Mpumalanga residents head to court to halt 20-hours-a-day power cuts

Written by Ciaran Ryan. Posted in Journalism

Daily outages threaten businesses and the health of residents. From Moneyweb.

The municipality has a long history of service delivery dereliction. Image: Govan Mbeki Municipality's Facebook page
The municipality has a long history of service delivery dereliction. Image: Govan Mbeki Municipality’s Facebook page

A residents association in the farming town of Bethal in Mpumalanga has dragged the local Govan Mbeki Municipality (GMM) and Eskom to court, claiming that power cuts of up to 20 hours a day are threatening the livelihoods and health of residents.

This is not the first time residents have taken a local municipality to court for service delivery failure, but what is unique about this case is that the applicant – the Bethal & eMzinoni Community for Services Association – is asking the court for a “structural interdict” that would force the municipality to settle its roughly R1.18 billion debt to Eskom and subject itself to court supervision to prevent or limit further power cuts.

Read: Deputy finance minister welcomes ruling opening way for intervention in municipalities

The other respondents in the case are the Gert Sibande Municipality (under which GMM falls), the municipal managers at GMM and Gert Sibande Municipality, and the provincial and national ministers for Co-operative Governance and Traditional Affairs.

The case was heard earlier this month in the Mpumalanga High Court.

Extent of collapse

Deposing for the residents’ association, Bethal businessman and resident Yusuf Carrim lays out the extent of the municipality’s financial and operational collapse: power outages of between four and 20 hours a day commenced in December 2019, and have increased in frequency and duration since March 2020.

The affected areas are the towns of Bethal, eMzinoni and Milan Park, all of which fall under GMM.

The association is asking the court to force the municipal respondents and Eskom to come to a repayment agreement for the roughly R1.18 billion owed to the electricity utility, and “to comply with their respective constitutional and statutory duties and to forthwith render the uninterrupted basic service of electricity to all those living and working within the Greater Bethal area who are willing and able to pay for it”.

The residents association was formed in June 2020 to address residents’ concerns over lack of service delivery by the municipality. It has more than 100 members and some 7 000 supporters drawn from all segments of the local communities.

After exhausting all possible remedies with the local municipality, the association raised more than R300 000 to take the matter to court.

Power supply isn’t the only issue

It’s not just daily power cuts that have outraged local residents. GMM has a long history of service delivery dereliction, from water cuts to unrepaired roads and broken garbage trucks.

Read: Is this the future of small town South Africa?

Local entrepreneurs have stepped in to provide the services the municipality is supposed to, from collection of rubbish to water supply.

The situation became so dire that the province was forced to step in with a recovery plan in 2019, though it is clear, says Carrim, that this had little material impact on the provision of basic services in GMM.

Eskom agreement

In 2019, the municipality and Eskom had agreed on what is known as a Notified Maximum Demand (NMD) system, whereby Eskom would implement “partial rotational load shedding” in the areas of Bethal, eMzinoni, Kinross and Evander.

Eskom is entitled to reduce or terminate the supply of electricity where a municipality contravenes payment conditions previously agreed, or fails to honour or to enter into an agreement for the supply of electricity under the Electricity Regulation Act.

The daily power outages are imposed on local businesses and residents without warning, and are unpredictable in timing and duration.

This is quite separate from national load shedding by Eskom which takes place at prescribed times.

Residents who can afford it have purchased generators to ensure they have sufficient power supply for the preparation of food, bathing and, for businesses, essential services such as wifi and power for computers.

Read: Eskom gets tough with errant municipalities, grabs cash and land

Carrim’s affidavit spells out how the power outages impact life for local residents:

  • The local high school is unable to function properly and cannot afford a generator to keep its computers running during power outages;
  • There are 68 residents in a frail care home that need uninterrupted power for lights, heating and electronic medical equipment;
  • A local grocery store had to shut down for a period due to damage to equipment caused by power outages; and
  • Other businesses likewise report damage to equipment caused by sudden power cuts, which in one case cost R75 000 to repair.

“Our argument is that the residents are dutifully paying their electricity bills to the municipality, but the municipality is not paying Eskom, so the power cuts that are imposed by Eskom prejudice law-abiding residents,” says Waseem Gani, attorney with MacRobert Attorneys, who is representing the association.

“This cannot be allowed to continue and we want to court to issue a structural interdict which will force the municipality to reach a settlement with Eskom over the arrears owed, and supervise the adherence to that settlement.

Acting municipal manager disputes residents’ claims

In response, Elizabeth Tshabalala, acting municipal manager at GMM, denies the residents association’s reasons for the power cuts, and says the municipality disputes the amount allegedly owed to Eskom, and that the matter was referred to arbitration.

She also denies the power interruptions at Bethal are as a result of the historic debt to Eskom, and argues that the decision to implement load shedding is a temporary measure until such time as the arbitration with Eskom is complete.

Some of Tshabalala’s affidavit is unintelligible – for example: “The First Respondent (GMM) hold meetings quality with the member of the communities)” – so one wonders how the judge will make sense of this.

The response from the Gert Sibande Municipality also appears to contain some basic errors, such as getting the name of the municipal manager wrong.

Its affidavit is signed by a CA Habini, described as an adult male, when the municipal manager’s name is CA Habile.

“It is of serious concern that the deponent would sign, and … the respondents deliver, an affidavit in which the apparent municipal manager has his surname given completely incorrectly, and his position within [the municipality] has not been described,” deposes Carrim.

Judgment in the case has been reserved.

A case to watch

Residents of other municipalities subject to similar power outages will be watching this case with interest with a view to potentially launching cases of their own.

“The allegations of [Bethal] residents, if true, represent a shocking case of indifference by GMM officials to the plight of residents who dutifully continue to pay their municipal dues,” says Tim Tyrrell, project manager at the Organisation Undoing Tax Abuse (Outa).

“It is appalling that there appear to be no consequences for officials who have clearly failed in their duty to deliver basic and constitutionally-mandated services.”

