Monthly Archives: March 2014

Saps Ready for Upcoming Elections

The South African Police Service (SAPS) stands ready to assist in democratic South Africa’s fifth elections.

“We are working flat out to prepare for the elections and I can say that we are very ready,” National Police Commissioner General Riah Phiyega said on Monday.

In an SABC interview, the national commissioner said that the police service has scaled up its capacity in terms of operations.

“Last week I was with the minister [Police Minister Nathi Mthethwa] where we were passing out additional trainees from our local municipalities, who are going to support the current Public Order Policing (POP) capacity, to ensure that South Africans have a peaceful, election period,” she said.

Millions of South Africans have registered to vote on May 7 this year.

Last month, Cabinet applauded eligible South Africans for registering to vote.

Acting Cabinet spokesperson Phumla Williams said the executive welcomed the registration of over 80% of all eligible voters during the successful registration campaign by the Independent Electoral Commission (IEC).

“In the spirit of celebrating and commemorating 20 years of freedom, Cabinet commends the IEC, political parties and members of society, whose combined efforts ensured that more eligible voters registered,” said Williams.

The first 2014 Cabinet meeting held this week, further commended the active participation by eligible voters.

Farlam Commission

On allegations of a cover up on the tragic events at Marikana, whereby two witnesses have told the Farlam Commission that were told to lie about details of the shooting at Marikana in 2012, Phiyega said the police would address the matter. Two separate witnesses have told the commission they were instructed to lie about details of the shooting at Lonmin’s Marikana mine, in 2012.

The Judicial Commission of Inquiry, led by Judge Ian Farlam, had been appointed to probe the tragedy in Marikana, where more than 44 people were killed during a strike by miners.

“We as the police have fully cooperated with the commission. You’ll also be aware that many of our police have already given their testimony to the commission. We shall await our opportunity to respond to the allegations that have been made and indeed we shall do as truthfully as we’ve done [before],” said the commissioner.

SAnews.gov.za

Source : SAnews.gov.za

The Financialisation of the South African Economy and the Havoc It Wreaks [analysis]

It has become commonplace for South African policymakers, business leaders and pundits, to extoll the virtues of South Africa’s “world-class” financial system.

Indeed, in post-apartheid South Africa the financial sector has grown at almost double the rate of the economy as a whole.

Before we applaud such dynamism we must consider whether the greatly expanded role of finance in our economy helps or hinders our ability to tackle the enormous developmental challenges we face.

The triple crises of unemployment, poverty and inequality are perpetuated by the manner in which the economy is organised.

Two key characteristics are low levels of investment – insufficient money dedicated to developing new or existing businesses – which has fallen from 27% of GDP in the 1970s and early 1980s to 17% in the democratic era, and the heavy concentration of the economy around mining, industries linked to mining, energy and finance.

The “financialisation” of the post-apartheid economy has been crucial in precipitating the former and maintaining the latter.

Financialisation refers not only to the growth and proliferation of financial institutions, actors and products, but to the increased centrality of financial markets in all aspects of social, economic and political life, and the manner in which the interests of financial markets have been imposed.

Today we take credit cards, pension funds and stock market updates on the hourly news for granted, we accept that a business should be judged by its share price and that governments must appease “the markets” this was not always so.

We witness financialisation in the transformed operations of financial institutions, financial markets, non-financial corporations and households, and the relationships between these sectors.

It is an international phenomenon of the last three to four decades with common global features and local specificities.

Government policy has actively promoted financialisation. In South Africa financial market liberalisation – reducing domestic regulation and international barriers to capital moving between countries – has been a cornerstone of government policy over the past two decades.

South African financial institutions have been transformed. They do not, as traditionally argued, serve primarily to pool savings and channel those towards long-term productive investment, that is investment in growing or starting factories, farms, mines, lumber mills, small businesses, transport services and the like. Rather they have increasingly engaged in short-term speculative investment and the extension of credit to households.

Domestic financial markets have also undergone transformation. The JSE has more than doubled its size relative to the total economy, and commodity, currency and derivative markets have been established and have burgeoned.

This has an impact on the “real” economy in profound ways. For example, the increased global speculation in commodity markets (essentially betting on the price of commodities such as gold, platinum and maize) means that the prices of these commodities have become separated from actual production costs and demand.

This can cause instability and volatility in these markets with the potential for bubbles and crashes, and encourage firms to play the stock market (where rewards may be higher) rather than invest long term. Considering the centrality of mining in South Africa, the consequences are potentially dire.

We have also witnessed precipitous increases in capital flows between countries. Democratic South Africa has failed to attract substantial long-term foreign direct investment in new enterprises.

Rather, liberalisation has induced short-term capital in and out flows, supported by high interest rates, and producing exchange rate volatility and crises (as experienced recently).

