Strangers in a new land
Vicki Robinson
08 Jul 2004 23:59
Lisa has her monthly period, which means she can’t work. Her cellphone screen flashes incessantly with the names of her regulars, but she only answers her boyfriend’s calls. Her boyfriend, Pieter, knows her line of work, but condones it because he is unemployed. In the growing poor white community, sex is a key source of income.
Seventy-five years after the armblank (poor white) crisis of the 1930s, the phenomenon is resurfacing. White unemployment has nearly doubled since 1995, according to the Institute for Security Studies.
Today 430 000 whites, of a total white population of 4,5-million, are “too poor to live in traditional white areas” and 90 000 “are in a survival struggle”, says Lawrence Schlemmer, director of the Helen Suzman Foundation. Of these, 305 000 are Afrikaans-speaking and 215 000 speak English.
Since 1998 these figures have increased year-on-year by 15%. According to a survey by the South African Institute of Race Relations, white unemployment increased by 74,4%, using the expanded definition, between 1998 and 2002, compared with the national average over the same period of 39,8%. However, the growth of white unemployment is off a much lower population base than black unemployment.
A key goal of the National Party in the heyday of apartheid was to uplift poor whites by using the state and semi-state sectors to provide them with jobs and housing, reserving certain jobs for whites, favouring their trade unions and shoring up the farming sector.
But for the first time in the mid-1970s, there were more white-collar than blue-collar Afrikaners, and the policies of the NP shifted accordingly. Poor whites were increasingly abandoned by the state.
The 1994 election and the advent of majority rule has accelerated the downward precipitation of whites without capital or marketable skills. In desperation, they are clinging to what they know: religion, xenophobia and racism. Many still believe their skin colour puts them above menial labour, and prostitution has become a common way of earning a living.
“I do everything except Greek style and blacks,” says Lisa, who lives in suburban Vanderbijlpark, a microcosm of white economic distress. “I work nine till five because in the evenings I like to spend quality time with my kids.” She only takes bookings from businessmen and earns up to R15 000 a month.
Her office — a cerise room with a double bed, a crimson lounge suite, and a table carrying with a bottle of Johnson’s baby oil, government condoms and Courtleigh cigarettes — is in her backyard next to her swimming pool. Her children are aware of her business. They say they accept it because it gives them a house of their own and a higher standard of living.
Another Vanderbijlpark prostitute, Nikkie, has size 44E breasts with a red rose tattooed next to her right nipple, making her black string top look like an overstuffed couch. Her husband is unemployed, and she has two small children.
Often Nikkie goes away for weekends with groups of farmers on hunting trips to Kuruman in the Northern Cape. On these occasions she earns R4 500 in addition to her average R2 000 weekly earnings.
“I only do men over 30 because I shake the shit out of anyone younger,” she jokes. “My husband doesn’t mind — it actually excites him. Often we have a passionate session after a full night’s work. My only three rules are whites only, no anal sex and cleanliness — you can’t do a client smelling like a three-day-old snoek.”
Lisa and Nikkie both insist survival has forced them into the “game”.
Poor whites typically compensate for their low socio-economic status with aggressive racism. In an era when many black people are upwardly mobile, it serves to bolster their self-pride.
Estelle Claasens lives in a former Iscor home, now owned by the church, with six other families — each one crammed into a bedroom. Last month she walked out of her job — washing dishes at the café in Vanderbijlpark — because she refused to wear the required green overall. “I was happy to wash the floors and the toilets and the dishes but when they tried to dress me like a kaffir, that’s when I said thanks, but no thanks,” she says.
Sucking hard on her cigarette and blowing a yellow smoke-stream from the corner of her mouth, she is a bottle-blond caricature of Patricia Lewis.
“The government, they must build us those — what youmacall it?” she says twisting her plump hand in the air for inspiration. “Those RDP houses. But ours must be here and the kaffirs must be over there. We don’t have to live by each other because poor blacks will always be much lower-class than poor whites.”
White families live in the garages of many Vanderbijlpark homes — a lucrative business for the home-owners, who charge between R500 and R700 a month in rent.
White poverty first came to prominence in South Africa during the 1920s when president Jan Smuts singled it out as the greatest threat to Afrikaner survival. Initially a rural problem of subsistence farmers and bywoners (share-croppers), it developed into an urban phenomenon during the Great Depression. The official tally of poor whites increased from 10 000 in 1890 to 535 000 in 1936. They lived on the periphery of white society; many were barely literate and almost unemployable.
In 1948 DF Malan romped to power on the slogan “The white man must remain master”, and set about creating the apartheid system that would allow whites “to remain white and live white”. An economic safety net was constructed by the apartheid state through the colour bar, the distinction between “civilised” and “uncivilised” labour, protectionist policies for companies that employed whites, and minimum wage laws that insulated semi-skilled whites from competition by unskilled blacks.
The Apprenticeship Act of 1922, a mainstay of apartheid labour legislation, is ironically the downfall of many poor whites today. It stipulated a standard six pass as a minimum qualification for apprenticeship in 41 trades, including the giant iron and steel industries.
A privatised Iscor — whose Vanderbijlpark plant has shed 16 000 jobs in the past 10 years — is the source of most white poverty in the Vaal Triangle. Poor whites were Iscor “appies”, like their fathers before them, at a time when state-owned businesses provided sheltered employment for whites and their children. Today, their lack of formal education renders them redundant.
Racial transformation over the past decade, including economic redress in the form of affirmative action and black economic empowerment, has deepened their despair. “Whites have been set quite a severe test by transformation policies,” says Schlemmer. “Whenever a population is put to this kind of test it produces heightened performance among those who are confident and well-educated, while some drop out at the bottom. In other words, it increases inequality. It is plunging the minority at the bottom into deeper poverty and sharpening the wits at the top end.”
In 1994 44% of civil service posts were held by whites; by last year this had dropped to about 20%. In 1996 almost 50% of technicians and artisans were white; today the figure has fallen to about 20%.
With the sense of abandonment goes fatalistic inertia and heightened religionism. The houses of poor whites are full of Durer’s praying hands and other religious paraphernalia; all insist God has sent them poverty as a test. Rather than job-hunt, many sit in their front yards — uncovered patches of ground littered with cigarette butts, dogs and chickens — waiting for divine dispensation.
In the younger generation, rebellion typically takes the form of dabbling in Satanism.
Poor whites are detached and alienated from post-1994 politics, although some express dismay at former president FW de Klerk’s failure to drive a harder bargain for whites.
Bertus Bornman, a garage-dweller who earns R5 200 as a boiler operator at Iscor, complained that President Thabo Mbeki “should stop looking outside the country, and look inward” at its problems.
Most refuse to take “charity” from the current government. They are aware of assistance in the form of child and disability grants, but have not bothered to find out how to access them. “We’ll never beg,” said Nikkie.
Despite the professions of sturdy self-reliance, there is heavy dependency on private charity from middle-class Afrikaners, church organisations and Child Welfare. The Vanderbijlpark Christian Centre, a local church, has three homes for destitutes in Vanderbijlpark, while the NG Kerk has arranged support groups for alcoholics and the mentally ill.
Alcohol abuse and domestic violence are rife, and suicides or attempted suicides apparently common among the youth. Sarie de Preez (37) lives with her mother, who now provides for her, after her drunken husband, Bennie, nearly beat her to death with a plank in front of her five-year-old twin boys.
