Johannesburg, 19 November 2018 &#8211; Ethics is not prioritised enough in corporate South Africa. And, according to a wide-ranging survey conducted in both the private and public sectors, the country’s leaders are failing us.
These are just some of the findings of the 2018 AEPF Ethical Practices Survey. The annual survey &#8211; the first was conducted last year &#8211; serves as a barometer and quantitative tool to capture “the perceptions of professionals regarding ethical practices in society, organisations and professional institutions”.
An initiative of the Anti-Intimidation and Ethical Practices Forum (AEPF), the 30-page report reveals how unethical behaviour is perceived by professionals in the governance, auditing, risk management, fraud management and ethical practices domain in South Africa.
The AEPF is a forum of professional bodies and other like-minded organisations formed two years ago following the rising levels of corruption, fraud, ethics failures and lack of corporate governance in the country.
It was established to assist professionals who experience intimidation and whistleblowers keen to expose unethical behaviour in the workplace.
It’s founding members include the Institute of Internal Auditors SA (IIA SA), Corruption Watch, the South African Institute of Chartered Accountants (SAICA), the Institute of Directors Southern Africa, the Ethics Institute, the SA Institute of Professional Accountants (SAIPA), the Association of Certified Fraud Examiners (ACFE) and the Institute of Risk Management SA (IRMSA).
The results of the ethics survey, meanwhile, show a sharp decline in perceptions as compared to the inaugural study. This year 1900 professionals from across corporate South Africa participated with the largest group working at an executive level (28% compared to 10% in 2017) with the second largest coming from middle management level (21% compared to 19% in 2017).
The majority of the responses were from the private sector while at least 32% who participated work in the banking and financial services sector.
Key findings, meanwhile, include: 
* 36% agree that doing the right thing is more important than financial success while 25% disagree. In the public sector 23% of the respondents agree compared to 42% in the private sector; 
* Leaders in the public sector are perceived as a lot less ethical than those in the private sector. Only 10% of respondents in both the public and private sectors agreed that leaders in the public sector are ethical; 
* 17% of respondents in the public sector agree that leaders in the private sector are ethical &#8211; a significant decline from the 60% in 2017; 
* Only 32% of respondents in the private sector agree that leaders in their sector are ethical, representing another sharp decline from 70% the previous year: 
* 32% of those in the public sector agree that ethics is a priority in their organisations compared to 43% previously; 
* Just 39% agree that their organisations encouraged employees to do the right thing compared to 63% in 2017; 
* 44% agree that their organisations encourage them to report unethical behavior compared to 59% previously; 
* This could be why there is also a decline in the percentage of respondents in both sectors who believe it is their personal duty to report unethical behaviour (84% in the public sector compared to 91% and 89% in the private sector compared to 92% in 2017); 
* Professionals in both sectors say they have been intimidated for doing the right thing (26% in the public sector and 17% in the private sector) and that they feared losing their job for doing the right thing (26% in the public sector and 20% in the private sector); and, 
* 24% in the public sector and 15% in the private sector say they were threatened for speaking out about unethical behaviour and that they feared for their lives for reporting unethical behaviour (25% in the public sector and 20% in the private sector).
Chairperson of the AEPF and IIA SA CEO, Dr. Claudelle von Eck, admitted that leaders in both the public and private sectors “have taken a substantial fall from grace” in the past year which explains why the respondents “significantly downgraded their perceptions in the ethical nature of their leaders”.
She said, however, that there were some “heartening” data to emanate from the survey. 
“Despite the negative sentiment around leaders in the private sector, the perception of ethics remains relatively high, with no significant shifts. Of the respondents in the private sector 78% agree that ethics is a priority in their organisation, 80% agree that talking about ethics is encouraged, 80% agree that people are encouraged to do the right thing and 80% agree that people are encouraged to report unethical behaviour.”
Deputy chair of the AEPF and CEO of the ACFE SA, Jaco De Jager, said the results also revealed that the perception of ethics in professional institutions “remain very high”. 
“For example, 83% in the public sector and 87% in the private sector agree that these bodies have ethical leadership &#8211; and 86% in the public sector and 88% in the private sector agree that these bodies are ethical. This is the only dimension where both sectors seem to be in agreement in their positive sentiment.”
De Jager adds that in both sectors there seems to be an increase in trust in professional institutions.
“In the public sector 47% agree that they preferred to report unethical behaviour to their professional body and not to their organisation, as compared to 38% in 2017. In the private sector the percentage that agree is 31% compared to 24% in 2017. It must be noted, however, that while this increase in trust in professional bodies is good for their reputation, it does not signal comfort in the leadership in the respondents organisations.”

