained they were being replaced by cheaper black miners as the mines cut cost. It led to the violent 1922 Rand Revolt when all the Witwatersrand gold mines closed for 10 weeks. 
The strike started on 10 January 1922, halting all gold mining activities, from Springs in the east of Johannesburg to Randfontein in the west. More than 220,000 mine workers downed tools shutting 40 gold mines. 
Planes dropped bombs from the blue, artillery shelled suburban houses, riflemen fought street battles, snipers fired from bedroom windows and tanks rumbled through the suburbs. The fighting around the mines saw 200 people killed and more than a 1000 injured. 
In Brixton – a working class suburb near the centre of Johannesburg – more than 1500 strikers besieged 183 police; warplanes swooped to drop food for the police and returned to drop bombs on the strikers. The attackers fired back shooting one of the aircrew through the heart. The strike was called off on March 17 and the mines went back to work. 
A war closer to home caused the longest closure of the mines. When the South African War broke out on October 11 1899. Many mines were not put on care and maintenance and were allowed to flood. It was only after Johannesburg was captured by the British on 1 June 1900 – nearly nine months later &#8211; that a few mines began production again. The gold mines in what is now Mpumalanga – Pilgrim’s Rest and Barberton-, which was the other major gold mining area after the Witwatersrand, were also closed during the war.

This is how war and revolt have done worse to the mines than COVID-19.

JOHANNESBURG (Reuters) &#8211; South African President Cyril Ramaphosa has tested negative for coronavirus, the presidency said in a statement on Thursday. 



“The president submitted for testing as a precautionary measure upon the advice of physicians on Tuesday 24th March 2020 and received his results last night,” the statement said, adding he had held meetings with a variety of people in recent weeks. 



(Reporting by Emma Rumney; Editing by Alison Williams)



This article was first published on Reuters Africa <a href="https://www.reuters.com/article/us-health-coronavirus-safrica-president-idUSKBN21D0X5">https://www.reuters.com/article/us-health-coronavirus-safrica-president-idUSKBN21D0X5</a> and is republished with its permission.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Ramaphosa tests negative for coronavirus as South Africa to begin lockdown

CR-lockdown

CAPE TOWN (Reuters) &#8211; South African president Cyril Ramaphosa declared a national state of disaster on Sunday as he announced a range of measures to contain a COVID-19 outbreak that has so far infected 61 and showed the first signs of internal transmission.



In a live television broadcast after a special cabinet meeting, Ramaphosa said the outbreak, first detected on March 5, could have a significant and “potentially lasting” impact on a struggling economy, which is already in recession. 



Measures to be taken include travel bans to countries such as Italy, Germany, China and the United States. The government will also prohibit gatherings of more than 100 people and cancel large events and celebrations, he said. 



“It is concerning we are now dealing with internal transmission of the virus. This situation calls for an extraordinary response, there can be no half measures,” Ramaphosa said. 



He said government has cancelled visas to visitors from high-risk countries from Sunday, with previously granted visas also revoked. 



“Any foreign national who has visited high-risk countries in the past 20 days will be denied a visa,” he said, adding that South Africans who visited targeted countries would be subjected to testing and quarantine when returning home. 



First detected two weeks ago with a single positive result, the number of cases has risen to 61 by Sunday, a mushrooming rate that mirrors the rapid spread of the virus worldwide. 



The health ministry said earlier it had conducted 1,476 tests, with no fatalities. On Sunday, one of South Africa’s top universities, Wits in the economic heartland Gauteng, instructed 350 students to immediately self-quarantine for two weeks after a classmate tested positive for COVID-19. 



Besides the health impacts, Ramaphosa said the economy would not be spared as exports decline in key markets, including China, and the labour-intensive tourism sector suffers. 



“Cabinet is therefore in the process of finalising a comprehensive package of interventions to mitigate the expected impact of COVID-19 on the economy,” he said. 



(Reporting by Wendell Roelf; Editing by Jan Harvey and Alexander Smith)



This article was first published on Reuters Africa <a href="https://af.reuters.com/article/topNews/idAFKBN2130XH-OZATP">https://af.reuters.com/article/topNews/idAFKBN2130XH-OZATP</a> and is republished with its permission.

Ramaphosa declares national state of disaster over COVID-19

By Presidency 



RELEASE OF THE REPORT OF THE JUDICIAL COMMISSION OF INQUIRY INTO PUBLIC INVESTMENT CORPORATION



President Cyril Ramaphosa today released the <a href="https://www.cnbcafrica.com/wp-content/uploads/2020/03/Report-of-the-PIC-Commission.pdf">report of the Judicial Commission of Inquiry</a> into the allegations of impropriety at the Public Investment Corporation, which he received in December last year.



“I wish to express my gratitude to retired Judge Lex Mpati, ably supported by Mr Emmanuel Lediga and Ms Gill Marcus, and the entire team for their detailed and voluminous report,” President Ramaphosa said.



“One of the priorities of this administration is to build a capable, ethical and developmental state. All public institutions need to be held to the highest standards of integrity and accountability, and must effectively and efficiently fulfil their mandates. It was for this reason that I established the Judicial Commission of Inquiry into the allegations of impropriety at the Public Investment Corporation (PIC).



“The Commission has made detailed findings against some
current and former members of the PIC Senior Management and Board members.



“The Commission largely attributes improprieties to the
PIC Senior Management for failure to manage decision-making in a professional
and honest manner, and failure to abide by due processes and relevant
prescripts.



“The Commission shows that the impropriety was worsened
by the fact that the PIC Board was not functioning well, and Board involvement
in investment decisions compromised their ability to exercise oversight over
the PIC.



“The Commission makes recommendations which require
urgent attention and action by different state institutions, including the
criminal justice system, National Treasury and the reconstituted PIC Board.



“To this end and in keeping with the recommendations in
the report we will be forwarding it to the National Prosecuting Authority and
all relevant regulatory authorities for their consideration.



“I am releasing this report to the public together with
this high level roadmap on the way forward. Different state institutions,
including the Board, will further communicate the details of the implementation
plans.



“National Treasury has been tasked with developing a
detailed plan of action for itself and the Board of the PIC, and with
monitoring the implementation of this plan. It will report to my office on
progress in implementation steps at regular intervals.&nbsp; 



“The Commission implicates a number of individuals in
wrongdoing. The Commission gave relevant persons the opportunity to be heard at
the hearings it held. Any follow-up investigations, based on the
recommendations made, will follow due process and therefore give them further
opportunity to be heard before any steps are taken against them.”



President Ramaphosa appointed the Mpati Commission to
inquire into (a) whether there was any impropriety in the investment decisions
at the PIC and associated improper personal gain by parties; (b) the&nbsp; governance and operational model of the PIC;
(c) the allegations contained in information on the PIC by “James Nogu’’ (and
others) and the ramifications thereof; (d) human resources-related matters such
as victimisation and remuneration including performance awards; (e) possible
political interference in the operations of the PIC; and (f) the manner in
which the PIC handled regulatory aspects with regards to key legislation such
as the Financial Advisory and Intermediary Services (FAIS) Act and other
legislation.



Impropriety in investment decisions and personal gain



In the Report, the Commission of Inquiry has made adverse
findings on numerous transactions and on actions of various individuals in
investment decisions. The Commission highlights widespread disregard of PIC
policies and processes on the transactions by PIC Management and certain Board
members. Involvement of employees and non-executive Board members in investee
companies must be reviewed. The Commission recommends that the relevant
Delegations of Authority be reviewed by no later than June 2020.



The management of conflicts of interest also require
review.