Felicity Curry (17) says she tried to kill herself last year by swallowing 28 pills after being raped by the leader of the Satanist cult. She lost her virginity at 13, after a lodger in her mother’s house gave her a choice: sex, or he would reveal her smoking habit to her parents. Her ankle is greyed with a slapdash tattoo that reads “Sex Cat”; the words “Bad Bitch” encircle her navel. She claims to have weaned herself from addiction to dagga and ecstasy.
There is an eeriness about Vanderbijlpark at weekends. The enduring image is of dilapidated Iscor homes, grimy children spinning tops on dusty lawns, and their dull, bleary-eyed fathers leaning on crooked gates.
“Die witmense kry swaar en die kaffirs kry lekker [Whites are suffering and kaffirs are doing great],” complains Bornman. He is a stranger in a strange, new South Africa, hopelessly alienated from its politics, washed up by change, imprisoned by a racial pride that harks back to a vanished era. He is one of apartheid’s hidden victims.
Tuesday, November 28, 2006
Limbo of the white squatters
Limbo of the white squatters
Vicki Robinson
12 Jul 2004 08:37
Seventeen-year-old Francine Walkenshaw tried to go back to school last year, but gave up when better-dressed pupils jeered at her: “Why do you live like a squatter? What did you do wrong?”
Francine, her father Casper and her two brothers live in Lochvaal Emfuleni, on the outskirts of Vanderbijlpark on the Sasolburg road. It is one of at least three white squatter camps that have sprouted in the Vaal Triangle.
None of the children who live there have finished school, and Francine, a quiet, pale girl, was forced to drop out in grade eight. Last year she tried to return to the local high school where poor children are subsidised, paying a R50 registration fee and contributing money when they can during the year. After being rejected by the other pupils, she never leaves Lochvaal. She wants company but has no friends. Her dream is to own a pair of Nike takkies and to live somewhere “restful”.
The camp is a litter of corrugated-iron structures, tents, decrepit caravans, scrap metal, cans, weeds and emaciated mongrels. The people who live there have the glazed, faraway look of sleepwalkers. They rarely wash their clothes, and turn a sullen, taciturn face to the outside world.
A typical white squatter camp is located on a private plot owned by a middle-class Afrikaner or a charity organisation. Usually the landlord lives in a respectable home with the shack settlement mushrooming behind it, hidden from the public eye.
The landlady of Lochvaal Emfuleni is Sally Bruwer, who spends most of the day in green curlers, bellowing orders because her legs can’t carry her enormous bulk.
Forty homeless whites currently live there, but the monthly turnover of residents is much higher, at about 800. Drifters or temporary workers constantly come and go.
Bruwer says the settlement is sustained by donations, usually dropped off by anonymous well-wishers. A communal kitchen offers a daily menu of pap and one spoon of sugar in the morning, and pap and sauce for lunch and supper. There are two long-drop lavatories that are humid and fusty, with used toilet paper lying on the floor.
Francine’s father was once a fitter and turner at Sasol, earning a monthly wage of R4 500. Five years ago he was retrenched with a R100 000 package, but blew it on a pyramid scheme. His wife walked out on him and their children. They moved here three months ago, and live in a rusted caravan and a blue tent. The canvas is rotting.
Casper has stopped looking for work. His last gainful employment was menial labour — bricklaying and digging holes — for R450 a month and his cash reserves are dwindling. No longer alert, he seems unable to fight the dullness that has settled on him.
The Walkenshaws’ neighbour, Hannes Schoeman (44), is mentally ill. He is a filthy six-footer with an obsession with shoes — because, he says, his penniless upbringing forced him to go barefoot as a child. He wears three pairs of shoes, one inside the other, and spends his day repairing other items from his extensive collection of tattered footwear.
Schoeman’s house, a 5mx4m cement and corrugated-iron hovel, is filled with scrap he has hoarded. He wears a piece of wire around his neck “to keep my neck up to keep me proud”, he says.
Some of the sleeping arrangements are communal. Ann (25), who has a five-year-old son, Kyle, and is eight months’ pregnant, lives in a room with eight other women and two children. She moved to the area three months ago from Newcastle in KwaZulu-Natal, to escape an abusive husband.
To earn their keep, the people in the camp are given chores like cooking, gardening and building. They go about these, listlessly sucking on cigarettes and staring into the middle distance.
They have lost touch with the world and live a vacant existence. Here the sons and daughters of impecunious whites, once elevated by apartheid, have become the detritus of democracy.
Thank you to Carla Lewis for translating
Vicki Robinson
12 Jul 2004 08:37
Seventeen-year-old Francine Walkenshaw tried to go back to school last year, but gave up when better-dressed pupils jeered at her: “Why do you live like a squatter? What did you do wrong?”
Francine, her father Casper and her two brothers live in Lochvaal Emfuleni, on the outskirts of Vanderbijlpark on the Sasolburg road. It is one of at least three white squatter camps that have sprouted in the Vaal Triangle.
None of the children who live there have finished school, and Francine, a quiet, pale girl, was forced to drop out in grade eight. Last year she tried to return to the local high school where poor children are subsidised, paying a R50 registration fee and contributing money when they can during the year. After being rejected by the other pupils, she never leaves Lochvaal. She wants company but has no friends. Her dream is to own a pair of Nike takkies and to live somewhere “restful”.
The camp is a litter of corrugated-iron structures, tents, decrepit caravans, scrap metal, cans, weeds and emaciated mongrels. The people who live there have the glazed, faraway look of sleepwalkers. They rarely wash their clothes, and turn a sullen, taciturn face to the outside world.
A typical white squatter camp is located on a private plot owned by a middle-class Afrikaner or a charity organisation. Usually the landlord lives in a respectable home with the shack settlement mushrooming behind it, hidden from the public eye.
The landlady of Lochvaal Emfuleni is Sally Bruwer, who spends most of the day in green curlers, bellowing orders because her legs can’t carry her enormous bulk.
Forty homeless whites currently live there, but the monthly turnover of residents is much higher, at about 800. Drifters or temporary workers constantly come and go.
Bruwer says the settlement is sustained by donations, usually dropped off by anonymous well-wishers. A communal kitchen offers a daily menu of pap and one spoon of sugar in the morning, and pap and sauce for lunch and supper. There are two long-drop lavatories that are humid and fusty, with used toilet paper lying on the floor.
Francine’s father was once a fitter and turner at Sasol, earning a monthly wage of R4 500. Five years ago he was retrenched with a R100 000 package, but blew it on a pyramid scheme. His wife walked out on him and their children. They moved here three months ago, and live in a rusted caravan and a blue tent. The canvas is rotting.
Casper has stopped looking for work. His last gainful employment was menial labour — bricklaying and digging holes — for R450 a month and his cash reserves are dwindling. No longer alert, he seems unable to fight the dullness that has settled on him.
The Walkenshaws’ neighbour, Hannes Schoeman (44), is mentally ill. He is a filthy six-footer with an obsession with shoes — because, he says, his penniless upbringing forced him to go barefoot as a child. He wears three pairs of shoes, one inside the other, and spends his day repairing other items from his extensive collection of tattered footwear.
