Author Archive

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.

Africa’s resource curse is more like a governance curse

Written by Ciaran Ryan. Posted in Uncategorized

SA’s huge offshore gas find could be a blessing or a curse.

This article first appeared in Moneyweb.

Total estimates that the recent gas discovery at the south of Mossel Bay is worth about one billion barrels. Picture: Shutterstock

Total estimates that the recent gas discovery at the south of Mossel Bay is worth about one billion barrels. Picture: Shutterstock

South Africa has just come into a huge gas find south of Mossel Bay, estimated by Total at about one billion barrels. That’s the good news. The bad news is that oil and gas are often accompanied by conflict and ‘resource curse’. That’s when an over-reliance on commodity exports leaves a country prone to wild cyclical economic swings.

Read: Brulpadda: Let’s not squander the ‘money toad’

SA has a sufficiently diversified economy to avoid resource curse, but any benefit to the economy from gas-related tax and royalties could be squandered if we follow the examples of other oil-rich countries such as Nigeria, Equatorial Guinea and Angola. All three have huge oil deposits and massive corruption. Nigeria’s discovery of oil in the Niger Delta in 1956 fuelled ethnic tensions and coups. The agricultural sector was neglected to the point where Nigeria went from food exporter to importer, as all attention went on the easy money to be made from oil exports. It still has to import refined fuel.

Good examples

If we are looking at good examples to follow, Botswana and to a lesser extent Gabon are two countries worthy of mention – Botswana for diamonds and Gabon for oil.

Gabon has been ruled by a single family since 1967. There was an attempted coup in January this year, but the government managed to avoid fiscal deficits until 2015, when the once-lofty oil price that sustained government spending came tumbling down.

Botswana, despite its massive reliance on diamond exports, has likewise avoided the resource curse. It did this by avoiding external debt and promoting economic diversification. Speaking at a recent International Mining and Oil & Gas Law, Development, and Investment conference in Brazil, Peter Leon, a partner at law firm Herbert Smith Freehills, pointed out that the Botswana government accumulated international reserves and ran budget surpluses earmarked for stability spending in leaner periods. “This policy avoided having to drastically cut expenditures during bad years and reduced inflationary pressures.”

Checks and balances

Another key factor in avoiding resource curse is maintaining strong institutional structures, with checks and balances to root out corruption and maladministration.

When Norway discovered oil in the North Sea in the 1960s, it put in place policies to ensure that there would be economic benefits long after the oil was gone. Key among these policies was an insistence on developing the local oil and gas sector, rather than leaving it all to outsiders. Petroleum accounted for 43% of exports in 2018, and great care is taken to ensure that exports exceed imports – which in turn provides currency stability. Compare this to Venezuela, where oil accounts for 95% of exports, a key factor behind its current political instability.

Leon says one way countries attempt to inoculate themselves against resource curse is by creating sovereign wealth funds (SWFs). These are state-owned funds that invest in real assets such as precious metals and real estate, and financial assets such as stocks and bonds.

Saving and diversifying 

Norway has been particularly adept at using its SWF to hedge against oil price volatility and as a means of saving wealth generated from its petroleum sector for use by future generations. Another benefit of SWFs is to diversify away from cash holdings or low-yielding US Treasury bills.

“A well-managed and effective SWF can help protect the economy’s non-commodity sectors from destabilising currency fluctuations while helping to spread the country’s wealth more equitably across generations,” says Leon. “SWFs help to achieve this by aiming explicitly at developing a broader base for economic growth. Developing an efficient and diversified economy reduces the impact of commodity price volatility and helps to prepare the economy for a post-commodity era.”

The danger in any country running budget deficits is the temptation to raid SWFs to plug budgetary gaps.

One way to overcome this is to set firm rules for the withdrawal of funds, and to create governance structures to keep greedy politicians’ hands off the loot.

All this is becoming relevant as some political parties have started introducing SWFs into their party manifestos as a solution to economic growth and job creation. But experience over the last decade shows that when the government runs out of cash, it starts looking in the wrong areas, such as the Reserve Bank’s accumulated assets which are (frustratingly for some) unavailable for state spending.

Read170 billion reasons why the state would want to capture the Sarb

A government will inevitably look to the country’s sovereign wealth fund to bail itself out of a tight fiscal spot. These funds belong to future generations and have to be kept well away from the transients who occupy political positions.

Afriforum fights to prevent banning of old SA flag

Written by Ciaran Ryan. Posted in Journalism

The Nelson Mandela Foundation and Afriforum are opposing each other in the Johannesburg Equality Court. From Groundup.

Photo of people in military clothing burning old SA flag

MK veterans burn an old South African flag in November 2017 following the #BlackMonday protestsby farmers against farm murders. Archive photo: Nomfundo Xolo

The Nelson Mandela Foundation is asking the Equality Court in Johannesburg to declare the display of the old South African flag hate speech and harassment under the Equality Act. The case is likely to set the boundaries between constitutionally-protected free speech, however offensive to some, and hate speech. Opposing the action is Afriforum, a group set up in 2006 to promote the protection of Afrikaner culture.

The background to the case is that on 30 October 2017 nationwide protests, in which Afriforum played a leading role, were held to protest over attacks on farmers. The protests were named #BlackMonday. It is disputed to what extent old South African flags were displayed at the protests.

In a press release following the protests, the Nelson Mandela Foundation decried the display of the old flag as indicative of support among some protesters for the old apartheid system.

Was the old flag displayed prominently?

On social media, photos of protesters carrying the old flag were circulated, but at least some of these photos were fake or for a different event. In an SABC2 debate the following week, Afriforum’s CEO Kallie Kriel dismissed reports of the old flag being displayed as fake news. The mayor of Midvaal in Gauteng, however, claimed he had seen them. Two Groundup reporters covered part of the Cape Town protest and did not witness conspicuous displays of the old flag.

Kriel said that Afriforum discourages its members from displaying the flag as it offends people, but that it should not be banned. Banning the old flag would be the same as banning communist symbols, which Kriel considered offensive, as communism, he asserts, was a crime against humanity.

The Promotion of Equality and Prevention of Unfair Discrimination Act, also known as the Equality Act, defines hate speech as showing a clear intention to be hurtful, incite harm and promote hatred. All three conditions must be present for hate speech to exist. This does not include genuine engagement in artistic creativity, academic and scientific inquiry and fair and accurate reporting in the public interest.

Farmers demonstrate against farm murders at Cape Town Stadium in the #BlackMonday protests in October 2017. Archive photo: Ashraf Hendricks

Mandela Foundation’s arguments

The Foundation’s CEO Sello Hatang affidavit says he was personally offended by the display as it recalled instances of racial abuse from his youth. “Gratuitous displays of the old flag, which serve no genuine journalistic, academic or artistic purpose in the public interest, are not about remembering but about forgetting our painful past. They do nothing to advance social justice, national unity and human dignity; quite the opposite. They cannot be protected by our Constitution, or defended in the name of tolerance, reconciliation and all of the values underlying the Constitution.”

