JOHANNESBURG (Reuters) &#8211; South African media and e-commerce giant Naspers said on Friday it would invest 4.6 billion rand ($315 million) over the next three years in its technology businesses and to fund technology start-ups.
Naspers said in a statement ahead of an investment summit called by President Cyril Ramaphosa it would allocate 3.2 billion rand to developing its existing technology businesses including the OLX Group, Takealot, and Mr D Food. Naspers said 1.4 billion rand would be used to fund technology start-ups.
($1 = 14.5850 rand)
Reporting by Tanisha Heiberg; Editing by James Macharia

This South African media giant plans to invest $315 million in technology expansion

JOHANNESBURG (Reuters) &#8211; Moody’s said on Friday that a weaker fiscal outlook in South Africa’s medium-term budget policy statement issued this week was a credit negative, sending the rand weaker.
“The government’s revised budget policy statement projects larger fiscal deficits and higher government debt, amid slower growth, a weaker rand and higher interest rates than expected in February, a credit negative,” Moody’s said in a research note.
Moody’s is the last of the top three agencies to still rate the country investment grade.
Reporting by James Macharia; Editing by Robin Pomeroy

Moody’s says weaker fiscal outlook highlighted in SA’s mini budget a credit negative

By Monique Vanek
In the forward to Medium Term Budget Policy Statement (MTBPS) it warns that South Africa finds itself at a crossroads and highlights the difficult economic and fiscal choices confronting government over the next several years. These are the key takeaways:
Economic
• The consolidated budget deficit narrows from 4.2% in 2019/20 to 4% in 2021/22. 
• Gross debt is expected to stabilise at 59.6% of GDP in 2023/24. 
• GDP growth revised downwards to 0.7 from 1.5% in 2018 following a recession in the first half of the year. 
• GDP growth is expected to recover gradually to 2.3% by 2021 
• Global economy expected to continue growing at 3.7% 
• Tax revenue has been revised down by R27.4 billion in 2018/19, R24.7 billion in 2019/20 and R33 billion in 2020/21 relative to the 2018 Budget. This mainly reflects higher-than-expected VAT refunds. 
• In 2017/18, for the first time since the 2008 global financial crisis, tax revenue growth did not exceed GDP growth. 
• The cost of servicing government debt is expected to exceed 2018 Budget estimates by R1 billion in 2018/19, R4.9 billion in 2019/20 and R7.9 billion in 2020/21. This reflects a larger main budget deficit, currency depreciation and higher interest rates. An estimated 15.1 per cent of main budget revenue will be used to service debt in 2021/22 compared with 13.9 per cent in 2018/19. 
• Main budget revenue is projected to increase from 25.7% of GDP in 2018/19 to 26% of GDP in 2021/22. Main budget expenditure is estimated to remain stable at 30.2% of GDP over the medium term
Where the money will go
• The Medium-term expenditure framework commits public resources of R5.9trn over the next three years. Of this amount: 
&#8211; R3.3trn or 56.2% t will be allocated to education, health, the provision of water and electricity services, and social grants. 
&#8211; 
• Government is proposing reprioritisation of R32.4bn over the next three years. Of this amount: 
&#8211; R15.9bn goes towards faster-spending infrastructure programmes. 
&#8211; R16.5bn will be allocated to various programmes, including recapitalising the South African Revenue Service (SARS), a minimum wage for community health workers, critical posts and goods and services in health, and streamlining the management of the justice system. 
&#8211; In addition, changes to grant structures amounting to R14.7 billion will promote upgrading of informal settlements in partnership with communities. 
&#8211; Housing subsidies amounting to R1 billion will be centralised to better support middle- and lower-income home buyers. 
• In the current year, R1.7 billion is added to infrastructure spending (including funding for fast-spending school building programmes) 
• R3.4 billion is allocated to drought relief, mostly to upgrade water infrastructure aside funding for this purpose. 
• R3.4 billion is allocated in 2018/19 to provide water, improve infrastructure and offset the economic costs of drought. Funding is also provided for the South African Isotope Facility at iThemba Labs and, following approval through the Budget Facility for Infrastructure, for the MyCiti Phase 2A bus programme in the City of Cape Town. 
• R800 million added to the school infrastructure backlogs grant to complete approved projects. 
• R3.4 billion is allocated to the education infrastructure grant. Funds are also allocated to the same grant to continue repairing infrastructure damaged by storms and floods in KwaZulu-Natal in 2017. 
• The Department of Women has developed a framework to provide free sanitary towels to learners from low-income households. The project rollout is funded through the provincial equitable share. 
• Local government equitable share, which finances free basic services to low-income households and some administrative costs for municipalities, is expected to grow by9.4 per cent per year to R82.2 billion by 2021/22. 
• Over the medium term, public transport expenditure is expected to increase to R101.1 billion as integrated public transport networks are built and operated in 13 cities.
State owned entities
• South African Airways will receive R5 billion through a special appropriation bill to settle debt redeeming between now and March 2019. This will help to prevent a call on the airline’s outstanding debt of R16.4 billion, which is guaranteed 
• R1.2 billion is allocated to South African Express Airways. 
• The South African Post Office receives R2.9 billion to reduce debt levels
National Health Insurance
• R166 million added to the national health insurance (NHI) indirect grant (health facility revitalisation) component to procure medical equipment and to design a new academic hospital in Limpopo. 
• R546 million reprioritised within the NHI indirect grant to address the critical shortage of medical professionals in the health sector, and to procure beds and linen for health facilities.
Tax changes
• In 2019 annual adjustments to personal income tax brackets, levies and excise duties in line with inflation are expected. 
• White bread flour, cake flour and sanitary pads will be zero-rated from 1 April 2019.
Students
• The Department of Higher Education and Training is developing a funding framework to clarify students’ food, book, transport and accommodation allowances, and the obligations required of bursary students during and after their studies. 
• Funds recommended through the Budget Facility for Infrastructure, and from educational institutions and the department, will support the Student Housing Infrastructure Programme. Over the next 10 years, it will provide 300 000 new beds at universities, and technical and vocational colleges. 
• Over the medium term, an estimated R61.5 billion in revenue from the skills development levy will continue to expand participation in learnerships, internships and skills development programmes.
Land reform
• Government is working with the Land Bank to accelerate land reform and maintain the productive use of transferred land. 
• Under the Land Reform Programme, government will provide 30-year leases, enabling the Land Bank to extend loans to emerging farmers. 
• The Land Bank will use a combination of loans and grants to increase production through the Black Producers Commercialisation Programme. Funding from the comprehensive agricultural support programme grant will be reprioritised to produce foot-and-mouth disease vaccines.