Read:Astral secures high court order against government in service delivery battle

Dysfunctional municipality chokes Astral

Out of my cold, dead Kung-fu hands

Written by Ciaran Ryan. Posted in Journalism

Beware governments that disarm. First published in DearSA.

In what is possibly the worst timing imaginable, the Firearms Control Amendment Bill was opened for comment just as looters racked up R50-R200 billion in damage and stolen property (it would be safe to assume the actual cost will tend towards the upper limit of this range).

We know this bill is a complete non-starter. Of the many thousands of comments collected by Dear South Africa, more than 99% are opposed to this bill. That’s probably a record for any campaign run by Dear SA, says campaign project leader, Rob Hutchinson.

South Africans are by now well aware of how close the country came to the abyss that many warned would never happen. It was a reality check for millions of people grown listless and numb to structural corruption. The thinking goes like this: if the guys at the top are able to loot without consequence, why not the rest of us?

As many have pointed out, it was an internal ANC battle that played out in the shopping malls and streets of Kwazulu-Natal and Gauteng, and it was armed citizens that saved the country.

Or, expressed more accurately, it was armed citizens of every colour and ethnicity – white, black, Indian and coloured – that did the job the police and army were unable to do. 

One of them was Nick Howarth, a former riot policeman and author of War in Peace: The Truth About the East Rand Riot Unit (a riveting read for those who imagine these terrifying days are behind us), who hastily convened a civilian militia to protect Umdloti, north of Durban, from mob attack.

“There were a few of us that had police or military training, but most had not,” says Howarth. “But the fact that we had set up road blocks and were armed was a definite deterrent. We know from intelligence we received from nearby townships that Umhloti and La Mercy were targeted for looting until the looters heard that there were armed civilians manning the entrances to the suburbs.”

There are also reports of gun dealers selling unlicensed firearms out of bakkies during the riots.

What does Howarth think of the Firearms Control Amendment Bill, and in particular its proposed restriction on access to firearms for purposes of self-defence?

“It’s dead in the water,” he says. “I would love to live in a country where guns were not needed, but South Africa is not that country – not now, at least. I’m keeping my gun.”

Here are some of the key proposed changes in the Bill:

  • No firearm licences for self-defence purposes (which looks like a Constitutional non-starter, unless the police Secretariate can convince the courts that it has miraculously rendered the country free of violence);
  • Limits on the number of firearm licences for occasional hunters and sports shooters;
  • No more private collection of firearms and ammunition;
  • New obligations to be imposed on gun access for the private security industry (which is reckoned to employ 1-1.5 million people in SA);
  • Ballistic sampling of firearms in possession of the private security industry;
  • Reduction in the amount of ammunition a licenced firearm owner may possess;
  • Create a Central Firearm Register under the police, and other administrative functions.

Speaking to the Centre for Risk Analysis, Martin Hood of law firm MJ Hood and Associates noted some serious problems with the current wording of the bill which, unless removed or changed, will face serious legal headwinds from gun advocates.

The security industry will have restricted access to firearms, limits will be placed on the number of firearms per person, access to firearms will be age-restricted, access to ammunition will be reduced for licenced gun owners.

Perhaps most disturbing about the draft Bill is that there was no consultation with civil society, nor any evidence of a proper economic impact assessment. The Ministry of Police claimed the bill was drafted based on research which has not been made available to the public, and there is no serious discussion about the impact this Bill will have on the security industry, nor the 900 licensed shooting ranges and 700 training centres, which Hood says will likely cease to exist if this Bill becomes law.

The Central Firearms Registry does not function, and previous amnesties were botched, resulting in thousands of guns that were handed in being sold to criminals.

It remains to be seen who commissioned the research that prompted this Bill, though there are bodies dedicated to reducing gun ownership, such as Gun Free SA, which says gun violence in SA has reached epidemic proportions. It welcomed the Draft Firearms Control Amendment Bill, and in particular:

“The alignment of the Firearms Control Act with global norms which do not recognise self-defence as a reason for gun ownership, as well as SA’s legal obligations

“The reliance on evidence that reducing access to firearms reduces gun violence

“The sharpening of provisions in the Act to facilitate its enforcement.

“All of us living in SA are grappling with ways to protect ourselves, our family, friends, colleagues and wider community from violent crime. The best way to do this is to use available evidence to make the most informed decision. The available evidence shows that reducing access to firearms helps make our homes, communities and country safer,” says Gun Free SA.

It cites the following table in support of its campaign to eliminate self-defence as a reason for gun ownership.

Gun Free SA then presents the following stats in making out its case for reducing gun ownership: Police annual reports consistently show that the majority of guns that are reported as lost or stolen were lost by or stolen from civilians. Of the 8,680 guns reported stolen or lost in 2019/20 (an average of 24 a day) 8,007 (92% or 22 a day) were owned by civilians and 673 were police owned.

South African research undertaken in two Johannesburg police precincts shows you are four times more likely to have your gun stolen from you than to use it in self-defence when being attacked.

For those a tad suspicious of Gun Free SA’s funders and motives, there is this somewhat dated article from Paratus, which points out some links to George Soros’s Open Society Foundation. Maybe harmless, but only if you think George Soros is a benign influence on the world, which is certainly open to question.

Gun advocates have a strong suspicion where the Police Ministry got its research, and they want to pull it apart, thread by thread. As we have seen in the US, gun control is hugely politicised, and you can pick whatever research you want to buttress your case.

Gun control advocates are playing the long game, so those who want to keep their guns had better brace themselves for what’s coming. In fact, they had better get organised, along with researchers to match the dodgy research that is pumped out by gun control advocates. Here’s just one example of how gun control research can so easily get twisted to fit a political cause.