Schoeman’s house, a 5mx4m cement and corrugated-iron hovel, is filled with scrap he has hoarded. He wears a piece of wire around his neck “to keep my neck up to keep me proud”, he says.
Some of the sleeping arrangements are communal. Ann (25), who has a five-year-old son, Kyle, and is eight months’ pregnant, lives in a room with eight other women and two children. She moved to the area three months ago from Newcastle in KwaZulu-Natal, to escape an abusive husband.
To earn their keep, the people in the camp are given chores like cooking, gardening and building. They go about these, listlessly sucking on cigarettes and staring into the middle distance.
They have lost touch with the world and live a vacant existence. Here the sons and daughters of impecunious whites, once elevated by apartheid, have become the detritus of democracy.
Thank you to Carla Lewis for translating
Bank charges under scrutiny
Bank charges under scrutiny
Vicki Robinson
30 August 2004 09:31
Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) are unbanked, partly because of exorbitantly high bank charges.
(Photograph: Tebogo Letsie)
Half of the country’s population does not participate in the economy because they cannot afford the hefty bank charges to run a savings account — built-in insurance against “high-risk” clients.
The combination of negligible returns on deposits and high charges for deposits and withdrawals means that saving for South Africa’s poorest is a pipe dream. The effective returns in all except one of the banks that offer entry-level savings accounts are negative — you end up with less money than you banked (see table).
A wide-ranging report, Concentration in South African Banking, released for public comment this month by a National Treasury and South African Reserve Bank task team highlights the lack of competition in the banking sector.
“Disclosure of the cost of banking services is weak, as is the disclosure of the return on savings accounts, both of which undermine the consumer’s ability to compare the products of different institutions and thus competition,” says the report.
“Banks generally speak in terms that the guys at the bottom really find bewildering,” said advocate Neville Melville, the ombudsman for banking services. “I don’t think the people at the banks are really skilled at explaining so they get frustrated and just tell the consumers: this is the way it is. They are therefore left with very little choice.”
Minister of Finance Trevor Manuel, who is currently reviewing the report, appears to have put his pen down to listen. Last month he said new laws will soon be on the table to create a second tier of commercial banks better equipped to include the millions of South Africans now excluded from banking services.
Until then, however, banks will remain out of the reach of the poor. Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) and 60% of low-income groups (those who earn between R1 500 and R3 000) are unbanked, partly because of exorbitantly high bank charges.
South African banks have been able to cherry-pick their clients because four of the country’s 22 registered banks — Absa, Nedcor, FirstRand and Standard Bank — control 80% of the market. The power of this dominance enabled them to increase the average service fee charged for current accounts by 29% between 1999 and 2003, notes the report.
There are 15 local branches of foreign banks and two mutual banks, but no building societies in South Africa. Postbank, an arm of the South African Post Office that acts as a saving institution, and village banks, which operate on a similar basis to stokvels, account for less than 0,005% of the deposit base in the banking industry.
Some analysts argue that greater international competition could lead to reduced bank charges here. But the international banks and the niche merchant banks have remained out of retail banking because of low volumes of business.
Dr Hans Falkena, a consultant for the Reserve Bank and the chair- person of the task team, said the government should investigate the existence of a “complex monopoly” between the four major banks.
A complex monopoly exists if at least 25% of the market is serviced by companies who are unconnected but who conduct their business through agreements among themselves that prevent or restrict competition.
Currently only entities that are authorised by the Registrar of Banks can take on the business of a bank. The required level of capital to register is a minimum of R250-million.
“For this reason [the high costs], you are unlikely to see new and local players popping up,” said Melville.
Falkena said the only way to break the back of this undiluted banking system is to introduce second- and third-tier banks — a need Manuel has acknowledged.
The Dedicated Banks Bill and the Co-operatives Banks Bill will soon emerge from the Treasury. These will allow for a wider range of participants — such as retail companies, telecoms companies and micro lenders — in the industry by granting them banking licences for restricted banking operations.
Their entry requirements in terms of capital will be much lower, but in return the scope of their operations will be narrower and restricted to liquid assets.
However, the Congress of South African Trade Unions (Cosatu) is sceptical. “They [the government] promised us this legislation two years ago — they say yes, they support lower banks charges, but they can never get the damn laws in place,” said Neva Makgetla, Cosatu economist.
The Banking Council of South Africa is currently working on a national bank account. This will meet a key Financial Services Charter aim of redressing market failures in supplying basic financial services to the majority.
“The logic is that we intend to launch, as a collective of banks, an account aimed at lower-income people, which would be significantly lower priced than existing offerings,” said Charles Chenel, the coordinator for implementing the financial charter initiatives.
Falkena expressed concern that this national bank account could result in price-fixing and collusion because the banks are in cahoots to form this lower-income account.
But for Chenel: “The point about the national bank account is that it isn’t going to make any extra money for the banks, they are coming together to serve the lower-end of the market. They can do this together because banks don’t compete to make losses.”
In the concentrated banking sector low- and middle-income consumers in South Africa are cross-subsidising the more prosperous. “South Africa is quite unusual in the structure of bank interest rates and charges,” the report says. “In the United Kingdom, for example, the lending business tends to subsidise payment and transmission facilities; in South Africa, the payment and transmission services dominate and appear to cross-subsidise lending.”
The banking sector impinges not only on the general efficiency of the economy but on the economic development of the country.
Vicki Robinson
30 August 2004 09:31
Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) are unbanked, partly because of exorbitantly high bank charges.
(Photograph: Tebogo Letsie)
Half of the country’s population does not participate in the economy because they cannot afford the hefty bank charges to run a savings account — built-in insurance against “high-risk” clients.
The combination of negligible returns on deposits and high charges for deposits and withdrawals means that saving for South Africa’s poorest is a pipe dream. The effective returns in all except one of the banks that offer entry-level savings accounts are negative — you end up with less money than you banked (see table).
A wide-ranging report, Concentration in South African Banking, released for public comment this month by a National Treasury and South African Reserve Bank task team highlights the lack of competition in the banking sector.
“Disclosure of the cost of banking services is weak, as is the disclosure of the return on savings accounts, both of which undermine the consumer’s ability to compare the products of different institutions and thus competition,” says the report.
“Banks generally speak in terms that the guys at the bottom really find bewildering,” said advocate Neville Melville, the ombudsman for banking services. “I don’t think the people at the banks are really skilled at explaining so they get frustrated and just tell the consumers: this is the way it is. They are therefore left with very little choice.”
Minister of Finance Trevor Manuel, who is currently reviewing the report, appears to have put his pen down to listen. Last month he said new laws will soon be on the table to create a second tier of commercial banks better equipped to include the millions of South Africans now excluded from banking services.
Until then, however, banks will remain out of the reach of the poor. Conservatively estimated, 80% of the lowest income group (those who earn up to R1 500) and 60% of low-income groups (those who earn between R1 500 and R3 000) are unbanked, partly because of exorbitantly high bank charges.
South African banks have been able to cherry-pick their clients because four of the country’s 22 registered banks — Absa, Nedcor, FirstRand and Standard Bank — control 80% of the market. The power of this dominance enabled them to increase the average service fee charged for current accounts by 29% between 1999 and 2003, notes the report.