SA’s #MTBPS2018: Key takeaways

By Monique Vanek
The public servants wage bill remains the single largest component of expenditure in the Medium Term Policy Framework, but with elections approaching in 2019 the Medium Term Budget Policy Statement (MTBPS) provided no concrete plans to address this, only stating that government is working on an approach to manage these pressures over the medium term.
According to the MTBPS, public servants compensation, accounts for 34.7 per cent of consolidated expenditure, and forms the major driver of spending pressures. The MTBPS highlights that “it is one of the fastest-growing items in the budget, increasing at an average of 11.2 per cent a year”.
It adds that “the 2018 public-service wage agreement (see box) exceeded budgeted baselines by about R30.2 billion through 2020/21. National and provincial departments are expected to absorb these costs within their R1.8 trillion compensation baselines over the same period.”
The MTBPS also states that “over the long term, government and trade unions need to agree on an approach that ensures fair remuneration and a sustainable wage bill”. 
An annexure to the MTBPS deflects that issue of the amount of public servants to earnings growth, stating that “earnings growth, rather than headcount, has been the major driver of the public-service wage bill over the past decade”.
The annexure says an analysis of compensation spending since 2006/07 reveals the following trends:
• The main driver of increased spending is large increases in wages and other employee benefits, rather than increases in employment. 
• The increase in average real wages is partly explained by above-inflation agreements reached between government and unions, but wage progression and promotion policies account for a considerable proportion of the rise. 
• Wages have increased most rapidly in the lowest ranks of the public service, compressing wage distribution. 
• Overall, the number of public servants has increased since 2006/07. Employment peaked in 2012/13, after which personnel numbers have fallen by just over 1 per cent. This decline is insufficient to contain real spending growth due to continued growth in real wages. 
• There is a significant amount of turnover in the public service, with as many as 6 per cent of personnel leaving in a given year.

#MTBPS2018: Public servants’ wages balloon, but headcount is not to blame

By Monique Vanek
Despite an economy on the ropes, evident by slower than expected growth, South Africans can breathe a sigh of relief as forecasted increases in value added tax (VAT) and other anticipated tax hikes are not expected. The Medium Term Budget Policy Statement (MTBPS) states that “increases in major tax instruments will be avoided unless the economic environment requires it.
“At this stage, revenue projections assume no changes to tax rates, but provide for annual adjustments to personal income tax brackets, levies and excise duties in line with inflation”. 
Despite hopes that chicken would be made VAT free, no mention was made of this, instead the MTBPS states that as per the recommendations of a panel of experts which were commissioned to investigate mitigating the effect of the VAT rate increase introduced in April on low-income households, government proposes to zero-rate white bread flour, cake flour and sanitary pads from 1 April 2019.