In addition, liberalisation has allowed South African corporations to move funds abroad on a grand scale, both legally and illegally. All of these have severely restricted productive investment.

Institutional investors (pension funds, insurers, hedge funds and private equity) have assumed a new prominence in South African markets, with their assets quadrupling since the early 1990s and their share of ownership on the JSE doubling.

Institutional investors tend to see the companies they buy as “bundles of assets” that can be bought and sold with more concern for their share price than for long-term growth prospects.

Such “short-termism” has also deeply affected non-financial corporations (NFCs) (that is, companies which are not banks and investment houses but firms involved in mining, manufacturing, construction etc.).

Worldwide we have seen a prioritisation of “shareholder value”. This entails attempting to boost the share price and distributing dividends to shareholders even at the expense of long-term investment.

One way of inflating a share price is for a company to buy back their own shares, using funds that previously would have gone towards long-term investment.

In 2011 the world’s 40 largest mining companies spent $26 billion on such “share buybacks”, which were legalised in South Africa in 1999. Dividends paid out by South African NFCs rose from 25% of their gross operating surplus in 1995 to a height of 45% in 2007.

Anglo American, arguably South Africa’s most important company, saw a drop in profits of $6.2 billion in 2012 but still increased its dividend payout by more than 10%, and spent $10.5 billion on share buybacks over a period of four years.

The same firms have also increasingly engaged directly in financial market trading and speculation. Their holding and trading of financial assets has risen significantly, as has the portion of their income that they receive from financial market activity.

In addition, the financial assets they hold, and their borrowing and lending more generally, are increasingly short-term in nature.

All of these trends have “crowded out” long-term productive investment, and it is long-term investment that is needed to grow businesses and create jobs.

South African households have also become financialised and subject to the whims, volatility and interests of financial markets.

Household debt has risen from 54% of disposable income in 1990 to 75% in 2013. This has fuelled consumption, which drove economic growth in the 2000s, but for sustainable growth you need investment, not only consumption.

Between 1997 and 2008 this debt also fuelled the world’s most exuberant real estate bubble. Real estate bubbles not only pose a threat to economic stability (as the recent financial crisis in the US vividly illustrates) but also drive up land and housing prices.

This makes well-located land more costly and perpetuates apartheid-era housing patterns with the poor located at the periphery of cities.

Wealthy households have also increasingly acquired financial assets, either directly or via their pension or insurance funds.

This means more money at the fingertips of large investors and exposes households to financial market instability.

But it also means the benefits of financial market inflation accrues to a minority of wealthier households the richest 10% hold 85% of financial assets, making inequality in financial assets one and half times higher than income inequality – itself the highest in the world.

The consequences of all these facets of financialisation are dire.

First, financialisation channels funds into financial market speculation, increases short-termism, and prioritises shareholder value, all of which reduce productive long-term fixed investment.

Without such investment the economy cannot diversify away from its reliance on minerals, energy and finance and grow in a manner that creates decent jobs.

These processes also place pressure on management to cut costs which leads to retrenchments, wage reduction, a casualisation of the labour force and a lack of investment in skills training.

Second, businesses and households are increasingly exposed to the volatility and instabilities inherent in financial markets.

Third, financialisation accentuates inequality through funnelling wealth into financial assets and concentrating these in the hands of a small minority.

Finally, the pervasive power of financial markets make policymakers (sometimes unwillingly, sometimes as willing accomplices) beholden to those markets.

This both undermines democracy and buttresses the free-market economic policies that have so spectacularly failed to improve the lives of the vast majority of South Africans.

Isaacs is an independent economist and PhD student at SOAS, University of London.

Source : The South African Civil Society Information Service

Dept Clarifies No Textbook Claims

The Department of Basic Education (DBE) has clarified insinuations that there are schools which have not received textbooks.

According to media reports, some schools in Limpopo say that between them they still need 18 000 books. The case, initiated by lobby group Basic Education for All, through civil rights organisation Section27, is due to be heard in the North Gauteng High Court in Pretoria on Tuesday.

The parties want the court to rule that the Basic Education Department must provide all outstanding books by 7 April.

“It is untrue that schools have not received textbooks. More than 6.5 million have been delivered in 2014 and an additional 306 000 have been ordered to address reported shortages,” the department said in a statement on Monday.

The majority of the 18 000 books alleged to be shortages are actually books from previous years, which schools were supposed to retrieve from learners at the end of the school year.

“We acknowledge that there are schools that have reported shortages in February and orders have been made and delivered. We are taken aback by the alleged shortages as it is unusual to have shortages once deliveries have been made on appropriately reported shortages of textbooks.