On its website, the Foundation states that Germany has passed laws criminalising gratuitous displays of Nazi symbols, as they signify only oppression, hatred and the Holocaust. But the Foundation says it is is not pressing for criminalisation of gratuitous displays of apartheid symbols. “Instead we are using law to discourage their use.” The Foundation says that the Promotion of Equality and Prevention of Unfair Discrimination Act of 2000 empowers Equality Courts to order remedies such as an apology, community service, or sensitivity training.

Johannesburg Pride, representing the LGBT community, has joined as a friend of the court, and argues that the apartheid regime oppressed people not only on grounds of race but sexual orientation.

Displaying the old flag “demeans, humiliates, and creates a hostile and intimidating environment toward members of the LGBT+ community who were also victims of apartheid and its legacy,” says Khuresha Ally, director of Johannesburg Pride.

Afriforum’s arguments

Afriforum says the Foundation’s court case, if successful, would be an attack on free speech. Deposing for Afriforum, deputy CEO Ernst Roets says the organisation has no particular love for the old flag and what it represents. “In the exceptionally rare instance that anyone participating in one of our events brings an old flag with them, we ask them to put it away.”

However, a wide-reaching ban on the flag, such as that sought by the Foundation, would be “an unconstitutional infringement of the right to freedom of expression.”

Freedom of speech is the pre-eminent freedom guaranteed under the Constitution, argues Roets: “Freedom of expression is the cornerstone of a functioning democratic state. It gives people the opportunity to be exposed to differing viewpoints to make informed and legitimate decisions about their political lives.

“If citizens are under the impression that the ideas they are exposed to have gone through a filtering process to remove all inappropriate forms of expression, then they are less likely to be critical of the material that they consume. Societies that allow for a broad selection of opinions create an environment that strengthens people’s analytical skills and trains them to question the views that are presented to them.”

Afriforum also argues that ideas that are suppressed can later result in violence.

Banning displays of the old flag is inappropriate as those displaying it may have different intentions, argues Roets, who presents evidence of Sharpeville residents burning the new South African flag to protest Human Rights Day commemorations being moved from Sharpeville to Soweto. “By way of analogy, it may be thought that anyone who burnt the new flag was motivated by hatred towards black South Africans and a desire to reinstitute apartheid,” says Roets.

He adds that displaying the old flag is not hate speech, nor does it amount to a call for action or an incitement to cause harm.

Roets then turns on ANC and SA Communist Party symbolism, recounting atrocities committed by its foot soldiers against South Africans. If the old SA flag is banned, a precedent is set for the banning of the ANC or SACP flags, or indeed the British Union, on the grounds that they may be distressful to victims of violence committed under these banners.

Roets dismisses the claim that the old flag represents harassment, which “must amount to a torment that is persistent and repetitive”. The best remedy for offensive speech is counter-dialogue.

The #BlackMonday protests were sparked by the murder of Western Cape farmer Joubert Conradie. Roets says the subsequent reporting on the protests ignored the farm murders and focused instead on the claims that some protesters carried old flags.

He argues that the Nelson Mandela Foundation is dismissive of farm murders. There were 357 incidents recorded in 2016/7 with 553 victims of whom 74 were murdered. “The notion that the #BlackMonday marches were only concerned with violence against white farmers is outrageous. All violence, regardless of the race of the victims or the perpetrators is unconscionable,” says Roets.

Former Sasol Coal miners claim more than R80 million for coal-related illnesses

Written by Ciaran Ryan. Posted in Journalism

Photo of South Gauteng High Court

Former miners at Sasol Coal are taking the company to the Johannesburg High Court to get compensation for the lung diseases they allege they contracted because of their work environment. Archive photo: Ashraf Hendricks

This article first appeared in Groundup.

Twenty-two former underground miners are claiming more than R80 million in damages from Sasol Coal after they contracted serious lung and other diseases as a result of years of inhaling coal dust while working in underground coal mines.

They are arguing that Sasol Coal was negligent in failing to take adequate care to maintain healthy working conditions underground, in violation of several health and safety laws. Even if it was not negligent, the miners say the company bears the liability of their ill-health and loss of income for being unable to work.

The miners are represented by Richard Spoor, the attorney who last year reached a R5-billion settlement with seven gold mining companies for miners afflicted with silicosis contracted after years of breathing silica dust in underground mines.

In papers before the Johannesburg High Court, 12 of the miners say they were dismissed from employment because they contracted lung-related illnesses which made them unable to continue working. They are claiming for the loss of income, aggravated by their inability to find alternative work due to age, illness, low educational levels and lack of qualifications. The largest individual claim is R10.2 million, and the smallest is just under R1 million.

“The plaintiffs have suffered permanent physical impairment. Such impairment includes shortness of breath, generalised weakness, chronic chest discomfort, tiredness and disturbed sleep,” states the miners’ particulars of claim before the court.

One of the principle hazards to which they were exposed was noxious coal dust that cause lung diseases such as Coal Workers’ Pneumoconiosis (CWP) and Chronic Pulmonary Disease (COPD). These diseases can lead to respiratory symptoms such as a persistent cough and shortness of breath, resulting in a reduced ability to perform physical tasks. These can eventually develop into Progressive Massive Fibrosis (PMF), which reduces life expectancy. If coal miners with CWP or COPD are further exposed to coal dust, the severity of the disease is likely to increase.

The miners argue that Sasol Coal should have known of these health hazards, and through dust sampling and measurement should have been aware of the quantities of coal dust to which miners were exposed. Routine medical surveillance, if undertaken, would have established whether miners were at risk from the levels of dust in the underground mines.

Sasol denies liability

In its reply, Sasol argues that the matter has prescribed – meaning it is now too late to bring before the court. The Prescription Act requires such matters to be brought within three years of the alleged offence. Summons was served on the company in April 2015, more than three years after most of the miners had left Sasol’s employ.

Sasol’s court papers show several of the miners were dismissed for illegal strike action, and some had received medical compensation once their conditions had been diagnosed. One of the miners has since passed away. In other cases, workers’ medical conditions were deemed not severe enough for compensation. Some of the miners had previously worked at other mines, which may have aggravated their medical conditions. In other cases, Sasol denies the miners suffered from any lung disease, and no occupational diseases were diagnosed, so no benefits were paid out on their dismissal.

Sasol also questions some of the medical assumptions on which the miners base their claim, adding that CWP seldom causes significant disability. It also denies that COPD is developed by everyone who breathes coal dust.

The company argues that it provided proper mine ventilation to reduce dust particles to acceptable levels, and all workers were given adequate protective gear. To reduce the risk to miners’ health, remote-controlled mine machinery was employed, allowing operators to control the machines from a safe distance. It further argues that the miners have not been able to identify any act or omission that caused their injuries, and that the company took reasonable measures to address and reduce the risk of harmful exposure to dust on its mines.