SA’s #MTBPS2018: These are the tax changes government is warning of

By Monique Vanek
The Medium Term Budget Policy Statement (MTBPS) has confirmed that the South African Revenue Service (SARS) under its former Commissioner Tom Moyane delayed paying tax refunds, which is now hurting revenue.
According to its current Commissioner Mark Kingon, whether this was intentional or not is up for debate but he believes it was not intentional.
Kingon in a closed media briefing said SARS is currently evaluating why refund payments slowed.
The MTBPS points a negative picture of what happened to tax revenues under Moyane’s tenure and the aftermath: “A backlog of VAT refunds at SARS, and an underestimation of refunds due, has led to an overly optimistic view of revenue growth. Net VAT collections account for about R20 billion of the in-year revenue shortfall. Two factors account for the revision in net VAT. The VAT refund estimate has been revised upwards by R9 billion, and about R11 billion will be paid out to clear the backlog in the VAT credit book (see table).
“The remaining R7.4 billion of the shortfall in the current year mostly reflects slower corporate income tax collections due to weak growth in wholesale and retail trade, manufacturing and transport. Personal income tax continues to be negatively affected by job losses, moderate wage settlements, lower bonus payments and a slower expansion of publicsector employment”.
The MTBPS also states: “In 2017/18, for the first time since the 2008 global financial crisis, tax revenue growth did not exceed GDP growth. Revenue shortfalls have widened over the past four years, with under-collections rising from R7.4 billion in 2014/15 to R49 billion in 2017/18. These shortfalls would have been larger were it not for increases in personal income, dividend withholding, capital gains and other taxes. Revenue collections in 2017/18 were R0.8 billion lower than estimated in the 2018 Budget. Revenue collection for the first six months of 2018/19 grew by 10.7 per cent compared with the same period last year. However, the technical recession experienced in the first half of the year has begun to feed through to revenue collection, which has slowed. Weaker economic growth, alongside a once-off payment of overdue VAT refunds, will result in an in-year revenue shortfall now estimated at R27.4 billion, relative to the 2018 Budget estimate.”

#MTBPS2018: SARS withheld tax refunds under former Commissioner Moyane, these are the consequences…

#MTBPS2018: A look at SA Finmin Tito Mboweni’s Medium-Term Budget Policy Statement

JOHANNESBURG (Reuters) &#8211; The South African rand was little changed early on Wednesday, as investor caution reigned ahead of a closely watched budget speech by the country’s finance minister.
At 0550 GMT, the rand traded at 14.2700 versus the dollar, a shade weaker from its close of 14.2625 on Tuesday.
Recently appointed Finance Minister Tito Mboweni is expected to announce revised budget deficit targets and growth forecasts, as well as measures to boost the economy and shore up struggling state-owned companies.
The tone of his medium-term budget speech will influence whether Moody’s strips South Africa of its last investment grade credit rating at a review expected after the speech.
“South Africa’s new finance minister will probably announce further fiscal tightening,” John Ashbourne at Capital Economics said in a note.
“This will likely placate ratings agencies, but supports our view that economic growth will remain weak.”
Government bonds were slightly stronger in early deals, with the yield on the benchmark instrument due in 2026 down 4 basis points to 9.125 percent.
Reporting by Alexander Winning; Editing by Sunil Nair

How is the South African rand performing ahead of finmin Mboweni’s mini budget speech?

JOHANNESBURG (Reuters) &#8211; South Africa’s state-run power firm Eskom said on Tuesday it is planning its first major battery storage project as President Cyril Ramaphosa seeks to boost renewable energy usage and reduce the country’s reliance on coal.
Prince Moyo, general manager for power delivery engineering at Eskom, told Reuters that the battery storage project would be rolled out in phases across 90 sites, with a tender for the first phase pencilled in for early next year.
“At this stage the focus is on storing energy for the benefit of all our customers. The aim is to ensure security of power supply,” Moyo said.
Although the 1,440 megawatt hour per day battery project would be able to store less than one percent of Eskom’s total generating capacity, it is a sign the utility is following through on promises to prioritise renewable energy ventures.
The project should also help smooth relations with the World Bank, which had become frustrated over the slow progress made on renewable power plans since it approved a more than $3 billion loan in 2010 to support green energy.
Eskom, which joins global firms like oil major BP and General Electric in investing in battery storage, is working on a new long-term strategy to assess whether its business model is sustainable.
The utility’s new management, appointed soon after Ramaphosa replaced scandal-plagued Jacob Zuma as leader of the ruling African National Congress last December, is fighting to rescue the firm after a period of steep financial decline.
It reported a 2.3 billion rand ($160 million) loss for the latest financial year, after which it said it was considering selling non-core assets and job cuts.
($1 = 14.3534 rand)
Reporting by Alexander Winning; Editing by Joe Brock