There are 15 local branches of foreign banks and two mutual banks, but no building societies in South Africa. Postbank, an arm of the South African Post Office that acts as a saving institution, and village banks, which operate on a similar basis to stokvels, account for less than 0,005% of the deposit base in the banking industry.
Some analysts argue that greater international competition could lead to reduced bank charges here. But the international banks and the niche merchant banks have remained out of retail banking because of low volumes of business.
Dr Hans Falkena, a consultant for the Reserve Bank and the chair- person of the task team, said the government should investigate the existence of a “complex monopoly” between the four major banks.
A complex monopoly exists if at least 25% of the market is serviced by companies who are unconnected but who conduct their business through agreements among themselves that prevent or restrict competition.
Currently only entities that are authorised by the Registrar of Banks can take on the business of a bank. The required level of capital to register is a minimum of R250-million.
“For this reason [the high costs], you are unlikely to see new and local players popping up,” said Melville.
Falkena said the only way to break the back of this undiluted banking system is to introduce second- and third-tier banks — a need Manuel has acknowledged.
The Dedicated Banks Bill and the Co-operatives Banks Bill will soon emerge from the Treasury. These will allow for a wider range of participants — such as retail companies, telecoms companies and micro lenders — in the industry by granting them banking licences for restricted banking operations.
Their entry requirements in terms of capital will be much lower, but in return the scope of their operations will be narrower and restricted to liquid assets.
However, the Congress of South African Trade Unions (Cosatu) is sceptical. “They [the government] promised us this legislation two years ago — they say yes, they support lower banks charges, but they can never get the damn laws in place,” said Neva Makgetla, Cosatu economist.
The Banking Council of South Africa is currently working on a national bank account. This will meet a key Financial Services Charter aim of redressing market failures in supplying basic financial services to the majority.
“The logic is that we intend to launch, as a collective of banks, an account aimed at lower-income people, which would be significantly lower priced than existing offerings,” said Charles Chenel, the coordinator for implementing the financial charter initiatives.
Falkena expressed concern that this national bank account could result in price-fixing and collusion because the banks are in cahoots to form this lower-income account.
But for Chenel: “The point about the national bank account is that it isn’t going to make any extra money for the banks, they are coming together to serve the lower-end of the market. They can do this together because banks don’t compete to make losses.”
In the concentrated banking sector low- and middle-income consumers in South Africa are cross-subsidising the more prosperous. “South Africa is quite unusual in the structure of bank interest rates and charges,” the report says. “In the United Kingdom, for example, the lending business tends to subsidise payment and transmission facilities; in South Africa, the payment and transmission services dominate and appear to cross-subsidise lending.”
The banking sector impinges not only on the general efficiency of the economy but on the economic development of the country.
E Cape minister 'took bond kickback'
E Cape minister 'took bond kickback'
Vicki Robinson | Johannesburg
29 October 2004 10:46
Anti-corruption investigators in the Eastern Cape are probing evidence that the mansion of provincial agriculture minister Max Mamase is being financed by the citrus farmer who landed a controversial R16-million empowerment deal from his department.
Mamase and his wife, provincial social development minister Neo Moerane Mamase, co-own the home through a company called Quickvest 54. This company’s account has received substantial payments deposited by the citrus farmer’s accountant. The R2,7-million home is in the plush East London suburb of Bonnie Doon.
Six weeks ago the Mail & Guardian reported on evidence that Mamase had ridden roughshod over provincial finance regulations and ordered his department to fund the acquisition of a portion of citrus king Norman Benjamin’s farms by an empowerment trust. Benjamin was allegedly paid double the market value.
At the time claims were made to the M&G that the Mamases’ new home had been financed by Benjamin.
The joint anti-corruption task team, an elite squad of investigators from the police and the National Prosecuting Authority deployed to the province, has been probing the payments by Mamase’s department to Benjamin. Now, the M&G understands, the team is interested in payments allegedly made by Benjamin’s accountant, Emiliya Peneva, towards the Mamases’ home.
Company records show that on February 1 this year Max and Neo Mamase became directors of Quickvest 54, a company bought “off the shelf”. On February 13 Neo Mamase signed an offer to purchase the Bonnie Doon home. This was a day after Max Mamase’s department had released the first of two multimillion-rand payments towards the empowerment deal from which Benjamin was to benefit.
Neo Mamase’s offer was accepted, and on June 24 the house was registered to Quickvest at a purchase price of R2,7-million. The Mamases, through Quickvest, obtained a R2,7-million bond to finance the purchase.
The M&G is aware of evidence that on August 10 and on September 2 Peneva made deposits of R15 000 each into the Quickvest account from Cape Town, where Peneva and Benjamin live.
While Peneva last week confirmed to the M&G that she made two such payments into the Quickvest account, she fervently denied that this money was to service the Mamases’ bond.
Peneva claims that the payments were to rent a different building in East London: a property company called Parch Properties 17 was renting it from Quickvest, she said. Company records show that Benjamin and Peneva are directors of Parch Properties.
Peneva claims that Parch Properties, together with the Buffalo City Development Agency, is involved in a “large development in East London”, which she said had not started yet.
“We want to do that development and we needed premises in East London to use as an office so we are renting a building [from Quickvest] — so far this lease agreement is for six months and we have only used the property twice or three times for meetings. I don’t know East London very well so I am not very familiar with the address [of the rented property],” said Peneva.
But there are problems with Peneva’s explanation:
The Buffalo City Development Agency’s acting CEO, Peter King, this week denied all knowledge of the partnership agreement, saying: “There is no partnership between the Buffalo City Development Agency and a company called Parch Properties 17. I have never heard of this company. I have not heard of, or from, these people [Emiliya Peneva and Norman Benjamin].”
A deed search into Quickvest shows that the only property that is registered under its name is the Mamases’ home. It is highly unlikely that Benjamin and Peneva “rented” a different property from the Mamases’ company.
The monthly bond repayment on the Mamases’ home would be about R25 000. Max and Neo Mamase’s monthly salaries are less than R30 000 each after tax. Questions of affordability arise.
But even if Peneva’s explanation holds, it is ethically problematic. Any private rental deal between Benjamin and Max Mamase, while Mamase’s department was benefiting Benjamin’s company, arguably constitutes a serious conflict of interests.
Further tending to corroborate that Benjamin has been financing the Mamases’ home is an allegation, made to the M&G by a well-placed insider, that Benjamin had accompanied Max Mamase when he and his wife bought the Bonnie Doon home.
Peneva said that, if true, the reason for this would be that “Mr Benjamin is a property developer and he knows properties very well, so he might have advised Mr Mamase from arm’s length ... on what is a good property to buy and what is not a good property to buy.”
Quickvest, as a shelf company, was created by the same auditing firm in Cape Town, Wilson Rich & Associates, as Kangela Citrus Farms, Benjamin’s company at the centre of the contested empowerment deal.
In terms of the empowerment deal, Max Mamase and Benjamin had negotiated the purchase of 49% shares from Kangela in a citrus farming venture in the Eastern Cape’s Addo district. These shares would be given to 44 of Benjamin’s employees with a view to developing them as future citrus farmers and a trust representing them was formed in July. Mamase’s agriculture department ultimately transferred R15,68-million to make this possible.