Sasol also argues that in the event of dust hazards, the miners themselves would have been negligent in not noticing, avoiding and reporting the hazard (to which the miners reply that the harmful dust is invisible to the eye, and therefore almost impossible to detect). Should the court find Sasol Coal guilty of negligence, the corresponding negligence of the miners should reduce the amount of damages to be paid, says Sasol.

The Mine Health and Safety Act (MHSA) sets out the health and safety obligations on mine operators, who are expected to provide a work environment that is safe and does not pose a risk to workers’ health. Mines are also required to periodically measure the health dangers and investigate every serious illness so that the causes can be isolated and mitigated. It is also claimed that the company failed to properly ventilate the mines.

The miners argue that Sasol violated mining legislation by failing to ensure its mines were safe and healthy.

Expert medical reports show several of the miners on pain medication for lung-related complaints and other diseases. The reports suggest dust masks were available only some of the time while working underground.

The Sasol mines named in the court papers are Bosjesspruit, Brandspruit, Middelbult, Syferfontein, Twistdraai and Sigma.

The case is about to enter the pre-trial stage where the opposing parties will narrow down the areas of dispute. If settlement is not reached before then, the matter will likely go on trial in 2020.

Protests grow over defamation suits against environmentalists

Written by Ciaran Ryan. Posted in Journalism

Lawsuits can keep activists out of commission by forcing them to focus on the court case, but often backfire by drawing even more attention to an issue – as Australian mining company MRC is discovering. Picture: Shutterstock

Lawsuits can keep activists out of commission by forcing them to focus on the court case, but often backfire by drawing even more attention to an issue – as Australian mining company MRC is discovering. Picture: Shutterstock

This article first appeared in Moneyweb.

Environmental activists are headed to court next month in a bitter defamation suit brought last year by Australian mining company MRC, which is planning to mine titanium sands at Xolobeni on the Wild Coast.

The case involving three of the six environmentalists who are being sued for defamation by MRC and its CEO Mark Caruso is a curtain raiser to the main hearing and is intended to discover documents the environmentalists say they need to properly defend themselves.

Other environmental and civil groups are rallying around the environmentalists, claiming the court actions are nothing but ‘Slapp’ suits (Strategic Litigations Against Public Participation) intended to silence legitimate criticism of the company and its environmental practices.

“Around the world, Slapp suits are used by companies, particularly in the mining and energy sectors, to intimidate environmental defenders, in an effort to suppress debate about the negative impacts of their operations on local communities and in relation to environmental degradation,” says Leanne Govindsamy, head of corporate accountability and transparency at the Centre for Environmental Rights (CER). Two of CER’s attorneys have been sued by MRC and Caruso for defamation over criticisms made of MRC’s environmental practices.

Read: Defamation suits fly over mining controversies

Earlier this month CER and several other civil bodies – including groundWork, Earthjustice and Human Rights Watch – released a report highlighting threats against activists in the form of harassment, intimidation, violence and the use of Slapp suits.

“Judging from the response to the report, including the response to the report’s findings around the Slapp suits brought by MRC, the company is likely to find itself facing a wall of opposition from other civil society groups which resist the notion of censorship over issues that are in the public interest,” says Govindsamy.

Activists harassed

The Human Rights Defenders report says activists are frequently harassed by companies seeking court orders to prevent protests, filing vexatious lawsuits and seeking financial penalties. Slapp suits are a growing trend around the world, prompting calls for anti-Slapp legislation such as exists in some US states.

MCR does not enter this contest with a clean slate. Its subsidiary Mineral Sands Resources was fined R1.25 million for environmental transgressions at its Tormin operations on the west coast, a fine many consider woefully inadequate relative to the damage caused.

The chances of getting rich off defamation suits in SA are not good, reckons human rights lawyer Advocate Mark Oppenheimer. The top award for defamation in SA was R50 000 plus costs to former head of the Independent Police Investigation Directorate Robert McBride, who successfully sued The Citizen in 2011 over its claims that he was an unrepentant murderer for the Magoo Bar bombings in Durban in the 1980s. This award was the result of several articles in The Citizen that the Constitutional Court found to be malicious and defamatory.

One of those being sued by MRC and Caruso is environmental lawyer Cormac Cullinan. Both Cullinan and Caruso were on a Cape Talk radio show discussing the Xolobeni mining story, when Cullinan suggested that pro-mining representatives of the local community had been bought off, and that forged names were used in support of the pro-mining lobby.

Diversionary tactic 

“Caruso had the opportunity to defend his position on the radio show, but chose instead to bring a lawsuit,” says Cullinan. “One of the effects of these cases is to keep you out of commission while you spend time defending a court case. My statements were fair comment and I don’t think MRC’s case has any merit.”

What seems to have irked environmentalists in relation to MRC is the visit last week by mining minister Gwede Mantashe to its Tormin operations in the Western Cape. In a letter to the minister, CER executive director Melissa Fourie wrote: “Attempts to silence criticism and debate on matters of public interest are the most egregious forms of attack on constitutional rights and undermine not only the rights of those who are sued but undermines constitutional freedoms, which are central to democracy and civil society’s ability to advance transparency and accountability.”

One of the defendants in a separate case brought by MRC is social worker John GI Clarke, who denies defaming the company, but also appears to have doubled down on his criticism of MRC and Caruso. He faces 19 claims totalling more than R5.5 million, a figure that seems to keep growing each time he opens his mouth. But Clarke shows no signs of going anywhere quietly.

He has been highly critical of the way MRC and Caruso went about trying to secure mining rights in Xolobeni, apparently against the wishes of many people living in the area.

“All I have simply done is what social workers are obliged to do, in terms of our professional code of practice,” says Clarke.

Doubling down

“As part of the discovery process I have given Caruso’s lawyers enough evidence, without disclosing my confidantes of course, to cause him even more anxiety. That perhaps explains why [they are] now doubling down on me by increasing the quantum of damages Caruso is claiming. He started with seven claims totalling R2.25 million, then doubled that to 18 claims totalling R5 million and then again, adding another 10% on that by suing me for statements I made in another recent article,” Clarke told Moneyweb.

In Caruso’s affidavit before the Cape High Court, he lists the 19 instances of alleged defamation by Clarke. One of them is an interview Clarke gave to the Daily Maverick in which he is claimed to implicate MRC in the murder of Pondoland community activist Sikhosiphi ‘Bazooka’ Rhadebe in 2016 – a claim which, it must be said, MRC has always denied and Clarke says he never made.

The offending sentence could with a stretch be interpreted this way, but is so grammatically mangled as to make hardly any sense at all.