Gun Free SA does not appear to have much popular support in SA, and the research it cites may just as well be an argument for more weapons training rather than handing over your guns. The DearSA stats around the campaign suggests the most contentious parts of the Firearms Control Amendment Bill are stillborn. But don’t imagine the government will rest on this one. It is always healthy to suspect the worst when governments are intent on restricting responsible gun ownership.

FSCA hits Viceroy with R50m penalty for false, misleading statements on Capitec

Written by Ciaran Ryan. Posted in Journalism

Its January 2018 report caused Capitec’s share price to drop 23%. From Moneyweb.

Image: Moneyweb

The Financial Sector Conduct Authority (FSCA) has slapped a R50-million administrative penalty on Viceroy Research and three partners – Aiden Lau, Fraser John Perring and Gabriel Bernarde – for publishing “false, misleading or deceptive” statements about Capitec Bank in 2018 that caused its share price to drop by 23%.

The FSCA says Viceroy Research and its partners had contravened Section 81 of the Financial Markets Act, which makes it an offence to publish false or misleading statements about securities and which the author “ought reasonably to know” is false, misleading or deceptive. The act also makes it an offence to omit material facts about securities that could lead to making false or misleading conclusions about securities.

Once made aware of false or misleading statements in the course of research, the author must, without delay, publish a correction.

FSCA Commissioner Unathi Kamlana told journalists on Wednesday that Viceroy Research was alerted to the fact that its research on Capitec Bank was based on false or misleading assumptions, yet it failed to issue a correction when this was brought to its attention.

“They sought to benefit from this by an arrangement with a client who had taken a short position in Capitec shares. They did this while destroying value in Capitec shares for others or dissuading others from purchasing these shares,” he said.

The graph below shows the drop in the bank’s share price in early 2018.

The FSCA did not name the partner who had taken a short position in Capitec shares.

The regulator says some of the factors determining the size of the fine were the need to deter this type of conduct in the future, the seriousness of the contravention, the losses suffered by Capitec shareholders (while Viceroy and its partner benefitted financially), and the impact the report had on SA’s financial system.

“This penalty is particularly significant because it shows just how far the Financial Markets Act (FMA) reaches,” says Kamlana. “Although the Viceroy Research Partnership, and its partners, are not financial institutions, and are domiciled in a different jurisdiction, their comments about South African-listed securities make them subject to the stipulations of the act. The penalty also makes it clear that breaching our financial sector laws has serious consequences”.

In a series of reports published in 2018, Viceroy alleged that Capitec’s balance sheet, income and solvency numbers were not reliable, and that it was underrepresenting losses “to pretend that uncollectable loans are collectable and still accruing income.” It alleged that at least R10 billion of loans fell into this uncollectable category. This was disputed by Capitec, with the SA Reserve Bank coming to its defence.

In response to the penalty, Viceroy tweeted: “Viceroy are challenging FSCA’s minimum effort investigation & fine imposed on us. We have cooperated with the @FSCA_ZA with their enquiries & have maintained open dialogue. Contrary to their assertion, we believe this fine seeks to shut down critical analysis of SA companies.”

The FSCA said it also investigated possible insider trading in Capitec securities during the period of the Viceroy publications but cleared it of any wrongdoing in this regard.

When questioned as to whether this penalty could discourage short selling of securities, the FSCA’s head of enforcement, Brandon Topham, said the objective was not to discourage short selling, but to prevent the publication of false information, and to protect market participants and investors. Kamlana said a more effective way of dealing with situations like this was through discourse rather than administrative action. However, Viceroy had been given adequate opportunity to correct its erroneous research and had not done so.

Topham hit back at Viceroy’s claim of a “minimum investigation” investigation by the FSCA, saying it took more than two years – including extensive dealings with the Securities and Exchange Commission (SEC) of the US to compel a representative of the Viceroy Research partnership to be questioned under oath – to bring the investigation to its conclusion.

Some of the specific findings of false and misleading statements include:

  • Viceroy’s claim that Capitec had to write off more than 42% of the gross collectible principal debt due to it in the 2017 financial year, which the FSCA found not to be true;
  • The FSCA also rejected Viceroy’s claim that Capitec had a “pervasive practice” of rescheduling delinquent loans by issuing new loans to clients;
  • That FSCA says Viceroy made errors in calculation to arrive at the conclusion that Capitec’s loan book was irreconcilable to the tune of R3 billion;’
  • The regulator also rejected the Viceroy claim that Capitec was guilt of reckless lending and would lose a court case, triggering a class action lawsuit (the basis of this claim being the erroneous assumption that a lawsuit was imminent and would centre around a multi-loan product that was prohibited – which was not the case);
  • That the imagined lawsuit would result in Capitec having to pay back R12.7 billion to current and former clients;
  • The incorrect claim that the Capitec board was made up largely of several executives from both PSG and Steinhoff;
  • That Capitec would require impairments and write-offs of more than R11 billion due to its “impossibly low arrears.”

When asked whether the FSCA would act against analysts who punted shares that later tanked, Kamlana said the regulator is bound to act in terms of the FMA, particularly where false, misleading and deceptive information is published.

Viceroy replies:

To be abundantly clear: the FSCA’s findings and list of grievances are entirely predicated on Viceroy not publishing “full and frank corrections” to our analysis after Capitec’s open response to our report. The grievances were not based on an investigation into Viceroy’s claims, but into Viceroy itself, from the onset.

Viceroy met with, provided working papers, and provided detailed responses, line-by-line, to the FSCA, which has been apparently ignored. We believe the purpose of the investigation, therefore, is purely to make an utilitarian example of critics who dare publish insightful contrarian analysis into South African companies. We say utilitarian, because the FSCA’s grievances in our reports have been duplicated and published by dozens of other journalists and financial analysts alike. We will not be the scapegoat.

Based on the investigation conducted, the FCSA avoided placing Capitec under any scrutiny. When reading the FSCA report presented to the Tribunal, you would be left wondering if the Capitec were a Grade A Credit reference agency, rather than the most expensive deposit-taking institution in the world whose loan book is almost exclusively unsecured loans to financially vulnerable demographics.

