Mini budget 2017


Cape Town – Joan Baez and Bob Dylan wrote the beautifully simple song, Where have all the flowers gone? The song, especially the chilling chorus refrain When will they every learn? perhaps aptly describes the feeling one has when thinking about the upcoming mini budget.

Finance Minister Malusi Gigaba will deliver his inaugural budget speech on October 25 when tabling the Medium-Term Budget Policy Statement (MTBPS) in the National Assembly.

Long gone though are the days just after the turn of the century when former minister of Finance Trevor Manuel, with the vibrant Maria Ramos as Treasury head at his side (later his wife), distributed fruit and small plants at budget time in Parliament as a symbol of the fruit of prudent management of government finances and new growth in the economy.

Looming tax rises and doubts about how money is being spent constantly bring to the fore the question of tax morality, which in any country that hopes to be happy and progressive should not even be a discussion point. But let’s leave that for now.

These days government finances – meaning the state or South Africans’ collective combined wallet – do not look healthy. Economic growth and thus income (taxes) is too low and being downgraded constantly, creating expenditure problems (spending on service delivery and infrastructure) and a looming escalation of debt to debt trap levels.

You can read all about it in analysts’ assessments and warnings, as well as economic reports of neutral institutions like the International Monetary Fund (IMF).

The South African Reserve Bank last week said that the budget deficit could swell to 4.5% of gross domestic product in the current financial year, compared with the 3.1% shortfall the Treasury forecasted in February. The general feeling seemed to be that the shortfall in tax revenue could amount to R50nn. Not a pretty picture.

Gigaba himself admitted this week in a Bloomberg interview that revenue targets are obviously not going to be met. “National Treasury has a lot of work to do to maintain the nation’s budget and spending framework,” he said in Washington, where he is attending the annual meetings of the IMF and World Bank.

Steep tax hikes and junk rating threat

Sharp tax hikes and the threat of the downgrading our financial and investment status by international ratings agencies seem to be the only factors that will keep us on the right track. South Africans can therefore brace themselves for paying more tax, the details of which will be announced in the National Budget in February next year.

But when Gigaba speaks on October 25 the figures, plans and rescue actions won’t necessarily be the main interest. The elephant in the room will be trust – lost trust.

Too many South Africans (and influential ones who play a crucial role in the economy, from labour unions and ordinary salaried taxpayers to industrialists and big investors) don’t trust the people in control of our common wallet. And you don’t have to be an economist to realise that any economic and financial activities are built on basic trust between parties involved.

On leaving for Washington this week, Gigaba again mentioned that he will remind international investors and other stakeholders of the 14 confidence-restoring points.

Who still remembers those points he announced in June this year to counter the no confidence issue?

The clouds have been forming since 2008/09, when the international financial crisis hit. Initially SA weathered the storm very well, thanks to its considerable fiscal manoeuvring space.

But sadly this coincided with President Jacob Zuma’s government taking over from Mbeki and apparently allowing, if not actively promoting, enrichment of some through the looting of state resources, especially state-owned enterprises. Gradually mistrust and suspicion started scrambling and clouding things further.

Eventually whistleblowing – first regarded as only suspicions, followed by counter-accusations, smear campaigns and casting of suspicion on and getting rid of those honest enough to come forward – has culminated in the term ‘state capture’, now apparently regarded as a fact by most impartial commentators.

Danger signs have appeared all along and the coming mini budget will probably not differ much from previous ones in its effort to address them.

Except that we’re almost ten years further down the road with the Zuma administration, with the elephant in the room getting bigger and bigger, now almost blocking out all reasonability and goodwill.

And that is the bigger danger – not a bad financial position which can certainly be rectified.

Beginnings of a tax revolt

In January 2015, even before the sacking of Nhlanhla Nene as finance minister in December 2015 by Zuma, a tax expert with 14 years’ experience at National Treasury warned about tax morality in SA, seeing the “beginnings of a tax revolt in SA”.

Keith Engel, in charge of legal aspects of SA taxation at the National Treasury before he left in 2014, was interviewed on CNBC Africa by Alec Hogg, founder of Moneyweb and Biznews. Engel spoke on taxpayers’ growing concern at the apparent waste of their contributions through controversial government spending, and the haemorrhaging of money to dubious individuals and projects.

He says it was an issue always identified and recognised by previous finance ministers that tax morale has to go both ways. “I’m willing to pay tax if I know it’s going to be properly used.”

He also said the real issue in South Africa is not a tax problem. It’s an expenditure problem – “one can be trying to simply do too much with too few resources”.

Engel further talked about attempts not to raise taxes and stifle economic growth, signs of divestment, the bleeding of billions of rands in revenue due to tax-based erosion (earning money in SA but shifting the income abroad), and possible “quantitative easing” (loosening of monetary and fiscal policy) in South Africa.

The full text of the interview is still available on the internet.

In the past two years, especially since the appointment of Gigaba as finance minister, the issues raised by Engel have worsened due to mistrust and lack of confidence in the people in charge.