First major battery storage project in works for South Africa’s Eskom, what you need to know

JOHANNESBURG (Reuters) &#8211; The board of directors of South African state-owned logistics firm Transnet said it had removed Chief Executive Siyabonga Gama, who has been accused of misconduct in a multi-million-dollar deal.
Transnet, which operates nearly three-quarters of the African rail network, the bulk of which is in South Africa, has been investigating allegations of corruption in the procurement of diesel and electric locomotives.
The board said late Sunday that it had lost confidence in Gama and that his last day as CEO would be Monday.
Gama was not immediately available for comment.
“We value and require transparency, accountability and expenditure that is cost-effective &#8230; But we have found Gama’s conduct – particularly during the investigation into the tender for new locomotives, with an inexplicable increase in excess of 9 billion rand ($627 million) in costs &#8211; to be incompatible with that culture,” Transnet’s board said.
Transnet is one of a handful of South African state firms that became embroiled in corruption scandals under former President Jacob Zuma.
However, Zuma has denied any wrongdoing and says he is the victim of a politically motivated witch-hunt, but new President Cyril Ramaphosa has launched an inquiry into allegations that tenders were awarded illegally during his predecessor’s time in office.
($1 = 14.3462 rand)
Reporting by Alexander Winning, Editing by Sherry Jacob-Phillips

What you need to know about the removal of South Africa’s Transnet CEO

By Gary van Staden – Senior Political Analyst, NKC African Economics.
Official results of Mozambique’s local authority elections announced on October 14 provided a boost to the prospects of the ruling Mozambique Liberation Front (Frelimo) ahead of national and presidential elections scheduled for 2019. The scale of the victory suggests Frelimo and President Filipe Nyusi face no serious electoral threat next year.
Ossufo Momade acting leader of the Mozambican National Resistance (Renamo), an opposition party cum rebel movement, was not happy after the comprehensive defeat. As was the habit of his late predecessor Afonso Dhlakama, Mr Momade threatened to suspend peace talks.
However, there is little prospect of that threat materialising as Renamo is currently too weak politically and militarily to make good.
Elections in Mozambique always produce two main headlines – Frelimo Wins and Renamo Complains. Allegations of fraud in the wake of last week’s (October 10) vote follow a well-trodden path of fraud and rigging allegations that may contain elements of truth but never enough to alter the scale of Frelimo’s electoral successes and which tend to be exaggerated.
The most recent local results were no exception, with Frelimo winning 44 local authorities against the eight councils won by Renamo while the Mozambique Democratic Movement (MDM) took one of the 53 local councils. Frelimo won 49 councils in 2013 while Renamo boycotted that poll.
There is some evidence for Renamo making gains in the central and northern regions of the country, but not enough with just a year to go to suggest it poses a credible electoral threat. Renamo won several major cities in Zambezia and Nampula provinces, its traditional stronghold, and came close in several others, but the results seem to confirm its regional rather than national power base.
Faced with the prospect of an electoral disappointment following the release of early results, Mr Momade told AFP that the ruling party had falsified results in several areas and he threatened to abandon the peace talks that have made considerable progress since Dhlakama’s death.
The latest phase of the peace talks between Frelimo and Renamo began in 2016 to end three years of violence between government troops and Renamo rebels that had created instability and impacted investment and logistics in the country.
Mr Nyusi and Mr Momade have made progress on the disarmament and integration of former Renamo rebels into the police and army and the decentralisation of powers to local and regional authorities.
“We do not want war, but we also do not accept any attempt to change the popular will,” Mr Momade told AFP, suggesting the “popular will” favoured Renamo while all other indications suggest otherwise.
The local authority elections cleared up several factors ahead of the national polls scheduled for next year. First, with barely a year to go, Renamo will be hard pressed to mount a serious challenge that dents Frelimo’s support. That will allow some continuity in the country that faces several major economic and financial crises that demand urgent and focused attention.
On the upside for Renamo, the outcome strengthened its position as the major (only, really) opposition after the MDM failed to make any headway.
While we accept that elections in Mozambique have seldom been in the same room as perfect, there has over several years been no credible evidence of large scale state-sponsored rigging or fraud and this election is likely to be no different.
Renamo may make threats and puff out its political chest, but it has little politically or militarily to back a withdrawal from the peace process for anything but a token period and we expect the talks to resume when the dust settles.
Gary van Staden – Senior Political Analyst

OpEd: Will Frelimo’s local poll victory boost party in Mozambique’s 2019 elections ?