Caruso supplies the passage that he says defamed him:

“‘The key issue is whether human rights trump mining rights,’ said John Clarke, a social worker and Daily Maverick contributor, who has been working closely with the community. The area, which was the site of the Pondoland revolt, is fiercely resistant to being told from the outside what to do,” said Clarke, and after MRC continues to try for a mining licence the killing of Rhadebe he said it shows it’s trying to increase the pressure on those in its way.”

For this sentence, MRC and Caruso are claiming R500 000 from Clarke. In reply, Clarke says the offending sentence is not a direct quote and makes no logical or grammatical sense. It must be read in the broader context of growing hostility between pro and anti-mining activists in the area.

Rhadebe’s killing was a tragedy that gutted the local community, especially as the killers were never found.

Mining licence ‘supported’ by the dead?

Clarke also claimed that some of the local residents’ signatures presented by MRC in support of its mining licence showing “prior, free and informed consent” were forged and included many who had died. Clarke added that Caruso had attempted to hide this fact. Caruso’s affidavit says this statement wrongly suggests criminality on his part. For this statement by Clarke, Caruso is claiming another R500 000. There are 17 other claims against Clarke alone.

MRC and Caruso are also claiming R1 million from community activist Mzamo Dlamini, R1 million from Cullinan and R250 000 each from CER lawyers Christine Redell and Tracey Davies, and community activist Davine Cloete. The CER lawyers were sued for comments they made during a presentation at the University of Cape Town claiming poor environmental practices by the company’s Tormin project. All are defending the claims.

Are Slapp suits effective in silencing criticism? Govindsamy says they are intended to promote self-censorship and place a huge financial burden on those forced to defend them. “However, civil society organisations in South Africa are committed to defending the right to freedom of expression, particularly around issues which are in the public interest and we are committed to ensuring that activists are not silenced through the use of Slapp suits, especially bearing in mind the integral role which freedom of expression has played in our nascent democracy.”

The ‘Streisand effect’

Slapp suits very often backfire on the plaintiffs by rallying support for the defendants. This is known as the ‘Streisand effect’, where attempts to silence free speech end up drawing even more attention to the issue. It is named after US performer Barbara Streisand’s attempts to have a picture of her house removed from a public collection of California coastal images. Her attempt to avoid public scrutiny had the opposite effect once it became known.

There is a push for anti-Slapp legislation in several US states, making it easier for judges to dismiss cases deemed to be attempts to silence criticism. The most frequent targets for these suits are civil society and environmental groups, and the press. 

Former finance minister Trevor Manuel has reportedly filed a suit against the Economic Freedom Fighters (EFF) for claiming the appointment of Sars Commissioner Edward Kieswetter was irregular. Manuel was part of the recruitment selection panel, and the EFF claimed he was related to Kieswetter and that the two had close business ties. Manuel demanded a retraction, calling the claims racist and libellous. The EFF appears to be sticking to its guns, saying it will defend any action brought by Manuel.

Many worthy stories are buried without having to go this far. PR agencies are sometimes able to do it with charm offensives. Sometimes all it takes is a phone call. In the opening section of Gangster State, author Pieter-Louis Myburgh recalls receiving a phone call from Ace Magashule, ANC secretary-general and the subject of the book, trying to fish for information on what Myburgh was planning to write about. That didn’t stop Myburgh, but it did stop a Free State reporter who received a similar call, says Myburgh.

Municipal sector in SA faces collapse

Written by Ciaran Ryan. Posted in Journalism

Of the seven metros analysed, Cape Town came out tops for financial sustainability. Picture: Jose Cendon/Bloomberg

Of the seven metros analysed, Cape Town came out tops for financial sustainability. Picture: Jose Cendon/Bloomberg

This article first appeared in Moneyweb.

SA’s municipal sector faces collapse as financial governance continues to deteriorate, says Ratings Afrika’s latest Municipal Financial Sustainability Index (MFSI) for 2018.

Unless corrective action is taken, a crisis is inevitable. And when service delivery is poor, violence is never far behind. Political leaders need to look at the interests of residents and businesses rather than their own, says the agency. They need to root out corruption, appoint managers with the right skills and experience, and apply sound budgetary practices and strict financial discipline.

Read: Amalgamation no silver bullet for struggling municipalities

Very little of this is in evidence in the latest MFSI. “The current political leadership in control of the majority of municipalities has demonstrated over the last five years and more to not being capable of sound governance,” says Ratings Afrika. “This is the main cause of the deteriorating financial sustainability of the municipal sector in SA.”

Of the seven metros analysed by Ratings Afrika, Cape Town came out tops for financial sustainability. Joburg came last.

Both are DA-run, so gloating rights ahead of the national elections are severely curtailed.

Tshwane, too, looks like it needs a financial reboot with a working capital deficit of R3.2 billion. It’s also DA-run, but is starting to show signs of improvement, reporting a R336 million operating surplus in 2018.

Joburg reported a deficit of R250 million in 2018 and has suffered a deterioration in its MFSI score from 43 to 29 over the last five years.

Ratings Afrika analyst Leon Claassen says it is difficult to draw political inferences from these scores, since many municipalities and metros are grappling with long-standing legacy and debt issues. However, it is well known that the governing party in each jurisdiction stacks management with political appointees.

Drop in electricity sales for Joburg

An analysis of Joburg’s revenue shows electricity sales dropping nearly R900 million to R13.5 billion – a decline of roughly 6%. Part of this would have been the result of electricity outages, but some of this is also certainly due to users switching to alternative energy sources. Non-payment is adversely affecting the working capital position of Johannesburg, which was R3 billion negative (shortfall) as at June 2018. Eskom’s annual report for the last year shows an arrears bill of nearly R17 billion in Soweto alone – this amount is not included in Johannesburg’s financial results.

Presenting the latest MFSI for 2018 on Tuesday, Claassen points out that only 23 of the top 100 municipalities in SA reported operating profits last year. The remaining 77 made combined operating losses of R13.3 billion and recorded a combined working capital shortfall of R23 billion. This means they have run out of cash and have stopped or delayed paying creditors.

Ratings Afrika’s MFSI uses a model that scores municipalities out of 100 based on operating performance, liabilities management, budget practices and liquidity.

Overall, the picture for municipalities is bleak and getting worse. The national average slipped below 40 to 38 for the first time since the index was calculated in 2012. Of the top 100 municipalities, 56 scored less than 35. Worst of the lot was Modimolle, formerly Nylstroom in Limpopo, which scored just 2 out of 100. It has virtually ceased to function and service delivery is almost non-existent – a recipe for protest and violence.

Redemption

Best of the lot is Swartland in the Western Cape with a score of 86. And herein lies a tale of redemption. When the index was first published in 2012, Swartland scored in the low 50s. After huffing and puffing about the low score, municipal managers asked what they should do to improve performance. “It came down to making basic financial corrections, such as reining in expenses, no new hires, improving revenue collection and implementing proper budgeting,” says Claassen.

