Category: Government Opinion Pieces

President Cyril Ramaphosa says government has finalised its “bounce-back loan scheme” which is set to give businesses a much-needed cash injection to create jobs.

He said this when he participated in a debate on The Presidency Budget Vote during a sitting of the National Assembly on Thursday.

“The broader context of the reform process is to improve the overall business operating environment and to improve our country’s competitiveness as an investment destination.

“To this end, we have finalised the bounce-back loan scheme, which gives additional funding to businesses to grow the economy and create jobs,” he said.

According to information from the National Treasury, the bounce-back scheme comprises two mechanisms – the first is a loan guarantee which facilitates loans guaranteed by government to eligible businesses.

The loans will assist eligible businesses in recovering from constraints in accessing finance due to COVID-19 lockdowns, the July 2021 civil unrest and disasters like the floods affecting KZN.

Funds borrowed from this scheme, through participating banks, Development Finance Institutions (DFIs) and non-bank Small Medium Enterprise (SME) finance providers, can be used for growth and expansion and to foster job creation.

The bounce-back scheme benefits from lessons learnt from the 2020 Loan Guarantee Scheme to provide for greater take-up including by DFIs and non-bank SME finance providers which will participate on the same basis as participating banks.

The President said, meanwhile, that in March the employee tax incentive was expanded to make it easier for employers to hire more young people.

Support for black industrialists

As part of government’s drive to create a new generation of black industrialists, create jobs and transform the economy, government last year approved R2.5 billion in new support to about 180 black industrialists in the form of loans and grants.

“Over the next three years, a further R21 billion has been committed to support black industrialists and an additional R25 billion to support black, women, youth and worker-owned companies,” he said.

Mining Exploration Strategy

The President said policy certainty in the mining sector has been bolstered by the publication of the long-awaited Mining Exploration Strategy.

The Infrastructure Office continues with its work of oversight and coordination over a number of catalytic infrastructure projects.

These include the Welisizwe Rural Bridges Programme, the rural roads programme, social infrastructure, bulk water, and others, the President said.

“To address onerous bureaucracy that impedes business growth, the Red Tape Reduction team is working with other departments to identify priority interventions and remove obstacles to growth.

“These initiatives take a collaborative and supportive approach, because ultimately it is departments and not the Presidency that implement policy.”

Interventions to address unemployment

The President said one of the tasks of government is to devise innovative solutions to address joblessness, particularly in a climate where there is a shortage of employment opportunities at a time when the private sector is not creating enough jobs at scale.

He said that the Presidential Employment Stimulus has enabled the rapid expansion of public employment and provided much-needed relief to mitigate the effects of the pandemic.

“To date, the Presidential Employment Stimulus has created 879 000 opportunities. Of the participants across both phases, 84 percent are youth and 62 percent are women.

“These programmes, which range from waste collection to small-scale farming, have provided work and an income for hundreds of thousands of people in both urban and rural areas.”

The President said the programme has provided livelihood support for people working in the arts and culture sector as part of our commitment to support the recovery of this vital sector of our economy and society.

Minister in the Presidency Mondli Gungubele has reiterated government’s commitment to pay out the R350 Social Relief of Distress Grants (SRD Grant) to beneficiaries.

This after media reported that some grant beneficiaries had not received payments for up to three months.

“This government will always fulfil whatever undertaking it has [with regards to the SRD]. If there was a period of non-payment… on behalf of this government, we will make that apology.

“But as along as those SRDs are due, in line with the President’s commitment, they will be paid,” Gungubele said.

The Minister was briefing media on Thursday after Cabinet’s meeting.

He said the executive has welcomed the launch of the Social Employment Fund.

The fund is a partnership between the Industrial Development Corporation (IDC), the Presidency and Department of Trade, Industry and Competition (dtic).

“The support will provide bridging employment opportunities for up to 50 000 young persons in socially-useful work being done in local communities.

