News in South Africa 30th August:
1. 5 years more of load shedding:
There is no ‘silver bullet’ to end load-shedding, and South Africa’s electricity crisis will be with the country for five more years, despite recent deals made with Chinese representatives.
This is the view of energy expert and University of Johannesburg professor Hartmut Winkler, who told eNCA that South Africa’s electricity crisis will not be solved overnight.
“I think what South Africans have to understand is that there is no magic bullet,” he said.
“Many promises have been made, many announcements have been made, but ultimately, all of those things can only help a little bit at a time.”
Winkler’s comments come after the Electricity Minister signed a Memorandum of Cooperation with eight Chinese companies “focused on enhancing South Africa’s energy security through infrastructure and technology development, human capital development, and research, amongst other objectives”.
Through an Exchange of Letters and a resultant Technical Assistance Programme, the Chinese Government will also donate emergency equipment to South Africa.
Under the programme, the first shipment of equipment will include 450 petrol generators, which will be deployed to critical facilities, including hospitals and clinics.
Over the long term, Ramokgopa hopes the agreements will help end load-shedding by transferring skills and technology from the Chinese firms to Eskom, thereby improving the utility’s performance.
However, Winkler warned that this is not a simple solution to the country’s electricity crisis.
“The electricity crisis is of such a nature that no single individual, no single entity or even another country can just come in and fix it overnight. We’re in it for the long haul,” he said.
“I still think that we’re going to have power problems for another five years or so, although hopefully not nearly as severe as now.”
While China has proven its expertise in electricity generation, having reformed its system from coal-intensive to a very large share of renewables, it will not be able to solve South Africa’s challenges as easily.
In addition, Winkler said South Africa already uses a lot of Chinese technology, and he, therefore, believes the change will likely not be as big as some might think.
Rather, Winkler believes South Africa should take a similar approach to China, which largely deregulated its energy sector to allow for private power generation.
South Africa has started this process by allowing for Independent Power Producers and incentivising individuals and households to install solar panels through tax breaks.
2. New laws with big changes for businesses:
Trade and Industry Minister Ebrahim Patel has tabled the new Companies Amendment Bill before parliament, kicking off the process of making the changes for businesses in South Africa law.
One of the key changes being introduced in the bill – which was published for public comment in 2021 – is to force listed companies in the country to disclose the ratio of the top-paid to the bottom-paid 5% of workers in their reporting.
Patel previously said that the bill will help to address South Africa’s inequality issues.
South Africa currently ranks as one of the, if not the most unequal countries in the world, with massive gaps in wealth distribution among top and bottom earners.
High levels of executive pay have become a contentious issue the world over, but stands out in a country like South Africa where some top executives earn over R500,000 a day, compared to the average of R800 a day, or the poverty line of R25 a day.
In recent years, there has been a significant spike in shareholders of listed companies voting against high executive pay at Annual General Meetings, particularly in the finance sector.
In terms of the new proposed laws, on top of the current remuneration reporting requirements, companies in South Africa will have to include the following in their reporting:
- The company’s remuneration policy, which must be set out in a separate part of the remuneration report;
- An implementation report containing details of remuneration and benefits received by each director or prescribed officer;
- The total remuneration – including all salary and benefits, including employer contributions to benefit funds, short-term incentives or bonuses and long-term incentives – of an employee with the highest total remuneration. This is not limited to the CEO, it can be any other executive or prescribed officer.
- The total remuneration – including all salary and benefits, including employer contributions to benefit funds and incentives or bonuses – of an employee with the lowest total remuneration in the company;
- The average remuneration of all employees, median remuneration of all employees and the remuneration gap reflecting the ratio between the total remuneration of the top 5% highest paid employees and the total remuneration of the bottom 5% lowest paid employees of the company.
The new remuneration report with all these details must be approved by the board of the company and presented to the shareholders at the annual general meeting where it must be voted on by the shareholders for approval.
The new laws don’t only focus on pay, however, they also put a spotlight on other factors like beneficial ownership of a company and cutting red tape.
3. Business tackles corruption mess:
Denouncing the gross levels of crime and corruption in South Africa, organised business has established an anti-corruption guide for corporate executives, which also calls for companies to set up protection funds for whistleblowers.