Potential criminal behaviour has also been highlighted,
which should followed up by law enforcement agencies. These practices have led
to situations in which the PIC lost a lot of funds, which must be urgently
recovered. Civil actions will be instituted in this regard.



It is also worrying that the Inquiry shows that the PIC has
not shown the urgency to salvage whatever money it can recover.



The PIC must recover all the monies utilised in irregular
transactions or unlawfully paid out. The National Treasury will be tracking
developments in this regard.



Where relevant, the PIC and GEPF should jointly
investigate whether monies were paid and properly accounted for, and whether
any of these monies should be recovered – the Commission recommends this be
done within 6 months of the Report’s publication.&nbsp; 



The Commission recommends that certain steps be taken at
the GEPF to secure its own position such as a review of the role,
relationships, nature and frequency of meetings between the GEPF and PIC, and
ensuring appropriate interaction at the required level actually takes place.



Additionally, the Report shows that there are a large
number of assets that are in distress and the PIC should urgently devise a
stronger mechanism to deal with this and recover whatever it can.



The report has also found that it is highly likely that
some sections of the FAIS Act have been contravened. The Commission suggests
that parties or former parties could have contravened laws dealing with issues
such as corruption and bribery, protected disclosures, electronic interceptions
and sections of the Companies Act. Criminal matters will be referred to the
relevant authorities.



The Commission also recommended that the PIC ensure that
all pre and post conditions for all investments made have been fully met and
implemented and that effective processes and systems are in place to properly
monitor the investment post disbursement. In this regard those responsible for
failing to implement conditions precedent to investments ought to be held to
account.



The Commission recommends that a forensic audit on some
transactions be undertaken and, if necessary thereafter, the matter be referred
to regulatory and law enforcement agencies.



The criminal justice system should urgently act,
including forensic investigation and possible prosecutions. Civil cases will
have to be instituted as well where relevant.



The National Prosecuting Authority (NPA) has been working
with the Commission to determine any matters that may be investigated further.



Management needs to monitor&nbsp; the performance of investments held by the
PIC. The capacity and role of post investment monitoring and valuation needs to
be strengthened.



Another issue that looms large in the Report is the fees
paid by the PIC on transactions. Some appeared to be excessive, others not
deserved and at times without proper invoicing. The Commission has recommended
that numerous payments should be further investigated and any malfeasance that
may have arisen to be penalised.



The Report further recommended that the work and
appointment of advisors to investees for potential transactions also requires
review, including a review of all advisor contracts over the past 5 years.



Specific transactions are highlighted in the Report for
further investigation and review, including reporting matters to the relevant
authorities.



Governance, operating model and PIC legislation



The PIC is governed through the PIC Act of 2004 (the
Act), its Shareholder Compact, its Memorandum of Incorporation (MoI) and
internal corporate governance processes.



The Commission has made substantial findings and
recommendations in this regard. The PIC’s internal corporate governance must be
urgently improved.



The Commission has recommended that the skills set of the
PIC Board should ensure that Board members and senior management have the
requisite knowledge of expertise in relevant fields. Appointment processes will
have to be reviewed to ensure this is the case throughout the organisation. 



The Inquiry has also strongly recommended that the
delegations of authority be comprehensively reviewed.



Significantly, the Commission found that the Board has
been improperly involved in operational and investment decisions. It ought not
to do so in future, and instead focus on exercising an oversight role.&nbsp; 



The Commission also recommends changes to laws governing
the PIC, taking into account the PIC Amendment Bill of 2017 and their
recommendations.



This will be the task of National Treasury and will be
finalised soon. The National Treasury, the PIC and its board will ensure that
all the above changes are effected in terms of legislation, the shareholder
compact, MOI and corporate governance processes.



Careful consideration will need to be given to
recommendations made on composition of the Board and selection of Board
members.



PIC’s operating model



The Commission has also recommended far-reaching changes
in the PIC’s operating model. It says the model is no longer fit-for-purpose
and needs restructuring.



The operating model, which developed organically over the
years, is too centralised and no longer fit for a R2 trillion asset manager and
not in keeping with international best practice.



In this regard, the Commission has recommended a much
more decentralised model to accelerate decision-making and to improve
efficiency and transparency.



The new organisational design will be undertaken by the
PIC and its Board of Directors with the concurrence of and oversight from the
National Treasury.



It will include changes to Board composition, including
for example development of risk management capacity as well as investment
valuation and monitoring capacity. The PIC should also keep its customers and
other stakeholders informed of the restructuring. 



Recommended changes include revising the way in which
Board meetings are recorded and decisions taken at Board level.



The Commission recommends that a compliance coordinator
must be established by no later than June 2020, including development of a
compliance charter.



Lastly the Commission touched on process optimisation and
use of technology. The Commission also recommends measures to ensure that the
information technology environment is appropriate for the scale and sophistication
of the PIC.



Leakage of PIC information and its ramifications



In the past few years, especially from 2017, the PIC
suffered debilitating leakage of its internal confidential information.



Confidential investment and operating information was
leaked to the public, mainly by a person with the name of “James Nogu”.



This threw the PIC into turmoil, and resulted in serious
reputational harm to the corporation and precipitated major changes to its
executive ranks and the Board.



Disputes arose on whether those who leaked the
information were genuine whistle-blowers or not, with the Commission holding
that they did not follow laid out processes, and thus could not be regarded as
such. In this regard the Commission recommended that whistle-blower policies
need to be in line with the Protected Disclosure Act.



The PIC’s technology and information security systems
were unable to adequately deal with the leaks and there were gaps that made it
vulnerable. These therefore need to be drastically overhauled. The PIC should
strengthen its systems to ensure such breaches do not occur in the future.



Human Resource and remuneration issues



There were widespread reports in the media about the
victimisation and dismissal of employees by top management and extensive
testimonies.



In terms of implementation actions the Board of the PIC
will have to investigate these further and bring disciplinary action against
executives that victimised employees or did not follow PIC policies in the
appointment of senior employees.



With regards to remuneration there were concerns about
performance awards (bonuses) that were to be paid by the PIC to employees. The
policies governing remuneration decisions, including bonuses and disciplinary
processes, need to be reviewed.



The Commission expressly stated that greater
transparency, fairness and inclusiveness with regard to salaries, grading,
performance criteria and balanced scorecard assessment were required.



It is recommended that an independent professional body
be commissioned to review the regrading process and its outcomes, to be
appointed by the Board and to finalise its report by end April 2020.



Political interference at the PIC



The Commission investigated the allegations related to
political interference in the PIC.



The PIC has a Politically Exposed Person (PEP) policy
(this can also mean a domestic prominent influential person) which in some
instances acted as a bulwark against PEPs and their associated parties. In some
instances the policy was totally disregarded by employees in the PIC.



The Commission recommended that weaknesses were found in
the PEP policy and it needs to be strengthened. The Board should undertake a
comprehensive review of the policy incorporating deliberations arising at the
Commission.&nbsp; 



Conduct of the PIC with regards to FAIS and other
legislation



The PIC is, amongst others, regulated under the Financial
Advisory and Intermediary Services Act, which mainly governs the relationship
between the PIC and its customers, such as the GEPF. A key requirement of the
Act is for investment professionals at the PIC to be “fit and proper’’ by
acting with honesty and integrity at all times.



The investment mandate agreement between the PIC and its
main client, the GEPF, emphasises that the PIC must make “prudent” investment
decisions.



In the light of the above-mentioned improprieties and
questionable investments decisions taken the PIC has, in some instances, not
acted in compliance with FAIS Act and legal agreements with the GEPF.



The Commission found that the relationship between the
GEPF and the PIC is strained and that efforts should be made by both parties to
restore trust and a good working relationship.