“The support will include health and community care, food and nutrition support like soup kitchens, promotion of literacy, greening and climate change mitigation programmes, as well as youth support initiatives.  The fund will support 26 community and not-for-profit enterprises,” he said.

Gungubele said Cabinet also reflected on last month’s launch of the Black Exporters Network by the dtic.

“Cabinet also welcomed the establishment of the Black Exporters Network by the Department of Trade, Industry and Competition, to bring together black-owned firms, which are currently exporting locally-made goods to other parts of the world.

“The network will enable the sharing of information, experience and know-how, and builds on successes from the Black Industrialists Programme,” he said.

Health matters

Cabinet has reiterated that health officials in South Africa remain on high alert to deal with the outbreak of the Monkeypox virus.

On Wednesday, the World Health Organisation (WHO) reported that more than 1 000 cases of the virus have been reported across 29 countries.

“Cabinet [assures] South Africans that our health authorities are on high alert to monitor and prevent Monkeypox disease, following its outbreak in several non-endemic countries. Although no positive case has so far been detected or reported in South Africa, health authorities in the country continue to monitor the situation very closely”, he said.

Turning to the COVID-19 pandemic, the Minister called on South Africans to remain vigilant.

“Cabinet reminds everyone that COVID-19 has not been eradicated and the risks of new infections will increase during the winter season. We must continue to take all the necessary precautions to safeguard ourselves and other people. This includes washing or sanitising hands regularly, wearing a mask when indoors, keeping a safe social distance, opening windows for ventilation and vaccinating,” Gungubele said.

Government recognises the need to address deep-rooted socio-economic challenges, including unemployment, inequality, and poverty, while stabilising government debt.

The comment was made by the National Treasury in response to an International Monetary Fund (IMF) assessment of the country’s economy.

From 26 May – 6 June, IMF staff held meetings with South Africa as part of their routine economic surveillance function, as prescribed in the IMF’s Articles of Agreement.

Economic developments in the country were under discussion during the meetings with IMF staff, government, the South African Reserve Bank, state-owned enterprises (SOEs), business and academia.

The visit by IMF staff did not result in a board discussion or publication of a report on South Africa’s economy, said Treasury in a statement.

In its findings, the IMF was of the view that South Africa’s economic recovery from the COVID-19 pandemic should continue this year as some sectors such as tourism, hospitality and construction, gradually improve.

The staff noted that South Africa was benefiting from favourable commodity prices, which had raised exports.

Nonetheless, the IMF pointed to various shocks that continue to affect the country’s economic outlook. These include the KwaZulu-Natal floods, uncertainty arising from the conflict in Ukraine, tightening of global financial conditions and lower economic growth in China.

“The IMF staff acknowledges progress made in implementing structural reforms and encouraged South Africa to deepen and speed up implementation of structural reforms to address a number of obstacles.

Areas needing urgent attention include growth, load shedding, and addressing deficiencies in the transportation system, which limit the benefits from the higher commodity prices,” said Treasury.

Other key reform areas highlighted include improving procurement processes, transforming network industries, fostering competition to attract private investment; and advancing the functioning of the labour market.

In addition, IMF staff underscored that operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances.

“The staff emphasised the need to implement growth-friendly fiscal consolidation to ensure that the country’s debt as a percentage of GDP is on a declining and sustainable path. Containment of compensation costs and streamlining transfers to SOEs were some of the recommendations tabled.

“In addition, the staff underscored that operations, finances and governance of Eskom and Transnet should be improved to contribute to the sustainability of public finances,” read the statement.

Economic recovery

Responding to this, Treasury said government’s steadfast commitment to restoring sustainability to public finances was supported by better than expected revenue collection, albeit temporary, and fiscal restraint.

“As stated in the 2022 Budget, government is using a portion of the additional revenue to reduce the fiscal deficit and stabilise debt, with the majority targeted to address urgent social needs, promote job creation through the presidential employment initiative, and support the public health sector,” it said.

