News in South Africa 14th November:

1. Infrastructure collapsing:

Around half of South Africa’s public infrastructure has collapsed or is close to collapsing, and needs to be addressed as soon as possible.

Infrastructure collapsing
Image taken by: Wendelin Jacober

This is the warning from the South African Institution of Civil Engineering (Saice).

Something has to be done or South Africa may become a failed state, said Saice President Professor Marianne Vanderschuren at the release of its 2022 Infrastructure Report Card (IRC) on Friday.

“Without infrastructure, our economy and our society cannot function.”

Going downhill …

Vanderschuren said the overall grade in the IRC was a ‘D’ compared to a ‘D+’ in 2006 and is the lowest rating since the IRC was first published in 2006.

She said there was an improvement in South Africa’s infrastructure to a ‘C-‘ with the investment made for the Fifa World Cup in 2010 “but the trend has been downwards ever since”.

The IRC scorecard is based on a five-point scale where:

  • ‘A’ is world class
  • ‘B’ is fit for the future
  • ‘C’ is satisfactory for now
  • ‘D’ is at risk of failure, and
  • ‘E’ is unfit for purpose.

The report covers 14 sectors and features a snapshot of the current condition and performance of 32 sub-sectors of infrastructure.

Saice 2023 president-elect Steven Kaplan said the overall goal of the IRC is to increase awareness and influence change for the better.

“We aim to also stimulate debate on the condition of South Africa’s infrastructure and its effect on the quality of life and the economy,” he said.

SA gets one A … and too many unfit-for-purpose ratings

The Gautrain is the only infrastructure sub-sector to receive an ‘A’ rating, with eight subsectors obtaining a ‘B’ rating, six a ‘C’, 13 a ‘D’ and four an ‘E’.

The report said the Gautrain is deemed “world class” because its infrastructure is in good condition and sound maintenance practices are in place, although the track geometry has deteriorated since the line was built.

The four sub-sectors to receive “unfit for purpose” ratings are the rail branch lines, Passenger Rail Agency of South Africa (Prasa) branch lines, sanitation and wastewater in all areas except urban areas, and provincial and municipal unpaved roads.

Underinvestment in infrastructure

IRC team convenor and Saice past president Sam Amod stressed that infrastructure is at the centre of everything people do in their social and economic lives, but South Africa has not invested enough in infrastructure since 1994.

“According to [National] Treasury itself, we need to be investing 30% of GDP in infrastructure. In 2020, it was 13.7%, less than half of what we should be doing,” Amod said.

“By 2030, Treasury has set a target to achieve 30% of GDP. It is a tall order to double your spending in the years that remain,” he warned.

Amod said the difference between social and economic infrastructure is important.

“If you do not invest enough in social infrastructure but keep the economic infrastructure working well, then the wealthy get wealthier and inequality gets wider and wider … Unless we invest in social infrastructure properly, we cannot give people the mobility to find jobs, you can’t keep them healthy, you can’t educate them so that they get jobs.”

2. DA wants cyber public protector:

The Democratic Alliance wants South Africa to get another high-powered office, similar to the Public Protector in many regards, to guard the online space against everything from all-out cyber attack to the theft of personal information from the state.

The opposition party this week launched the formal process of proposing an update to the Constitution, to create a Cyber Commissioner among what is formally known as the state institutions supporting constitutional democracy, but typically referred to as Chapter 9 institutions for the section of the Constitution that establishes them: the South African Human Rights Commission, the Auditor-General, the Electoral Commission, and others.

Like the Public Protector and Auditor-General, that commissioner should be an individual South African citizen, the DA has proposed, appointed for a five-year term that can be renewed once, who may have some specialised knowledge of cyber security.

Once in office, that individual would be very hard to remove before the end of their term, likely requiring the same kind of process as getting rid of a Public Protector should Parliament lose faith in them.

And while in office, that person would have a great deal of power over the state and companies. 

“At present, South African state departments and critical infrastructure is not sufficiently protected against cyber threats,” says the DA in its motivation for the update to the Constitution. “They are also not properly equipped with protecting sensitive public information against hacks.”