“It is surprising to learn that the same organisation that applauded the Limpopo Education Department and DBE for the successful procurement and delivery of books is the same organisation that has now turned to the courts,” the department said.

This NGO, the department said, had earlier this year undertaken to inform the public that they would work with the departments in resolving all issues regarding textbooks.

The department said the NGO had now elected to work with some School Governing Bodies (SGBs) to approach the courts on the same matters they said they would cooperate with the department on.

For the record, the department said, some of the SGBs have not even reported these shortages to the authorities in Limpopo or DBE.

“The evidence at our disposal has revealed that the shortages reported are not even books that are in the catalogue.

It appears that the majority of the 39 schools listed in the court appears did not check or verify the deliveries of textbooks against the orders placed. They belatedly only did so after the aent of the 2014 school year during 2014,” the department said.

The department said there had been opportunities for the schools to report the shortages to the Limpopo Department of Education. Workshops were held and attended by the representatives of the schools, where they were informed about the process to be followed in the event of shortages.

The department has taken extra ordinary steps to ensure that books are delivered on time and that any reported shortages are addressed. This includes holding a series of meetings with school principals in November and December 2013.

The meetings were called to engage school principals on how to deal with textbooks procurement, shortages and all other matters regarding textbooks.

“In those meetings nothing came up on the issues raised in the court papers that we have received. We are left with no option but to suspect that there is a nefarious agenda at play,” the department said.

The department said it continues to welcome reports of shortages and would deal with the matter immediately.

– SAnews.gov.za

Source : SAnews.gov.za

Pre-Election, South Africa Shows Off Its Brighter Side [analysis]

Richard Dowden spent last week touring South Africa looking at projects where the country leads the world or is working on things you would not expect to find in Africa. This is the first of his reports. Each day this week he will add a short description of another project.

In South Africa last week I saw: a mobile robot being programmed, a magical film studio, a radio telescope system that explores galaxies and dark matter, polluted mine water being purified. And I went down a coal mine.

Meanwhile, South Africa’s newspapers ran reams on the Pistorius murder trial and the row over the 200 Million Rand (pound11.3 million) ‘renovation’ of President Jacob Zuma’s private residence at Nkandla.

Everyone knows what news is but no one can define it. In my experience humans are drawn mostly to the bad stuff. The coverage of success is often limited to lives of celebrities that we identify with but envy. So the headlines are full of human dramas, scandals and celebs that feed that human need – plus a bit of politics. But if you treat ‘the news’ as a first draft of this week’s human progress, you will be misled – it does not give a comprehensive picture of where a country, or the entire human race, is headed.

Africa – including South Africa – has suffered from this. It has been a source of ‘bad’ news stories because its day to day life and politics do not affect western countries or interest western media. Until recently only the disasters, the wars, the suffering got covered and that has accumulated into a picture of perpetual – and continent-wide – African misery.

South Africa’s fundamental reality is that the vast majority are much better off than they were 20 years ago when Nelson Mandela was elected president. Real per capita incomes are 27% higher. The economy has grown by more than 60% since he was let out of jail. Yet there is a widespread feeling that the country is not where it could be or should be. The gap between rich and poor has widened and many South Africans are worse off than they were then.

When the government set up Brand South Africa to promote a better global perception image of the country I wrote an article saying this was nonsense. Improve the reality, I said, and the image will take care of itself. Branding also seemed a commercial concept which should not be applied to nation states. The word should be ‘reputation’.

But because journalism tends to deal with bad news or single issues, these became The Narrative in places like Africa and other parts of the world whose progress has little global impact on America or Europe. The story of Columbia is drugs, the story of Brazil is the rainforest, and the story of Australia is bush fires (and cricket). Africa’s story is war, poverty and elephants.

And the story becomes the one-dimensional image – usually created by outsiders. And the image affects investment decisions. So I now concede that African countries do need to try to manage how they are viewed by the rest of the world. And that means bringing in journalists to write about progress and improvements as well as disasters, war and hunger. So last week I accepted an invitation to visit South Africa to look at some of the better things it is doing in the lead-up to the May 7th election.

We were a small but diverse group – two young Chinese workaholic women journalists, a tall, quiet American, a British Turkish woman who writes for an Africa magazine, the editor of Africa.com who is Nigerian-American and a South African journalist. With our black South African guides we were hard to label. The first destination was not good a trip to a poor part of Soweto, a reception area where people newly-arrived from rural areas stay while they look for somewhere to live. It felt like a visit to the zoo with the ‘local’ guides as the keepers. We were assured that what we were seeing was real and told not to hand out money, but any encounter between poor people and tourists is very uncomfortable and unreal. They know the patter to feed the visitors and I sensed they had learned their lines.