It said there was faster implementation of economic and SOE reforms, accompanied by fiscal consolidation to provide a stable foundation for growth, easing of investor concerns, and support a faster recovery and higher levels of economic growth.

The National Treasury acknowledged that South Africa’s economic recovery had been “uneven” and that “risks remain high”.

In general, it said, the IMF’s concerns were aligned with government’s response programme to stimulate economic growth, which was guided by South Africa’s Economic Reconstruction and Recovery Plan (ERRP) as well as commitment towards growth and fiscal sustainability.

On fiscal risks posed by some SOEs, the department said the Presidential State-Owned Enterprises Council was considering their value add and which SOEs would be rationalised or consolidated to reduce their continuing demand on South Africa’s public resources.

“The National Treasury is working on a sustainable solution to deal with Eskom’s debt in a manner that is equitable and fair to all stakeholders. Any solution will be contingent on continued progress to reform South Africa’s electricity sector and Eskom’s own progress on its turnaround plan and its restructuring,” it said.

Structural reforms

Treasury said it remains committed to fast-tracking structural reforms to foster job-led growth, as supported through Operation Vulindlela.

In this regard, 26 structural reforms were prioritised. Of these, eight reforms had been completed while another 11 are progressing well.

Key achievements to include:

• concluding the spectrum auction, opening bid windows five and six of the renewable energy programme
• publishing the draft electricity regulation amendment bill
• Cabinet approval of the white paper on the National Rail Policy
• publishing of the Green Drop report to ensure better monitoring of water and wastewater treatment quality
• publishing the revised critical skills list
• issuing of the RFP (Request For Proposal) to initiate third party access to the freight rail network.

The department said work was also underway to reform the procurement system as well as the launching of the e-Visa system in 14 countries.

On energy security, the Treasury said the process of unbundling Eskom was underway.

“On 17 December 2021 the National Transmission Company South Africa SOC Limited (NTCSA) was executed. Eskom has also applied to the National Energy Regulator of South Africa for the transmission license for the Transmission Company.

“On environmental matters, South Africa remains committed to address climate change based on science, equity and sustainable development. South Africa’s Presidential Climate Finance Task Team will advise the country on the execution of the Just Energy Transition (JET),” said Treasury.

Government has offered much-needed short-term reprieve to motorists by extending the temporary reduction in the general fuel levy of R1.50 per litre.

Initially, the Ministers of Finance and Mineral Resources and Energy had on 31 March 2022 jointly announced a temporary reduction in the general fuel levy of R1.50 per litre from 6 April 2022 until 31 May 2022.

This was to provide limited short term relief to households from rising fuel prices following the Russia/Ukraine conflict.

On Tuesday, the two departments said relief was to be funded by a liquidation of a portion of the strategic crude oil reserves.

“Since this announcement, the continuation of the Russia/Ukraine conflict, supply chain bottle-necks and a tightening of global monetary policy have led to further unfavourable changes in the two key drivers of the regulated petrol price, the exchange rate and the global oil price.

“These events have led to even larger increases in fuel prices compared to a few months ago when the temporary fuel levy relief was introduced. The withdrawal of the temporary relief in the general fuel levy on 31 March 2022, as per the original announcement, would contribute to an increase in petrol prices of close to R4 per litre, and push prices of 95 octane unleaded petrol (ULP) to above R25 per litre, an increase of just under 20 percent next month.”

The departments said due to this significant monthly price increase, Finance Minister Enoch Godongwana on Tuesday submitted a letter to the Speaker of the National Assembly, requesting the tabling of a two-month proposal for the extension of the reduction in the general fuel levy.

“This will take the form of a continuation of the relief of R1.50 per litre for the first month, from 1 June 2022 to 6 July 2022, and then a downward adjustment to the relief for the second month to 75c per litre from 7 July 2022 to 2 August 2022,” they said.

They added that the temporary relief would be withdrawn from 3 August 2022.

The Chair of the National Council of Provinces was also been informed of this proposal.