We were investigated by the SEC who did not recommend any enforcement and closed the case – this is the “outcome” of our discussions with the SEC and FSCA, which the FSCA has refused to comment on to the press. The FCSA has set about attacking a thesis that has been backed up by many including the media in South Africa. The level of prejudice the FSCA has used to protect a South African institution is appalling.

The FSCA has proceeded to insult the public further by claiming “We’re going to hold you liable for saying things, even on your personal blog. If that personal blog is on the public domain and those statements are negligent, we are going to come and hold you accountable”. If this were actually the case, we would like to know how many fines have been issued to Steinhoff analysts who had jockeyed the company’s share price for years in the midst of obvious fraud.

Viceroy Research was not notified of the (FSCA) Tribunal date or time, merely its findings. We have informed the FCSA that we are appealing this.

Bidvest shrugs off Covid woes with record profit

Written by Ciaran Ryan. Posted in Journalism

Trading profit is up 47.8%, with strong performance from Services, Automotive and Commercial Products. From Moneyweb.

The Automotive division reported a trading profit of R652m, up 267% on the previous year. Image: Supplied
The Automotive division reported a trading profit of R652m, up 267% on the previous year. Image: Supplied

Bidvest shrugged off the disruptive effects of Covid-19, registering a 47.8% growth in trading profit to R7.9 billion for the year to June 2021.

The Services division remains the largest contributor to profit (41%), with geographical contributions more or less equally split between SA and international businesses. Trading profit from this division was up 54.8% to R3.3 billion, despite the negative impacts of Covid on travel and services to hotels and offices. This was to some extent offset by new business opportunities, such as decontamination and cleansing services.

Branded Products

After a shaky first half to the year, the Branded Products division ended up with a 4.2% increase in trading profit for the year at R1.5 billion.

The main contributor was healthcare company Adcock Ingram, which had to contend with exchange rate fluctuations, supply chain challenges and the absence of a normal flu season. Business reengineering and expense control were major factors behind the turnaround in this division.

Automotive

In the Automotive division, Bidvest McCarthy increased sales of new and used vehicles by 1.1% and 7.2% respectively. Bidvest CEO Mpumi Madisa says the company lost some market share in new car sales by focusing on higher-margin business.

“Due to less disposable income, there is a definite shift [among consumers] from new to used vehicles. The main risk in this business is the supply chain, given the shortage of computer chips globally. Original equipment manufacturers are struggling to source chips.”

Read:
Pre-owned vehicles selling for more than book value – Motus CEO 
VW CEO fears semiconductors will be in short supply for years

The ability to source good quality used vehicles remains a challenge, which is driving up purchase prices. Though the new vehicle market is 15% lower today compared with the 2017 financial year, trading profit is 20% higher, due in large measure to cost cutting and rationalisation efforts undertaken in prior years.

Trading profit for the 2021 financial year was R652 million, up 267% on the previous year.

Freight

The Freight division turned in a trading profit of R1.3 billion, 11.6% higher than the previous year, helped by the commissioning of a 22 600 tonne LPG (liquid petroleum gas) storage facility in Richards Bay. This is one of the largest of its kind in the world and removes a major obstacle to unrestricted supply of LPG to the region.

Bumper maize, rice and wheat crops boosted profits in South African Bulk Terminals. Bulk Connections benefitted from surging commodity demand, along with a 17% improvement in volumes of minerals handled. This had a knock-on effect on Bidfreight Port Operations, particularly in the second half of the year.

Madisa says results from this division could have been stronger but for the global shortage of containers, and rising air and sea freight costs.

Commercial Products

One of the standout performances of the year came from the Commercial Products division, which produced a trading profit of R92 million, up 134.5% on the previous year.

Strong market share gains and some prescient inventory acquisitions just prior to the Covid supply disruptions translated into record bottom-line performance.

Several of the underlying businesses reported double-digit growth in trading profit over pre-Covid levels in 2019, including Plumblink, Bidvest Electrical, Academy Brushware, Matus, Yamaha, Bidvest Afcom, Burncrete and Vulcan.

Properties

Bidvest Properties, which earns most of its income from rentals on 136 Bidvest-occupied buildings in SA and Namibia, experienced a 4.8% drop in rentals for the year, with vacancies now standing at about 5.5%. Trading profit declined by 3.2% to R560.7 million.

Financial Services

Financial Services reported as 8.9% increase in trading profit to R331 million. The strongest performer here was insurance, which saw strong demand for life policies during the year. Bidvest Bank was hit by the slowdown in asset and fleet leasing, as well as travel-related forex transactions.

Group results

At group level, cash generation was 48.6% higher at R13.6 billion with free cash generated doubling to R10.1 billion.

Headline earnings per share (Heps) grew by 113.9% to 1 183.3 cents from continuing operations. Normalised Heps (which excludes acquisition costs, amortisation of acquired customer contracts and Covid-19 costs), grew by 25.6% to 1 292 cents.

Return on funds employed improved from 23% to 31.6% over the year, while return on invested capital of 14.1% compares to 12.9% last year.

The group declared a final dividend of 310 cents per share, bringing the total dividend for the year to 600 cents per share.

There was limited damage to the infrastructure of the group during the riots in KwaZulu-Natal and parts of Gauteng in July this year, and thankfully no employees were harmed.Read: Bidvest’s fight to emerge stronger

Outlook

On the prospects for the coming year, Madisa says disruptions to global supply chains continue to affect some of the group’s markets, and a rapid sustainable economic recovery is likely to be delayed.

“However, we remain positive that the group’s profitability momentum will be maintained given our spread of products and services, and there are signs of increased infrastructure investment activity out of the mining and industrial sectors,” she says.

“While we will continue to optimise our cost base and improve efficiencies across the group, the significant work already completed in these areas will positively support future results.”