Another municipality on the mend is Midvaal in Gauteng, whose score has improved from 53 to 72 over the last five years. It has consistently won clean audits from the Auditor General. In 2013 the ANC attempted to merge the DA-run Midvaal with the disastrous ANC-run Emfuleni in what was seen as a cynical attempt to capture the province’s best-run municipality. The attempted merger was defeated in the North Gauteng High Court in 2015.

Moving in the opposite direction is Msunduzi in KwaZulu-Natal, which was once rated among the best-managed municipalities in the country. All that has gone as new management took over, squandered the reserves, and let revenue and arrears collections go to the dogs.

The political question

How much does politics play in the management of municipalities?

Ratings Afrika director Charl Kocks relates the story of one metro that soft-peddled on arrears collections so as not to lose votes ahead of an election. The obvious solution seems to be to get professional managers in to run the municipalities, rather than using them as playthings for dispensing political favours.

The main revenue source for metros and municipalities is electricity sales, followed by water charges, refuse and sewage charges, and property tax.

“Given that the financial sustainability of key local municipalities in SA is weak, our expectation is that the quality of service delivery is likely to deteriorate over the short to medium term,” says Ratings Afrika. “Weak service delivery impacts quality of living as well as the economic growth and development that are desperately needed to reduce unemployment in the country.”

What differentiates the high-scoring municipalities from the weak are skills, experience, financial discipline and quality of management backed by sound governance.

Equality court tosses out discrimination case against FNB

Written by Ciaran Ryan. Posted in Journalism

The Cape Equality Court has dismissed a claim of racial discrimination against FNB. Photographer: Nadine Hutton/Bloomberg

The Cape Equality Court has dismissed a claim of racial discrimination against FNB. Photographer: Nadine Hutton/Bloomberg

This article first appeared in Moneyweb.

The Cape Equality Court last week tossed out a claim of racial discrimination against FNB brought by usury expert Emerald van Zyl on behalf of several black customers of the former Saambou Bank, which was taken over by FNB in the 1990s.

The claim of discrimination was based on a Saambou customer database leaked to Van Zyl in 2010. His affidavit before the court suggested a pattern of discrimination against black customers who he said were being charged up to 30% more than white customers for their mortgage loans. There was no reference to the race of customers in the database, but Van Zyl argues this was coded by the use of “low-cost housing” (black) and “high-cost housing” (predominantly white) clients.

Research by retired sociology professor Cornie Groenewald concluded that 99% of the low-cost housing Saambou clients reflected in the database were black.

In a statement issued last week, FNB said it welcomed the Equality Court’s dismissal of the race discrimination case. “The Court dismissed the matter in its entirety, including the complainant’s application to amend their declarations.”

Read: Claims of discrimination against black FNB customers heads to court

Commented chief executive of FNB Home Finance, Lee Mhlongo: “We’ve always maintained that the callous use of racial allegations is irresponsible and unacceptable. There has never been any evidence to suggest that race played any role in Saambou’s determination of interest rates for its customers.”

Judge Fortuin described the evidence as “vague and embarrassing” and appeared to take exception to the wide media coverage given to the case. The Equality Court was established in 2003, and the judge said the court did not have jurisdiction to consider cases that occurred prior to this date.

But Van Zyl says the merits of the case have yet to be heard, and he will now approach the SA Human Rights Commission (SAHRC) to deliberate on the case. “We have a few options available to us. One of them is to appeal the judgment. Another is to approach the SA Human Rights Commission or the Constitutional Court. We will consider our options over the next few days. We have already presented evidence to the Human Rights Commission in terms of one FNB customer.”

Indirect discrimination

The SAHRC has approached Stellenbosch University’s Law Clinic for legal assistance on the case alleging discrimination. Says the Law Clinic’s Stephan van der Merwe: “It is correct that we were consulted by the SAHRC who requested our assistance on the matter. We confirmed that we are willing to co-operate if there is sufficient merit. From what we have been informed, we are concerned that there may be reason to suspect indirect discrimination in the matter.”

Indirect discrimination is where there is a practice, policy or rule that applies to everyone in the same way, but has a worse effect on some. For example, if people living in a particular area are charged high interest rates and are also of a particular race, that could be considered indirect discrimination.

FNB says cases related to these racism allegations have been dismissed by the courts on four separate occasions since 2013, including the Supreme Court of Appeal.

Van Zyl says he has assisted 1 570 clients from having their houses sold in execution by the banks. Of these, 179 were black Saambou clients. Most of these cases were heard in the high courts, where Van Zyl says he was able to show that the banks had discriminated against clients by not reducing interest rates for low-cost housing clients when prime lending rates were dropped for other customers.

FNB says the allegations were first dismissed in 2013 by the North Gauteng High Court. The court found that, after all the evidence had been led and all witnesses cross-examined, the claims that Saambou charged black people higher interest rates than white people were “completely unfounded”. Van Zyl replied that in this case racism was not pleaded. The claimants in this case, who happened to be black, argued that the interest rate they were charged was not fair and reasonable and exceeded the amounts permitted by law.

“As a responsible corporate citizen, FNB has been and will always remain committed to ensuring that customers are treated fairly,” says Mhlongo.

Sibanye-Stillwater’s long march to the courts

Written by Ciaran Ryan. Posted in Journalism

Sibanye-Stillwater CEO Neal Froneman has had to fight a fair share of battles on behalf of the company recently. Picture: Waldo Swiegers/Bloomberg

Sibanye-Stillwater CEO Neal Froneman has had to fight a fair share of battles on behalf of the company recently. Picture: Waldo Swiegers/Bloomberg

This article first appeared in Moneyweb.

The modern era of deal-making requires an army of lawyers.

It’s been more than a year since Sibanye-Stillwater announced its proposed R5.17 billion all-share buyout of Lonmin.

Since then the company has been in and out of court, fighting cases on multiple fronts, not all of them related to the Lonmin deal. It’s also had to deal with a particularly nasty pay strike by 15 000 workers affiliated with the Association of Mineworkers and Construction Union (Amcu) that has resulted in the deaths of nine workers. The strike has dragged on for five months. Other unions accepted the pay offer from management and returned to work. Amcu held out for a better deal, launching one of the ugliest strikes in years.

This week the SA Human Rights Commission sent a fact-finding mission to the mines, and met with union representatives and police. Last month the Labour Court ruled that the wage agreement reached between the company and three other trade unions could be extended to Amcu, and will approach the Labour Court again within the next few days to force Amcu members back to work.

Again at war

Two weeks ago Sibanye-Stillwater was again at war with Amcu – this time in front of the Competition Appeal Court, defending an appeal brought by the union to set aside a 2018 decision by the Competition Commission greenlighting the merger with Lonmin.

Amcu claimed the merger would result in massive job losses, citing a figure of 13 000 merger-related retrenchments, which far exceeds the roughly 3 200 projected by the Competition Tribunal last year. The union asked the court to extend the six-month moratorium on retrenchments (a condition of the merger imposed by the commission) to 24 months. The result of this appeal is still being awaited.