The departments said the revenue foregone from the extension of the relief was estimated at R4.5 billion.

“Unlike the previous announcement, this proposal is expected to have an impact on the fiscal framework as it will not be fully funded through a sale of strategic oil stocks.

“Government remains committed to the fiscal framework outlined in the Budget 2022. The proposed temporary reduction in the fuel levy will be accommodated in the current fiscal framework in a manner that is consistent with the fiscal strategy outlined in the Budget. Any changes, if required, will be announced at the time of the 2022 Medium Term Budget Policy Statement.”

The temporary reduction in the general fuel levy was expected to only smoothen the impact of persistently higher fuel prices on consumers and businesses, as the economy would need to adjust to the new reality.

They added: “As announced on 31 March 2022, government will also take further measures to help reduce fuel prices in a more sustainable manner. From 1 June 2022, the DMRE will remove the demand side management levy of 10c per litre that has been applied to inland 95 ULP.”

After a review and consultation by the DMRE, it is proposed that the basic fuel price also be decreased by 3c per litre in the coming months.

Government intends to continue with consultations and proposals to remove the price cap on 93 ULP, which will partially deregulate the market and introduce more competition to lower pump prices.

The departments said a review on the Regulatory Accounting System would be completed by the DMRE to assess the potential to lower margins over the medium term.

The DMRE will publish further details within the next hour on the actual adjustment of fuel prices with effect from 1 June 2022.

Parliament’s Portfolio Committee on Human Settlements will hold public hearings into the Housing Consumer Protection Bill.

At the centre of the bill is regulating and streamlining processes to ensure consumers’ protection within the home building environment.

“Through this bill, it is hoped that home builders will benefit by appointing registered builders, which will ensure quality housing, as well as extend protection through the extension of warranty cover,” said committee chairperson, Machwene Semenya.

The bill proposes these protections through the repeal of the Housing Consumers Protection Measures Act of 1998, by providing protections for housing consumers, registration of homebuilders, continuance of home warranty fund, and sets out the framework to claim against the fund.

The bill also provides continuance of the National Home Builders Registration Council as the National Home Building Regulatory Council.

“Also, an important pillar of the bill is its transformative outlook, which seeks to improve builders and downstream the consumers. This protection is proposed through the bill’s call for registration of builders, which will require proper training for builders, which will enable full economic participation.

“Furthermore, a database of registered builders and their grading would assist the sector in knowing what builders are available and at what level,” Semenya said.

The public hearings are scheduled to take place in the Eastern Cape from 22 to 24 April 2022.

Semenya emphasised that the public consultation and participation are a constitutional requirement that Parliament is obliged to undertake within its decision-making processes.

“These hearings are in line with Section 59 (1) of the Constitution, which urges for public involvement in the legislative making process of the Assembly. Also, we are hopeful that as the primary beneficiaries of the protections proposed by the bill, [we] will present qualitative inputs aimed at improving the bill to ensure that it meets daily challenges,” Semenya said.

The hearings on 22 April will be held at Ikhwezi Hall in Khwezi township, Umthatha, followed by hearings at NU10 Hall in Mdantsane on 23 April.

The final hearings in the Eastern Cape will be held at Wells Estate Hall in Motherwell, Gqeberha.

The hearings will get underway at 10 am.

President Cyril Ramaphosa has described the loss of life and damage to infrastructure that occurred during flooding in KwaZulu-Natal as a disaster of “enormous proportions”.

The President visited the area on Wednesday following torrential rains which battered the eThekweni Municipality – leaving at least ten districts needing humanitarian and other relief.

At least 306 people have lost their lives during the flooding.

President Ramaphosa assured residents of affected areas that all spheres of government are working hand in hand to bring relief and aid to them.

“We are dealing with a calamity of enormous proportions here but our government is getting into gear [and] the [South African] Defence Force is also going to be here. We are going to roll out as much assistance to our people as we possibly can.