Opposition parties want to deliver kill shot to ‘wounded’ ANC in local elections

Written by Ciaran Ryan. Posted in Journalism

By reminding residents that it’s all about potholes, clean water and keeping the lights on. From Moneyweb.

A successful challenge to the IEC’s decision to reopen the candidate registration list would be fatal to the ANC’s campaign. Image: Waldo Swiegers/Bloomberg
A successful challenge to the IEC’s decision to reopen the candidate registration list would be fatal to the ANC’s campaign. Image: Waldo Swiegers/Bloomberg

The Constitutional Court’s ruling last week that local government elections must go ahead by November 1 has energised opposition parties and civic society who see an opportunity to deliver a kill shot to the ANC.

The court ruling was in response to an application by the Electoral Commission of SA (IEC) for the postponement of the elections on the grounds that free and fair elections could not be guaranteed due to the impact of Covid-19.

On Monday (September 6), the IEC issued a statement saying it was complying with the ConCourt ruling, but that a new deadline would have to be set for candidate nominations.

“It is clear [that] there are different interpretations amongst parties as to whether the order of the Constitutional Court permits the Commission to reopen nominations,” says the IEC. “The Commission has taken advice on the matter and is of the view that amending the timetable to reopen nominations is reasonably necessary in the circumstances.”

The ANC failed to register candidates in 93 of the country’s 257 municipalities.

This would be fatal to its local government election campaign should the IEC be blocked from reopening the candidate registration list.

There are currently 77 970 candidates, 911 of whom are independent, contesting more than 10 500 municipal seats across the country.

DA plans to fight IEC’s move

The DA says the ConCourt ruling gave the IEC a revised election timetable in the form of a five-day delay, which the IEC has used to reopen the candidate registration process.

It says there was a clear deadline for candidate registration, which the ANC missed.

The IEC cannot be used by the ruling party to do its bidding, and any attempt to reopen the candidate registration process will be fought, says the DA.

Read: South Africa extends deadline to register election candidates (Sep 6)

“It cannot now demand a second bite at the cherry. This has never been granted before when other parties have requested leeway on an IEC deadline, resulting in the NFP’s total exclusion from the 2016 local election, and the IFP’s partial exclusion from certain wards in the 2011 election.

“What we saw today [Monday, September 6] gives the ANC an advantage that other parties have never enjoyed,” says the DA.

The ANC last week said it had indicated its intention to lodge an application with the IEC to amend the electoral timetable after a number of parties had failed to register all their candidates for local government elections. This failure was due to a combination of technical challenges on the IEC’s online candidate registration system and the pressure placed on candidate selection by restrictions on meetings to contain the Covid-19 pandemic.

Some opposition parties smell blood.

“The ANC is wounded and people are fed up with years of cadre deployment and corruption at local government level,” says James Lorimer, the DA’s shadow minister of mines. He says the timing to unseat dysfunctional ANC-led municipalities has never been better.

‘Change must start at local government level’

Newly-formed civic society, the Azanian Independent Community Movement (AICM), is fighting six municipalities in North West province on a platform of getting rid of corrupt local councillors and restoring social justice and accountability to local government. Ultimately, it wants to build a nationwide movement that will contest dozens of municipalities in future elections.

“Our message is simple: it’s a war on potholes,” says Mandla Mpempe, one of the founders of AICM, and head of the Centre for Good Governance and Social Justice.

“We want clean water, a sewage system that works, we want the lights to stay on and we want to get rid of corrupt councillors. What we are demanding is what municipalities are supposed to provide but are not. That must change. If we are to bring change to SA, it must start at the local government level.”

Anger on the streets

King Sibiya, head of the Lungelo Lethu Human Rights Foundation, says the mood on the street in areas such as Soweto is angry after years of deteriorating service delivery, and this will be preeminent in people’s minds come election day.

“We have a structural problem at local government level. We elect councillors and they very quickly step into line and see it as a job where they can draw a salary rather than represent the people who elected them.

“I know this because I have been there and it’s why I left local government. At some point when you challenge some budget spending item, you get pulled aside and told to toe the line,” says Sibiya.

“One of the projects we are working on is to train young people to be effective and accountable local government representatives.

“We have to get past this idea that one party or another is going to deliver freedom to us. It won’t happen. Let’s focus on those issues that we can influence, like electrical connections.”

He adds: “In Soweto, we have whole blocks being disconnected by Eskom even though people are paying their bills. This is blanket punishment, and there are old people who have had no power for a year.”

Dissenting voice

Not everyone is on board with the ConCourt’s ruling to compel the IEC to hold elections by November 1.

Pan Africanist Congress of Azania (PAC) President Narius Moloto says the ConCourt “missed the critical point fundamental to the freeness and fairness of the elections, given the often almost impossible task of conducting political activities under these extreme restrictions, which have had a devastating effect on the poor and unemployed”.

“The implications of this judgment are that smaller political parties with limited budgets will not able to interact with their constituencies and their voters, due to the restrictive conditions prevailing at the time of the judgment, in particular the limit of 50 people for indoor and 100 people for outdoor political meetings.”

By implication, says Moloto, the Constitutional Court has endorsed the holding of local government elections under conditions that cannot be free and fair.

Judgment welcomed

ActionSA, the party founded by former DA mayor of Johannesburg, Herman Mashaba, welcomed the IEC’s judgment and says it “stands ready to deliver inclusive and prosperous change to the metros of Gauteng and the people of KwaZulu-Natal in eThekwini, Newcastle, and KwaDukuza.”

It also says the IEC must work to reopen the Voters’ Roll until the very last possible moment.

“A failure to properly reopen the Voters’ Roll before the local government elections would disenfranchise many South Africans, predominantly young South Africans who became recently eligible,” says ActionSA in a statement.

Scale of ludicracy

Melanie Veness of the Pietermaritzburg Chamber of Business says it defies belief that the local municipality can find R9 million in funding for the Maritzburg United football club but not for the fixing essential infrastructure like roads and electricity.