Improperly appointed boards spell disaster for organisations

Ethical sentiment among professional South Africans drop sharply following bruising year of corporate scandals 

Media Release
23 November 2018
South Africa blazed the trail by being the first African country to host the World Travel and Tourism Council (WTTC) Africa Leaders Forum since the first WTTC Global Summit hosted by Portugal in 1996.
The Minister of Tourism, Derek Hanekom, expressed his gratitude at the opportunity and confidence given to South Africa to be first host of the forum on African soil, as he delivered the opening address in Stellenbosch on Thursday.
“The growth of this sector will catalyse job creation. We require greater active participation of the continent in the work of WTTC,” said Minister Hanekom.
For 26 years, the WTTC has been the voice of the global tourism industry. This organisation promotes sustainable growth in the sector, works with governments and international institutions to create jobs, to drive exports and to generate prosperity.
South Africa sees the value of the WTTC as being the voice of this industry globally bringing specialist knowledge to guide government policy and decision-making, raising awareness of the importance of the industry as an economic generator of prosperity.
Given the potential of Travel and Tourism in Africa, WTTC gathered the CEOs and regional leaders of the top Travel &amp; Tourism companies from across Africa, along with Tourism Ministers and regional experts at its inaugural Africa Leaders Forum in Stellenbosch to discuss the key issues facing the region’s Travel &amp; Tourism sector. The President and CEO of WTTC, Gloria Guevara Manzo, praised the South African government for recognising the opportunities in this sector and the steps it has taken to realise this potential.
The Africa Leaders Forum promotes further investment in Africa’s tourism sector and supports innovation in tourism. The Forum also provided a unique and exclusive space for networking among industry leaders. Some of the key issues facing the region’s travel and tourism sector were discussed including Tourism’s role in sustainable growth and development, as well as tourism and inclusive job creation.
As an economic lever and a growth pillar, tourism currently supports about 1.5 million jobs directly and indirectly in South Africa. Growing the country’s tourism sector is a key aspect of the country’s Nine-Point Plan and aligned to the National Development Plan that recognises tourism as one of the main drivers in the economy. By achieving the objectives of the National Tourism Sector Strategy (2016-2026), there will be more sustainable jobs and a more inclusive tourism sector. This strategy is a guiding document for the Tourism Sector in South Africa, with particular focus on inclusive growth, job creation and transformation.
“The African Continent has huge growth potential if we harness the tourism sector opportunities”, Minister Hanekom concluded.

How South Africa is propelling the continent into the forefront of the tourism sector

JUBA (Reuters) &#8211; South Africa will invest $1 billion in South Sudan’s oil sector, including in the construction of a refinery, the South African minister for energy and his South Sudanese counterpart for petroleum said on Friday.
South Sudan’s oil industry is dominated by Asian firms including China National Petroleum Corporation (CNPC), Malaysia’s Petronas and India’s Oil and Natural Gas Corporation (ONGC Videsh).
The two ministers signed a memorandum of understanding which will also involve South Africa taking part in the exploration of several oil blocks, the ministers said.
“When this refinery is complete, it will have the capacity of producing 60,000 barrels of oil per day,” said Jeff Radebe, South Africa’s minister of energy.
Ezekiel Lol Gatkuoth, petroleum minister for South Sudan, said the deal also offers avenues for cooperation in the construction of a pipeline to serve fields located in the south of the country.
South Sudan exports its crude through another pipeline that goes to a port in neighbouring Sudan to the north.
“It is instrumental to have a new a pipeline,” Gatkuoth said.
Reporting by Denis Dumo; writing by Duncan Miriri; Editing bt Mark Potter and Jason Neely

South Africa is investing $1 bln in South Sudan’s oil sector, what you need to know

(Reuters) &#8211; Steinhoff International said on Thursday its Mattress Firm Inc unit, the largest U.S. mattress retailer, emerged out of bankruptcy with access to $525 million in exit financing, within two months of filing for Chapter 11 protection.
Mattress Firm also closed about 660 underperforming stores, said Steinhoff, which has been working on a deal to restructure the debt of some units after revealing multi-billion-euro holes in its balance sheet.
The store closures still leave the Houston-based company with about 2,600 stores across the United States.
“Today’s announcement is a further positive step in the wider Steinhoff restructuring process, which continues to make good progress,” Steinhoff acting CEO Danie van der Merwe said.
Mattress Firm, founded in 1986, had filed for voluntary bankruptcy protection in early October, gaining some breathing room to restructure and shore up its finances.
The retail industry has seen a series of bankruptcies, including Toys “R” Us, over the last couple of years on mounting pressure from e-commerce companies like Amazon.com Inc.
Reporting by Muvija M in Bengaluru; Editing by Gopakumar Warrier

What you need to know about Steinhoff’s US unit Mattress Firm shutting down 660 stores as it emerges out of bankruptcy