Speaking at the launch of the guide, Business Leadership South Africa (BLSA) CEO Busi Mavuso said the private sector should be allowed to do its bit in fighting corruption in a way that only the private sector can, decrying a “state capture project” that remains prevalent within state-owned enterprises (SOEs).
She pointed to the BLSA’s contribution towards a R50 million graft probe into Eskom, which drew criticism earlier this year. The BLSA provided a sum of R18 million for the investigation, a contribution the lobby group had to defend.
“Institutions like the BLSA, on the request of the CEO of Eskom, [funded] an investigation report into Eskom… to [give to] the SIU… Then you have government crying foul, saying, ‘What the hell are you doing getting involved?’,” Mavuso said.
She said BLSA has a vested interest in ensuring that South Africa is a country that works.
“…Because this is not government’s country; this is South Africa’s country, and if South Africa fails, then we lose as much as all South Africans,” said Mavuso.
The guide, unveiled by the Gordon Institute of Businesses Science (Gibs) in partnership with BLSA, was launched against the backdrop of a country that has faced abject levels of crime and corruption over the past decade, within both public and private sector entities, which has contributed the stalling the country’s economic growth.
Rooting out corruption
The 40-page guide sets out a framework for South African companies in a bid to root out crime and corruption.
It was written by Financial Mail editor Rob Rose, who has played a major role in covering some of South Africa’s biggest corporate corruption scandals, notably in Steinhoff and Tongaat Hulett, among others.
Its foreword was drafted by Auditor General Tsakani Maluleke, with other contributions from the founding director of the Gibs Centre for Business Ethics, Rabbi Gideon Pogrund, Business Unity South Africa CEO Cas Coovadia, Mavuso, South African Revenue Service commissioner Edward Kieswetter, and others.
The guide lists 38 core principles, including dealing with corruption from the top down, stipulating that contracts with the state be placed before a company’s complete board for approval, and running regular risk assessments to detect illicit activity.
It also proposes that whistleblowers, who have often been targeted for reporting unethical activities within organisations, be encouraged to come forward on a confidential basis and recommends that companies set up protection funds to protect whistleblowers and offer them rewards.
4. Urgent calls for order on critical minerals:
South Africa and other African nations must urgently formulate their own critical minerals strategies or risk continued failure to capitalise on their rich natural resources, mining and energy minister Gwede Mantashe said in a keynote address at the inaugural African Critical Minerals summit held in Sandton this week.
The minister said many developed countries have already categorised certain minerals as critical based on their resource endowment, supply chain vulnerabilities, and specific economic and technological priorities.
Many African nations, including South Africa, are yet to define and list critical minerals, but this is vital “because it will have significant implications for our strategic planning, prioritisation, and investment,” Mantashe said.
Phumzile Mlambo-Ngcuka, former deputy president of South Africa, outlined the vast mineral wealth of the continent. But, she said, “the fact that we do not have that strategy in 2023, is already a crisis.” She said she a way forward would be determined by the end of the two-day, inaugural summit.
“One critical question that we need to answer for ourselves and answer it, honestly, is why have we not benefitted as much as we should have from our minerals,” Mlambo-Ngcuka said. “Indeed, we have had challenges of leadership. We have external circumstances that have made it difficult for us to take full advantage of our resources. And of course, we are not always as strategic as we need to be.”
Mantashe said South Africa is at an advanced stage of developing its critical minerals strategy, “which will help us industrialise and support our just energy transition to a low-carbon future”.
The minister, however, also noted that some countries define critical minerals in terms of their importance for the economy or national security and, in this vein, a commodity like coal could potentially be categorised as critical.
5. Collapsing SOEs:
Parliament was briefed on the performance of several state-owned enterprises (SOEs), and every single one lost hundreds of millions of rands.
Over the most recent quarter, Transnet’s revenue was 13.8% below budget, SAA lost R182 million, the SAPO lost R367.3 million, Arms manufacturer Denel lost R206 million, and the Land Bank lost R80 million.
All information sourced from articles posted by: DailyInvestor, BusinessTech, Moneyweb, Fin24, and BusinessDay.