There should be a review by the PIC and its customer on
the various investment strategies adopted by the PIC in meeting the clients’
requirements, including the non-domestic and unlisted investments strategies,
which are areas that have sustained massive losses.



The PIC and GEPF, and its other clients, should support
maximum transparency on transactions and disclose as much as possible. This
will lessen potential improprieties.&nbsp; 



In conclusion, President Ramaphosa said:



“I trust that the implementation of the actions above and
the detailed steps set out in the Report shall put the PIC in a much stronger
position to face the future and be an institution we can all be proud of.



“Given the substantial work accomplished, I would like,
once more, to thank those who participated in this important work of the
Commission, including the Commissioners, the Secretary, staff and the relevant
government departments.



“This also includes the City of Tshwane for the venue and
security services provided. We would also like to thank those who came forward
to offer their testimonies and thus immensely enhanced the work of the
Commission.



“Finally the media is thanked for keeping our people
informed on a regular basis.”



The report can be accessed from the home page of The Presidency&#8217;s website: <a href="http://www.thepresidency.gov.za">www.thepresidency.gov.za</a>

SA’s President Cyril Ramaphosa releases the Judicial Commission of Inquiry into Public Investment Corporation report

.By Chris Bishop



Before South Africa&#8217;s President Cyril Ramaphosa uttered a word in his State of the Nation Address in Parliament in Cape Town the proceedings were thrown into chaos.



Everyone thought the Economic Freedom Fighters were going to attack public enterprises minister Pravin Gordhan – instead, they hurled angry words across the floor at the president of South Africa who stepped aside 26 years ago to make way for democracy and Nelson Mandela.



Julius Malema led the way by standing and raising a point of order. He castigated former South Africa&#8217;s President FW de Klerk as the commander of Vlakplaas – the apartheid era camp where torture and killings of political activists went on. He called the former president the “Commander of Vlakplaas” and said his presence was an insult to those who died.   “Are we going to go on and on and on about the matter of FW de Klerk? The presence of FW de Klerk in this house is proper as a former president we have done it by the rules.



Delaying the matters of this house on this matter is not
going to achieve anything,” replied Thandi Modise the speaker of the house to
applause from the ANC ruling party benches.



“Only last week de Klerk takes the mic and says apartheid was not a crime against humanity and you are clapping hands for him,” retorted Mbuyiseni Ndlozi, an EFF MP. 



The speaker ruled against them and President Ramaphosa was
invited to give his address to applause from most of the house. 



As the president prepared to speak, again the EFF benches rose –as expected &#8211; to howl down Gordhan who is saddled with the job of reforming the loss-making state owned enterprises. 



They called him a minister working for what they called white monopoly capital. The same opposition MPS in EFF red who once howled: “Payback the money” to former president Jacob Zuma and applauded Gordhan when he was named as finance minister for the second time after the former’s disastrous finance minister shuffle.  



“Pravin Gordhan must go,” shouted one of the EFF MPs to
cheers from his Parliamentary colleagues.



“ Please fire Pravin Gordhan or we go…Please adjourn the
house so you can fire Pravin Gordhan and you will have a peaceful, peaceful,
SONA,” shouted another.



The increasingly angry Speaker of the House looked like a kettle about to boil over. Modise told EFF MPs to take their seats to laughter from the EFF benches and uproar from the ruling party benches.



“You all have a minute to take your seats or march out,”
Modise shouted, over the din on the floor, jabbing her finger at the EFF
benches.



Other MPs complained that millions across the country were waiting to hear what the president had to say and it was unfair that the chaos on the floor was holding up proceedings. Elder statesman Mangosuthu Buthelezi tried to call for calm, but it was as if he was shouting in the wilds of KwaZulu-Natal where he grew up.



Malema’s EFF argued they had a right to speak in Parliament,
yet the speaker disagreed. 



“You are simply retarding the progress of this house
tonight,” says Modise. &nbsp;&nbsp;



The best part of an hour was wasted in squabbling across the
floor and the nation still had no idea, from the lips of the president, what
state it was in. 



“South Africa is not very proud of us tonight,” said Modise
with the shake of her head after 40 minutes of arguing. The heartfelt words
fell like a cup of water on a bushfire.



Maybe the chaos did reflect on the state of the nation in a backhanded way. At the very least, the squabbling was a clear, depressing, sign of the divisions and dissatisfaction that ail the once hopeful, golden, rainbow nation.

#SONA2020: Point of order Mr President !..Two presidents  howled down in Parliamentary fiasco

JOHANNESBURG (Reuters) &#8211; South African President Cyril Ramaphosa won a court case against the anti-corruption watchdog on Thursday over a matter concerning ally Pravin Gordhan, ahead of a fresh battle over findings against the president himself.



A high court judge found that Ramaphosa had acted reasonably in not immediately disciplining Gordhan, the public enterprises minister, over a decision regarding the retirement of a tax official.



Thursday’s ruling was the third high-profile court defeat for Public Protector Busisiwe Mkhwebane in as many weeks, and she has come under public scrutiny for her investigations, including one into Ramaphosa.



Ramaphosa secured an “interdict” from the court, meaning he does not have to implement disciplinary action against Gordhan while Gordhan appeals against the finding by Mkhwebane.



By targeting Ramaphosa and Gordhan, the president’s supporters say, Mkhwebane is acting as a proxy for a faction in the ruling African National Congress party that is aligned with former president Jacob Zuma and opposes Ramaphosa’s agenda.



Mkhwebane denies playing politics, saying she is simply holding senior officials to account.



The judge criticised Mkhwebane for pushing for the disciplinary action against Gordhan to be implemented before his appeal of the public protector’s findings could be heard.



“It is mind-boggling why, in this matter, the public protector did not even consent to at least&#8230;have the remedial action stayed, pending finalisation of the review application,” judge Letty Molopa-Sethosa said in delivering her ruling.



Mkhwebane has also found in a separate investigation that Ramaphosa deliberately misled parliament over a 2017 donation to his campaign for the governing African National Congress party.



Ramaphosa has said he will urgently challenge the finding, which he says is flawed yet is still a headache for a president who has staked his reputation on cleaning up deep-rooted corruption and reviving Africa’s most developed economy.



Reporting by Alistair Smout; Editing by Mark Heinrich

South Africa’s Ramaphosa wins court case against #PublicProtector, what you need to know

JOHANNESBURG (Reuters) &#8211; South Africa’s anti-corruption watchdog said on Friday that President Cyril Ramaphosa had “deliberately misled” parliament about a 500,000 rand ($35,900) donation he received for his campaign to lead the African National Congress (ANC).



Public Protector Busisiwe Mkhwebane, who investigates allegations of wrongdoing by state officials, told reporters that Ramaphosa had violated the constitution and breached the executive code of ethics in his reply to parliament in November.



($1 = 13.9326 rand)



Reporting by Nqobile Dludla; Editing by Kevin Liffey

South Africa’s #PublicProtector says Ramaphosa deliberately misled parliament

By Efosa Ojomo



In their paper
“The Rise of the Regulatory State,”Harvard University economists
Edward Glaeser and Andrei Schleifer wrote “whatever law enforcement strategy
the society chooses, private individuals will seek to subvert its workings to
benefit themselves.” In recent years, few African countries have exhibited that
theory better than South Africa. 



Before the ousting of the allegedly corrupt former president, Jacob Zuma, South Africa was engrossed in a web of corruption characterised as “state capture”: a severe level of corruption where private individuals influence the state to such an extent that they almost assume ownership of the state’s resources. 