CAPE TOWN (Reuters) &#8211; BP Southern Africa (BPSA) will invest $1 billion in South Africa in the next five years with more than a quarter of that set aside to upgrade the SAPREF refinery to produce lower sulphur diesel, its chief executive said on Thursday.
The 180,00 barrels per day SAPREF refinery, South Africa’s largest, is a 50:50 venture between Royal Dutch Shell and BPSA, a subsidiary of British oil major BP. The plant is located in the east coast city of Durban.
BP would invest 3.5 billion-4 billion rand ($252 million-$288 million) in the refinery upgrade, Chief Executive Priscillah Mabelane told Reuters, adding that about 40 percent of the total $1 billion investment would go on retail activities.
She said the upgrade would make “sure the refinery can meet the new specifications in terms of low sulphur and Marpol regulations.”
The plant would shut for maintenance from May to June 2019, she added.
The upgrade has been driven by new rules demanding a lower fuel sulphur content and changing customer preferences for cleaner diesel, such as D50 and D10.
Refinery operators have been in long-running talks with government on how to recover costs from upgrading work needed to produce cleaner fuel in South Africa, the continent’s most industrialised economy.
“From an industry perspective we are pushing very hard to ensure that there is policy clarity because we have been on this journey very long, almost a decade,” Mabelane said about the ongoing talks.
Industry players estimated in 2009 that the cost to upgrade to cleaner fuels would be about $4 billion.
Other operators in the sector include Total and Sasol.
Besides upgrading the refinery, Mabelane said BPSA would expand its retail activities in South Africa.
“We are aggressively going to grow our footprint in the country,” she said on the sidelines of an event with retailer partner Pick n Pay to launch a new innovation for a loyalty card that will also work at BP fuel stations nationwide.
BP was looking at opportunities to expand its services in Mozambique, where it is the second largest oil company, Mabelane said. “The market is exciting and dynamic,” she said.
($1 = 13.8783 rand)
Reporting by Wendell Roelf; Editing by James Macharia and Edmund Blair

What you need to know about BP’s plans to invest $1 bln in South Africa

HARARE (Reuters) &#8211; Zimbabwean miner RioZim is demanding $92 million from the central bank in a lawsuit brought to force the Reserve Bank to pay for more of its gold purchases from the company in U.S. dollars, court documents showed.
Miners are struggling as Zimbabwe grapples with an acute shortage of dollars.
Producers sell all their gold to the central bank’s subsidiary Fidelity Printers and Refiners, which then exports it. RioZim, however, says that since 2016 the central bank only paid for 15 percent of gold it purchased from the company in dollars, breaching its policy to pay for 30 percent in the U.S. currency.
The central bank has not commented on the lawsuit.
RioZim first announced on Oct. 9 that it would take legal action against the central bank, signalling impatience by miners over the dollar shortages.
In its summons filed with the High Court dated Nov. 14, RioZim says it failed to receive $48 million due in payments from the central bank for its sales in dollars and suffered losses of $44 million due to lost production.
“The plaintiff suffered a direct loss of money and the devaluation of the purchasing power of its earnings &#8230;,” RioZim said in the documents seen by Reuters on Thursday.
The company says failure to receive dollar payments left it unable to import equipment and materials for capital projects, putting its operations in jeopardy.
The gold miner shut its three mines last month due to the dollar crunch until it can find a solution.
RioZim CEO Bekhinkosi Nkosi did not answer calls to his mobile phone for comment, while company attorneys Devittie Rudolph and Timba refused to comment.
The southern African nation adopted the U.S. dollar in 2009 to tame hyperinflation, but it is facing acute dollar shortages and that has sent prices of basic goods spiralling and inflation rising to double digits.
On Monday, in a change of policy, central bank Governor John Mangudya and the deputy minister for mines announced that the government would allow gold, platinum and chrome mining companies to retain up to 55 percent of their earnings in dollars, up from 30 percent. The move is aimed at ensuring operators remain viable.
Mangudya could not be reached for comment on the lawsuit.
Reporting by MacDonald Dzirutwe; Editing by Susan Fenton

Zimbabwean miner RioZim is demanding $92 million from central bank in lawsuit, what you need to know…