By <a href="https://theconversation.com/profiles/alf-gunvald-nilsen-573050">Alf Gunvald Nilsen</a>, <a href="http://theconversation.com/institutions/university-of-agder-3690">University of Agder</a>
The World Bank’s latest annual report on <a href="http://www.worldbank.org/en/publication/poverty-and-shared-prosperity?cid=EXT_WBSocialShare_EXT&amp;ogImage=http%3A%2F%2Fwww.worldbank.org%2Fcontent%2Fdam%2Fphotos%2F780x439%2F2018%2Foct-1%2FEPD2.png">poverty and shared prosperity</a> has an unsurprisingly positive message that only 10% of the world’s population lived in extreme poverty in 2015, which is the most recent year that available data allows for global poverty estimates to be made.
As World Bank President Jim Yong Kim points out in the foreword to the report, this is “the lowest poverty rate in recorded history”.
This is a story that we have become accustomed to hearing from the Bank, and other significant participants in the debate about poverty and development in the global South (Asia, Africa, and Latin America). But does the story actually hold true? For example, the World Bank measures extreme poverty in terms of the number of people who live on less than USD$1.90 a day. But is this in fact a meaningful measurement of poverty?
World Bank poverty estimates have come in for a lot of criticism. For example, Jason Hickel, an anthropologist at the London School of Economics, <a href="https://www.penguin.co.uk/books/111/1113531/the-divide/9781786090034.html">has pointed out</a> that there’s often a large gap between national poverty lines and the international poverty line stipulated by the bank.
For example, more than 55% of South Africa’s population lives below the country’s upper poverty line, of R1,138 (USD$80) a month. But, according to the World Bank, only 18.85% of the South African population lives in poverty. This suggests that the international poverty lined touted by the World Bank systematically underestimates the extent of global poverty.
This point is partially acknowledged in this year’s report. Accordingly, the World Bank proposes new and higher poverty lines &#8211; USD$3.20 and USD$5.50 a day, respectively. According to the report, almost half the world’s population lives below the USD $5.50 a day poverty line. However, we need to go further than this – indeed, the World Bank’s widely touted story of historically low poverty levels must be rejected.
If we are to have a serious debate about world poverty on <a href="http://www.un.org/en/events/povertyday/">End Poverty Day</a>, we have to start by acknowledging that the global problem of poverty is far more extensive than World Bank rhetoric would have us believe. Two big factors need to be confronted. The first is that the majority of the world’s poor live in countries that have experienced strong economic growth. The second is that the growth strategies these countries have practised create and reproduce poverty.
<h2>Unequal distribution</h2>
The World Bank attributes the supposed historical decline in poverty in large part to the rising wealth of several Asian countries. But, this is a problematic argument. In his recent book <a href="https://global.oup.com/academic/product/global-poverty-9780198703525?cc=za&amp;lang=en&amp;">Global Poverty</a>, development economist Andy Sumner shows how a new geography of poverty has emerged in the global South.
Whether we use monetary estimates – Sumner uses a poverty line of $2.50 a day – or estimates of multidimensional poverty; that is, poverty measured according to health indicators, education levels, and economic standards of living – as many as 70% of the world’s poor currently live in what the World Bank refers to as middle-income countries.
As Sumner points out, poverty in middle-income countries cannot be attributed to an absolute lack of resources. These are countries that have experienced strong economic growth since the 1990s. What it boils down to in middle-income countries like <a href="https://edition.cnn.com/2018/06/26/africa/nigeria-overtakes-india-extreme-poverty-intl/index.html">India</a>,<a href="https://theconversation.com/beating-poverty-needs-partnerships-and-collaboration-not-just-money-101145">Nigeria</a>, and <a href="https://www.theglobeandmail.com/news/world/the-illusion-of-brazils-incomeequality/article37536515/">Brazil</a> is the issue of distribution.
The economic growth that has lifted countries from low-income status to middle-income status is profoundly unequally distributed. As a result, large parts of the populations in these countries are excluded from the benefits that accrue from this growth.
This in turn has implications for how we think about growth strategies and poverty reduction in the global South.
<h2>Global growth and development</h2>
Much of the economic growth that has lifted countries from low-income status to middle-income status has resulted from the emergence of global production networks and global value chains since the late 1970s. Poorer countries have been integrated into these networks in large part due to their large reservoirs of cheap labour. It is this process of industrialisation that has turned low-income countries into middle-income countries.
But if global production networks come with so many developmental benefits, why is it that world poverty is concentrated in countries that have experienced economic growth precisely because they are integrated in these networks? To understand this paradox, it is important to remember that global production networks are comprised of different value tiers, and that different countries and different groups capture different amounts of the value that is created in these networks.
This obviously leads to a <a href="https://www.cambridge.org/core/journals/review-of-international-studies/article/poverty-reduction-through-liberalisation-neoliberalism-and-the-myth-of-global-convergence/FAC3F9EDA9C6B87938804D260B795412">reproduction of inequality</a> – countries in the global South tend to be integrated in lower value tiers.
This is evident in the fact that the distribution of national incomes and wealth at a world scale is still characterised by a pronounced North-South hierarchy. But it is more important still to be aware that countries in the global South that have witnessed strong economic growth have also experienced marked escalations in national levels of inequality. In India in 2016, for example, the richest 10% of the population received 55% of all income. This is an increase of <a href="https://www.aljazeera.com/indepth/opinion/india-wealth-inequality-growing-rapidly-180125084201143.html">more than 20% since 1980</a>.
This pattern of development clearly shows how poverty is a matter of distribution that is related to the kind of employment opportunities that are created when southern countries are embedded in global value chains. The factory jobs that are established when transnational corporations set up shop in countries like Mexico or Vietnam are fundamentally precarious. And it is precarious workers who capture the least of the value that is created in global production networks. This is why <a href="https://www.plutobooks.com/9780745335995/southern-insurgency/">precarious workers live in poverty</a> in middle-income countries in the global South.
What’s clear from this is that we have to ask ourselves what a development policy based on redistribution in favour of the working classes in the global South might look like – because that, ultimately, is the key to ending poverty in an unequal world.<img loading="lazy" decoding="async" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/104963/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />
<a href="https://theconversation.com/profiles/alf-gunvald-nilsen-573050">Alf Gunvald Nilsen</a>, Associate Professor of Development Studies, <a href="http://theconversation.com/institutions/university-of-agder-3690">University of Agder</a>
This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/why-the-world-banks-optimism-about-global-poverty-misses-the-point-104963">original article</a>.