Dennis George, general secretary of the Federation of Unions of South Africa, convincingly described in a recent article how Gigaba has been the central architect of the state capture project. This started with his appointment in November 2010 as minister of public enterprises after the removal of Barbara Hogan, and continued right up to the recent threats around using the PIC (which holds state pensioners money) to help balance the governments books and keep the SOEs going.

But as Colin Coleman, head of Goldman Sachs in South Africa, this week said at a Thomson Reuters Summit in Cape Town, South Africa is a hard country to break, although some are trying their best to do it.According to Fin24, he believes South Africa can get back to a 3% GDP growth rate if it gets “the basics right.  And in the right circumstances, the country could even push its growth rate to 5% in three to five years”.

State-owned enterprises are the “biggest systemic failure” in South Africa currently. But “the potential for turnaround is there. The good guys will overcome,” Coleman said.

South Africa has many sides. Most of the time not all the angles have shown a pretty picture – or the good news story that the Zuma government is still (feebly these days) trying to convince everybody of.

Change will come – though not through the Zuma government and his young and ambitious finance minister.


Eskom verkies Duinefontein bo Thyspunt

Nuclear Power Plant at Sunset


KOUGA BESIGHEID FORUM is baie teleur gestel in die aankondiging van ROD ten gunste van
Duinefontein (Koeberg) vir die ontwikkeling van Kernkrag Stasie . Hierdie is inderdaad ‘n gevoelige
slag vir ekonomiese ontwikkeling in Kouga. Deel van KBF se betoog was as voorwaarde van ROD, dat
R4 biljoen rand van die nuwe ontwikkeling moes spandeer word op infrastruktuur in Kouga soos
paaie, skoole en klinieke, asook die verouderde rioolstelsel.
Kouga se basiese infrastruktuur het in die afgelope 20 jaar min tot geen aandag gekry nie, en die sou
ideale geleendheid wees om ons gebied se veroudere en dikwels nie werkende infrastruktuur weer
op datum te kry met eksterne fondse. Plaaslike munisipaliteit het so ver agter geraak, dat die
kapitaal benodig, eenvoudig nie met belastings bekostig kan word nie.
Ook maak die ou instrastruktuur dit baie moeilik vir ontwikkelaars om te ontwikkel, want massa
dienste soos skoon water, elektrisiteit en riolerings kapasiteit is nie voldoende. Hierdie het ‘n
negatiewe kringloop wat weer lei tot werkloosheid en armoede, en meer mense wat afhanglik raak
vir staatshulp in die vorm van toelae, om te oorleef.
Kouga Besigheids Forum (KBF) gaan appel aanteken teen die besluit op grond van die sosiale
ekonomiese impak wat die besluit op Kouga het, en sal die publiek op hoogte hou.
KBF fokus ook om in die kort en medium termyn , ekonomiese groei te bewerkstellig en gaan baie
fokus om Toerisme na ons gebied te bevorder, asook om Munisipaliteit by te staan om Aansporings
Voordele Beleid daar te stel vir ontwikkelaars en nywerhede om in ons gebied te vestig. Ook stel KBF
hulle ekspert panel van kundiges gratis aan munisipaliteit beskikbaar om te help met infrastruktuur
ontwikkeling en ander sake wat ontwikkeling en ekonomiese groei in Kouga strem.

South Africa grants environmental permit for new 4,000 MW nuclear plant-letter

CAPE TOWN (Reuters) – South Africa’s department of environmental affairs has granted authorisation to state-owned power utility Eskom to build a new 4,000 megawatt nuclear power plant in the Western Cape, according to a letter seen by Reuters.


Pylons carry power from South Africa’s Koeberg nuclear power plant near Cape Town August 13, 2015.

Construction at Duynefontein, close to South Africa’s only existing nuclear site Koeberg, will only go ahead once the National Nuclear Regulator (NNR) has granted an installation site license, the letter from the government to Eskom said.

“The project comprises the construction and operation of a Generation III pressurised water reactor type nuclear power station of up to 4,000 MWe, comprising two or three nuclear reactor units and associated infrastructure,” the letter from Sabelo Malaza, a chief director in the department, said.

A department spokesman did not immediately respond to requests for comment.

The new plant is located north of Koeberg, Africa’s only commercial nuclear power station, and will be almost double its 1,800 MW capacity.

Eskom wants to add 9,600 megawatts (MW) of nuclear capacity – equivalent to up to 10 nuclear reactors – to help wean the economy off polluting coal in what could one of the world’s biggest nuclear contracts in decades.

In April, a South African pact with Russia’s Rosatom to build nuclear reactors was deemed unlawful by a court and there are also concerns over the cost of the plans and their transparency.

Nuclear reactor makers including Rosatom, South Korea’s Kepco, France’s EDF and Areva, Toshiba-owned Westinghouse and China’s CGN are eyeing the South African project, which could be worth tens of billions of dollars.

Eskom welcomed the authorisation on Friday, saying that at the beginning of the project, five sites were considered. Eskom’s preferred choice for the site was Thyspunt along the east coast.