By Professor Halton Cheadle, partner at BCHC, a specialist labour law firm. Danny Hodgson, a candidate attorney at the firm.
In September 2018, the Constitutional Court ruled that certain provisions of the Drugs and Drug Trafficking Act were unconstitutional and infringed on the right to privacy. But what does it mean for occupational health and safety in the workplace?
One of the biggest changes will be around testing. In the past, the focus was on determining whether an employee was a user of cannabis and therefore urine, blood and hair follicle testing was appropriate. Now the focus is on whether the employee is intoxicated by cannabis at the workplace and therefore observational checklists need to be utilised as well as saliva tests in order to signal recent use, lawyers from BCHC, specialists in labour law, said.
“The intoxicating effects of alcohol are well known and, for that reason, most employers have a zero tolerance policy against being drunk at work,” said Professor Halton Cheadle of BCHC. “The effects of cannabis, on the other hand, are not as familiar and although dagga may not impair a person to the same extent as alcohol, it is a psychoactive drug.”
The Constitutional Court ruled that adult South African citizens are allowed to cultivate and use cannabis in a private place, which means it can no longer be described as an illegal substance. “Employers will have to reconsider policies that deal with substance use in light of this change,” he explained.
This means that if workers’ cognitive abilities are impaired, they could potentially pose a risk to themselves and others when it comes to operating machinery, driving a vehicle or performing other dangerous work. From these effects, it seems clear cannabis should be regulated in the same manner as alcohol, and a zero tolerance policy should be applied, said BCHC’s Danny Hodgson.
The Occupational Health and Safety Act 85 of 1993 requires employers to provide and maintain, as far as is reasonably practicable, a working environment that is safe and without risk to the health of employees. And if someone is intoxicated, with alcohol or cannabis, this could pose problems for employers and other employees.
“This means an employer is obliged to implement policies and put measures in place to limit any potential risk of harm, which include identifying intoxicated employees through observation and drug testing and excluding them from the workplace,” said Hodgson.
In light of the Constitutional Court judgment, cannabis use is likely to increase due to its new legal status and a corresponding change in societal norms, Cheadle reckons. “It is therefore important for employers to review their policies to ensure that they can adequately deal with intoxicated employees and comply with their obligations.”

OpEd: What employers need to know about cannabis in the workplace

By Eric Streso, Certified Financial Planner, FPI.
21 November 2018; “Clients often ask me when they should invest offshore and I tell them now is the time, why wait until the next financial setback reduces your potential investment capital further,” says Eric Streso, a top-flight financial consultant, with more than 20 years’ experience in financial planning.
“South Africa is a relatively small financial market and, with the ability to invest up to R1 million every calendar year, without a tax clearance certificate, the opportunities multiply internationally.
“Here are markets, sectors or even companies outside the JSE that represent a wealth of experience and prospects. Utilising South African advice and expertise, clients are able to discuss the portfolios with an expert, who then advises and creates investment opportunities in various markets. I find the personal touch alleviates the understandable anxiety of venturing into a new monetary space. I encourage clients to ask questions, review portfolios and generally understand the complexities of offshore investments, taxes and regulatory practices.
“Investing in funds that are registered in foreign currencies can protect your investments in a hard currency and, if you plan to use the money overseas without bringing it back to South Africa, can potentially protect you from political and economic downturns at home.
“Ideally, one should be looking at $30 000 as an investment, with an investment period of 5-8 years, otherwise the returns may not be as lucrative as desired. One must also take into account capital gains tax, if you wish to realise your investment and convert it back to Rands. However, again if the rand has depreciated over this period, your capital gain is likely to be lower on your offshore investment than it would have be on a rand-denominated fund,” concludes Streso.

OpEd: It’s a good time to invest offshore, here’s why

By Suzanne Daniels
JOHANNESBURG, South Africa, 20 November 2018.
The public outcry in response to Momentum’s decision not to pay Nathan Ganas’ family out following his tragic death at the hands of hijackers has raised some ethical questions. While Momentum may legally be in the right, South Africans are questioning the morality of its decision, writes Suzanne Daniels, lawyer and fellow of the Institute of Directors.
In March last year, Ganas was fatally wounded in a hail of bullets while trying to protect his wife and daughter during a hijacking. Ganas, however, was well insured through Momentum Life and thankfully the policy kicked in with an immediate release of R50,000 to cover urgent expenses such as funeral and living costs following the tragedy.
But that did not happen. The media reported that Ganas’ widow would have to pay back the instant cash pay-out and she would not be receiving the insured amount. Apparently, Ganas had a pre-existing condition, diabetes, which should have precluded him from even being insured in the first place. While his death was not even remotely caused by the condition, Momentum is within its legal rights to not pay out.
This decision resulted in public outrage – nobody can quite understand how bullets and blood-sugar relate to each other. The horrific way in which Ganas died would have happened no matter what his health status was.
Notably, South African law is very clear that contracts are binding. When it comes to civil law, such as in this case, there are no grey areas. If the contract states you will not be paid out if you did not disclose a pre-existing medical condition, then that’s what will happen. The manner of death does not come in to play.
The bottom line is that Momentum is correct in terms of the law. The public outcry has been about the morality of it. But just how do you navigate the grey areas between law and morality?
While Momentum may be correct in law and maintaining its business equity balance, it is displaying a lack of moral equity in this instance. The company has, however, redeemed itself somewhat by allowing Ganas’ widow to keep the R50 000 funeral benefit and agreeing to pay the premiums back to her.
Unfortunately, there are no courts of equity in South Africa and the law can be relatively heartless. This is why it is vital that South Africans know what they are signing. Contracts are fully binding and if they don’t understand what their role is, or what the insurer’s role is, they can find themselves in a very tricky situation.
In an interview on Radio 702 with Bongani Bingwa, Momentum CEO Johan Le Roux stated that Nathan Ganas should not have been insured in the first place. So, whose fault is it then? Why was he given a policy and why did the insurer accept his monthly premiums? The answer isn’t exactly clear.
The insurance industry is highly regulated and there are checks and balances in place to ensure that both parties understand what is expected of them. But it seems there needs to be even more stringent checks in place so that a situation like Nathan Ganas doesn’t happen again. Consumers cannot be passive participants in their own lives and have a responsibility to educate themselves.
What is worth pondering, however, is whether the decision to not pay the claim was worth the subsequent negative publicity and potential loss of existing and future clients. Perhaps if Momentum had acted in good faith and supported the grieving family, it would have elevated its reputation amongst South Africans and boosted its social license to operate.
On a final note, I cannot stress enough how consumers need to know what they are signing. There does need to be an element of trust as well – they need to trust that the insurer can and will pay out a verified claim, and the insurer needs to trust that the consumer has actually been open and honest when answering questions relating to the risk assessment.

