Category: Government Opinion Pieces

South Africa’s gross domestic product (GDP) increased by 1.6% between July and September, Deputy Director General for Economic Statistics, Joe de Beer, announced on Tuesday.

The main attributors, Statistics South Africa (Stats SA) said, were the agriculture, forestry and fishing industries, which increased by 19.2% in the third quarter, contributing 0.5 of a percentage point to GDP growth.

During this period, said Stats SA, increased economic activities were reported for field crops and horticulture products.

“Finance, real estate and business services increased at a rate of 1.9% in the third quarter, contributing 0.5 of a percentage point to GDP growth. Increased economic activity was reported for financial intermediation, insurance and pension funding, auxiliary activities, real estate activities and other business services.

“The transport, storage and communication industry increased by 3.7%, contributing 0.3 of a percentage point. Increased economic activities were reported for land transport, transport support services and communication services,” said de Beer.

Stats SA said the manufacturing industry during this period increased by 1.5%, contributing 0.2 of a percentage point to GDP growth.

“Seven of the 10 manufacturing divisions reported positive growth rates in the third quarter. The motor vehicles, parts and accessories and other transport equipment division made the largest contribution to the increase in the third quarter.

“The food and beverages division and the basic iron and steel, non-ferrous metal products, metal products and machinery division also made significant contributions to growth.

“The unadjusted real GDP at market prices for the first nine months of 2022 increased by 2.3% compared with the first nine months of 2021,” Stats SA said in a statement.

Expenditure on GDP

Expenditure on real gross domestic product increased by 1.6% in the third quarter of 2022, the agency said.

Household final consumption expenditure decreased by 0.3% in the third quarter, contributing -0.2 of a percentage point to total growth. The largest contribution to negative growth was non-durable goods.

Stats SA said the main contributors to the decline in household final consumption expenditure (HFCE) were expenditures in the ‘other’ category (-3.8%, contributing -0.5 of a percentage point), food and non-alcoholic beverages (-0.9%, contributing -0.1 of a percentage point) and recreation and culture (-1.6%, contributing -0.1 of a percentage point).

Expenditure on restaurants, transport and housing contributed positively to growth in HFCE in the third quarter.

Final consumption expenditure by general government increased by 0.5% in the third quarter, mainly driven by increases in goods and services.

Total gross fixed capital formation increased by 0.3%. The main contributors to the increase were residential buildings (11.0%, contributing 1.4 percentage points) and transport equipment (11.0%, contributing 1.1 percentage points).

“There was a R63 billion build-up of inventories in the third quarter of 2022 (seasonally adjusted and annualised value). Large increases in three industries contributed to the inventory build-up, namely trade, catering and accommodation; transport, storage and communication; and mining and quarrying.

“Net exports contributed positively to growth in expenditure on GDP in the third quarter. Exports of goods and services increased by 4.2%, largely influenced by increased trade in mineral products; base metals and articles of base metals; vegetable products; and paper products,” Stats SA said.

Imports of goods and services increased by 0.6%, driven largely by increases in mineral products and animal and vegetable fats and oils.

Agriculture, Land Reform and Rural Development Minister, Thoko Didiza, has led a multi-disciplinary team meeting with stakeholders from uMkhanyakude District Municipality in KwaZulu-Natal to discuss water challenges in the agriculture sector.

The meeting, held on Sunday, included Amakhosi and councillors. The multi-disciplinary team includes the Departments of Water and Sanitation; Agriculture, Land and Rural Development; KZN Cooperative Governance and Traditional Affairs; uMkhanyakude District and Mhlathuze Water.

It was also used as a platform to give an update on government’s interventions to ensure water provision for sustainable livelihoods.

“In consultation with my counterpart responsible for Water and Sanitation, Minister Senzo Mchunu, we agreed that at the same time as we focus on overcoming the domestic water challenges of this region, we also need to ensure that there is sufficient water to drive agriculture,” Didiza said.

She said the consistent outcry from the community of uMkhanyakude is the dearth of access to water for emerging farmers.

In this regard, Didiza said, senior officials from Water and Sanitation, and Agriculture, Land and Rural Development Departments have been tasked with working with the newly established Lower Pongola District Water User Association and Infrastructure to overcome the region’s water challenge and ensure equitable access to water.