Is the World Bank missing the point about global poverty?

JOHANNESBURG (Reuters) &#8211; South Africa’s President Cyril Ramaphosa on Wednesday appointed a judicial inquiry into the 2 trillion rand ($142 billion) state pension fund, a government gazette said, following corruption allegations.
The PIC is Africa’s biggest pension fund and the biggest investor in South Africa’s economy holding a large volume of bonds issued by government and state-owned firms.
The gazette notice said it will investigate “persistent and continued negative reports about alleged improprieties regarding investments” by the Public Investment Corporation (PIC), which manages assets on behalf of the government employees.
Ramaphosa said the inquiry should issue a final report by latest April next year.
In May, opposition parties called for an investigation into the pension fund’s chief executive Dan Matjila, accusing him of misuse of funds and careless investment decisions.
Matjila has denied the allegations and was also backed by the Treasury, which oversees the PIC.
The PIC’s spokesman could not immediately comment and referred any questions to the Treasury.
In 2017, Matjila was cleared of any wrongdoing by an internal audit committee that looked into the allegations.
But the collapse of VBS Mutual Bank early this year, where the fund has a 25 percent stake, and the resignations of two PIC employees linked to the fraud have raised new questions.
The PIC also has stakes in blue-chip companies across various sectors such as miner Anglo American Platinum, lender Barclays Africa and retailer Shoprite.
($1 = 14.0966 rand)
Reporting by Mfuneko Toyana; Editing by James Macharia

South Africa’s Ramaphosa appoints judicial inquiry into $142 billion state pension fund, here’s why…

JOHANNESBURG (Reuters) &#8211; An inquiry reviewing evidence on Tom Moyane, the suspended head of South Africa’s Revenue Service (SARS), issued an interim report on Tuesday urging President Cyril Ramaphosa to fire the tax official.
The agency has been plagued by infighting over the last three years and is subject to ongoing government investigations.
Judge Robert Nugent, who is heading the inquiry into Moyane, says the suspended tax chief should be removed from office for the “reckless mismanagement of SARS” under his tenure.
“We consider it imperative that a new commissioner be appointed without delay to remove the uncertainty at SARS and enable it to be set on a firm course of recovery so as to arrest ongoing loss of revenue,” Nugent said in the report.
In March, Ramaphosa suspended Moyane, saying he had failed as commissioner of the revenue service and had lost the confidence of taxpayers.
Moyane was not available for comment on Tuesday. He has repeatedly defended his record and denied any wrongdoing.
The president’s office said Ramaphosa was weighing up the contents of the interim report and its recommendations.
As part of that process, Ramaphosa had given a copy of the interim report to Moyane, and invited him to make any submissions on its recommendations.
Moyane, who was appointed in 2014, had been criticised by SARS employees and members of the ruling African National Congress after the tax agency missed revenue collection targets and faced allegations of corruption and mismanagement.
Reporting by James Macharia; Editing by Gareth Jones