On February 12 this year — the day before Neo Mamase had made the offer on the house — the first tranche of R7,84-million was transferred from the agriculture department to Uvimba Bank, which in turn transferred it on February 25 to the trust account of the lawyers of Kangela Citrus Farms. Uvimba is a parastatal that provides micro-financing to emerging farmers.
The provincial treasury became suspicious when it discovered that the payment had not been budgeted for and that Mamase had sought no special permission for the transfer. It regarded this as unauthorised expenditure. The treasury issued an immediate directive to Mamase that the transfer be reversed. It was not.
On March 18 a meeting was held in Port Elizabeth between representatives of Kangela and the department of agriculture where it was decided that the Kangela deal should be construed as a “loan” rather than a “procurement”, as it was originally treated. On June 3 a loan agreement was signed between Kangela and Uvimba to be repaid after 20 years, if both parties agreed to the terms of repayment.
On August 31 the agriculture department transferred a second tranche through Uvimba to a company, also owned by Benjamin, called Oudewesthof Township Development.
The M&G has seen a letter written by Mamase to his department’s accounting officer, Lumkile Ngada, instructing him to make this second payment despite Ngada’s objections that procurement procedures had been flouted. This payment was two days before Benjamin’s accountant, Peneva, made the second R15 000 payment to Mamase’s Quickvest.
Another major concern of the treasury was that the shares were bought before the property had been valued by the agriculture department.
A retrospective valuation under the treasury’s order pegged the land at R16-million, which, if accurate, means that the agriculture department irregularly funnelled funds to Uvimba to buy a 49% share in a R16-million property for R15,6-million. This would mean it paid nearly double what the shares were worth.
According to Peneva, “This can be explained because when that valuation was done [the evaluator] missed two of the main farms.”
When the M&G approached Max Mamase to explain the two R15 000 payments into the account of his company Quickvest, he said: “What you are asking me is confidential, I signed a declaration form to that effect. Ask the people who gave you the information to follow through with it.”
At the time of going to press Neo Mamase was not available for comment.
Benjamin told the M&G: “I know nothing about this.” He then put the phone down.
Vicki Robinson | Johannesburg
29 October 2004 10:46
Anti-corruption investigators in the Eastern Cape are probing evidence that the mansion of provincial agriculture minister Max Mamase is being financed by the citrus farmer who landed a controversial R16-million empowerment deal from his department.
Mamase and his wife, provincial social development minister Neo Moerane Mamase, co-own the home through a company called Quickvest 54. This company’s account has received substantial payments deposited by the citrus farmer’s accountant. The R2,7-million home is in the plush East London suburb of Bonnie Doon.
Six weeks ago the Mail & Guardian reported on evidence that Mamase had ridden roughshod over provincial finance regulations and ordered his department to fund the acquisition of a portion of citrus king Norman Benjamin’s farms by an empowerment trust. Benjamin was allegedly paid double the market value.
At the time claims were made to the M&G that the Mamases’ new home had been financed by Benjamin.
The joint anti-corruption task team, an elite squad of investigators from the police and the National Prosecuting Authority deployed to the province, has been probing the payments by Mamase’s department to Benjamin. Now, the M&G understands, the team is interested in payments allegedly made by Benjamin’s accountant, Emiliya Peneva, towards the Mamases’ home.
Company records show that on February 1 this year Max and Neo Mamase became directors of Quickvest 54, a company bought “off the shelf”. On February 13 Neo Mamase signed an offer to purchase the Bonnie Doon home. This was a day after Max Mamase’s department had released the first of two multimillion-rand payments towards the empowerment deal from which Benjamin was to benefit.
Neo Mamase’s offer was accepted, and on June 24 the house was registered to Quickvest at a purchase price of R2,7-million. The Mamases, through Quickvest, obtained a R2,7-million bond to finance the purchase.
The M&G is aware of evidence that on August 10 and on September 2 Peneva made deposits of R15 000 each into the Quickvest account from Cape Town, where Peneva and Benjamin live.
While Peneva last week confirmed to the M&G that she made two such payments into the Quickvest account, she fervently denied that this money was to service the Mamases’ bond.
Peneva claims that the payments were to rent a different building in East London: a property company called Parch Properties 17 was renting it from Quickvest, she said. Company records show that Benjamin and Peneva are directors of Parch Properties.
Peneva claims that Parch Properties, together with the Buffalo City Development Agency, is involved in a “large development in East London”, which she said had not started yet.
“We want to do that development and we needed premises in East London to use as an office so we are renting a building [from Quickvest] — so far this lease agreement is for six months and we have only used the property twice or three times for meetings. I don’t know East London very well so I am not very familiar with the address [of the rented property],” said Peneva.
But there are problems with Peneva’s explanation:
The Buffalo City Development Agency’s acting CEO, Peter King, this week denied all knowledge of the partnership agreement, saying: “There is no partnership between the Buffalo City Development Agency and a company called Parch Properties 17. I have never heard of this company. I have not heard of, or from, these people [Emiliya Peneva and Norman Benjamin].”
A deed search into Quickvest shows that the only property that is registered under its name is the Mamases’ home. It is highly unlikely that Benjamin and Peneva “rented” a different property from the Mamases’ company.
The monthly bond repayment on the Mamases’ home would be about R25 000. Max and Neo Mamase’s monthly salaries are less than R30 000 each after tax. Questions of affordability arise.
But even if Peneva’s explanation holds, it is ethically problematic. Any private rental deal between Benjamin and Max Mamase, while Mamase’s department was benefiting Benjamin’s company, arguably constitutes a serious conflict of interests.
Further tending to corroborate that Benjamin has been financing the Mamases’ home is an allegation, made to the M&G by a well-placed insider, that Benjamin had accompanied Max Mamase when he and his wife bought the Bonnie Doon home.
Peneva said that, if true, the reason for this would be that “Mr Benjamin is a property developer and he knows properties very well, so he might have advised Mr Mamase from arm’s length ... on what is a good property to buy and what is not a good property to buy.”
Quickvest, as a shelf company, was created by the same auditing firm in Cape Town, Wilson Rich & Associates, as Kangela Citrus Farms, Benjamin’s company at the centre of the contested empowerment deal.
In terms of the empowerment deal, Max Mamase and Benjamin had negotiated the purchase of 49% shares from Kangela in a citrus farming venture in the Eastern Cape’s Addo district. These shares would be given to 44 of Benjamin’s employees with a view to developing them as future citrus farmers and a trust representing them was formed in July. Mamase’s agriculture department ultimately transferred R15,68-million to make this possible.
On February 12 this year — the day before Neo Mamase had made the offer on the house — the first tranche of R7,84-million was transferred from the agriculture department to Uvimba Bank, which in turn transferred it on February 25 to the trust account of the lawyers of Kangela Citrus Farms. Uvimba is a parastatal that provides micro-financing to emerging farmers.
The provincial treasury became suspicious when it discovered that the payment had not been budgeted for and that Mamase had sought no special permission for the transfer. It regarded this as unauthorised expenditure. The treasury issued an immediate directive to Mamase that the transfer be reversed. It was not.
On March 18 a meeting was held in Port Elizabeth between representatives of Kangela and the department of agriculture where it was decided that the Kangela deal should be construed as a “loan” rather than a “procurement”, as it was originally treated. On June 3 a loan agreement was signed between Kangela and Uvimba to be repaid after 20 years, if both parties agreed to the terms of repayment.