The Water User Association consists of various stakeholders drawn from civil society.

The Department of Water and Sanitation recently appointed Mhlathuze Water to act as the implementing agent under section 63 of the Water Services Act.

Under the directive, Mhlathuze Water has already begun working with the uMkhanyakude District Municipality to improve water infrastructure in the district.

Presidential spokesperson, Vincent Magwenya, says President Cyril Ramaphosa is still engaging stakeholders with regards to the way forward following findings by an Independent Section 89 panel that the President may have violated his oath of office.

The panel was formed to look into the circumstances around a robbery at the President’s Phala Phala game farm and found that President Ramaphosa may have seriously violated sections 96(2)(a) of the Constitution and Section 34(1) of the Prevention and Combating of Corrupt Activities (PRECCA) Act – allegations the President said he “categorically denies”.

At a media briefing last night, Magwenya said the President is cognisant of the urgency of addressing the nation in this regard.

“The President appreciates the urgency of this matter. The President appreciates the enormity of this issue… what it means for the country, the stability of government and as a result of that, he is still processing the report.

“But in that exercise, he’s also engaging a number of role players and stakeholders across the governing party, different levels of the governing party, different levels of the alliance and he’s engaging a broad range of stakeholders, and this is in appreciation of the enormity of the matter,” Magwenya said.

He assured that President Ramaphosa would address the nation in due course.

“We are in an unprecedented and extraordinary moment as a constitutional democracy as a result of the report and therefore, whatever [decision] the President makes, that decision has to be informed by the best interest of the country and that decision cannot be rushed and cannot be taken in haste.

“An announcement is imminent because the President will need to indicate to the country the course of action he will take going forward,” the spokesperson said.

South Africa requires an initial funding of about R1.5 trillion to transition to a low carbon and climate resilient society for the five-year period 2023–2027, says Presidential Climate Commission (PCC) Commissioner Joanne Yawitch.

Addressing a hybrid Special Sitting on Understanding the contents of South Africa’s Just Energy Transition Investment Plan (JET-IP) on Thursday, Yawitch said achieving the JET IP outcomes is dependent on the scale and nature of financial support that South Africa can secure from the international community to complement domestic resources.

“At the 26th Conference of the Parties (COP) in 2021, a Just Energy Transition Partnership (JETP) was forged with France, Germany, United Kingdom, the European Union, and the United States (forming the International Partners Group [IPG]) in which the IPG undertook to mobilise US$8.5 billion (~ ZAR 128 billion) over five years to support South Africa’s Just Energy Transition.

“The initial IPG offer of US$8.5 billion is thus a catalytic contribution towards addressing the JET IP priorities,” she said.

The IPG funds will be primarily directed towards the electricity sector for the decommissioning of coal plants; the expansion and strengthening of the transmission grid and distribution infrastructure; supporting economic diversification in affected coal mining areas and the deployment of renewable energy.

The IPG US$8.5bilion offer comprises grants, concessional and commercial loans, and guarantee instruments, contributing to approximately 12% of South Africa’s JET IP funding needs for the period.

“South Africa’s dependence on fossil fuels gives rise to a range of climate, energy and transition risks, especially for affected workers, communities, businesses and exporters.

“However, embracing new economic opportunities in green technologies can drive industrial development and innovation, leading to a sustainable and resilient future with decent work, social inclusion and lower levels of poverty,” Yawitch said.

The JET IP represents the initial building blocks of managing South Africa’s Just Energy Transition and climate response, which will be a managed, phased, long-term process of economic, social, and environmental change.

It will involve multi-year, multi-sectoral, and multi-jurisdictional initiatives with many stakeholders, including significant capacity building to manage the scale of the Just Energy Transition.

“Implementation must be based on solid foundations for a sustained, focused, and visible effort across government, civil society, trade unions and the private sector that can adapt as needed over time. It will be grounded in existing South African institutions and systems and will adopt both local and global best practice,” Yawitch said.

The JET IP is premised on South Africa’s National Development Plan (NDP) 2030, with its focus on tackling the country’s systemic challenges of poverty, inequality, and unemployment.