South Africa’s Ramaphosa urged to fire suspended tax head, what you need to know…

CAPE TOWN (Reuters) &#8211; South Africa expects Moody’s to release its ratings review after next week’s medium term budget policy statement (MTBPS), Dondo Mogajane, the director general of the National Treasury said on Tuesday.
Mogajane said he met Moody’s representatives at an international financial conference in Bali last week and told Reuters that the ratings agency “will obviously get back to us after the MTBPS.”
Moody’s, the last of the top three agencies to still rate the country investment grade, did not publish the review on Friday as was widely expected.
Reporting by Wendell Roelf; Writing by Mfuneko Toyana; Editing by James Macharia

South Africa’s ratings review to be released by Moody’s after Medium term budget

JOHANNESBURG (Reuters) &#8211; South Africa’s Nedbank Group Ltd said on Monday it will buy back its stock from shareholders who hold less than 100 Nedbank shares as a result of a spin-off by its biggest shareholder Old Mutual.
Old Mutual, which holds 52 percent of Nedbank, has been dismantling its conglomerate structure, created after a series of acquisitions, since it moved its headquarters and primary listing to London in 1999.
As part of the plan, it spun-off a majority stake in Nedbank on Monday and now holds around 19.9 percent.
Nedbank, whose businesses include retail banking and asset management, said in September it had estimated that after the spin-off, it will have a large number of shareholders, increasing from about 20,000 to 500,000.
“For Nedbank Group it will, inter alia, reduce the complexity and ongoing administration costs associated with a significantly larger shareholder base including a sizeable number of Odd-lot holders,” it said in a statement.
Odd-lot holders are shareholders who hold less than 100 Nedbank shares, estimated to be 1.5 percent of its ordinary shares in issue.
Nedbank’s offer price will be at a 5 percent premium to the 10-day volume weighted average price of a Nedbank share at the close of business on Dec. 3, it said. The deal is subject to shareholder approval.
The minority shareholders will be given an opportunity to decide whether to sell their holding or retain it.
Reporting by Nqobile Dludla, editing by Louise Heavens