At the center of
the web were the Gupta brothers, who rose to such prominence in South Africa
that <a href="https://www.nytimes.com/2018/12/22/world/africa/gupta-zuma-south-africa-corruption.html">The
New York Times</a> reported “it became difficult to draw the
line between their business empire and the president’s office.” From high-level
cabinet appointments to the South African Revenue Services, corruption
permeated virtually every element of society, with much of it involving the
country’s leading political party, the ANC.



But things appear
to be looking up for South Africa, where newly elected leader Cyril Ramaphosa
has <a href="https://www.bbc.com/news/world-africa-48252097">vowed to tackle
corruption</a>. In March he established a new Investigating Directorate within
the National Prosecution Authority (NPA). And since his election, various party
leaders facing corruption probes by the ANC Integrity Commission have delayed
taking their seats in parliament or have declined to do so. 



While holding
corrupt leaders accountable sends a powerful message, if Ramaphosa’s long-term
strategy does not include investments in innovations that lead to prosperity
creation, he’s effectively snipping the buds while the roots remain intact.



For many,
engaging in corruption is simply a workaround—a means of making progress when
few better options exist. But the corrupt behavior exhibited by those within
the highest levels of government is something entirely different: the result of
an imbalance of power, in which those who have it use it to exploit those
without it. In contrast to the wealth and power of Zuma and the Gupta brothers,
more than half of South Africans live below the poverty line. Without financial
and political resources, it&#8217;s difficult for people living in poverty to
advocate for themselves. Thus, Zuma and his cronies succeeded in siphoning
funds away from public projects and programs for years because those who bore
the cost—the South African people—couldn’t do much about it. 



Ramaphosa’s best
shot at making a dent in corruption, then, is to not only investigate corrupt
individuals—a necessary short-term approach—but to also to double-down on his
market-oriented approach to development. If he’s able to help his country
become more prosperous, South Africans will not only have more bargaining
power, but the government will also be less vulnerable to exploitation and
better equipped to fight corruption.



To achieve this
goal, his government can support investments in market-creating innovations
that solve everyday problems. Unlike other types of innovations, our research
has found that these innovations create the foundation for robust, sustainable
growth by transforming complex and expensive products into simple and
affordable ones, allowing more people to participate in the economy. They
create jobs, result in investments in infrastructure, and provide much-needed
tax revenue to the government that can then be reinvested in communities and
anti-corruption efforts. They also tend to <a href="https://www.christenseninstitute.org/blog/to-strengthen-institutions-good-laws-are-not-enough/">strengthen
institutions</a> once stronger legislative systems and more contextual
regulations become essential to sustaining and growing the new markets. In
short, these powerful innovations spur significant economic development, while
creating the conditions for good governance. 



As people become
more prosperous and drive economic growth, the power dynamic shifts such that
government leaders become more responsive to the people’s needs, recognizing a
mutual interest in seeing the economic engine of their country succeed. This is
exactly what happened in the United States, where corruption ran rampant from
the mid-19th century until the early 20th century. But as more Americans
created more wealth for themselves, their voices of dissatisfaction with
corruption became louder. “Politically, the rage of victims counted for very
little in 1840, not much in 1860; by 1890, it was a roaring force” is how
Stanford Law Professor <a href="https://www.amazon.com/History-American-Law-Third/dp/0684869888">Lawrence
Friedman</a> put it.



Corruption can be
found in virtually every country across the globe, but it’s especially
difficult to squash wherever people lack the ability to advocate for their own
interests, and governments lack the ability to adequately respond to their needs.
To that end, Ramaphosa must play the short game and the long game—trim the buds
and pull out the roots. By encouraging investments in market-creating
innovations, he can spearhead a new era of development, while simultaneously
creating the conditions for corruption to plummet and a stable, responsive
government to take its place. 



*Efosa Ojomo is a senior research fellow at the Clayton Christensen Institute, where he leads its Global Prosperity research.



@GlobalCCI



###

Op-Ed: On corruption: How South Africa’s new leader can replace bold promises with bold action

JOHANNESBURG (Reuters) &#8211; South Africa’s governing African National Congress (ANC) has not decided to expand the central bank’s mandate, the head of the party’s economic transformation committee told Reuters, rebutting comments by another senior party official which hurt the rand.



ANC Secretary General Ace Magashule told a news conference earlier on Tuesday that the party’s executive had “agreed to expand the mandate of the South African Reserve Bank beyond price stability to include growth and employment.”



But senior ANC economic official Enoch Godongwana said there was “no decision” to expand the bank’s mandate.



Magashule’s statement that the ANC executive also wanted to set up a team to explore the possibility of quantitative easing was also inaccurate, Godongwana said.



Reporting by Alexander Winning, Editing by Olivia Kumwenda-Mtambo, William Maclean

South Africa’s ANC has not taken a decision to expand central bank mandate, what you need to know…

STATEMENT ON THE APPOINTMENT OF MEMBERS OF THE NATIONAL
EXECUTIVE, 29 MAY 2019



Fellow South Africans,



In the election of the 8th of May, South Africans
provided this administration with a clear mandate to accelerate inclusive
economic growth, act with greater urgency to tackle poverty, improve government
services, fight corruption and end state capture.



If we are to give effect to this mandate, we need a
capable, efficient and ethical government.



Today, we are announcing some of the outcomes of the
reconfiguration of national government.



As I indicated in the State of the Nation Address in
February 2018:



“It is critical that the structure and size of the state
is optimally suited to meet the needs of the people and ensure the most
efficient allocation of public resources.”



In undertaking this review, we have been guided by the
need to build a modern developmental state that has the means to drive economic
and social transformation, to embrace innovation and to direct effort and
resources towards where they will have the greatest impact.



All South Africans are acutely aware of the great
economic difficulties our country has been experiencing and the constraints
this has placed on public finances.



It is therefore imperative that in all areas and spheres
of government, we place priority on revitalising our economy while exercising
the greatest care in the use of public funds.



To promote greater coherence, better coordination and
improved efficiency, we have combined a number of portfolios, thereby reducing
the number of Ministers from 36 to 28.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Trade and
Industry is combined with Economic Development



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Higher
Education and Training is combined withScience and Technology



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Environmental Affairs is combined with Forestry and Fisheries



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Agriculture is combined with Land Reform and Rural Development



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mineral
Resources is combined with Energy



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Human
Settlements is combined with Water and Sanitation



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sports
and Recreation is combined with Arts and Culture



We had already combined the portfolios of Communications
andTelecommunications and Postal Services.



We have also decided to add responsibility for
infrastructure to thePublic Works portfolio and to add responsibility for
employment to the Labour portfolio.



If we are to make effective progress in building the
South Africa that we all want, it is important that we deploy into positions of
responsibility people who are committed, capable and hard-working, and who have
integrity.



In appointing a new national executive, I have taken a
number of considerations into account, including experience, continuity,
competence, generational mix and demographic and regional diversity.



The people who I am appointing today must realise that
the expectations of the South African people have never been greater and that
they will shoulder a great responsibility.



Their performance – individually and collectively – will
be closely monitored against specific outcomes. Where implementation is
unsatisfactory, action will be taken.