“The [nearby] Edendale area was one of the worst hit by the recent looting,” she says. “The shopping mall and most local shops were trashed, which means people now have to travel to Pietermaritzburg and other areas for groceries. The effect on this community has been devastating.

“We need a lot more civic action to get rid of inept and broken local government.”

There are civic movements across the country that are challenging local municipalities through the courts, or through ratepayer revolts. The upcoming local government elections present an opportunity to unseat those who delivered the country to what Ratings Afrika says is a R51 billion hole that must be filled.

Read:The revolt of the ratepayers

The extent of SA’s municipal problem? R51bn, says Ratings Afrika

North West residents appeal court decision handing service delivery back to municipality

Bitcoin and the beauty of rear-view vision

Written by Ciaran Ryan. Posted in Journalism

As BTC bumps up against the $50 000 resistance level, are we poised for a replay of late 2020? From Moneyweb.

Spending trends provide a clue: the older coins become, the less likely they are to be cashed in. Image: Dan Kitwood/Getty Images
Spending trends provide a clue: the older coins become, the less likely they are to be cashed in. Image: Dan Kitwood/Getty Images

A year ago bitcoin was at $10 500 and by December had smashed through the previous all-time high of $20 000.

In April 2021 it hit $63 000 and then traded all the way down to $29 200 in July, losing more than half its value in a matter of months.

It was a timely reminder that cryptos are not for the faint-hearted.

This week, bitcoin (BTC) pressed up against the $50 000 resistance level. Could this be the start of the next bull leg, coming almost exactly a year after the previous run that set new all-time highs week after week?

Source: CoinMarketCap

Blockchain research group Glassnode reports that those who bought BTC at $53 700 and above are still holding tight, but could become sellers with a view to exiting their investment as close to break-even as possible.

Those who bought in the $45 000 to $50 000 range account for 1.65 million BTC and this likely to act as a price support.

A far larger number of buyers accumulated in the $31 000 to $40 000 range since January. This is now a very strong underlying support zone.

“On net, this indicates that a fairly strong set of high conviction investors remain in the market and is a powerful signal for the bulls,” says Glassnode.

There’s also evidence that BTC and Ethereum (ETH) holders are in it for the long haul. The number of BTC transactions at 200 000 a day is about 37.5% below its peak in January. The number of ‘active addresses’ – normally seen as a proxy for the popularity of the crypto asset – is down by 35% for BTC and 33% for ETH. Despite the drop in active addresses, the prices of both BTC and ETH trended higher, suggesting a larger percentage of investors are inactive because they intend to hold.

Bitcoin: Number of active addresses

Source: Glassnode

While ETH transaction counts and active addresses are down, the magnitude of fees paid for transacting on the Ethereum blockchain are significantly higher. This is most likely attributed, at least in part, to the strong demand for non-fungible token (NFT) trading and investing.

Glassnode says “Young BTC” – those younger than three months – now account for 15% of supply and are most likely to be spent in periods of volatility.

The fact that they remain largely unspent is a bullish sign, as the older coins become, the less likely they are to be cashed in.

The same trend is evident in ETH, with a whopping 70% of the coins being dormant for at least three months. For both BTC and ETH, “these uptrends in older coin supply commenced around March 2021, which therefore reflects a very strong demand to buy and hold throughout this bull market,” says Glassnode.

Source: Glassnode

Another signal of adoption and accumulation is the growth in non-zero account balances. Bitcoin non-zero addresses have continued to grind higher, with more than 38 million addresses, and are about to take out the all-time high.

ETH non-zero addresses also cracked an all-time high in recent weeks at 60.7 million addresses.

While all this suggests strong underlying demand in both BTC and ETH, “aggressive spending of older coins would be a key invalidation signal to watch for,” according to Glassnode.

Can you be mandated by your employer to get vaccinated?

Written by Ciaran Ryan. Posted in Journalism

And if you are injured by the vaccine, can you sue your employer? From DearSA.

DearSA-Mandatory-vax

With more than 12.5 million vaccines administered to 9.4 million South Africans as of 30 August 2021, that’s about 16% of the total population. Compare that with United Arab Emirates (76%), Uruguay (72%) or Malta (82%).

The Department of Health shows 23.7% of the adult population has been vaccinated, but it’s now clear we’re in for a tough haul to get anywhere near the likes of UAE or Uruguay. There’s obvious hesitancy among segments of the population who are determined at all costs to avoid the jab.

Government stats show women (58.15%) are more likely to get the jab than men (41.85%).

The Western Cape has the highest percentage of vaccinated (30%) and Mpumalanga (16.7%) the lowest.

Government’s public health response to Covid is almost entirely invested in the vaccines manufactured by Pfizer, accounting for 6.6 million jabs so far, and Johnson & Johnson, with less than half that.

Companies are now about to mandate vaccines for staff. How did we get here so fast, considering President Cyril Ramaphosa’s address to the nation in February this year?

Said Ramaphosa: “It is in the best interests of all that as many of us receive the vaccine as possible, but I want to be clear: nobody will be forced to take this vaccine. I want to repeat: nobody will be forced to take this vaccine. Nobody will be forbidden from travelling to wherever they want to travel to, including from enrolling at school or from taking part in any public activity if they have not been vaccinated. Nobody will be given this vaccine against their will, nor will the vaccine be administered in secret or in some dark corners. Any rumours to this effect are both false and dangerous and we would like those who are spreading these rumours to stop.”

Dear South Africa commissioned law firm Hurter Spies to provide a legal opinion on the constitutionality of mandatory workplace vaccinations against Covid-19. In SA and abroad, opinions vary as to the legality of vaccine mandates, though there is an emerging consensus that some form of balance has to be achieved when weighing up an employer’s obligation to provide a safe and secure working environment against an individual’s Constitutional rights. “These affected rights include the right to freedom and security of the person, which includes the right to bodily integrity, as well as the right to freedom of religion, belief and opinion,” says Hurter Spies.