However, environmental activists who successfully challenged the government’s nuclear programme in court said they were studying the environmental permit and would probably appeal.

“This is creating regulatory confusion and chaos because you might end up with one authority who has authorised and the other one, the NNR, may potentially come to a different decision and say it is too risky and shouldn’t go ahead,” said Liz McDaid, of the Southern African Faith Communities’ Environment Institute.

Thyspunt is situated within the Kouga region in the Eastern Cape. The Kouga Municipality’s leadership will be meeting with Eskom on Monday to discuss the way forward. The Local Kouga Business Forum is completely surprised by this decision, stating that a wide reaction is expected from businesses in the region.


Persverklaring van die SBI (voorheen AHI)


Oor die afgelope jaar het die AHI besigheidskamer organisasie stappe geneem om haarself te vernuwe ten ten einde haar relevansie en diversiteit te verseker en, om “die Groot Stem vir Kleinsake” te wees.

Tydens ‘n spesiale algemene vergadering wat op Vrydag 22 September gehou is, het AHI lede gestem vir die aanvaarding van‘n nuwe Memorandum van Inkorporering asook ‘n nuwe naam, SBI.

“Ons sal met trots daarop terugkyk indien SBI met verloop van tyd vereenselwig word met geloofwaardige navorsing en openbare standpunte aangaande alle aangeleenthede wat vir Kleinsake van belang is. Buiten ‘n paar honderd groot maatskappye en staatsondersteunde ondernemings val meer as 95% van alle besighede in die kategorie van kleinsake,” sê President Bernard Swanepoel.

As ‘n lid van Business Unity South Africa (BUSA) bring SBI meer as ‘n honderd sakekamers byeen wat sommige van die nagenoeg twee miljoen KMOs verteenwoordig.  Kleinsake se bydrae tot die land se BBP beloop ten minste 40%. As die voorste werkskepper in enige samelewing het Suid Afrka se 9 miloen werkloses ‘n dinamiese kleinsake sektor met goeie vooruitsigte vir groei en ‘n omgewing wat KMOs se sukses sal help bevorder, broodnodig.

Uitvoerende Hoof, Dr Ernest Messina het verklaar: “SBI sal daarop fokus om die beste belange van alle KMOs in Suid Afrika te bevorder. Ons sal met alle rolspelers saamwerk om te help verseker KMOs bly in besigheid, groei, en skep werk.”

SBI het vanjaar alreeds ‘n reeks van suksesvolle KMO Indabas in Johannesburg, Kaapstad en Durban gehou.  Twee verdere Indabas gaan gehou word in onderskeidelik Bloemfontein en Johannesburg op 11 Oktober and 2 November.  Regeringsleiers, die media, politieke en eonomiese analiste, korporatiewe Suid Afrika en inspirerende entrepreneurs het deelgeneem.  In hierdie dinamiese debatte is verdere gesprekspunte gegenereer en die uitdagings wat deur SBI daargestel is, is ondersteun, naamlik:   

  • Dat beleidsmakers “klein, eerste moet dink” alvorens wette en nuwe regulasies ingestel word;
  • Dat die regering en korporatiewe maatskappye KMOs betyds moet betaal vir werk wat bevredigend gelewer is;
  • Dat elkeen twee moet skep” – ons uitdaging aan SBI lede om twee nuwe werke te skep.

‘n Spesifieke frustrasie vir Swanepoel is die gebrek aan omvattende navorsing rakende dié sektor.
“Ofskoon ons voortgaan om vlakke van burokrasie in te stel wat veronderstel is om KMOs by te staan en te help weet ons glad nie eens hoeveel KMOs daar is nie, hoeveel werkers hulle in diens het nie, of hulle groei of verklein, watter sektore hulle oorheers en watter uitdagings hulle in die gesig staar nie. Ons hoop om voldoende fondse te bekom om ‘n basiese grondlynstudie in die Nuwe Jaar te kan onderneem,” het hy gesê.

SBI sal deur ‘n nuut saamgestelde direksie bestuur word wat sal bestaan uit kundiges wat almal ‘n passie vir kleinsake deel.  Dit sal ‘n demografies verteenwoordigende direksie wees met bepaalde “portefeuljes” vir beter verantwoordbaarheid.

“SBI is daartoe verbind én entoesiasties om ‘n betekenisvolle rol te vervul in vennootskap met die regering, korporatiewe Suid Afrika asook met suster-organisasies ten einde ‘n bevorderlike omgewing vir KMOs te skep wat hulle in staat sal stel om te floreer, sê Messina.

“SBI sal daarna streef om tasbare resultate teweeg te bring wat ‘n sigbare verskil binne die sakelandskap sal bewerkstellig.  Ons is dit verskuldig aan die huidige en toekomstige geslag as ons bydrae tot ‘n nuwe erfenis en nalatenskap vir KMOs. Soos ons land, behoort ons diverse erfenis die grondslag te wees vir ‘n toekoms waarbinne ons inklusiewe welvaart vir almal skep.”