Why South Africa’s Nedbank is buying back shares from minority shareholders

<figure><img decoding="async" src="https://images.theconversation.com/files/240075/original/file-20181010-72121-1cn15os.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="File 20181010 72121 1cn15os.jpg?ixlib=rb 1.1" /><figcaption>A significant number of South Africans can’t find jobs and scrounge for a living on the sidelines of the economy. 
Shutterstock</figcaption></figure>
<a href="https://theconversation.com/profiles/alan-hirsch-170889">By Alan Hirsch</a>, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>
Nearly a week has passed since South Africa’s <a href="http://jobssummit.co.za/">2018 jobs summit</a>. The two-day gathering produced some useful agreements between the social partners: government, organised labour and business (essentially, big business).
This was the fourth jobs summit in 20 years. The frequency of attempts to find a solution to the country’s unemployment problems isn’t surprising given that South Africa has one of the <a href="https://www.timeslive.co.za/news/south-africa/2018-09-03-more-adults-not-working-than-working-in-south-africa/">highest jobless rates</a> in the world. The unemployment rate has increased from under 22% in 2008 to the current rate of <a href="https://ewn.co.za/2018/07/31/sa-unemployment-rate-rises-to-27-2-in-q2">27.2%</a>.
But the record on delivering results has been mixed, to say the least.
The <a href="https://mg.co.za/article/1998-05-29-threats-to-job-summit">first jobs summit</a> in the post 1994 era was held in 1998 when Nelson Mandela’s presidency was nearing its end and amid a developing country debt crisis. It achieved very little. The next one – <a href="http://www.polity.org.za/article/mbeki-growth-and-development-summit-07062003-2003-06-07">the 2003 Growth and Development Summit</a> – achieved significant agreements. But these were poorly monitored and implemented.
Six years later in 2009 social partners agreed on a <a href="https://pmg.org.za/committee-meeting/10717/">framework</a> to respond to the global financial crisis. In spite of the measures introduced by agreements reached at the gathering, South Africa <a href="https://www.tandfonline.com/doi/abs/10.1080/09765239.2014.11884980">lost</a> nearly a million jobs.
Undoubtedly the outcome of the recent summit is positive. Job-saving elements of the 2009 agreement have been revived. There are forward-looking commitments such as finance for the black industrialist scheme and a focus on the export of manufactured products. There are initiatives for small business support, technical training and a mechanism for the absorption of <a href="http://www.engineeringnews.co.za/print-version/jobs-summit-2018-10-04">graduates into the economy</a>.
But perhaps the most important outcome was that a Presidential jobs council will be established to <a href="https://www.gov.za/sites/default/files/gcis_documents/Jobs_Summit_FrameWork_Agreement.pdf">monitor progress</a>.
As welcome as these developments are, the agreement doesn’t explicitly acknowledge that there might be some fundamental issues in the approach to development and job creation in South Africa. In a <a href="http://www.effective-states.org/wp-content/uploads/working_papers/final-pdfs/esid_wp_105_hirsch_levy.pdf">paper just published</a> Brian Levy and I identify what these might be.
We argue that the <a href="http://www.effective-states.org/wp-content/uploads/working_papers/final-pdfs/esid_wp_105_hirsch_levy.pdf">implicit social compact</a> of the 1990s laid a poor foundation for job creating growth in South Africa. Our view is that unless South Africa revisits the implicit and explicit deals struck at that time, the chances of making serious inroads into unemployment are remote.
But is South Africa in the kind of crisis as Mauritius was in 1968 and Ireland in 1988, where key social players were forced to review the social compact and work together towards a coherent developmental model? And do the social partners have strong enough leaders to arrive at suitable agreements?
These are the questions excitingly raised by the outcome of jobs summit, and should, in our view, be the preoccupation of the President’s jobs council.
<h2>The 1990s compact</h2>
An elite bargain over the country’s economic framework formed an essential part of the foundation for a democratic South Africa. The context of the bargaining process included the capitulation of the communist block, economic stagnation in most African countries, and a relentless campaign by the white South African business community for government not to intervene in the economic framework.
There was the threat of flight of capital and white citizens who were virtually monopoly owners of wealth and key economic skills and networks. What emerged was an apparently strong commitment to market-opening reforms.
The result is well known. The economic policies emphasised what was then called “getting the prices right and what we call &#8220;disciplining reforms”. This included: trade and financial liberalisation, fiscal restraint, tougher competition laws and a conservative mandate for the central bank.
Conversely, policies lacked on the side of interventionist mechanisms that were effective in some more successful developing countries. These included support for industrial innovation, cluster development and industrial policy which would have encouraged domestic investment in job creating growth.
Policy choices weren’t the only problem. Key players in the economy were pursuing new agendas as their options had broadened with the end of South Africa’s economic isolation and the repression of apartheid.
<a href="https://dash.harvard.edu/bitstream/handle/1/3350068/aghion_southafrica.pdf?sequence=2">South African corporations</a> were focused on narrowing their South African operations and spreading their activities and assets abroad. While they cast off some non-core assets, the corporations remain extraordinarily powerful.
At the same time, the trade unions used their bargaining power with government to strengthen worker rights. All labour laws had to go through the newly formed National Economic Development and Labour Council (NEDLAC) and could not go through until all parties were happy. The result was that big business, which always dominated the business delegation, agreed to labour laws that they could manage with their sophisticated human resource departments and because of the choices they could exercise. However, these laws were not all easy to implement for small and medium companies.
In addition, the reformed industrial training system was poorly designed which set back industrial training for many years.
The market opening reforms combined with the labour reforms achieved very little in the way of supporting dynamic investment and innovation. So, the elite pact that emerged reflected what powerful stakeholders were prepared to agree too – not a coherent package derived from carefully thought out trade-offs.
Compared with outcomes of more successful social pacts like Mauritius in the late 1960s and Ireland in the late 1980s, South Africa’s social compact failed. And over time commitment to the elements of the compact waned.
<h2>In a different world</h2>
In a different world, perhaps, had South African elites agreed on a clear developmental model and had they strived for suitable strategies, the outcome might have been very different. There would have been a much stronger emphasis on the more interventionist kinds of supportive industrial policies.
It’s not too late. More recently, industrial policy has formed part of the approach of government as seen in major initiatives in several sectors.
Informed analysts in South Africa are now asking “Where is growth going to come from?” Skilled people are streaming out the country as they did in Mauritius in the 1960s and in Ireland in the 1980s. Could it be that this is the moment for a coherent, developmental social compact?<img loading="lazy" decoding="async" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/104591/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" />
<a href="https://theconversation.com/profiles/alan-hirsch-170889">Alan Hirsch</a>, Professor and Director of The Nelson Mandela School of Public Governance, <a href="http://theconversation.com/institutions/university-of-cape-town-691">University of Cape Town</a>
This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/south-africa-wont-create-jobs-unless-it-settles-on-a-new-social-compact-104591">original article</a>.

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