It is in line with South Africa’s updated Nationally Determined Contribution (NDC) which was lodged with the United Nations Framework Convention on Climate Change (UNFCCC) prior to its 26th Conference of the Parties (COP 26) in Glasgow in November 2021, and South Africa’s long-term Low-Emissions Development Strategy (LEDS) submitted to the UNFCCC in 2020.

The NDC commits the country to reducing its emissions to within a range of 420-350 megatons carbon dioxide equivalent (MtCO2-eq) by 2030.

The National Assembly at its plenary sitting on Thursday passed the Adjustments Appropriation Bill and the Special Appropriation Bill.

This comes after Finance Minister Enoch Godongwana tabled the two Bills when he presented the 2022 Medium Term Budget Policy Statement (MTBPS) to Parliament on 26 October 2022.

Parliament in a statement said the Bills were tabled in Parliament in terms of section 12(1) and (2) of the Money Bills and Related Matters Act as amended by the Money Bills Amendment Procedure and Related Matters Amendment Act, 2018 (Act No. 13 of 2018).

Section 12(1) of the Money Bills and Related Matters Act requires the Minister of Finance to table a national adjustments budget as envisaged in section 30 of the Public Finance Management Act, 1999 (PFMA). Section 12(2) of the Money Bills and Related Matters Act requires that “an adjustments appropriation Bill must be tabled with a national adjustments budget”.

“The Adjustments Appropriation Bill provides for increases to allocations set out in the main Appropriation Act of 2022. Total in-year spending adjustments amounts to R13 billion, inclusive of the total adjusted appropriations per vote and adjusted estimates of direct charges against the National Revenue Fund (NRF).

“Of the total in-year adjustments of R13 billion, R7.24 billion is with respect to direct charges against the NRF,” said Parliament.

These include, among others, a proposed additional allocation of R5.93 billion towards debt service costs; a proposed additional allocation of R48.5 million as unforeseeable and unavoidable expenditures through the Provincial Equitable Share for the continuation of care and protection of flood victims who were placed in shelters in KwaZulu-Natal.

They also include a proposed additional allocation of R306.26 million for state-owned enterprises – R204.7 million for Denel as well as R101.56 million for the Land and Agricultural Development Bank. There is also a proposed additional allocation of R618.82 million for the skills levy and sector education and training authorities (SETAs).

The Special Appropriations Bill, on the other hand, was referred to the committee in terms of Section 13 of the Money Bills Amendment Procedure and Related Matters Act No. 9 of 2009 (as amended by the Money Bills Amendments Procedure and Related Matters Amendment Act, No. 13 of 2018).

The Bill proposes to Parliament to appropriate additional funds in the 2022/23 financial year for the requirements of Vote 10 – Public Enterprises and Vote 40 – Transport. This proposed additional funding is allocated to three state-owned enterprises located across the Public Enterprises and Transport Votes, namely, Transnet, Denel, and the South African National Roads Agency (Sanral).

The Bill proposes that R6.278 billion and R23.736 billion be appropriated from the NRF and be allocated to the Departments of Public Enterprises and Transport, respectively, for the 2022/2023 financial year.

The bills will be sent to the National Council of Provinces (NCOP) for consideration and concurrence.

The National Assembly will consider and adopt a resolution on the report of the Section 89 independent panel into President Cyril Ramaphosa on Tuesday next week.

This was announced by National Assembly Speaker Nosiviwe Mapisa-Nqakula during the handover of the report by the panel led by retired Chief Justice Sandile Ngcobo.

The panel investigated whether there is sufficient evidence to show that President Cyril Ramaphosa violated any grounds of impeachment set out in Section 89 of the Constitution linked to his conduct related to a robbery at his Phala Phala game farm in 2020.

The section provides that a sitting President can be removed on these grounds:

• serious violation of the Constitution or the law
• serious misconduct
• inability to perform the functions of office

“The report will be communicated to members of Parliament through the next publication of the Announcements, Tabling and Committee Reports tonight. We have set aside the 6th of December for consideration by the National Assembly.