On 11 June 2021, the Department of Employment and Labour issued a directive which expressly permits an employer to implement a mandatory vaccination policy subject to certain guidelines. The workplace plan must be amended to indicate whether the vaccinations will be made mandatory; which categories of employees are to be vaccinated; the manner in which the company will adhere to the Department’s directive; measures to be taken to implement the programme when vaccines becomes available and allowing paid time off for employees to be vaccinated.

Vaccines in the workplace are not compulsory in law

“From the directive it is evident that vaccinations in the workplace are not compulsory through law but rather that it may be allowed subject to the conditions of the directive,” says Hurter Spies.

The issue of vaccine mandates falls under a host of laws, including:
· the Constitution
· Basic Conditions of Employment Act
· Disaster Management Act
· Employment Equity Act
· Labour Relations Act
· National Health Act
· Occupational Health and Safety Act.

Medical testing in the workplace is permitted under the Employment Equity Act, but there is no law regulating medical treatment or immunisation in the workplace.

The key Constitutional protection is outlined in Section 12(2), which states that everyone has the right to bodily and psychological integrity, including the right “not to be subject to medical or scientific experiments without their informed consent.”

Hurter Spies says a plain reading of this makes it clear that each person has the right to make decisions on health, medical interventions and treatment, and that includes the acceptance or rejection of the vaccine.

Section 15(1) of the Constitution protects the right to freedom of conscience, religion, thought, belief and opinion.

Anyone who believes that mandatory vaccines will infringe their strongly-held beliefs, whether these beliefs are derived from religious observance or otherwise, is likewise protected in refusing the vaccine.

Section 36 of the Constitution, however, makes provision for the limitation of these rights where “reasonable” and “justifiable”.

Our courts have not yet had the opportunity to decide on the issue of compulsory vaccinations, but it has previously compelled treatments against someone’s will. In one instance, the matter of public interest was cited as reason to compel a respondent to undergo surgery against his will.

This is where the balance of legal rights will have to be weighed. There may be cases where an individual’s right to refuse vaccination clashes with the rights of co-workers and the employer. “Vaccinated employees may raise that their constitutional right to life is being compromised by working with employees who object / refuse to being vaccinated. This constitutional legal question is therefore complex and uncertain without any guiding court precedence,” says Hurter Spies.

Unfair dismissal

What about the Labour Relations Act (LRA) and the question of unfair dismissal over one’s refusal to get vaccinated?

The LRA prohibits dismissal over religion, conscience, belief, political opinion or culture. Certain religions may prohibit immunisation, or may contain ingredients that are prohibited in certain faiths. Here again, the Supreme Court of Appeal has held that religious and personal beliefs may be trumped by to an employer’s legitimate operational requirements or its occupational health and safety obligations.

While employers have an obligation to protect employees and maintain a healthy and safe working environment, when considering mandatory vaccine policies, they will have to consider the following:

  • The viability of continued remote work;
  • The number of vulnerable employees in the workplace;
  • The effectiveness of additional PPE where necessary;
  • Temporary alternative placements;
  • The employee’s exposure to the public; and
  • The number of employees with religious and/or medical grounds for objection.

You cannot, therefore, be dismissed simply for refusing the vaccine. Your employer must consider whether other measures such as remote working or personal protective equipment or alternative assignments can be implemented.

Informed consent

The National Health Act prohibits health services being provided without informed consent, with only a few, narrow exceptions.

It is therefore essential that an employer planning to implement mandatory workplace vaccinations must notify affected employees of their right to refuse vaccination on constitutional or medical grounds.

Where an employee refuses the vaccination, the employer should counsel the employee (and allow them to consult a trade union representative or health and safety representative); refer the employee for further medical observation (again with informed consent); and, if necessary, take reasonable steps to accommodate the employee by amending their role or work environment.

No compulsion

Employers may (this is not obligatory) enact a policy of mandatory vaccinations, but that process must be accompanied by a thorough consultation process and must respect the rights of employees.

An employee must consent to be vaccinated, and employers planning a mandatory vaccination programme must inform their employees of their right to refuse.

“An employee may not summarily be dismissed for refusing to be vaccinated. Instead, reasonable steps must be taken by the employer to accommodate a refusing employee,” says Hurter Spies.

Legal challenges

Employers find themselves in a legal bind – the decision to mandate vaccination or not, both carry serious legal consequences.

“In the absence of legal precedent, mandatory vaccination policies should be approached with caution, complete transparency and willingness to engage,” concludes Hurter Spies.

Government pulls green paper on mandatory social security

Written by Ciaran Ryan. Posted in Journalism

No reasons given, but almost universal condemnation from labour to business appears to have sunk this ship before it could sail. From Moneyweb.

Minister for Social Development, Lindiwe Zulu. Image: GCIS
Minister for Social Development, Lindiwe Zulu. Image: GCIS

Social development minister Lindiwe Zulu withdrew the controversial green paper on comprehensive social security and retirement reform on Monday, without providing reasons.

The green paper was roundly condemned by business, labour and opposition parties, while National Treasury insisted it was not government policy. There is also concern that the proposed mandatory social security system would upend the private savings sector, which provides coverage to more than 60% of SA’s workforce – all of it voluntary.

Read: Mandatory social security plan proposes another tax on the middle class

Furious pushback on mandatory social security plan

The green paper proposes setting up a new National Social Security Fund (NSSF) into which employers and employees will have to pay up to 12% of their earnings, with a ceiling of R276  000 per year or R2 760 per month.

The mandatory savings proposal was widely regarded as yet another tax on the middle class that would give more power to the ANC and allow corrupt politicians to tap into the country’s private savings.

The proposals drew fierce criticism across the board. A Dear South Africa campaign elicited more than 17 000 public comments, some 99% of them against the green paper in its entirety.

Some representatives at the National Economic Development and Labour Council (Nedlac) said the green paper did not consider amendments proposed by business.

