News in South Africa 3rd August:

1. Social distance confusion in schools:

There is widespread confusion among primary schools over the newly announced social distancing protocols, which suggest that pupils be kept at least 1 metre apart in classrooms, as they return to full-time learning.

Social distance confusion in schools
Image taken by: Pixabay

The protocol was hastily changed over the weekend, as schools prepared to implement the full-time teaching order on Monday.

However, many schools report that they are unable to comply, as classes are overcrowded. They say they were told that returning to full-time teaching takes precedence over social distancing; however, as many as 500 township schools could not open because they could not comply.

2. Chinese crackdown on tech companies:

Last week was a week of great anxiety for SA investors. Naspers and Prosus, together the biggest local companies on the JSE and with disproportionate weightings in indices and investor portfolios, fell sharply following a crackdown by the Chinese government on the operations of big technology companies.

The share price of Tencent, one of the largest tech companies in the world and one of the two biggest in China, fell by 40% within days.

“We can categorise this as a crash,” says Peter Armitage, founder and CEO of stockbroking and investment firm Anchor Capital.

“Due to the dominance of Tencent in the valuation of Naspers, Naspers fell to only R2 500 [last] week, down about 20%, compared to its all-time high of R4 000,” says Armitage.

“The Anchor valuation models show that Tencent composes 81% of the net asset value [NAV] of Naspers,” he adds, leaving one with the impression that Naspers (and Prosus) shareholders should be happy that they only suffered losses of 20%.

The reason for this is the well-known fact that both Naspers and Prosus are trading at deep discounts to their NAVs.

Anchor calculates that Naspers is trading at a 49% discount to its NAV and Prosus at a 35.5% discount.

The crackdown was huge, or seemed huge. Within weeks, different Chinese government agencies issued fines, enacted new regulations, and restricted the operations of many technology companies.

Says Lillian Li: “Mere days after Didi Global’s $4.4 billion IPO [initial public offering] on the Nasdaq, their apps were removed from online stores at the behest of the Cybersecurity Administration of China. The reason cited was violations of personal data collection.

“Over the past nine months, Ant Group’s IPO got pulled, Community Group Buying players were fined for price dumping, Alibaba was fined for anti-monopoly violations and Meituan was also fined for anti-monopoly violations,” she says of the actions against several big tech firms in China.

Tencent was caught up in the furore. The company had to suspend new subscriptions to its popular WeChat app when Chinese authorities raised concerns over security of users’ information.

3. Lack of skills a major problem in SA:

Business experts say that South Africa doesn’t have a jobs problem – it has a skills problem; the country – the government in particular – is very adept at planning, but fails when it comes to executing them.

This puts long term growth at serious risk, because the planning pushes all the attention to fixing problems ‘one day’, but not dealing with the issues that we are facing right now.

And when one day comes, the plans fall through. The situation calls for public and private partnerships to make changes now to form a strong foundation for long term plans to be executed.

“We can’t just have good plans that are not executed… We as a country plan, plan and continue to plan. The real problem we have is our inability to execute… We just don’t do it!” said Vukani Mngxati, CEO of Accenture in Africa.

He went on to state, “So, how should this plan look? In my mind a one-day national recovery colloquium led by Business Unity SA and government must begin the process by asking key questions as to how this attempted insurrection happened; how to prevent an uprising like this in future; and, on a more practical and less philosophical level, how to help small business with immediate effect.”

“Then we need the establishment of a permanent high-level SA Police Service/justice department team to fast track investigations and consequences for the criminality displayed. I want to see more urgent engagement with SA’s tech sector to improve co-operative capability to enhance future intelligence gathering, and the creation of a short-term permanent supply chain tactical unit to safeguard important road travel routes such as the N3 highway between KwaZulu-Natal and Gauteng, SA’s most vulnerable supply chain route.”

“We also need to apply our collective minds to forms of intervention to enable the retail sector to safeguard their transportation vehicles and facilities as they speed up and normalise the supply of goods to KwaZulu-Natal and Gauteng.”

“And then we need to reassure the anxious investment community. That will take a co-ordinated effort from both organised business and government, with assurances that our strong centre has held and is holding, and that we remain open and ready for trade and growth.”

4. SA first country to award patent to AI invention:

South Africa recently became what is believed to be the first country in the world to award a patent to an invention by an Artificial Intelligence (AI).

An interlocking food and beverage container based on fractal geometry has been awarded a patent by South Africa’s Companies and Intellectual Property Commission (CIPC). Confirmation of the patent was published in the commission’s journal on 28 July.

But unlike the hundreds of patents listed in the CIPC’s latest journal, this container was not conceptualised by a human. The patent identifies Dabus – the Device for the Autonomous Bootstrapping of Unified Sentience – as the inventor.

Dabus’ creator, Stephen Thaler, is the owner of the patent awarded by the CIPC.

This is a major victory for the Artificial Inventor Project (AIP) led by Ryan Abbott from the University of Surrey. The project, which filed its first patents in 2019, proposes that the act which qualifies a natural person to be an inventor can be functionally automated by a machine, which, in its case, is represented by Dabus.

But not everyone agrees. Attempts to have patents attributed to Dabus’ inventions have failed in the European Union, United Kingdom, and United States. The AIP has appealed these dismissals and, recently, the European Patent Office (EPO) Board of Appeal upheld Dabus’ rejection, arguing that an inventor on a patent application must have “legal capacity”.

Patent applications have been registered in at least ten other countries, including Brazil, India, China, Japan, and Taiwan.

South Africa is the only country in the world that has awarded a patent to Dabus’ invention. Just a week after the CIPC published its journal of patents, a federal court in Australia ruled that “an inventor can be an artificial intelligence system or device” in response to a challenge by the AIP.

5. Stats on municipal financial health:

Statistics South Africa has published its financial census of local municipalities for the year ending June 2020, providing a general breakdown of their financial health, along with wider insights into how self-efficient they may or may not be.

The stats body said that the country’s municipalities are becoming marginally more self-sufficient, with a greater portion of revenue coming from their own sources. However, this is not true across the board – and particularly not in rural areas.

“If we consider all 257 municipalities, 71% of total income in 2020 was self-generated. The remaining share (29%) was from government grants and subsidies, as well as from donations and contributions,” the group said.

“The figure of 71% might seem relatively high, but – as is often the case with data analysis – the devil is in the details.”

According to Stats SA, South Africa’s eight largest cities dominate the municipal financial landscape, accounting for almost 60% of total municipal income. These urban centres generate a large proportion of their own income, skewing the national picture.

In 2020, metropolitan councils self-generated 81% of their income, compared with 28% recorded by rural municipalities. The general picture, however, remains positive, Stats SA said.

Most municipalities have increased their share of self revenue generation since 2017, albeit marginally (71% in 2021, vs 70% in 2017). A deeper analysis of municipalities on a granular level is needed to better determine the financial health of each region, it said.

In monetary terms, the total revenue collected by municipalities in 2020 was R421.4 billion. ‘Other’ revenue accounts for approximately R45.5 billion of this.

Aside from interest earned on investments and outstanding debtors, fines are one of the largest sources of ‘other’ revenue for municipalities. In 2020, municipalities pulled in R5.9 billion in fines – though this was down from R6.3 billion the year before (less R344 million).

Of the fine revenue, traffic fines make up the biggest portion – R4.6 billion in fines were paid in 2020, up from R4.34 billion the year before, representing 1.1% of total revenue.

Municipalities also made R185 million from issuing traffic-related licences and permits in 2020.


All information sourced from articles posted by: BusinessTech, Business Insider, TimesLive, Moneyweb, Cape Talk, and BusinessDay.

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