James Wellsted, senior vice-president of investor relations at Sibanye-Stillwater, says should the Competition Appeal Court rule in the company’s favour, the Lonmin merger should be wrapped up within the first half of this year.

“The Amcu strike at our gold operations is obviously not directly related to the Lonmin merger, although some argue that there is a link between the strike and Amcu’s opposition to the Lonmin transaction.”

Lonmin has also had to fight in court

Lonmin has also had its share of court action. In October last year, it successfully defended an attempt by the Mining Forum of South Africa to have its mining licences suspended on the grounds that it had ducked its Social and Labour Plan (SLP) obligations, which are a precondition of every mining licence.

The forum is a non-profit organisation set up to ensure that mining companies adhere to the conditions of their licences, and was appointed by the Bapo Ba Mogale Traditional Council to represent its interests and ensure compliance with the mines’ SLP commitments. Lonmin argued that the proper forum for complaints of this nature is judicial review in terms of the Promotion of Administrative Justice Act (Paja). The forum also asked the North West High Court to interdict Lonmin from transferring or disposing its shares to Sibanye-Stillwater on the grounds that this was an attempt to shirk its SLP obligations, and there was a pre-existing agreement to sell two of its shafts to the local community.

Justice Leeuw ruled against the forum, and dismissed its case with costs, saying it had followed wrong procedure in approaching the high court when it should have taken the matter under judicial review in terms of Paja.

Muddying the waters

All of this muddies what has been a determined bid by Sibanye-Stillwater to sweeten its portfolio of platinum group metal assets. Its platinum assets share boundaries with Lonmin, so it makes sense to consolidate operations and reduce capital outlay. One of the primary targets of the deal is Lonmin’s metallurgical processing complex, including smelting, base and precious metals refining facilities.

Lonmin’s processing facilities will allow Sibanye-Stillwater to smelt and refine ore from its existing Rustenburg operations, thereby improving the economics of those operations. Lonmin’s balance sheet is in tatters after several bad years. The deal offers its shareholders a dignified exit, as they will now hold Sibanye-Stillwater stock.

But before that happens, there are few more court hurdles to be cleared.


Disease haunts Mpumalanga coal town

Written by Ciaran Ryan. Posted in Journalism

Photo of woman in front of house with broken windows

Kate Kobe, who lives in the Mpumalanga town of Phola, wants to know who will pay for the damage to her home. She and other residents say cracks and broken windows are caused by blasting at nearby coal mines. Photo: Ciaran Ryan .
This article first appeared in Groundup.

Last week Mineral Resources Minister Gwede Mantashe visited Phola, in Mpumalanga, to hear complaints that blasting from nearby coal mines was causing cracks in houses and broken windows. The visit concluded with an undertaking to determine whether the cracks were caused by blasting from mines already in operation or from other activities. The minister may be uncertain of the cause, but the residents of Phola are not.

“The blasting happens every day and you can feel the houses shaking,” says Goodwell Matala, who once worked for the coal mines but lost his job several years ago. He points to windows at the front of his house which he says were broken by the ferocious shudder of coal mine blasts. The pattern is repeated up and down the street where Matala lives. Houses have shed their plaster coatings and internal cracks are clearly visible. In one house, the blast shock was so severe it brought down the ceiling, according to residents.

This is coal country, and most of those lucky enough to have jobs work either for the nearby coal mines or the Kendal Power Station.

Many of the residents complain that they are breathing dust stirred up by the blasting and ash dumps from Eskom power stations, creating respiratory conditions for those living nearby.

Margaret Nkambule, a Phola resident, has been diagnosed with TB, and her three-year-old son Sbonokuhle has damaged hearing which she says is a result of the blasting. “The blasting sometimes happens when we are sleeping and dust falls down from the ceiling and goes into our lungs,” says Margaret’s husband, Shorty.

Kate Kobe is a pensioner and she wanted a chance to speak to Mantashe at the Phola Community Hall about the damage caused to her modest home by the blasting. Like Goodwell Matala, she has stories of her own: blasting has disfigured her home and broken several windows. “Who’s going to pay for this?” she wants to know.

Some community members seemed irritated that Mantashe was in town for the day. “We only ever see these politicians when there is an election,” says Tebugo Mashianhe, pointing to garbage lying on the street (the air is rancid from the rot). He points to a street light on a towering pole nearby. “The street lights started working in January after being broken for three years. It’s because there is an election.”

Anglo American and South32 are the mining houses most residents blame for the blasting, but the Department of Mineral Resources (DMR) says their mines have not yet started blasting.

South32 spokesperson Jenny White says the group’s nearby Klipspruit coal extension project was one of three sites visited by Mantashe last week. “The Klipspruit Extension is under construction and not yet operational and no blasting activity has taken place at the site.”

White says an independent environmental control officer reporting to the DMR confirmed that construction activities at the Klipspruit Extension project are carried out in line with approvals.

Anglo American’s Moeketsi Mofokeng said the Zibulo colliery near Ogies adheres to the “highest environmental management standards”. The company has a “community complaints and grievance procedure”. Measurements of dust from the Anglo colliery show that it is not the source of the dust fallout in the area, Mofokeng said. There is blasting from the colliery from time to time but, says Mofokeng, these activities are regulated and within legal requirements. (See Anglo’s full response below.)

“The two mines about which complaints were raised have not commenced operating, and no blasting has occurred yet,” said the DMR in a statement after the minister’s visit. “Furthermore, the Department will be engaging with the mines to strengthen measures in place for the minimisation of dust from mining activities, where mining is already taking place.”

That doesn’t satisfy the residents of Phola, who are living in what may be one of the unhealthiest parts of the country. The local clinic is crowded with people complaining of breathing problems. And blasting is clearly taking place at mines in the area.

Health problems

Many studies have analysed the health hazards for people working on and living close to coal mines.

A 2012 study on Highveld air quality reported that the biggest contributors to the ambient air pollution were Eskom’s coal-fired power generation and mine haulage. An air quality management plan was put in place more than a decade ago to clean up air quality, but little appears to have changed, according to Broken Promises, a 2017 report by the Centre for Environmental Rights (CER).

Timothy Lloyd of the CER says people battling TB and other debilitating illnesses from having worked in coal mines are often left with medical bills to pay, as well as transport costs to a distant hospital. They have to deal with the constant fallout from a nearby ash dump aggravating their conditions.

In 2016, UK-based air quality and health expert Dr Mike Holland assessed the health impacts and associated economic costs of current emissions of just one type of pollutant from Eskom’s coal-fired power stations. His report, titled Health impacts of coal fired power plants in South Africa, estimates that the following impacts are attributable to these emissions:

  • 2,239 deaths per year: 157 from lung cancer; 1,110 from ischaemic heart disease, 73 from chronic obstructive pulmonary disease, 719 from strokes, and 180 from lower respiratory infection;
  • 2,781 cases of chronic bronchitis per year in adults;
  • 9,533 cases of bronchitis per year in children aged 6 to 12;
  • 2,379 hospital admissions per year;
  • 3,972,902 days of restricted activity per year;
  • 94,680 days of asthma symptoms per year in children aged 5 to 19;
  • 996,628 lost working days per year; and
  • the total costs associated with these impacts exceed US$2 billion (approximately R28 billion) a year.