On August 31 the agriculture department transferred a second tranche through Uvimba to a company, also owned by Benjamin, called Oudewesthof Township Development.
The M&G has seen a letter written by Mamase to his department’s accounting officer, Lumkile Ngada, instructing him to make this second payment despite Ngada’s objections that procurement procedures had been flouted. This payment was two days before Benjamin’s accountant, Peneva, made the second R15 000 payment to Mamase’s Quickvest.
Another major concern of the treasury was that the shares were bought before the property had been valued by the agriculture department.
A retrospective valuation under the treasury’s order pegged the land at R16-million, which, if accurate, means that the agriculture department irregularly funnelled funds to Uvimba to buy a 49% share in a R16-million property for R15,6-million. This would mean it paid nearly double what the shares were worth.
According to Peneva, “This can be explained because when that valuation was done [the evaluator] missed two of the main farms.”
When the M&G approached Max Mamase to explain the two R15 000 payments into the account of his company Quickvest, he said: “What you are asking me is confidential, I signed a declaration form to that effect. Ask the people who gave you the information to follow through with it.”
At the time of going to press Neo Mamase was not available for comment.
Benjamin told the M&G: “I know nothing about this.” He then put the phone down.
Provincial finances on brink of collapse
Provincial finances on brink of collapse
Vicki Robinson
26 November 2004 09:16
National government is rejecting calls to bail out delinquent provinces brought to the fiscal brink by chaotic accounting, social grant fraud and inadequate budget controls. And with even well-off provinces squeezed for cash, the debate over provincial taxation is gaining a sharp new edge as some provinces plan to impose their own fuel tax.
KwaZulu-Natal
The KwaZulu-Natal government is facing a “major systems breakdown” in three provincial departments as mismanagement, negligence and fraud have resulted in over expenditure of R1,5-billion in the past financial year. A KPMG report has found that nine out of 10 provincial disability grants were made fraudulently.
The bad news is that the Treasury regards KwaZulu-Natal as one of the better fiscal performers, which suggests that the crisis in provincial financial management is widespread.
This month the provincial standing committee on public accounts was forced to take exceptional recuperation steps to salvage these departments, said Joanne Downs, the committee chairperson and deputy president of the African Christian Democratic Party.
“Several departments have little or no financial controls in place, resulting in mismanagement. This has led to a major systems breakdown,” she said.
Two weeks ago the public accounts committee stepped into action demanding that three provincial departments — education and culture, public works and social services and population development — submit quarterly progress reports detailing the measures they are taking to retrieve and stem their over expenditure and to “overhaul” internal control systems.
“We have given each of these departments until the end of this month to present the five most important financial control issues that will make 80% of the difference in terms of bringing to an end the over expenditure in the province and flushing the system of mismanagement,” said Downs.
“It is now going to cost the KwaZulu-Natal government about R2-billion to rectify the situation.”
According to Ismail Momoniat, the Deputy Director General for intergovernmental relations in the Treasury, oversight by legislatures needs to improve so that greater control is exercised over provincial finances.
“It’s only when legislatures adopt a critical and constructive approach that you can get behind the underlying reason for [over expenditure],” he said.
However, he said that KwaZulu-Natal “has a reasonably high quality of financial management compared to other provinces”.
The Free State is in the poorest financial state, with eight qualified audits, while Mpumalanga has one qualified audit and one department that has overspent.
The worst malefactor in KwaZulu-Natal is the social services department, which has overspent by R693-million on social assistance grants. This is in addition to over expenditure of R840-million from the previous financial year that has been carried over.
“The obvious reason ... is that the number of social security grant beneficiaries far exceeds what has been budgeted for,” said Belinda Scott, the chairperson of the provincial social welfare portfolio committee. “The major reason is that the level of corruption is just unspeakable in the social services department both because of the fraudulent grants that are coming in as well as corrupt departmental officials.”
She says that on average the over expenditure figure is increasing by R130-million a month. “The national government has already bailed us out by R500-million this year. It is therefore unlikely that they will help again.”
Momoniat said the Treasury will help the province by putting measures in place to assist it to manage its finances but “it is up to the provincial executive in the first instance and then the legislature to get an explanation for the financial weaknesses. Once they have diagnosed the problem they have to take corrective steps.”
A report by KPMG on the social grant system on the KwaZulu-Natal South Coast shows that 90% of the disability grant uptake was fraudulent.
Another report completed this year by the provincial social services department shows that in the Mahlabatini region, near Ulundi, 0,7% of social grant applicants were rejected. Similarly, in Mandeni on the North Coast only 0,1% of applications were rejected.
The reason for this imbalance is doctors who issue bogus medical certificates to people who do not qualify and fraudulent assessment panels.
The assessment panels were introduced in 2002 so that people who lived in areas where there were no doctors could access social grants. According to Scott, “arbitrary community members were appointed to sit on these panels and as a result would not reject their fellows applying for grants”.
In August the provincial treasury and the social services department suspended the assessment panels and appointed seven auditing firms to begin a forensic investigation. A sum of R8-million has been set aside for the investigation.
The firms have formed a consortium and have begun investigating 41 “red flag” areas where “there are high volumes of beneficiaries”, said Sipho Tshabalala, the director general in the provincial treasury.
According to the pro-vincial minister for social services, Inkosi Ngubane, “we are expecting that 10 000 people at the very least will be removed from the system ... We are hoping that this new system will rectify the situation where in the rural areas every Tom, Dick and Harry is receiving a social grant.”
Eastern Cape
The Treasury will veto a request from the Eastern Cape government to bail it out of its R1,7-billion deficit in the face of a renewed avowal that any shortfalls will have to be financed from next year’s budget because the state will no longer rescue incompetent provinces.
Provincial minister for finance in the Eastern Cape, Billy Nel, said that he will request a bail-out from the Treasury at the end of this financial year.
The appeal for aid is an attempt to forestall contravening a statutory requirement that a province’s books should close without a deficit.
However, “provinces that ended up with an overdraft last year will have to run surpluses in this year and next years’ budgets,” said Momoniat. “It is the policy of the Treasury not to bail out provinces that have financial problems. The National Treasury allocates funds equitably between provinces and does not award more to provinces that overspend their budgets.
“I have read press reports that the province is going to be applying for a bail out … to be honest there are not the extra funds to give to any province that is in trouble,” said Momoniat.
The Eastern Cape and the Northern Cape are the only two provinces that are already operating on overdrafts. In the Eastern Cape the problem is caused mainly by the provincial education department, which is overdrawn by R602-million and the social development department, which has a R628-million overdraft.
Nel has already instituted controversial cost containment measures under the title Budget Belt-Tightening Exercise, which forced departments to surrender from their budgets to diminish the deficit. To date, Nel says, this exercise has yielded R598-million, still a far cry from putting the province back on an even keel.
In addition to this, he said, the provincial treasury is “looking at the possibility of selling off some of the physical assets in the province”. He was unclear about what these were but said he would be “working closely with the provincial public works department”.
Another salvage plan that is likely to cause waves in the province is the possibility of a fuel levy. “The fuel levy is not high on the agenda yet because it is a very emotional thing, but it is a possibility,” said Nel.