“The role of the National Assembly pertaining to this report is articulated in the rules. The House will consider the report, its findings and recommendations and adopt a resolution through a simple majority vote whether a further action by the House is necessary or not,” she said.

The Speaker emphasised that the work of political parties related to the panel has ensured the impartiality of the report.

“The ceremonial handover of the report of the Section 89 independent panel marks one of the indicative milestones in South Africa’s maturing democracy.

“The involvement of political parties in the constitution of the panel forms an essential element of checks and balances to jealously guard its independence to remove any perception of bias so that the integrity of its outcome is not brought into question,” she said.

Ngcobo emphasised that the panel followed the mandate set out by the National Assembly (NA) to the letter during its investigation.

The other members of the panel were Judge Thokozile Masipa and Advocate Mahlape Sello.

“Someone went on television and said if this panel does not call the Hawks, it would not have done its job. Let me make it quite clear…that’s not our job. Our job was to interrogate the information that members of the [National] Assembly saw fit to present to us. That’s what the rules set by the National Assembly told and required us to do.

“It is not in my blood to disregard the law. I live by the law and that’s what I have to do. So let me clear that perception once and for all. It was not our job to call whoever you wanted us to call to help us here. The rules that [the NA] made, made it quite clear and that’s what these volumes [of the report] are based on,” he said.

The report consists of three volumes with the first being the report itself and the latter being a record of proceedings. –

Government has welcomed the results of the Quarterly Labour Force Survey for quarter three, which revealed that 204 000 jobs were gained between the second and third quarters of 2022.

“Government is doing all within its power to attract and create a conducive environment for investment and business to thrive in South Africa,” Minister in the Presidency Mondli Gungubele said on Wednesday.

The Labour Force Survey also revealed that the total number of persons employed was 15.8 million in the third quarter of 2022. This means that the official unemployment rate decreased by 1.0 percentage point from 33.9% in the second quarter to 32.9% in the third quarter of 2022.

The unemployment rate according to the expanded definition of unemployment also decreased by 1.0 percentage point to 43.1% in Q3:2022 compared to Q2:2022.

The largest jobs gain were recorded in manufacturing (123 000), followed by trade (82 000), construction (46 000), transport (33 000) and community and social services (27 000).

“Whilst this is welcomed news ahead of the festive season, government acknowledges that the country has a long way to go and more work needs to be done to address the challenge of unemployment in the country.

“Despite an increase of 25 000 in the number of employed youth during the third quarter, the results show that the youth (aged 15-34 years) remain vulnerable in the labour market,” the Minister said.

Gungubele said government is implementing the Economic Recovery and Reconstruction Plan to build a sustainable, resilient and inclusive economy.

“We are pleased with the growth of the employment rate but more must be done. Government together with the business sector, organised labour and other partners are committed to addressing the challenge of unemployment.

“Citizens are encouraged to support local businesses and embrace entrepreneurship. Let us work together to improve the employment rate of South Africa, leaving no one behind. But in short, we are very encouraged by these results and hope that these green shoots building upon previous quarters are starting to signify the turn in our economic outlook,” the Minister said.

The Public Investment Corporation (PIC) has adopted a hydrogen investment strategy aimed at unlocking value through funding and the provision of early-stage capital for the development of the hydrogen value chain.

Sekgoela Sekgoela, a Senior Investor Relations Specialist at the PIC, on Monday said the strategy further seeks to leverage on more than 200 hydrogen projects that have been announced worldwide and the more than $250 billion (approximately R4.3 trillion) required for the development of a hydrogen economy in South Africa.

“The South African government, through its Hydrogen Roadmap, has identified hydrogen as a possible investment avenue. Hydrogen promises to be the next frontier in clean energy technology due to its extensive value chain applications.

“It can be used to industrialise and create a resultant hydrogen economy. Other benefits include job creation and localised manufacturing, and the potential of turning the country into one of the largest exporters of green hydrogen in the world,” said Sekgoela.

Moreover, he said, South Africa has significant renewable energy potential, given its high solar radiation levels, as well as a large area of coastline for wind deployment.