I have decided to make the following appointments to the
National Executive:



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy President is David Mabuza.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Agriculture, Land Reform and Rural Development is Thoko Didiza.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Ministers are Sdumo Dlamini and Mcebisi Skwatsha.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Basic Education is Angie Motshekga.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Dr Regina Mhaule.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Communications is Stella Ndabeni-Abrahams.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Pinky Kekana.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Cooperative Governance and Traditional Affairs is Dr Nkosazana
Dlamini-Zuma.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Ministers are Parks Tau and Obed Bapela.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Defence and Military Veterans is Nosiviwe Mapisa-Nqakula.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Thabang Makwetla.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Environment, Forestry and Fisheriesis Barbara Creecy.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Maggie Sotyu.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Employment and Labour is Thulas Nxesi.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Boitumelo Moloi.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Finance is Tito Mboweni.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Dr David Masondo.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Health is Dr Zwelini Mkhize.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Dr Joe Phaahla.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Higher Education, Science and Technology is Dr Blade Nzimande.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Buti Manamela.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Home Affairs is Dr Aaron Motsoaledi.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Njabulo Nzuza.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Human Settlements, Water and Sanitation is Lindiwe Sisulu.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Ministers are Pam Tshwete and David Mahlobo.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of International Relations and Cooperation is Dr Naledi Pandor.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Ministers are Alvin Botes and Candith Mashego-Dlamini.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Justice and Correctional Services is Ronald Lamola.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Ministers are John Jeffery and Inkosi Phathekile Holomisa.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Mineral Resources and Energy is Gwede Mantashe.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Bavelile Hlongwa.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Police is General Bheki Cele.



·&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Deputy Minister is Cassel Mathale.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister in the Presidency is Jackson Mthembu.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister in the Presidency is Thembi Siweya.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister in the Presidency for Women, Youth and Persons with Disabilities is
Maite Nkoana-Mashabane.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Prof Hlengiwe Mkhize.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Public Enterprises is Pravin Gordhan.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Phumulo Masualle.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Public Service and Administration is Senzo Mchunu.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Sindy Chikunga.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Public Works and Infrastructure is Patricia De Lille.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Noxolo Kiviet.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Small Business Development is Khumbudzo Ntshavheni.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Rosemary Capa.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Social Development is Lindiwe Zulu.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Henrietta Bogopane-Zulu.



·&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Minister of Sports, Arts and Culture
is Nathi Mthethwa.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Nocawe Mafu.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of State Security is Ayanda Dlodlo.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Zizi Kodwa.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Tourism is Nkhensani Kubayi-Ngubane.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Fish Mahlalela.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Trade and Industry is Ebrahim Patel.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Ministers are Fikile Majola and Nomalungelo Gina.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Minister of Transport is Fikile Mbalula.



·&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Deputy Minister is Dikeledi Magadzi.



These men and women we have appointed to the executive
are drawn from all corners of our country.



For the first time in the history of our country, half of
all Ministers are women.



We have also included a significant number of young
people.



This is in fulfillment of our commitment to giving young
people roles of responsibility in all sectors of society.



This is part of a generational transition in which we are
creating a pipeline of leaders to take our country further into the future.



In conclusion, I wish to express my appreciation to all
those outgoing members of the Executive who served the country so ably in the
Fifth Administration.



We continue to value their experience, skills and
contribution, and will give them suitable responsibilities where they will be
able to serve the nation.



Allow me to express my gratitude to all the Members of
the incoming Executive for making themselves available to serve the nation, and
I wish them all the best in the execution of their responsibilities.



We have all been called upon to serve the people of this
country, and we will do so to the utmost of our ability.



I thank you.



ISSUED BY THE PRESIDENCY OF THE REPUBLIC OF SOUTH AFRICA



Sent from my Huawei Mobile

SA’s President Ramaphosa has his cabinet, this is who’s in

Wars money and politics have divided families for centuries
– in the economic powerhouse of Singapore there can be another divisive factor
– corruption. There’s a good chance, if you bribe or cheat, your own family
will ostracise you, so says Hwee Hua Lim, and one of the former lieutenants to
Singapore’s guiding spirit in its economic revolution Lee Kuan Yew.



Singapore’s war on corruption, along with tight control of
its just over five million people through what its critics often call draconian
laws, has been part of the transformation of the island from a rundown port,
off the southern tip of Malaysia, into a manufacturing and financial powerhouse
considered one of the most robust and open economies in the world. It holds
lessons for South Africa as it tries to battle corruption on the road to
economic recovery under its re-elected President Cyril Ramaphosa.



“People take a very dim view of corruption; no one wants anything to do with it. It is in our DNA. Even members of your own family won’t talk to you if you are found guilty of corruption,” says Lim, who was in Johannesburg this week to speak at a conference.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/k7g5aNhpq-s" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>



Lim cited a common sense example that South Africa and a
score of other nations across the continent could learn from. It concerns
government contracts that are very lucrative and highly prized in Singapore’s
island economy. Each contract is ratified by three separate committees – one
dealing with procurement, one with assessment and the third with awarding the
contract. It is a system designed to make it difficult for one person to hold
sway over the contracts.



There is also the Criminal Breach of Trust Act that covers
business to stop everything from fraud, embezzling and bribery right down to
misrepresenting financial products, says Lim.



“The penalties can be years in prison, depending on the
amount of money involved,” says Lim.



“It is how we maintain our integrity as an economy. We take
the view that no one in the world owes us a living and that no one is forced to
do business with us. So we try to ensure clean fairness to encourage investors
to put money into our economy.”



Lim believes South Africa, with its rich resources, can
gather the political will to fight the corruption that has eaten away at the
economy over the last decade. 



“What it needs is a change of mind-set at the top and it
will percolate down to the people,” she says.



Lim’s life mirrors the rise of Singapore that set its mind
on economic growth following complete independence from Britain in 1965. Her
parents arrived in Singapore, during World War Two, from China and her father
eked out a living as a tea trader. The family of 11 lived in a two-bedroomed
flat, yet with the education, at the heart of Singapore’s economic boom; Lim
studied at Cambridge and became a name in business.



In 1996, she was elected to Parliament and in 2001 became
the first ever woman cabinet member in Singapore. She spent seven years as a
lieutenant to Prime Minister Lee Kuan Yew, who died in 2015, and argues he was
not as forbidding as many thought him to be.



“He was a visionary and used to say ‘fix it now and then we
will find a better way of doing it’ Everyone through he was unapproachable, but
he would always listen to people and learn from what they had to say. He was
like a sponge,” chuckles Lim. &nbsp;&nbsp;

Lessons from Singapore for SA’s newly elected President Cyril Ramaphosa

PRETORIA (Reuters) &#8211; South African elections officials counted ballot papers early on Thursday, a day after a vote seen as the toughest test yet for the ruling African National Congress (ANC) party 25 years after it swept to power at the end of white minority rule.



The elections for a new parliament and nine provincial legislatures are the first barometer of national sentiment since President Cyril Ramaphosa replaced scandal-plagued Jacob Zuma as head of state in February 2018.



Ramaphosa is trying to arrest a slide in support for the ANC, which has won every parliamentary vote since the end of apartheid in 1994 but whose image has been tarnished by corruption scandals and a weak economy in the past decade.



Opinion polls suggest the ANC will again win a majority of the parliament’s 400 seats, but analysts say its margin of victory may fall from the 62 percent of the vote it secured in the last election in 2014 because of frustration with slow progress addressing racial disparities in income and wealth.



The ANC’s biggest challengers at these elections are the main opposition party, the Democratic Alliance (DA), and the leftist Economic Freedom Fighters (EFF). The DA won 22 percent of the parliamentary vote in 2014 and the EFF six percent.



Most polling stations closed around 1900 GMT on Wednesday.



Results from some smaller voting districts started to trickle in on Thursday morning. As of 0330 GMT, more than 1.3 million votes had been processed out of around 26.8 million registered voters.



In the parliamentary vote the ANC was on around 53 percent, with the DA on 28 percent and the EFF on seven percent, with a turnout of 64 percent. Given that less five percent of the potential number of votes had been processed, it was too early to make an accurate prediction about the final result.



A full tally may not be known until Saturday.



Elections officials said voting had in general progressed smoothly but that there had been isolated incidents where bad weather, unscheduled power outages or community protests had caused disruptions. The electoral commission said it was investigating two potential instances of double-voting.