“This calls for working together as government and…our other provinces have already pledged support and assistance…. personnel, experts, food stuffs and all that. There is solidarity and we are working as a team.

“Right now we are dealing with the immediate situation of ensuring that those who have lost loved ones are comforted, accommodated and they are well cared for and that we should also ensure that we help them bury their loved ones and also to find their loved ones because some of their loved ones were washed away by the water through the river system so the search is still going on,” the President said.

On Wednesday evening, the national Department of Cooperative Governance and Traditional Affairs (COGTA) declared a provincial state of disaster in KZN.

This, the President said, would allow for more financial resources to be ploughed into the provision of relief and to count the cost of the floods.

“We are going to lay out professionals and engineers to look at exactly what the extent of the damage is and we will also look at the cost that it is going to take. But I have said we are going to spare nothing. We are going to do everything that is to do with this disaster and the economic part of the issue that we have to address,” he said.

The President said the disaster is an indication of the devastating effects that climate change can have.

“This disaster is obviously part of climate change. It is telling us that climate change is serious; it is here. We no longer can postpone what we need to do [and] the measures we need to take to deal with climate change. It is here and our disaster management capability needs to be at a higher level,” he said.

National Disaster Management Centre head, Dr Mmaphaka Tau, has classified this week’s KwaZulu-Natal floods as a provincial disaster.

The classification, done in terms of Section 23 of the Disaster Management Act: Impact of Severe Weather Events, was gazetted on Wednesday.

Tau said the move came after having deliberations with sector Departments and the KwaZulu-Natal Provincial Disaster Management Centre.

He said the disaster management centre also assessed the magnitude and severity of the impact of the severe weather events occurring in various municipal areas of the province. These have resulted in the loss of life and damage to property, infrastructure and the environment caused by heavy rain, flooding, strong winds and landslides.

The devastating floods had claimed over 300 lives by Thursday.

“The Disaster Management Act, Section 40 read with section 23(8), designates the primary responsibility to coordinate and manage this disaster, in terms of existing legislation and contingency arrangements to the provincial executive,” said the Department of Cooperative Governance and Traditional Affairs in a statement.

Accordingly, the Department urged all state organs to further strengthen support to existing structures to implement contingency arrangements and ensure that measures are put in place to enable the province to effectively deal with the effects of this disaster.

Software producing company Systems Applications Products (SAP) has been ordered to pay back at least R431 million in contract fees to the Department of Water and Sanitation (DWS).

This after the Special Tribunal declared a 2016 software license and support agreement between the two parties unconstitutional and invalid.

Furthermore, the tribunal ordered that:

• The Department may not use any of the software licensed under the 2015 and 2016 license agreements.
• SAP must pay the department an amount of R413 121 383 which represents the total amount the company received pursuant to the agreement.
• SAP must pay back at least R68 million in yearly maintenance fees paid by the department.
• SAP must pay the Department an amount of at least R263 million within five days of the order.

“For the avoidance of doubt, if the Special Tribunal determines that SAP is required to pay the Department more than R263 282 173. 78, because the Special Tribunal determines that SAP may not make some or all of the deductions that it submits it is entitled to make, then that further amount will be payable, together with interest running from the date of this order,” the court said.

The tribunal highlighted that the other issue that remains in dispute is if the software company is entitled to deduct payments it made to a third party during the execution of its duties.

“To enable the Special Tribunal to determine the issues, SAP will, within 15 court days of this order, file an affidavit solely dealing with the payments made to third party software companies and the factual basis for its contention that these expenses ought to be deducted from the amount to be paid to the Department of Water and Sanitation.

“[Within] 10 court days of receipt of the SAP’s affidavit, the SIU and the Department of Water and Sanitation will file their affidavits in answer thereto. The Presiding Member of the Special Tribunal shall be requested to convene a case management meeting within 10 court days of the expiry period thereto,” the court said.

With South Africa being at risk of losing a potential multibillion rand investment by Ford, Finance Minister Enoch Godongwana has emphasised the important role that cities and provinces play in creating an enabling environment for investment.