These numbers exclude the significant impacts from air pollution from mining (such as coal dust), transport of coal, and contamination of water (as well as the impacts from other pollutants emitted by Eskom stations).

Human rights lawyer Richard Spoor, who successfully sued Gencor and Swiss multinational Eternit on behalf of miners suffering diseases as a result of exposure to asbestos, has more recently taken up the cause of coal miners. He has launched a court case against a coal company claiming damages on behalf of 22 underground coal miners suffering various work-related ailments.

“There is a perception that sickness among coal miners is less severe than it is among gold miners, but our research shows the opposite,” says Spoor. “Based on the health tests we have done, nearly one in three coal miners is afflicted with some kind of illness related to their work. There’s a particularly high incidence of lung complaints among coal miners.”

Spoor adds that blasting in the vicinity of mines is also a major problem whose costs are under-reported.

Dr Jim te Water Naudé, a public health specialist based in Cape Town, confirms an abnormally high incidence of lung-related illnesses among more than 300 ex-coal miners tested on behalf of Spoor. Highveld coal mining areas are well known for high levels of air pollution through a combination of coal mining, dust from Eskom power station ash dumps and dust thrown up by haulage trucks, to name a few. What is less certain is which source is the main culprit.

Anglo American’s full response

Our Zibulo colliery near Ogies – like all other Anglo American operations – adheres to the highest environmental management standards. We have established practices that set out how we interact with our communities and stakeholders. We aim to deliver on our commitment to ongoing and honest communication with our stakeholders.

For example, Zibulo Colliery has a Community complaints and grievance procedure in place. All community complaints are investigated and acted on promptly. These are entered into the register that is available at the access gate to the opencast operation. We have other platforms like community forums have been set up to encourage ongoing communication.

Zibulo Colliery has measures in place to manage other possible impacts like dust. Although all dust measuring data shows that Zibulo is not the source of the dust fall out, we have agreed to jointly with other mining companies to initiate a study into understanding not only the source of this dust but how best to alleviate the dust impact.

We also use dust suppression on all mine roads. This involves the application of a chemical suppressant agent and water. The mine has a dedicated air quality management plan in place.

The Zibulo opencast operation undertakes blasting activities from time to time. These activities, together with the mining plan, are regulated and approved by the Department of Mineral Resources and are within the legal requirements prescribed in the Mine Health and Safety Act.

Message to South Africans: The good times will be back shortly

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Listening to the daily corruption report from the Commission of Inquiry into State Capture one can easily miss some shards of optimism glinting through the cloud cover.

FTI Consulting’s The future of South Africa report released this week has some encouraging words from CEOs such as Discovery’s Adrian Gore and Goldman Sachs’s sub-Saharan Africa CEO Colin Coleman, who breaks rank with many of his peers in forecasting reasonably strong growth of 1.9% in 2019 and 2.8% by 2021.

Coleman says a good target for SA is to get back to 3% growth within three to four years. “During the Thabo Mbeki years, we were growing at 4% and during the Jacob Zuma years, at 1.5%. Over the combined period we had an average 3% growth rate.”

Gore introduces some much-needed optimism into the picture, pointing out that life in SA gets better with time. “Our GDP is 2.5 times the size it was in 1994 on a dollar basis; formal housing has increased by 131% from 1996 to 2016; new HIV infections are down 60% from 1999-2016; and the murder rate per 100 000 is down 50% from 1994 to 2017.”

South Africans tend to wallow in gloom, which leads them to make erroneous predictions. In a recent survey involving 28 countries, South Africans gave the least accurate guesses on global and national development figures.

South Africans move on quickly

Gore points out that South Africans tend to obsess over the problems of the day and move on quickly to the next one: HIV, crime, labour unrest, the Eskom crisis, state capture and land expropriation. “It is precisely because these problems change that they cannot be intractable,” he says. “I’m not minimising these problems. They are tragic and need to be solved. I’m making the point that we have the ability to gain traction on these issues, albeit at times in a messy way.”

Claire Lawrie, senior MD at FTI Consulting, points out that SA tends to mirror global economic cycles and is currently lagging global growth rates. A key sign of improved outlook is the rise in foreign direct investment, which last year touched 2.25% of GDP.

Poverty rates are down over the last decade, though 14 million people are still unable to afford basic necessities.

Lumkile Mondi, Wits University lecturer and economist, says SA is headed for a difficult period of low growth akin to the 1988-1994 period preceding the country’s first democratic elections. The growth of the black middle class was a result of state intervention and preferential procurement for black people. We first need to accept that we are in a crisis before we can get out of it, he says. “We’re going to see more violence as claims having to do with the past come up. There [are] no consequences for breaking the law in SA. We need to reclaim our democracy.

‘Everything seems to be about BEE’

“SA has too many competing interests, and everything seems to be about BEE.” He cited the example of a much-needed Highlands Water Project phase that was held up by the relevant minister because there were not enough BEE participants.

Investec group economist Annabel Bishop agreed that SA is going to have to go through a period of repair, similar to 1994, when it took five years to fix national finances. SA has yet to benefit from the upswing in commodity prices, in large part because of higher energy and deep-level mining costs.

Dr Rod Crompton, director of the Energy Leadership Centre at Wits University, says several transformations are happening simultaneously, including deindustrialisation and IT modernisation.

“Only organised business can save the country,” says Crompton. “It needs to come out from behind the parapet and play its part.”

One sector to watch as an engine of growth is the gas and petroleum sector following the massive gas discovery by oil company Total off the SA coast. The centre of power in energy will shift from the state to the private sector, and this will undermine the business model of municipalities which generate revenue from electricity sales.

For a new democracy, SA’s public sector swallows 16.7% of GDP, well above that of other Brics countries and on a par with Sweden. “The public sector contributes 16.7% to GDP and 16.3% to employment, but takes a 35% share of South Africa’s total wage bill. This is a strain on public finances and reigning it in will be the litmus test of whether the government is taken seriously on sound economic management. There is a growing public perception that the public sector does not provide value for money for the services delivered,” says the report.

Bishop says business confidence is at levels previously seen during the global recession in 2009. SA risks credit rating downgrades on the weakness of government and state-owned company finances. “The private corporate sector has been increasingly crowded out by the substantial fiscal expansion of the past 10 years, as government debt has escalated rapidly, the budget deficit has widened and government expenditure consistently exceeds revenue.”