“The Electoral Commission will not allow the potential misconduct of one or two individuals to taint the overall outcome of these elections,” the commission said in a statement.



The ANC achieved its best parliamentary election result in 2004, under former president Thabo Mbeki, when it won 69 percent of the vote. But its support fell under Zuma, and it lost control of big cities like the commercial capital Johannesburg in local government elections in 2016.



The ANC currently controls eight of the country’s nine provinces, with the DA in power in the Western Cape. Analysts predict the provincial races for Gauteng, where Johannesburg and the administrative capital Pretoria are located, and the Western Cape, home to Cape Town, will be close.



Ramaphosa, who became ANC leader in December 2017 after narrowly defeating a faction allied with Zuma, has promised to improve poor public services, create jobs and fight corruption.



But he has been constrained by divisions within his own party, where some Zuma supporters still retain influence and oppose his agenda.



Reporting by Alexander Winning and Mfuneko Toyana; Editing by Peter Cooney and Michael Perry

#SAElections2019: Will Ramaphosa’s ANC retain power ?

South Africa’s President Cyril Ramaphosa deviated from the
campaign trail to tell how youth unemployment keeps him awake at night and how kissing
a frog can make it better.



Unemployment is one of the issues of the election on May 8
as South Africa’s population grows faster than the economy. The official
unemployment rate is around 27%, but many economists think it may be even higher.
More than half of the jobless are under 30 creating fear among politicians of a
growing idle, restive, yet educated, mob.



“We send our young people away to college, they come back
waving a certificate of a degree and then spend the next four years sitting at home,”
Ramaphosa told a group of interns, among more than 3,000, sponsored by one of
South Africa’s biggest financial institutions Nedbank.



“It keeps me up at night, the unemployment of so many young
people.”



President Ramaphosa said South Africa had to review its
education system.&nbsp; He said he was more in
favour of the German system where study and work experience work side-by-side
to help ease young people into jobs after graduation day. 



More than half a century ago, the young Ramaphosa worked his
first job hauling milk churns around in a dairy. In his relaxed, avuncular,
style he related a story, from his humble roots in Soweto, that he hoped would
inspire the young to find to transcend the lives they were born into.



“My father was a policeman and my mother was a domestic
worker and we had very little money. When I wanted to go to college I walked
the streets, knocking on office doors. I used to go in with a letter asking for
sponsorship for my bursary,” he says.



“Eventually I came across two old Jewish ladies who ran a
trust and they gave me the money. They gave me that lift that I required. In
life, I had to kiss a lot of frogs before I found my princess. I advise you all
in life to kiss a lot of frogs along the way.”



Young people also had to work hard when life offered them a
chance of work.



“If you work hard you will be seen as a gem and nobody wants
to lose a gem.”

The problem that keeps SA’s president up at night

<figure>
 <img decoding="async" src="https://images.theconversation.com/files/258072/original/file-20190210-174861-bywlwy.jpg?ixlib=rb-1.1.0&#038;q=45&#038;auto=format&#038;w=754&#038;fit=clip" alt="File 20190210 174861 bywlwy.jpg?ixlib=rb 1.1" />
 <figcaption>
 There’s no painless way for South Africans to deal with the power utility crisis.
 Shutterstock
 </figcaption>
 </figure>


By <a href="https://theconversation.com/profiles/rod-crompton-309956">Rod Crompton</a>, <a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894">University of the Witwatersrand</a>

Eskom is by far the largest of South Africa’s many state owned companies. This near monopoly power utility is in crisis. It’s the <a href="https://businesstech.co.za/news/finance/255015/eskom-is-the-single-biggest-risk-to-south-africas-economy/">single largest threat</a> to South Africa’s economy, according to a former minister of finance. The Conversation Africa spoke to Adjunct Professor Rod Crompton about why this is the case and what can be done. 

<h2>How is power generated and distributed in South Africa?</h2>

Electricity markets in most countries consist of three parts: generation, transmission and distribution. Most electricity is generated by using heat to boil water to create steam which in turn spins a turbine that generates electricity.

South Africa’s cheap and abundant coal resources made coal generated electricity an obvious choice for many years. Initially, power stations were owned by municipalities and large mining and industrial concerns. But as the costs of recapitalisation emerged, government was persuaded to take over responsibility for power. 

Eskom is <a href="http://www.dpe.gov.za/soc/Pages/Eskom.aspx">among the biggest</a> power utilities <a href="http://www.engineeringnews.co.za/article/how-power-utility-eskom-is-hobbling-south-africas-economy-2018-12-05">in the world</a>, famous for its ability to handle vast tonnages of low grade coal. Eskom accounts for <a href="http://www.dpe.gov.za/soc/Pages/Eskom.aspx">over 90% of power generating</a> capacity. Its power plants are mostly coal with one nuclear station and some pumped storage (water). Only a few minor power generators have remained outside Eskom’s fold. 

More recently, international climate change pressure caused government to introduce renewable power generation through <a href="http://www.engineeringnews.co.za/article/south-africa-to-release-new-look-renewables-bid-window-in-november-2018-06-01">bidding rounds</a>. These private investors were given 20 year price guarantees underwritten by government – some at exorbitant prices. Nevertheless, as these technologies became more globally popular, some of them – solar (photo voltaic) and wind power – emerged as the lowest cost generators. 

All power generation is tied into Eskom’s national transmission grid that moves electricity from generation stations to demand areas. Transmission is a natural monopoly. If you want to use the transmission grid you need Eskom’s permission. 

Transmission lines end where high voltage power is stepped down to distribution networks until it reaches residential customers – at 220 volts. In many areas Eskom sells to municipal distributors.

So, Eskom is a vertically integrated near monopoly responsible for generation, transmission and distribution.

<h2>Is this monopoly situation unusual in the 21st century?</h2>

In many countries competition between power generators has been encouraged to drive down prices. Transmission, being a natural monopoly, remains just that; but like toll roads they are open to all who obey the “road rules” and pay the toll. The same goes for distribution to a lesser extent.

<h2>What’s the trouble with Eskom?</h2>

Eskom has two major problems. Its operating costs are too high and it can’t pay its debt. It owes over <a href="https://www.moneyweb.co.za/news/south-africa/eskom-needs-a-bailout/">R400 billion</a> and does not generate enough cash to pay even the interest on its debt. It’s reached the end of the road. 

Eskom has been getting steep tariff increases in recent years but these have driven some customers off-grid and shut others down. Eskom’s sales have been declining by about 1% per <a href="https://www.biznews.com/briefs/2018/07/23/eskom-loss-power-sales-drop-debt-slumps">annum</a>. The less it sells, the higher the tariff it wants, and the less it sells – the utility death spiral.

<h2>How did it get here?</h2>

The main cause of its troubles is its decision to build two of the biggest coal fired generating plants in the world, (<a href="http://www.eskom.co.za/Whatweredoing/NewBuild/MedupiPowerStation/Documents/NB_0002MedupiFactSheetSept2013.pdf">Medupi</a> and <a href="http://www.eskom.co.za/Whatweredoing/NewBuild/Pages/Kusile_Power_Station.aspx">Kusile</a>). These plants are running way behind schedule, they’re over budget and the bits that are complete don’t work properly. They are <a href="https://www.businesslive.co.za/bd/opinion/editorials/2018-06-20-editorial-keep-an-open-mind-on--energy/">probably</a> the single largest disaster in South Africa’s economic history.