The party is not alone in that assessment. This week the South African Banking Risk Information Centre (Sabric) decried the “limited capacity of the police and [National Prosecuting Authority] to prevent, detect, investigate, and prosecute cybersecurity breaches” and urged a “substantial investment” to prevent criminals from having free rein online.

Meanwhile, the SA National Defence Force’s ability to guard against cyber attacks is severely limited, by its own analysis.

The Cyber Commissioner would assist the police with cyber forensics, and at least advise the defence force – as well as any other institutions with critical or vulnerable systems – on preparing cyber defences. 

3. Big property market shift:

In spite of the aggressive rate hiking by the Reserve Bank since November last year, both housing demand and the availability of bond finance have so far remained strong – but deposit percentages are now rising, and buyers are extremely price conscious, says Gerhard Kotzé, managing director of RealNet.

“There are far fewer 100% loans being granted now, and as rates have risen, the average deposit requirement has risen too, to around 10% of the purchase price,” he said.

This means that most buyers once again need to have a considerable amount of cash available to finalise a purchase. And because it is difficult for them to save in a climate of high inflation and rising rates, they are really focused on finding the best value for money.

“At the same time, many existing homeowners are also under financial pressure, and we are seeing a rise in the number of ‘distressed’ sales – which not only increases the supply of homes for prospective buyers to choose from, but also exerts downward pressure on prices.”

Consequently, Kotzé said home sellers need to adjust their view of the market now and really start looking at it from the buyers’ point of view.

“A year ago, we were looking at a shortage of stock that made it very difficult for buyers to negotiate the price. They were effectively paying what sellers asked for – and sometimes more – to secure the properties they wanted, and they were not really objecting because interest rates were at their lowest levels in 40 years.

“Now, though, most households have a very different financial perspective, and home buyers have become much more inclined to make offers based on their own perceptions of value for money and potential growth, even if these are well below sellers’ asking prices.”

Kotzé said it is taking sellers longer to adjust to this market shift than buyers, “and many are unfortunately rejecting offers they consider too low and holding out for their initial asking prices until it becomes all too evident that any buyers who might have been interested in their property have simply moved on to other prospects – and more flexible sellers.

“The result is that more properties are getting ‘stuck’ on the market until their owners drop their asking price – as evidenced by the fact that the average listing time has risen by almost two weeks since the start of the year and that the average differential between the initial asking price and eventual selling price is also going up steadily.”

4. Coal is here to stay:

There’s a misconception that South Africa is quickly moving away from coal-fired power at the behest of rich countries, resulting from bad communication from the state and its funding partners.

According to South Africa’s Just Energy Transition Plan (JETP), Of Eskom’s 15 coal-fired power plants, seven will be decommissioned by the end of 2030, while two more will be shut by 2035.

By the end of 2050, only the two youngest coal plants – Medupi and Kusile – and one unit of the Majuba plant will remain operational, “as currently envisaged”.

This means we get to use coal power for several decades after wealthy countries’ billion-dollar energy transition deals and complete their phase-outs.

5. New wage demands:

The government is facing renewed threats of a national shutdown if it fails to give in to civil servants’ wage demands.

At least two unions have vowed to ramp up demonstrations amid deadlocked negotiations between the government and the public service.

The Public Servants Association of South Africa (PSA) and the healthcare professionals union Hospersa reignited the threats during last week’s strike action.

National Treasury has less than a week to respond to an ultimatum by the PSA and Hospersa.

The two unions staged a national strike last week, calling on the government to honour the 2018 three-year wage agreement.

The government pulled out of the deal after the second year, citing financial constraints.

Public servants want the government to match their wage demand of 10% and continue the R1,000 cash allowance beyond March 2023.

The government has until Thursday to respond.

Meanwhile, the 3% offered by the government is set to take effect from Tuesday.

All information sourced from articles posted by: Moneyweb, Business Insider, BusinessTech, Fin24, and EWN.

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