Business Unity South Africa (Busa) said the green paper’s proposals were not new, and had been the subject of discussions for several years. Any new system introduced would have to build on the existing savings mechanisms, and would have to be considered in the context of SA’s current fiscal crisis.

Economist Mike Schüssler told Moneyweb, if implemented, these proposals would “improve” SA’s ranking to seventh most-taxed country (in terms of personal income taxes) in the world.

Several commentators point out that the best social security the country can offer its citizens is a job. Social security payments from the state should only be made available when all else fails, says Dr Stephen Smith, senior policy advisor at the Association for Savings and Investment SA (Asisa).

One possible reason for Zulu’s withdrawal of the green paper is the fact that it does not appear to have been subjected to an economic impact assessment study, as required by law.

Trade union Solidarity threatened to take the minister to court unless the green paper was withdrawn, arguing that the process in introducing it was flawed, and that the content was irrational and unaffordable.

AdvTech benefits from declining trust in public sector education

Written by Ciaran Ryan. Posted in Journalism

With 6% growth in student numbers over the year to June, and a 37% surge in headline earnings. From Moneyweb.

The group’s investments in IT and online delivery methods meant it was well placed to respond to the Covid lockdowns. Image: Supplied
The group’s investments in IT and online delivery methods meant it was well placed to respond to the Covid lockdowns. Image: Supplied

AdvTech shares have been on an extraordinary roller coaster ride since peaking at close to R21 in March 2017. After the hard lockdown was announced in March 2020, the shares dropped to around R6 before commencing their climb to nearly R17 this week.

The share price decline between 2017 and 2019 was in large part due to investors falling out of love with retail stocks generally. Clearly, that’s no longer the case.

Read: AdvTech shares ride the retail elevator down (Aug 2019)

Interim results for the six months to June 2021 released on Tuesday (August 31) explain the renewed enthusiasm for AdvTech shares.

The group is primarily focused on education and recruitment.

SA recruitment has been withering on the vine for years due to a weak economy and the flight of skills abroad, so it says something about AdvTech management that it was able to pull a few rabbits out of the hat and return its SA division to profitability.

It managed to increase its share of a declining South African market while expanding aggressively in Africa by offering contracting and payroll services to large organisations. The margins are thin on this business, but IFRS (International Financial Reporting Standards) requires it to account for this revenue on its income statement. Underlying volumes in the placements divisions increased in both SA and the rest of Africa, with operating profit increasing to R16 million (2020: R3 million).

At the group level, operating profit was up 16% to R514 million (2020: R445 million) with group operating margins up to 18% (2020: 15.7%). Group revenue grew by 1% to R2.9 billion (2020: R2.8 billion).

Normalised earnings for the period increased by 31% to R297 million (2020: R226 million) while normalised earnings per share increased by 31% to 54.6 cents (2020: 41.8 cents) per share.

Education

The schools portfolio includes Crawford Schools, Pinnacle, Trinityhouse and several smaller school brands, as well as a number of tertiary education institutions such as Monash, Varsity College, Rosebank College, Vega and six Capsicum chef schools.

Growth in the African school market, principally in Kenya and Botswana, has been one of the standout stories driving AdvTech in recent years. School enrolments were up 6% for the year to June 2021, and were up 5% for the group’s tertiary institutions.

“In Africa, there is strong demand for quality education among the growing middle class, and we have been major beneficiaries of that trend,” says CEO Roy Douglas.

“In SA we have also been seeing an increase in new enrolments, but this is largely due to falling trust in public sector education.”

The group’s prior investment in IT and online delivery methods meant it was well placed to respond to the Covid lockdowns, and is now able to offer a blended model of face-to-face tuition alongside online delivery.

Read: Parents will make significant sacrifices to ensure the best-quality education

In SA, the mid-fee education sector continues to show good enrolment growth. A new online offering called Evolve Online School was launched, with 460 students enrolled in its first year of operation. The repositioning of Abbotts College at a lower price point has been well received by the market with enrolments growing by 15%. The premium brands in the AdvTech portfolio managed to maintain student numbers despite more students than usual leaving or being excluded for financial reasons.

Revenue in the SA schools division was up 1% to R1.09 billion (2020: R1.07 billion), and operating profit increased by 2% to R202 million (2020: R199 million).

Crawford International in Kenya is now generating positive cash flow after the initial investment, while Makini is making a strong recovery following the setback in 2020 where, due to a government directive, it was unable to deliver the curriculum for a large part of the year and consequently not able to charge students. One of the mitigating actions taken by the school was the introduction of the Cambridge International Curriculum to allow those students who chose to, to continue with their schooling.

Read: Global private school group scoops Tsogo Sun Hotels exec

Revenue in the rest of Africa increased 11% to R120 million (2020: R108 million) with an operating profit of R16 million (2020: loss of R9 million). The operating margin of 13.5% is expected to widen as Crawford increases its capacity in the coming trading period.

The tertiary division’s trading period was disrupted by the delayed release of matric results. However, it still managed to increased revenue by 3% R1.22 billion (2020: R1.19 billion), with new enrolments coming primarily from Rosebank College.

The resources division reported a 6% decline in revenue due to a change in the nature of contracts signed with client companies, coupled with the translation effects of a stronger rand. Underlying volumes have increased in both SA and the rest of Africa. Operating profit increased to R16 million (2020: R3 million).

Read: ADvTech’s update highlights quality

AdvTech learned some valuable lessons during the Covid lockdowns, says Douglas, including an ability to respond at speed at changing circumstances, cost containment and a fleet-footed management style capable of capitalising on opportunities as they arise.

Highlights

  • 16% growth in operating profit
  • 69% increase in earnings per share (after a 24% decline in the corresponding 2020 reporting period)
  • 37% increase in headline earnings per share
  • 12% improvement in cash generated by operating activities, and
  • 19c per share interim dividend (2020: no dividend).