“State capture” (patronage networks), corruption and poor management have led to over staffing and neglected maintenance, resulting in <a href="https://www.fin24.com/Economy/Eskom/corruption-state-capture-behind-eskoms-downfall-nersa-hears-20190114-2">constant breakdowns</a>. Electricity theft, a culture of non-payment and defaulting municipalities have deepened the <a href="https://www.fin24.com/Economy/how-eskoms-looming-death-spiral-is-menacing-sa-economy-20181206">crisis</a>. Eskom is owed over <a href="https://businesstech.co.za/news/energy/293980/why-youre-going-to-pay-more-for-eskoms-mistakes/">R30 billion</a>.

<h2>What are the answers?</h2>

Eskom needs to simultaneously reduce operating costs, increase tariffs and shed a big chunk of its debt. There is no painless way for South Africans to deal with their Eskom crisis. And it can’t wait until the national elections on 8 May 2019.

President Cyril Ramaphosa appointed a team of advisers and has announced that Eskom is to be split into three subsidiaries: generation, transmission and distribution. This has been a government policy since 1998. This should increase cost and debt transparency and may lead to increased efficiencies, especially if competition is allowed.

<hr>

 
 
 Read more:
 <a href="http://theconversation.com/why-south-africas-latest-plan-for-state-owned-power-giant-could-work-111480">Why South Africa&#8217;s latest plan for state-owned power giant could work</a>
 
 

<hr>


Ramaphosa hinted that Eskom will be allowed to invest in renewables, possibly to absorb surplus staff and avoid retrenchments that have been so <a href="https://www.moneyweb.co.za/news-fast-news/num-union-tells-ramaphosa-to-scrap-eskom-split-plan/">vehemently opposed</a> by the unions. Some think this is too little too late. He passed the debt hot potato to the minister of finance’s budget speech on 20 February 2018. 

Energy Minister Jeff Radebe <a href="http://www.engineeringnews.co.za/article/prepare-for-greater-power-generation-competition-radebe-tells-eskom-2018-06-04">said</a> Eskom must prepare for increased competition, presumably in generation. The transmission network needs to be opened to allow this. The courts <a href="https://www.news24.com/SouthAfrica/News/court-prevents-eskom-from-cutting-off-musinas-electricity-20181120">have stopped</a> Eskom from switching off defaulting municipalities. Esokm’s crisis gets worse every day. Government will have to sort out municipal non-payment or allow towns and cities to go dark or let Eskom collapse. 

Until the President’s statement, government seemed paralysed. Will words turn into the effective action that’s needed to save South Africa from its power utility?<img decoding="async" loading="lazy" src="https://counter.theconversation.com/content/111510/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" />

<a href="https://theconversation.com/profiles/rod-crompton-309956">Rod Crompton</a>, Adjunct professor African Energy Leadership Centre Wits Business School, <a href="http://theconversation.com/institutions/university-of-the-witwatersrand-894">University of the Witwatersrand</a>

This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/explainer-why-south-africas-energy-generator-is-in-so-much-trouble-111510">original article</a>.

Explainer: South Africa’s energy generator is in trouble, here’s why

By <a href="https://theconversation.com/profiles/lauren-hermanus-403160">Lauren Hermanus</a>, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a> and <a href="https://theconversation.com/profiles/catrina-godinho-686367">Catrina Godinho</a>, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>


South African President Cyril Ramaphosa has unveiled a new plan for the country’s beleaguered state owned power utility, Eskom. During his <a href="https://www.gov.za/speeches/president-cyril-ramaphosa-2019-state-nation-address-7-feb-2019-0000">State of the Nation Address</a> on 7 February, Ramaphosa announced that Eskom would be unbundled into “three separate entities – generation, transmission and distribution”. These would all be established “under Eskom Holdings”. 

This announcement has been a long time coming. It was first proposed and formalised 20 years ago in the country’s <a href="http://www.energy.gov.za/files/policies/whitepaper_energypolicy_1998.pdf">1998 White Paper on Energy Policy</a>. Among other things, the policy sought to break Eskom into distinct smaller entities.

Ramaphosa’s speech was the seventh State of the Nation Address in which a president committed to structural reforms in the electricity sector. Former Presidents <a href="https://www.sahistory.org.za/archive/2001-president-mbeki-state-nation-address-9-february-2001">Thabo Mbeki</a> and <a href="https://www.sahistory.org.za/archive/2010-president-zuma-state-nation-address-11-february-2010-0">Jacob Zuma</a> made similar promises. Given that they never followed through, Ramaphosa’s announcement may sound all too familiar – and hollow – to some.

But we believe the unbundling will have far reaching consequences for South Africa’s energy sector. Ramaphosa offered a comprehensive outline of the plan. His commitment also comes at a time when <a href="https://www.parliament.gov.za/storage/app/media/Links/2018/November%202018/28-11-2018/Final%20Report%20-%20Eskom%20Inquiry%2028%20NOV.pdf">Eskom is mired in financial, operational and governance crises</a>. This time, it seems, an electricity reform may really be on the horizon.

<h2>Unbundling explained</h2>

<a href="https://www.powerfutures.org/updates/2019/2/6/what-is-unbundling-understanding-electricity-sector-unbundling-in-sa">Unbundling</a> is a type of structural reform. In the electricity sector, vertical unbundling refers to the separation of a utility’s generation, transmission, distribution and (sometimes) retail functions. Horizontal unbundling refers to the creation or entry of multiple players into each of these functions. The players may compete against each other to deliver the same service. 

South Africa is certainly not the first country to undergo this type of reform. It can learn from examples of similar processes in countries like <a href="https://elibrary.worldbank.org/doi/abs/10.1596/9780821395561_CH19">Kenya</a> and <a href="https://www.era.or.ug/index.php/sector-overview/uganda-electricity-sector">Uganda</a>. 

There are a number of benefits associated with unbundling. These include: 

<ul>
<li>more efficiency, resilience and sustainability through a tighter focus and clearer incentives within each functional area; </li>
<li>More competition and diversification of players; </li>
<li>Clarity in costs and functions of unbundled entities, which increases accountability for the purposes of governance and oversight; and,</li>
<li>Low-cost procurement driven by effective planning, competition and transparency.</li>
</ul>

Eskom currently operates as a vertically integrated monopoly. This means it performs the generation, transmission, distribution and retail functions. Its current structure and governance systems were cemented by apartheid’s internationally isolated security state. This outdated structure, which is characterised by a lack of transparency and accountability, has continued to shape the utility in the years since democracy.

There is a narrow window for municipalities and the private sector to play a role in distribution and retail, and generation, respectively. 

But Eskom still generates approximately <a href="http://www.eskom.co.za/Whatweredoing/SupplyStatus/Pages/SupplyStatusT.aspx">95% of the country’s electricity</a>. It exercises tremendous power in controlling access to the national grid. It has used its dominance to oppose national energy policy by, for example, <a href="https://www.iol.co.za/business-report/energy/disagreement-over-benefit-of-ipp-projects-for-sa-14277850">refusing to sign power purchase agreements</a> with independent power producers.

<h2>South Africa is lagging behind</h2>

This kind of monopolistic structure is unusual by international standards, in both developed and developing countries. And it often comes with operational inefficiencies, bloated costs and poor governance. 

Eskom has experienced all of these maladies. This has been demonstrated by its conduct with independent power producers, its role in the <a href="https://www.fin24.com/Economy/Eskom/eskom-powers-ahead-with-nuclear-plans-report-shows-20171117">controversial nuclear deal</a>, which has now been put on ice, and endemic corruption exposed by the portfolio <a href="https://www.parliament.gov.za/storage/app/media/Links/2018/November%202018/28-11-2018/Final%20Report%20-%20Eskom%20Inquiry%2028%20NOV.pdf">committee on public enterprises’ inquiry</a> into allegations of state capture at the utility.