“One of the interesting things in the Eastern Cape is that only 2,7% of our total budget is own revenue, which we derive mostly out of gambling taxes and motor vehicle licences, for example. It is far too small and we need to find ways to grow this.”
Next year’s budget allocations to the nine provinces will increase by R33,5-billion, or an average of 4%, in real terms over the next three years.
The biggest change is that the R41-billion normally allocated to the provinces as part of equitable share will be made a conditional grant.
This measure comes ahead of the establishment of a National Social Security Agency, which is set to take over all social grants payments at national level in a bid to control fraud.
Despite Momoniat’s insistence that the province must fend for itself, Nel remains confident that “National Treasury is aware of our dilemma and is not going to throw us away.”
The high cost of long weekends
The auditor general has refused to certify accounts for the KwaZulu-Natal education department for the fifth consecutive year because abysmal financial controls have resulted in over expenditure of R102-million.
One of the reasons for the over-expenditure is that teachers take long weekends and sign them off as sick leave.
According to legislation civil servants have 36 normal sick leave days over a three-year period. If they exceed this they are granted an additional 30 days temporary disability leave, during which time an investigation, by the department, into their illness has to be done. Based on the findings of the investigation additional leave can be granted.
However, education is a special case in that once a teacher exceeds his or her 36 days of normal leave a temporary teacher is appointed, adding heavily to personnel costs.
In one area cited by the auditor general 1 555 employees took 41 334 sick leave days in excess of the normal sick days at a cost of R12-million to the department.
In addition, R1 531 778 was paid towards the salaries of temporary teachers in the area.
Of the sick leave taken 61% was captured on the system as “unknown/no type of illness” and 30% of leave taken was on a Monday, “indicating a possible trend of extended weekends which contributes to inefficient utilisation of resources”, says the report.
According to the Public Service Commission, at the national level 28% of sick leave is taken on a Monday. On average, the annual cost to the state for sick leave is R631-million for national and provincial government.
The provincial minister of education, Ina Cronje, said: “I am in the process of conducting various investigations into financial irregularities and systemic matters.”
Paying for empty offices
The provincial department of public works, the heartbeat of infrastructure development in KwaZulu-Natal, is the quintessence of mismanagement.
One of the most illuminating examples in the auditor general’s report was an invoice the department received totalling R2 776,66 from a travel agent, the payment for which was captured as R1 042 004,00. This means the department overpaid by R1 039 227,34.
“Documentation was provided which indicates that the overpayment was subsequently off-set against later invoices,” according to the report.
In addition, a full departmental inquiry is under way into the rental of a building in Durban, supposedly for the purpose of relocating the department from Ulundi. It has never been occupied, though over R4-million has already changed hands.
To date the department has not taken occupation of the building and four of the six floors are occupied by other tenants.
In July this year the head of department, Edmond Radebe, was suspended on full pay pending the outcome of the departmental inquiry.
According to Meshack Radebe, chairperson of the public works portfolio standing committee, the report of the investigation will be tabled in the legislature next week. “Corrective action will then be taken,” he said.
Other details in the audit report include a 23% vacancy rate in the department, no asset register and eight forensic investigations conducted over the past year into procurement and tender irregularities, which remain unacknowledged by the management of the department.
Vicki Robinson
26 November 2004 09:16
National government is rejecting calls to bail out delinquent provinces brought to the fiscal brink by chaotic accounting, social grant fraud and inadequate budget controls. And with even well-off provinces squeezed for cash, the debate over provincial taxation is gaining a sharp new edge as some provinces plan to impose their own fuel tax.
KwaZulu-Natal
The KwaZulu-Natal government is facing a “major systems breakdown” in three provincial departments as mismanagement, negligence and fraud have resulted in over expenditure of R1,5-billion in the past financial year. A KPMG report has found that nine out of 10 provincial disability grants were made fraudulently.
The bad news is that the Treasury regards KwaZulu-Natal as one of the better fiscal performers, which suggests that the crisis in provincial financial management is widespread.
This month the provincial standing committee on public accounts was forced to take exceptional recuperation steps to salvage these departments, said Joanne Downs, the committee chairperson and deputy president of the African Christian Democratic Party.
“Several departments have little or no financial controls in place, resulting in mismanagement. This has led to a major systems breakdown,” she said.
Two weeks ago the public accounts committee stepped into action demanding that three provincial departments — education and culture, public works and social services and population development — submit quarterly progress reports detailing the measures they are taking to retrieve and stem their over expenditure and to “overhaul” internal control systems.
“We have given each of these departments until the end of this month to present the five most important financial control issues that will make 80% of the difference in terms of bringing to an end the over expenditure in the province and flushing the system of mismanagement,” said Downs.
“It is now going to cost the KwaZulu-Natal government about R2-billion to rectify the situation.”
According to Ismail Momoniat, the Deputy Director General for intergovernmental relations in the Treasury, oversight by legislatures needs to improve so that greater control is exercised over provincial finances.
“It’s only when legislatures adopt a critical and constructive approach that you can get behind the underlying reason for [over expenditure],” he said.
However, he said that KwaZulu-Natal “has a reasonably high quality of financial management compared to other provinces”.
The Free State is in the poorest financial state, with eight qualified audits, while Mpumalanga has one qualified audit and one department that has overspent.
The worst malefactor in KwaZulu-Natal is the social services department, which has overspent by R693-million on social assistance grants. This is in addition to over expenditure of R840-million from the previous financial year that has been carried over.
“The obvious reason ... is that the number of social security grant beneficiaries far exceeds what has been budgeted for,” said Belinda Scott, the chairperson of the provincial social welfare portfolio committee. “The major reason is that the level of corruption is just unspeakable in the social services department both because of the fraudulent grants that are coming in as well as corrupt departmental officials.”
She says that on average the over expenditure figure is increasing by R130-million a month. “The national government has already bailed us out by R500-million this year. It is therefore unlikely that they will help again.”
Momoniat said the Treasury will help the province by putting measures in place to assist it to manage its finances but “it is up to the provincial executive in the first instance and then the legislature to get an explanation for the financial weaknesses. Once they have diagnosed the problem they have to take corrective steps.”
A report by KPMG on the social grant system on the KwaZulu-Natal South Coast shows that 90% of the disability grant uptake was fraudulent.
Another report completed this year by the provincial social services department shows that in the Mahlabatini region, near Ulundi, 0,7% of social grant applicants were rejected. Similarly, in Mandeni on the North Coast only 0,1% of applications were rejected.
The reason for this imbalance is doctors who issue bogus medical certificates to people who do not qualify and fraudulent assessment panels.
The assessment panels were introduced in 2002 so that people who lived in areas where there were no doctors could access social grants. According to Scott, “arbitrary community members were appointed to sit on these panels and as a result would not reject their fellows applying for grants”.
In August the provincial treasury and the social services department suspended the assessment panels and appointed seven auditing firms to begin a forensic investigation. A sum of R8-million has been set aside for the investigation.
The firms have formed a consortium and have begun investigating 41 “red flag” areas where “there are high volumes of beneficiaries”, said Sipho Tshabalala, the director general in the provincial treasury.
According to the pro-vincial minister for social services, Inkosi Ngubane, “we are expecting that 10 000 people at the very least will be removed from the system ... We are hoping that this new system will rectify the situation where in the rural areas every Tom, Dick and Harry is receiving a social grant.”