OpEd: Was Momentum within their rights to decline R2.4m claim by Nathan Ganas’ family?

Global market research company Euromonitor International launched a global study on illicit alcohol.
The multi-region report compiles findings from 24 countries in Africa, Eastern Europe and Latin America. Results show that 26 percent of the total volume of alcohol consumed in these countries is illicit.
Out of the 25 countries covered by Euromonitor’s research, Africa has the largest illicit alcohol problem. Whilst almost double the number of countries were covered in South America, Africans consume double the volumes (in absolute alcohol terms) of illicit alcohol.
Key points on illicit alcohol in Sub-Saharan Africa
• South Africa witnessed the largest fiscal loss out of the 7 African countries due to illicit trade despite the low share of illicit to licit litres of absolute alcohol (LAE) volume predominantly due to its tax strategies. 
• In international standards and even by African standards, South Africans consume excessive amounts of alcohol. The country has the second highest per capita alcohol consumption, falling just behind Zambia. 
• South Africa has the largest variance between the price that consumers can purchase legal alcohol vs what they pay for illicit alcohol (51%) and it is well above the regional average of 42%. 
• In 5 of the 8 countries covered the share of the illicit alcohol market is more than 50%, which means that 1 in every two 2 alcoholic beverages consumed, are illicit. In Zambia, this number is much higher. At 69.5% percent, Zambia is second only to Mozambique and almost 3 out of every 4 alcohol drinks are illicit. 
• Measured on a per capita basis, Zambians drink the largest amount of legal alcohol but also drink the most illegal alcohol. These numbers are measured on an LAE basis so this is absolute alcohol consumption. South Africans follow closely when it comes to the per capita consumption of illicit alcohol. 
• Whilst smuggling is present across all the countries researched, Zambia loses by far the most of its tax revenue to smuggling (71%).
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Article provided by Euromonitor International.

One in four bottles of alcohol consumed is illicit, what you need to know

JOHANNESBURG (Reuters) &#8211; South Africa’s economic recovery plans face serious constraints with growing debt of state firms domestically and capital outflows as a result of global trade tensions, <a href="https://www.imf.org/en/News/Articles/2018/11/16/ms111918-south-africa-staff-concluding-statement-of-an-imf-staff-visit">the International Monetary Fund (IMF)</a> said on Monday.
In October the global lender said it saw Africa’s most industrialised economy expanding by 0.8 percent in 2018, down from a prior forecast of 1.5 percent. South Africa’s Treasury predicts growth of 0.7 percent.
The recession-bound economy and a bleak budget in October have piled pressure on President Cyril’s Ramaphosa.
“Some of the initial optimism has dissipated as growth remains stuck in low gear and reform implementation has faced constraints,” the IMF said, naming the state power firm Eskom as a key risk.
The president’s work is made harder by cash-strapped state-owned firms, including debt-ridden Eskom, which is struggling to supply the nation’s power.
The IMF said the proposal to amend property laws to allow for expropriation without compensation should be carefully considered and be guided by lessons of international experience.
“Land reform should focus on enhancing agricultural productivity and strengthening tenure security,” said the IMF.
A parliamentary team has recommended a constitutional amendment to make it possible for the state to expropriate land without compensation. The recommendation will now go to the national assembly for a vote.
Reporting by Mfuneko Toyana; Editing by James Macharia
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South Africa’s economic recovery plans fading: IMF