These challenges are not unique to South Africa. But the country is behind the curve when it comes to addressing the structural factors and ensuring that its energy sector is well positioned to benefit from technological developments and shifting investment trends.

<h2>What Ramaphosa’s announcement means</h2>

President Ramaphosa has committed to the full vertical unbundling of Eskom. Generation, transmission and distribution companies will have their own boards and executive structures. This process will take time to implement, probably in the region of <a href="https://www.powerfutures.org/updates/2019/2/6/what-is-unbundling-understanding-electricity-sector-unbundling-in-sa">five years</a>.

It will require legislative and possibly policy reform. Due to the urgent need for transformation in the sector, the president said immediate attention should be given to the establishment of an independent, state owned transmission grid company. 

A good starting point for the unbundling process would be the establishment of an Eskom subsidiary with its own board. This subsidiary would oversee the migration of relevant assets and personnel. The intention would be to combine the transmission, system operation, power planning, procurement and buying functions. This separation is intended to leave the grid company free to contract independent power producers and Eskom generation without the conflict of interest that currently exists. As it stands, Eskom transmission is incentivised to give its own generation plants preference, blocking new technology and new entrants to bolster its own operations. 

It’s not only the president’s explicit commitment to a comprehensive reform plan that makes this announcement different from those that came before. The sector is in a fundamentally different situation compared to the early 2000s and early 2010s. 

Eskom is in the midst of extreme financial, operational and governance crises which it will not be able to solve alone, especially within the context of the complex <a href="https://irena.org/publications/2018/Apr/Global-Energy-Transition-A-Roadmap-to-2050">global energy transition</a>. 

But, to ensure this plan doesn’t go the way of its predecessors, Ramaphosa must ensure meaningful consultation and dialogue with all key stakeholders, as well as credible and sustainable plans to address the needs of all those who may be affected. Without this, the president’s announcement will meet the same fate as previous South African energy policy reform pronouncements. Reform is a complex social and technical process. It is not without risk and costs. This time, however, failure of implementation is not something the country can afford.<img decoding="async" loading="lazy" src="https://counter.theconversation.com/content/111480/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" />

<a href="https://theconversation.com/profiles/lauren-hermanus-403160">Lauren Hermanus</a>, Research associate, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a> and <a href="https://theconversation.com/profiles/catrina-godinho-686367">Catrina Godinho</a>, Research associate, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>

This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/why-south-africas-latest-plan-for-state-owned-power-giant-could-work-111480">original article</a>.

Here’s why South Africa’s new plan for state-owned power utility Eskom could work

By Gary Van Staden, Senior Political Analyst at NKC African Economics



With
an election around the corner, it was always a little unrealistic to expect the
State of the Nation Address (Sona) given by the South African president in Cape
Town on Thursday, February 7, to be an era-defining speech. 



President
Cyril Ramaphosa delivered a talk more tilted toward the African National
Congress (ANC) than the country, but what politician would have done anything
different? Under sweltering heat-wave conditions there was nothing unexpected –
apart from the rather sudden announcement of May 8 as the date for this year’s
general election – but the tone was positive and left listeners with the
feeling that, certainly in terms of the economy, there was some prospect of an
improvement. 



Mr
Ramaphosa covered all the bases he had been expected to cover, including
announcing that power utility Eskom would be split into three entities,
responsible respectively for generation, transmission and distribution. 



There
was also, however, a lot of repetition. Mr Ramaphosa spoke about dealing with
corruption, strengthening state institutions, establishing strategic
partnerships in state-owned enterprises (SOEs), better education, more
investment, and more economic development plans – all familiar themes a year
into his presidency. 



To
our mind there was still too big a role for the state in his plans, and too
much superficial mention of “reform” without the major policy shifts that
reform will require. But then again… a May date looms for the ANC to try to
retain power. 



There
was a good dose of calling back the past with plans to reintroduce technical
high schools and formal pre-school learning. Business and investors would not
have found anything disagreeable in the presentation, and enough to be publicly
encouraging. 



That
will help sentiment, but positive sentiment will last only if implementation
and delivery follow the talk, and implementation has been and remains an ANC
weakness. 



Our
understanding from sources close to the Economic Freedom Fighters (EFF) was that
the leftist opposition party would allow its members to make only minor
interjections and not to be altogether disruptive of Sona. Also, there is clear
evidence to suggest that the apparently accidental meetings between Mr
Ramaphosa and opposition leaders, including Julius Malema of the EFF and Mmusi
Maimane of the Democratic Alliance (DA), were no accident. 



So,
Mr Ramaphosa was allowed to proceed with a speech that was a little too much of
all things to all people to provide any real insight into what we can expect
when he delivers his next Sona once the ANC has comfortably won the election
(if the result turns out to be in line with our expectations). 



Some
news channels searching bravely for breaking news in Sona got excited about the
formal announcement of the breakup of Eskom, a policy which had been pushed by
Public Enterprises Minister Pravin Gordhan and expected for some time to be
announced in the speech. We find it disappointing, however, that the three
operations – generation, transmission and distribution – will remain under the
SOE Eskom Holdings when only the natural monopoly of transmission should remain
a state function. 



We
expect that this will mean the companies will remain less efficient than they
could have been if they were sold at least partly to private operators, but it
does provide an opportunity to deal with Eskom’s massive surplus labour
problem. 



The
company is estimated to be overstaffed by between 40% and 60%, and the
restructuring provides a reason for retrenchments, but that is not a topic the
president was willing to tackle in this pre-polls speech. 



Mr
Ramaphosa also mentioned that the utility “will need more revenue through an
affordable tariff increase” and said that more detail about the state’s support
for Eskom would be included in the budget speech that Finance Minister Tito
Mboweni will deliver later this month.



The
plans to deal with Eskom and its financial problems are illustrative of the
whole speech: it was largely anticipated and covered all the bases. It was
somehow underwhelming without being overtly negative. The elections do loom
very large so perhaps we got the best Mr Ramaphosa was prepared to offer
without supplying his opponents – both within and outside of his own party –
with any political ammunition. 



In general, we are encouraged but hold back on too much hope given the ANC’s poor record of translating words into deeds, a weakness that Mr Ramaphosa has not entirely dispelled. Perhaps the main point, given the political tightrope Mr Ramaphosa must walk, is that unlike almost all previous Sonas of the past decade this one was a notch better than neutral rather than downright negative.

﻿Op-Ed: Plenty of heat on the street, but no fire in #SONA2019

JOHANNESBURG (Reuters) &#8211; South Africa’s rand weakened early on Thursday as a bounce-back by the dollar aided by positive economic data put the local currency on the back foot ahead of President Cyril Ramaphosa’s state of the nation address this evening.



At 0640 GMT the rand was 0.17 percent softer at 13.5700 per dollar compared to its close of 13.5475 overnight in New York.



The rand has now retreated around 2.5 percent since last Thursday’s rally to a two-and-a-half year peak, tracking fellow high-yielding emerging market currencies hit by a bout of risk aversion triggered by better U.S. economic data.



On Wednesday the United States reported a narrower trade gap, helping the dollar index to a fifth straight session of gains.



With no top-tier economic data due locally, focus is expected to shift to Ramaphosa’s speech after the market close, with investors looking for clues about the fate of cash-strapped state power firm Eskom.



On Wednesday a monthly measure of business confidence noted concerns about slowing progress in promised reforms to ailing state firms and the broader economy.



Bonds also weakened, with the yield on the benchmark government issue due in 2026 adding 2 basis points to 8.67 percent.



Stocks were set to open lower at 0700 GMT, with the JSE securities exchange’s Top-40 futures index down 0.48 percent.



Reporting by Mfuneko Toyana; Editing by Jan Harvey

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