Then we drove through Diepkloof, the posh part of Soweto, where I noticed that the smart two or three story freestanding houses, unlike houses of the same size in the richer parts of the northern (formerly whites only) suburbs, had little protection. And their very smart Mercedes, BMWs and some even flashier cars were parked in the street – unthinkable in the northern suburbs. No one steals here I am told. “If you steal a car from here people will see it and find the thief. But if you steal a car in the northern suburbs, the owner will not dare to look for it here,” says my guide.

We then drove to the Soweto museum near the Hector Pietersen memorial which marks the death of the 14 year-old demonstrating student, shot by police in the 1976 student uprising. The picture of his body being carried away is one of the iconic images of that era, as powerful as the picture of the burning Vietnamese girl fleeing her napalmed village. The museum gives the squalid history of Soweto’s beginnings in the 1930s and the fight-back in pictures and film on loops.

The biggest transformation I saw was around the Regina Mundi Catholic church where so many meetings were held, demonstrations began and people were shot or clubbed by police. I remember the church in the late 1970s as a bleak, barren ground covered in broken things, stones and rubbish. Nearby was a tiny shack, the clinic where the great Albertina Sisulu worked as a nurse. She was banned from organising meetings so could only meet one person at a time. I went to see her and, once she had completed her work in the clinic and was able to meet me alone, she made me tea and told me about life, misery and hope in Soweto. Then on her fingers she counted her close family. All were either in prison or exile except one who was at university: “I don’t know where I went wrong with that one,’ she said lightly.

Now the clinic is gone and the whole area is grassed over and a tree-lined avenue leads to the front of the church. Groups of coolly dressed kids hang out, laughing and chatting. And the thick yellow Soweto smog from the power station and a million small coal fires has gone, replaced by electricity. The endless rows of tiny brick houses without water or electricity have mostly been rebuilt, except for Mandela’s old house in Orlando which is now a museum and tourist venue surrounded by stands selling merchandise. I found it hard to feel what it was really like. However, I was shocked to see that many of the notorious hostels are still being used. Built to cram in migrant workers from all over southern Africa, some still do not have running water.

In the few unused spaces in Soweto, squatter camps of corrugated iron and plank shacks still spring up as more and more migrants come to the city, but they are gradually being transformed into new homes. In the past a white man standing here would have been watched warily and at times attacked depending on the anger levels. Last week I never felt anything but safe. Instead I felt comfortably ignored. The only time my stomach churned was when one of our group, Sinem from Turkey, decided to do the bungie jump from a platform between the two cooling towers at the disused power station.

Richard Dowden is Director of the Royal African Society and author of a href=”http:astore.amazon.co.ukroyaafrisoci-21detail184627155X” target=”_blank”Africa altered states, ordinary miraclesa. Follow Richard on twitter @DowdenAfrica

Source : African Arguments

KZN Voters Urged to Vote Agang Nationally [press release]

Agang SA, the start-up political party headed by Dr Mamphela Ramphele, ex-Managing Director of the World Bank and Vice-Chancellor of the University of Cape Town, has registered candidates for seven provinces and for the National Assembly but will not be competing for representation in the KwaZulu-Natal provincial legislature.

According to deputy national spokesperson Andrew Gasnolar, the party has done remarkably well to put itself in the running in so many provinces and to have attracted a g national candidates list that includes Paul O’Sullivan who was instrumental in bringing down Jackie Selebi, the previous head of Interpol and the South African Police Service, and Radovan Krejcir a notorious underworld figure.

“The South African political system is tilted against new entrants to the party political landscape as they receive no support from the national purse, no matter how demonstrable their support or commitment, so we have had to build our organisation from the ground up using our own resources. To have got this far in so short a time is testament to the work and sacrifices of thousands of volunteers and the support of supporters on the ground who have resourced our party. Unfortunately, in the time we have been in existence, we have fallen just short of building a competitive party in just two regions, including KZN,” says Gasnolar.

“We are aware that we have attracted substantial support in the province though, and invite voters to nonetheless support us at the national ballot by voting Agang SA and sending the gest anti-corruption team in party politics into the National Assembly,” says Gasnolar.

Besides O’Sullivan, the Agang SA national assembly candidates include Mike Tshishonga, who blew the whistle while a deputy director-general in the Department of Justice and brought to heel a range of corrupt practices in the department, as well as John McConnachie, and aocate from the Eastern Cape, and Andrew Gasnolar, an admitted attorney.

“Agang SA is in the process of building a g organisation and has set itself the goal of continuing to build a citizens movement after the election,” says Gasnolar, “so even though we will not be competing for the provincial legislature, we urge all voters in KZN to exercise their vote for Agang SA at the national level so we can continue our fight against corruption that has seen the likes of Nkandla come to light.”

Source : Agang South Africa