“Hydrogen can augment renewable energy production by offering a relatively affordable way to store and transport the excess energy produced from these sources. South Africa also hosts the world’s largest Platinum Group Metals resources, which benefit significantly from increased demand that could arise from a well-developed hydrogen sector,” Sekgoela said.

The adoption of the strategy comes at a time when several countries around the world are increasingly considering making use of hydrogen as a potential clean energy source.

The Hydrogen Roadmap has identified the PIC as a potential co-investor with other finance institutions in hydrogen projects. The roadmap is one of government’s strategies and policy direction aimed at bringing together a variety of public and private stakeholders and institutions around a common vision on how to use and deploy hydrogen and hydrogen-related technologies, as part of the country’s economic development and greening objectives.

Government says it has noted Fitch’s decision to affirm South Africa’s long term foreign and local currency debt ratings at ‘BB-’ and maintained a stable outlook.

This comes after the rating agency on Friday had kept South Africa at sub-investment grade.

According to Fitch, the affirmation takes into account the recent over-performance of revenue and government’s strong efforts to control expenditure which, if continued successfully, could bring about debt stabilisation.

In a statement, the National Treasury said: “However, the agency assumes a substantial part of recent higher revenues to be temporary and sees current public sector wage demands pointing to increased upward pressure on spending.”

The department said government’s fiscal strategy reduces risks to the economy and public finances over the medium term.

“The higher-than-anticipated revenues will be used to reduce the gross borrowing requirement, support spending priorities and reduce risks to the fiscal outlook.

“Government is working to improve the efficiency of spending and remains committed to returning public finances on a sustainable path,” reads the statement.

According to the agency, South Africa’s ratings continue to be supported by a favourable debt structure with long maturities and mostly denominated in local currency as well as a credible monetary policy framework.

While the South African economy has experienced various challenges, including electricity shortages, work is underway to ensure that the country attracts investment.

“While there are many attractions and huge potential for investors in South Africa, there are a number of constraints on economic growth and social development. For more than a decade, South Africa has been confronted with a shortage of electricity,” said President Cyril Ramaphosa.

The President made these remarks at the SA-UK Business Roundtable in London on the second day of his two-day State Visit to the United Kingdom, on Wednesday.

“We have taken urgent steps to remedy this dire situation by significantly and rapidly increasing the construction of new generating capacity.

We have accelerated the procurement of renewable energy and have removed many of the regulatory hurdles to greater private investment in embedded generation,” he said adding that government is working closely with Eskom to improve the fleet of the utility’s power stations.

The UK is the largest foreign investor in South Africa while several South African companies have a presence in the UK.

He said that government is also undertaking far-reaching reforms to improve the capacity and competitiveness of railways and ports, to open up the telecommunications industry and to improve the supply and pricing of water.

Mechanisms like the Infrastructure Fund have been established to leverage funding from various sources, including the private sector, for substantial infrastructure investment.

In addition, decisive measures to tackle crime and corruption have been taken with law enforcement agencies being rebuilt and being provided with the resources needed to prosecute those responsible for the criminal capture of state institutions.

South Africa is also strengthening the ability of the police and other security services to respond to economic crimes, such as extortion and damage to infrastructure.

“It is important for the South African government to understand the issues, concerns and expectations of British companies and business leaders. We are therefore keen to hear from you on what we can do to encourage you to increase your investment in South Africa,” said the President.

Exports from South Africa to the UK are estimated to support 134,000 South African jobs.

“Bilateral trade is at its highest yet, with goods and services worth £10.7 billion being traded between the United Kingdom and South Africa in the 12 months ending in June this year,” he said.

Meanwhile, a number of UK companies have attended the annual South Africa Investment Conference that the country has held since 2018 – during which significant new investment commitments were made.

President Ramaphosa added that South Africa which has free trade agreements with the United Kingdom and European Union, has over the past four years, been putting in place an African Continental Free Trade Area that will connect 55 national economies and more than 1.3 billion people.

“The legal instruments have been completed and countries and customs unions are now finalising their tariff offers, with the intention that trade would commence next year.”

With the UK being the largest foreign investor in South Africa, “it is our intention and our ambition to substantially increase the value and diversify the composition of both trade and investment,” said President Ramaphosa.