ABUJA (Reuters) &#8211; Nigeria is in talks with Transnet for the concession to run its railways after General Electric, which has spun off its transport business, handed the leadership of the consortium to the South African firm, the transport minister said on Sunday.
“We are in talks with Transnet. When we conclude we will sign the concession agreement and they will rehabilitate the entire 3,500 kilometers of railways,” Transport Minister Rotimi Amaechi told a government delegation in Abuja.
Transnet was not immediately available for comment.
A procurement process adviser told Reuters last week that General Electric (GE) had pulled out of the $2 billion concession deal with the Nigerian government for two rail lines connecting northern cities to others in the south.
GE on Thursday said it had handed over the leadership of a consortium chosen to run the Nigerian rail concession to Transnet.
The concession aims to cover about 3,500 km (2,200 miles) of existing narrow-gauge lines from the southwestern commercial capital Lagos to Kano in the north and from southeastern oil hub Port Harcourt to Maiduguri in the northeast.
Economic growth in Nigeria has been hampered for decades by its dilapidated rail network, built mainly by British colonial rulers before independence in 1960.
Nigeria, which has one of Africa’s biggest economies and is the continent’s top oil producer, is seeing slow growth after emerging last year from its first recession in a quarter of a century which was largely brought on by low crude prices from late 2014.
Reporting by Chijioke Ohuocha; Editing by Robin Pomeroy and Emelia Sithole-Matarise

Here’s why Nigeria is in talks with South Africa’s Transnet

HARARE (Reuters) &#8211; Zimbabwean gold mines have been allowed to retain 55 percent of their earnings in dollars, from 30 percent previously, the deputy mines minister said, as the government moves to ensure their operations remain viable.
Polite Kambamura said miners of gold, the country’s largest mineral export, should be allowed to earn up to 70 percent of their sales in dollars.
The mining sector like most of businesses in the southern African nation, is struggling to pay for imports like spares and other consumables due to a severe dollar crunch.
Reporting by MacDonald Dzirutwe; Editing by Adrian Croft

Zimbabwe gold mining firms have been allowed to retain 55 pct of dollar earnings, what you need to know…