FTI Consulting suggests five enablers of growth:

  • Creating policy certainty
  • Addressing the skills mismatch between what exists and what is needed in a technological economy
  • Re-industrialising the economy
  • Improving investment attractiveness, and
  • Ensuring sustainable energy supply.

Annual GDP growth, SA and the world

Source: FTI Consulting, World Bank

South African GDP growth performance

Source: FTI Consulting, Statistics SA

Gini coefficient (the higher the score, the greater the inequality)

Source: FTI Consulting, World Bank

Party election manifestos are a collection of fantasies

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

The ANC is on target to win next month’s election. The big question is whether it loses Gauteng.

The ANC is heading into next month’s election fielding several candidates whose names have surfaced in the Zondo Commission of Inquiry into state capture. Despite the Eskom electricity crisis and a constant stream of corruption-related news pointing to senior levels of the ruling party, the ANC is still expected to win the upcoming national election, perhaps even bettering the 54% it won in the 2016 election.

Speaking at a pre-election debate in Sandton this week chaired by Peter Leon of Herbert Smith Freehills, independent elections analyst Dawie Scholtz said the ANC, based on polling and by-election data, should win about 56% of the national vote. Cyril Ramaphosa’s assumption of the presidency may have arrested the slide in ANC support suffered under former president Jacob Zuma, but this is by no means certain.

The party manifestos make for riveting reading, with very little attention given to how parties are going to fund their schemes. Investment expert Martin Kingston says looking at all the free stuff on offer from the EFF, he’d be inclined to vote them, but with one caveat: “How do we pay for it? All the parties believe in something called a free lunch. They all disregard the fact that we are challenged by a lack of a competent and capable state and that undermines the prospects for the country. At the heart of this problem sits cadre deployment.”

Leon described the upcoming election as the most consequential for SA since 1994.

The ruling party should perform better in certain areas such as Limpopo, Ramaphosa’s home province, urban Gauteng, where the president’s approval rating is strong, and the Eastern Cape, but will under-perform in Kwazulu-Natal, where his approval rating is lower.

The EFF stands to have a great election, perhaps even doubling the 6.6% they won in the last election. Scholtz says the party is on target to win 9-12% of the national vote.

The Democratic Alliance (DA) should match or slightly exceed the 22% it secured in the last election. This depends on voter minority turnout, which is traditionally high among suburban voters. There is some attrition from Afrikaners who don’t like the DA’s position on land reform, to the benefit of Freedom Front Plus (FF+). This was reflected in two recent by-elections in traditionally strong Afrikaner areas, where the DA lost about 20% of its support, mainly to the FF+.

The wild card here is black middle class voters in Gauteng, who have been deserting the ANC since 2011. Lumkile Mondi, Wits University lecturer and economist, says the number of black middle class voters who turned out for the DA in the last election could double this time around, with some of this support going to other parties. Much of this turnout will be driven by dissatisfaction with rising living costs. “The ANC here (Gauteng) is a sitting duck, particularly around the cost of living. The black middle class is forming the view that the ANC cannot manage the economy.”

Is the ANC in danger of losing Gauteng, largely due to the surge in support for the EFF and DA?

Scholtz says the ANC won 46% of the Gauteng vote in 2016, so it should secure 48% in a national election. The ANC won 87% of black vote in Gauteng in 2011, but this fell to 78% in the 2014 election and 69% in 2016. The real question is whether the ruling party is facing an irreversible attrition of support from its traditional black voter base.

Suburban turnout in Gauteng was 78% in the last election, against 71% for townships, and should remain more or less the same this time, as voters turn out to express their dissatisfaction with Eskom power outages and a constant stream of corruption news from the Zondo Commission.

The Western Cape looks like a reasonably safe bet for the DA, which can withstand a 10-15% swing in voter allegiances. Again, much depends on voter turnout. There was a 71% suburban turnout in the last election in the Western Cape, against 53% in townships. This time Scholtz believes it should secure 53-55% of the vote in the Western Cape.

SA is stuck in a long-term trend of very low economic growth going forward, underpinned by the structural problems such as lower revenue collections, and lack of human capital that defines the democratic state, says Mondi. “Embedded in the economy is a sense that there is only one way for blacks to create wealth and that is through preferential procurement. This is coming out of the Commissions (of inquiry). Preferential procurement is a poisoned chalice. The state has created an enabling environment and opened opportunities for black people where they can go out and become professionals or earn their living the criminal way, through political power.”

The message the ANC is sending by retaining members suspected of corruption is that it is willing to put its own interests ahead of the Constitutional state. Ramaphosa is no reformer, and the list of candidates the ANC is fielding is not going to push the reforms needed to get growth going again, says Mondi. A notion gaining traction in SA is modern monetary theory, or the idea that printing money is not a bad idea. Advocates of this theory point to the Netherlands, Portugal or Ireland where debt-to-GDP ratios are far higher than they are in SA.

State-owned companies have become the seat of corruption and cadre deployment. For Eskom to be fit for purpose means job losses, says Kingston. The power utility is currently in a death spiral, characterized by falling revenue, rising interest costs and a shrinking customer base that requires constant increases in electricity tariffs. Kingston adds that Ramaphosa is unlikely to attract anything like $100 billion in foreign investment so long as property rights are in question.

There are 26.7 million people registered to vote, more than half of them women. The stakes in this election are perhaps higher than at any time in the last 20 years. At the start of the Zuma reign in 2009, economic growth was a respectable 4%. Last year it slipped to 0.8%.

Government debt has increased from 30% of GDP in 2009 to 53%, and unemployment has gone from 23% to 27% over the same period. Corruption has desecrated the ruling party, prompting three presidential commissions of inquiry and two rating downgrades.

A taste of what the three main parties are offering:

ANC: Amend Section 25 of Constitution to allow expropriation of land without compensation (EWC), but in a way that promotes economic development, agricultural production and food security. It plans to create 275,000 new jobs a year, and allocate 30% of government procurement spend on small businesses and cooperatives. It will also fund a national student financial aid scheme, fight corruption and encourage foreigners to stay in their own countries through incentives to African states.  Many of these are hold-overs from the last party manifesto.

DA: The party also talks about land reform by ensuring those entitled to land receive it by way of direct ownership; secure borders, honest police; speedier service delivery. It, too, plans to fight corruption, introduce a job seekers allowance, national civilian service for unemployed matriculants, and a new funding model for deserving students. It plans to promote better economic growth by removing red tape, exempting small businesses from certain labour and BEE laws, and implementing tax amnesty for small business.

EFF: In addition to EWC, all land to fall under state custodianship for equal distribution for all; foreign ownership of land prohibited; food for local consumption must be produced locally; all unemployed graduates will be placed in jobs relevant to their qualifications. Schools will be provided with facilities such as swimming pools and driving schools, with free tablets for every learner; all fees for higher education abolished, all student debt cancelled; free accommodation and free public transports for students; social grants doubled; sovereign wealth fund will partner with foreign direct investors to maximise job creation.