“We need to get the basics right. This entails reducing regulatory constraints, providing effective services, as well as coordinating and sequencing economic interventions,” Godongwana said on Wednesday.

Addressing Parliament during the debate on the 2022 Fiscal Framework and Revenue Proposals, the Minister said the country could lose a potential multibillion rand investment by Ford for an electric vehicle plant.

“Ford has already invested R16 billion in the Tshwane Automotive Special Economic Zone, where it is producing its Ford Ranger model. This is the largest foreign direct investment project our country has seen in recent times, and has already created around 8 000 jobs.

“Ford intended to invest further in bringing its electric vehicle production to South Africa. This, however, has been put at risk because the City of Tshwane has been unable and perhaps unwilling to secure the electricity the new plant needs.

“The Tshwane example reminds us that a deficit of political will at municipal level makes it massively harder than it should be to create conditions for job-rich growth,” the Godongwana said.

Public sector wage bill

As part of addressing the public sector wage bill, a Public Sector Labour Summit is scheduled to take place at the end of this month.

The summit is an important opportunity for all stakeholders to engage honestly and transparently and chart a path towards a more sustainable public service and remuneration guidelines.

The Minister said much has been made of the $750 million loan that government took from the World Bank.

“The World Bank loan has no conditionalities attached. It does not in any way threaten the sovereignty of our country. We considered all forms of concessional and non-concessional funding necessary to address the shortfall between our revenue and our expenditure. We then chose an affordable option available to us,” the Minister said.

In this year’s State of the Nation Address, the President announced the extension of the Social Relief of Distress grant to March 2023.

“The President further indicated that in this period, detailed technical work and engagements will take place to identify the best options to replace this grant. In this regard, work is underway to review the grants system, with a view to developing an optimal support mechanism for grants recipients.

“The review will also inform our approach to long-term social security for South Africa,” the Minister said.

This includes considerations regarding:

• social assistance;
• social insurance;
• active labour policies, and
• artisan training for learners exiting vocational training, where the intention is to engage not only the private sector, but also municipalities and State-owned enterprises to equip learners in Technical and Vocational Education and Training (TVET) colleges with the relevant industry experience to enable them to transition to gainful employment.

Higher Education, Science and Innovation Minister Blade Nzimande says all students that have been admitted to accredited programmes in institutions of higher learning will be funded for the 2022 academic year.

The Minister said this when Ministers in the Social Services Cluster responded to oral questions during a plenary of the National Assembly on Wednesday.

He said this after it emerged during a debate on the State of the Nation Address last month that there was a shortfall of nearly R10 billion in funding for the National Student Financial Aid Scheme.

“…all qualifying NSFAS students this year who have been admitted to accredited programmes at universities and colleges will be funded for the 2022 academic year,” he said.

Democratic Alliance Member of Parliament, Chantel King, had asked Nzimande, with reference to his commitment made during the resumption of the debate on the President’s State of the Nation Address on 15 February 2022, to provide the details of how the predicted R10 billion shortfall in funding for the National Student Financial Aid Scheme in the 2022 academic year will be covered in order to ensure that all eligible students will receive funding.

Nzimande said the National Treasury allocated an additional amount of R7.775 billion for the 2022/ 23 financial year.

A further amount of R1.5 billion will be reprioritised from the Department of Higher Education and Training’s 2022/23 budget.

“This allocation is in line with the projected R9.3 billion shortfall for NSFAS in the 2022/ 23 financial year.

“In addition, the National Treasury has allocated additional amounts in the Medium Term Budget Framework for the anticipated shortfall in subsequent years.”

He said this was done, however, at the same time as the department is working with a Ministerial Task Team appointed in 2021 to develop a comprehensive student financing model or student financial aid system that will bring certainty in terms of the different funding needs of the students.

The Minister said the hope is that such a model and the necessary policy frameworks would be finalised by the middle of the year in order to move forward.