President Cyril Ramaphosa reported nearly R290 billion worth of investment pledges from local and international companies. PwC’s Strategy&amp; calculations suggest that this investment would add an estimated R338 billion to South Africa’s GDP over the 2019–2024 period, create or sustain an estimated 825 000 direct and indirect jobs (on average per year) and generate an estimated R59 billion in additional government revenue.
In addition, the investment would enable some R468.8 billion in potential production from 2025 to 2035. This production would, over the ten-year period, add an estimated R505 billion to South Africa’s GDP, create and/or sustain an estimated 116 000 direct and indirect jobs (on average per year) and generate an estimated R133 billion in government revenue.
On 16 April 2018, President Cyril Ramaphosa announced his five-year, US$100 billion investment drive in a bid to revive the South African economy. According to the president, his initiative is a response to the drop in total fixed investment in South Africa from 24% of GDP in 2008 to 19% of GDP in 2017, and foreign direct investment (FDI) inflows dropping 77% in rand terms over the same period 1.
Shortly after this announcement, President Ramaphosa began an international roadshow promoting trade and investment agreements with existing South African partners. A team of investment envoys was assembled to support the presidency, made up of former finance minister Trevor Manuel, former deputy finance minister Mcebisi Jonas, Afropulse executive chairperson Phumzile Langeni, and chairman of Liberty Group Jacko Maree. In addition, economist Trudi Makhaya was appointed as the president’s economic advisor.
Early results 
Initial investment pledges were made by the governments of the United Arab Emirates (US$10 billion), the Kingdom of Saudi Arabia (US$10 billion) and the Republic of China (US$14.7 billion)5.
In an announcement about the Presidential Investment Summit held in October, investment envoy, Jacko Maree supported the President’s benchmark vision of a 50/50 split between local and foreign investment to make up the projected $100 billion total sum6.
FDI is an important enabler of economic growth. For emerging market economies, foreign investment inflows are crucial for transferring money and expertise from multinational companies to local enterprises. Emerging markets also need FDI to help finance infrastructure deficits.
President Ramaphosa was cognisant of this when, as the deputy head of the National Planning Commission (NPC), he oversaw the formulation of the National Development Plan (NDP) 2030, published in 2012. The NDP aimed for total fixed investment to rise from below 20% of GDP at the start of the current decade to 30% of GDP by 2030.
The NDP also planned for public sector investment to account for 10% of GDP by 2030. In 2017, total fixed investment was recorded at 19% of GDP, with around 80% of the investment coming from the private sector.9
In other words, both the overall investment target as well as the public investment target have not been met.
This is indicative of the fact that the South African economy needs significant investment stimulus.
Outcomes of the Investment Conference 
The key sectors targeted by the summit were: 
• Agriculture and agro-processing; 
• Mining and minerals beneficiation; 
Heavy manufacturing; 
• Water and transport infrastructure; 
• Energy; 
• Information, communication and technology; 
• Manufacturing; 
• Tourism, business process outsourcing, and film; and 
• Venture capital. 
During his final address to the summit, President Ramaphosa declared that during the course of the day “nearly R290 billion” had been pledged by both local and international companies seeking to participate in the President’s five-year plan.
Unemployment remains one of government’s core concerns. In August 2018 , President Ramaphosa declared the urgency “to develop and implement a stimulus package to ignite growth that will lead to the creation of jobs, especially for young people and women”.10 To this end, some of the investment pledges also specify job creation targets, including those by Sumitomo Rubber, Anglo America and McDonald’s.
Estimated economic impact of the promised investment
The R284.6 billion of investment pledged is expected to support long-term economic benefits for South Africa, including stronger real GDP growth, the creation of jobs and generation of additional tax revenue.
We estimate the potential economic activity over the next five years 
resulting from this investment will include:
• An estimated R338 billion added to GDP; 
• Creating and/or sustaining an estimated 165 000 direct and indirect 
jobs, on average, per year; and 
• An estimated R59 billion added to total government revenue, through 
both the collection of direct and indirect taxes.
These estimated economic impacts are only associated with the investment spending between 2019 and 2024.
Long-term economic contributions will be created by the additional production in the various sectors, once the investment phase is complete.
We estimate some R468.8 billion in potential production from 2025 to 2035 due to linkages. Our calculations show that the above-mentioned production would potentially contribute the following impacts over a ten year period: 
• R505 billion added to GDP; 
• Creating and/or sustaining an estimated 116 000 direct and indirect 
jobs, on average per year; and 
• R133 billion added to total government revenue.
When considering the economic impact results for each of the sectors, we see that the sector with the largest investment does not necessarily generate the largest long-term economic contributions: 
• The largest investment is captured within the mining sector; 
• Investment in the rubber sector generates the largest GDP multiplier 
effect; 
• In terms of the jobs created and tax revenue generated through the investment, the food sector has the largest job and tax multipliers; and 
• The sector that generates the largest production from the investment is the transport equipment sector. This sector will also generate the most long-term economic benefit across all three performance indicators (GDP, employment and tax).
From our analysis, we see that the continued investment in South Africa would assist in reducing unemployment, poverty and improve people’s lives, which, in turn, would also support long-term economic growth.
This aligns with President Ramaphosa’s State of the Nation Address (SONA) 2018 in which he promised to use investment, among other levers, to address the country’s challenges of poverty and inequality.
However, this analysis is based on the assumption that all investment pledges, amounting to R284.6 billion, are translated into real investments, as the estimated economic contributions will be proportionate to the investment made. The challenge for South Africa is to ensure that the already-listed factors that influence investment are 
addressed. Investment pledges will only translate into actual investments if a supportive business environment, policy certainty and political stability are in place. These too were pledges of SONA 2018.
The well-attended Investment Summit was a showcase of South Africa’s attributes, and a place of conversation about how the country had progressed over the preceding eight months on the policy and political front. The R284.6 billion in investment pledges assessed here are testament to the perceived improvement in the local investment climate and the optimism around South Africa heading into 2019.
Provided by PWC

Estimating the potential economic impact of investment pledges made at the South Africa Investment Conference

JOHANNESBURG (Reuters) &#8211; South Africa’s Home Affairs Minister Malusi Gigaba has resigned, the presidency said on Tuesday, following calls from opposition parties to stand down in recent weeks over a High Court ruling which found he lied under oath.
Gigaba, who was finance minister between March 2017 and February 2018, has denied any wrongdoing. Gigaba, who in February was reappointed home affairs minister, last month apologised over a private sex video that was leaked.
Reporting by Nqobile Dludla; Editing by James Macharia

Gigaba resigns as South Africa’s home affairs minister, Nzimande appointed as acting minister

JOHANNESBURG (Reuters) &#8211; A South African court on Tuesday approved an application by the central bank to wind up VBS Mutual Bank, which was caught up in a corruption scandal this year.
A report commissioned by the South African Reserve Bank and titled “The Great Bank Heist” found that at least 1.9 billion rand ($132 million) had been looted from VBS and that its financial statements had been misstated.
The regulator placed the small lender under curatorship before applying last month to the High Court to close it down for being “hopelessly insolvent”.
“There is no reasonable probability that the continuation of the curatorship will enable VBS to pay its debts or meet its obligations and become a successful concern,” court papers filed by the Reserve Bank said.
The collapse of VBS has prompted an outcry in South Africa because many municipalities had deposits with the bank. More than 50 individuals and firms are alleged to have benefited from the fraud.
VBS was thrust into the spotlight in 2016 when it provided a 7.8 million rand loan to then-president Jacob Zuma to reimburse the state for lavish upgrades to his private residence including a swimming pool and amphitheatre. ($1 = 14.3926 rand)
Reporting by Alexander Winning; Editing by Dale Hudson

South African court orders VBS Bank to be liquidated

By: Amadou Hott, Vice-President of Power, Energy, Climate Change &amp; Green Growth at the African Development Bank
Accessible, reliable and affordable energy is the cornerstone of transformational socio-economic development. For Africa, delivering sustainable development is dependent on meeting the continent’s energy needs in order to lift populations out of poverty, catalyze industrialization, and stimulate economic growth.
Despite the continent’s abundant energy resources, energy poverty is still rife in the continent with close to 600 million people lacking access to electricity. This sets nations back on meeting energy access goals, retards industry progress, and diminishes the continent’s economic growth by 2 to 4 percent every year.
On a positive note, energy access has improved in recent years with the number of people without access in sub-Saharan Africa falling for the first time in absolute terms, and with countries such as Ethiopia, Kenya and Rwanda leading the pace. Africa is at the forefront of distributed energy systems that can increase energy access in rural areas faster, more cheaply, and more widely than conventional grid extension, driven by innovative business models and rapidly decreasing technology costs. At the same time, renewables are on the rise across the continent with significant renewable generation capacities added in countries such as Egypt, Morocco and South Africa.
Renewable energy investments are also on the rise across the continent from Senegal, to Kenya, and Zambia. While this progress is encouraging, the pace of energy access falls far short of meeting the universal energy access target by 2030.
Closing the gap on Africa’s energy challenges presents major opportunities for investors keen on engaging with the continent, especially on helping Africa meet the shortfall in the estimated $90 billion required to achieve universal energy access by 2030.
Clearly, these financing needs are of such magnitude that no single institution is capable of meeting them in isolation. This is why development finance institutions need a pragmatic shift in how they do business and leverage scarce public resources in order to mobilize private sector financing at scale, “from billions to trillions”.
The African Development Bank is leading by example. For instance, the Bank launched the Facility for Energy Inclusion to close funding gaps in the small-scale energy infrastructure sector, and catalyze last-mile energy access. Through a mix of commercial and concessional instruments, the facility provides low cost of capital, and mitigates key credit and currency risks. Additionally, the recently approved the Room2Run transaction allows the Bank to effectively transfer the credit risks of selected loan portfolios to investors, which lowers the total risk consumption of the Bank.
This initiative will enable the Bank to recycle capital efficiently in order to boost lending capacity and enhance private sector investments. The transaction has already attracted major support from partners like the European Commission who will provide a $100 million guarantee to be channeled into renewable energy projects in Africa. Ultimately, this will free up around $700 million, which can be re-allocated to new projects.
Multiple barriers hinder investments and private sector participation which could potentially fast-track energy access. These include lack of an enabling policy environment for investors, and other systemic bottlenecks that slow down transactions and escalate project costs. Transforming the energy landscape calls for a multi-faceted approach to unlock private sector capital by resolving these barriers in order to create the ideal conditions for investments in the continent.
The African Development Bank in close collaboration with other development partners is perched on the apex of creating a vibrant marketplace that will deliver the energy transformation necessary to move Africa forward. The Bank is dedicated to eliminating and minimizing barriers for investors, primarily through financial instruments to de-risk transactions, disseminating knowledge and market data, and facilitating peer-to peer learning and networking. Private sector engagement is on the rise, buoyed by various partnerships such as the New Deal on Energy for Africa and the US-led Power Africa Initiative.
To sustain this momentum, the bank convened the inaugural Africa Energy Market Place (AEMP) in Abidjan in July 2018. The AEMP is a platform for public private dialogue, and is set up to address barriers to mobilizing and scaling-up private investment into the energy sector. Effectively, AEMP reviews and prioritizes transformative energy transactions, and accelerates reforms in order to attract private investments and create a pipeline of bankable projects. Five countries participated in the inaugural edition: Côte d&#8217;Ivoire, Egypt, Ethiopia, Nigeria, and Zambia.
The conversations that began at the AEMP are set to continue in November’s Africa Investment Forum (AIF) in South Africa. The forum convenes project sponsors, borrowers, lenders and investors with a shared interest in closing Africa’s infrastructure gap which is estimated to be anywhere between $130–$170 billion per year.
By convening,and facilitating mutually beneficial dialogue amongst stakeholders who can dramatically impact Africa’s energy landscape, the Bank is creating the requisite foundation for accelerated private sector investments in Africa’s energy sector to achieve universal energy access.
Indisputably, this will put the continent steadily on the path to socio-economic growth, and sustainable development.

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Southern Africa

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Estimating the potential economic impact of investment pledges made at the South Africa Investment Conference

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OpEd: Why financing Africa’s energy infrastructure is a major opportunity for investors

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