Eastern Cape
The Treasury will veto a request from the Eastern Cape government to bail it out of its R1,7-billion deficit in the face of a renewed avowal that any shortfalls will have to be financed from next year’s budget because the state will no longer rescue incompetent provinces.
Provincial minister for finance in the Eastern Cape, Billy Nel, said that he will request a bail-out from the Treasury at the end of this financial year.
The appeal for aid is an attempt to forestall contravening a statutory requirement that a province’s books should close without a deficit.
However, “provinces that ended up with an overdraft last year will have to run surpluses in this year and next years’ budgets,” said Momoniat. “It is the policy of the Treasury not to bail out provinces that have financial problems. The National Treasury allocates funds equitably between provinces and does not award more to provinces that overspend their budgets.
“I have read press reports that the province is going to be applying for a bail out … to be honest there are not the extra funds to give to any province that is in trouble,” said Momoniat.
The Eastern Cape and the Northern Cape are the only two provinces that are already operating on overdrafts. In the Eastern Cape the problem is caused mainly by the provincial education department, which is overdrawn by R602-million and the social development department, which has a R628-million overdraft.
Nel has already instituted controversial cost containment measures under the title Budget Belt-Tightening Exercise, which forced departments to surrender from their budgets to diminish the deficit. To date, Nel says, this exercise has yielded R598-million, still a far cry from putting the province back on an even keel.
In addition to this, he said, the provincial treasury is “looking at the possibility of selling off some of the physical assets in the province”. He was unclear about what these were but said he would be “working closely with the provincial public works department”.
Another salvage plan that is likely to cause waves in the province is the possibility of a fuel levy. “The fuel levy is not high on the agenda yet because it is a very emotional thing, but it is a possibility,” said Nel.
“One of the interesting things in the Eastern Cape is that only 2,7% of our total budget is own revenue, which we derive mostly out of gambling taxes and motor vehicle licences, for example. It is far too small and we need to find ways to grow this.”
Next year’s budget allocations to the nine provinces will increase by R33,5-billion, or an average of 4%, in real terms over the next three years.
The biggest change is that the R41-billion normally allocated to the provinces as part of equitable share will be made a conditional grant.
This measure comes ahead of the establishment of a National Social Security Agency, which is set to take over all social grants payments at national level in a bid to control fraud.
Despite Momoniat’s insistence that the province must fend for itself, Nel remains confident that “National Treasury is aware of our dilemma and is not going to throw us away.”
The high cost of long weekends
The auditor general has refused to certify accounts for the KwaZulu-Natal education department for the fifth consecutive year because abysmal financial controls have resulted in over expenditure of R102-million.
One of the reasons for the over-expenditure is that teachers take long weekends and sign them off as sick leave.
According to legislation civil servants have 36 normal sick leave days over a three-year period. If they exceed this they are granted an additional 30 days temporary disability leave, during which time an investigation, by the department, into their illness has to be done. Based on the findings of the investigation additional leave can be granted.
However, education is a special case in that once a teacher exceeds his or her 36 days of normal leave a temporary teacher is appointed, adding heavily to personnel costs.
In one area cited by the auditor general 1 555 employees took 41 334 sick leave days in excess of the normal sick days at a cost of R12-million to the department.
In addition, R1 531 778 was paid towards the salaries of temporary teachers in the area.
Of the sick leave taken 61% was captured on the system as “unknown/no type of illness” and 30% of leave taken was on a Monday, “indicating a possible trend of extended weekends which contributes to inefficient utilisation of resources”, says the report.
According to the Public Service Commission, at the national level 28% of sick leave is taken on a Monday. On average, the annual cost to the state for sick leave is R631-million for national and provincial government.
The provincial minister of education, Ina Cronje, said: “I am in the process of conducting various investigations into financial irregularities and systemic matters.”
Paying for empty offices
The provincial department of public works, the heartbeat of infrastructure development in KwaZulu-Natal, is the quintessence of mismanagement.
One of the most illuminating examples in the auditor general’s report was an invoice the department received totalling R2 776,66 from a travel agent, the payment for which was captured as R1 042 004,00. This means the department overpaid by R1 039 227,34.
“Documentation was provided which indicates that the overpayment was subsequently off-set against later invoices,” according to the report.
In addition, a full departmental inquiry is under way into the rental of a building in Durban, supposedly for the purpose of relocating the department from Ulundi. It has never been occupied, though over R4-million has already changed hands.
To date the department has not taken occupation of the building and four of the six floors are occupied by other tenants.
In July this year the head of department, Edmond Radebe, was suspended on full pay pending the outcome of the departmental inquiry.
According to Meshack Radebe, chairperson of the public works portfolio standing committee, the report of the investigation will be tabled in the legislature next week. “Corrective action will then be taken,” he said.
Other details in the audit report include a 23% vacancy rate in the department, no asset register and eight forensic investigations conducted over the past year into procurement and tender irregularities, which remain unacknowledged by the management of the department.
Sweat from coal
Sweat from coal
Vicki Robinson
04 January 2005 08:59
A barefoot man with a pickaxe ignores the “Prohibited” sign — entry to the disused colliery could mean injury or death. At 7am a hot Berg wind is already blowing across the flyblown northern KwaZulu-Natal valley.
A nastier form of self-employment — scouring abandoned mines for coal to sell — is hard to think of, yet 45 retrenched miners and their families in Verdriet, south of Dundee, depend on it. They are a microcosm of the country’s burgeoning bootleg coal-mining industry.
Since 1980, 114 000 coalminers have been retrenched countrywide. Abandoned “people’s mines”, as local communities know them, contain almost 3% low grade ore, and have become a lifeline.
The Department of Minerals and Energy has classified the practice as illegal because of the dangers. But in Verdriet they call their resource “black gold”, while the miners are known by the ironically cheerful name “Vukuzenzela” (Get up and go).
The man with the pickaxe, Peter Dlamini, extends a calloused hand, his breath smelling of stale alcohol. “Fish Eagle,” he says. “It’s what we drink when we want to forget.”
Dlamini was retrenched from Durban Navigation Collieries three years ago. But rather than give up in this valley of broken mud huts and upended cars, he took a pickaxe, a spade and a wheelbarrow and colonised the deserted mine behind his two-roomed home. Since then 44 other miners have joined him.
“The government says we are stealing the coal, but this is an honest business. We wouldn’t risk our lives if we had another job. I’m ready to leave, but let the government give us another job,” Dlamini says.
Each miner earns R200 a month, or a dollar a day — the universal poverty measure.
Informal coal mining is new in South Africa but common elsewhere in the developing world. In India researchers estimate that 500 000 people depend on it. In China similar numbers are cited. “Technology is changing the way that coal is mined, which accounts for the large numbers of people losing their jobs and turning to illegal mining,” said Xavier Prevost, the department’s chief mineral economist.
Thabo Dube, the head of the regional department in Dundee, says the growth in informal mining has paralleled the decline of KwaZulu-Natal’s coal industry. Because informal mining is a new phenomenon, there are no official figures for this informal workforce.
“Legislation requires mining companies to sand-stow underground hollows and rehabilitate open-cast mines when they close their operations, but some ignore this. This has empowered illicit mining,” Dube says.
Mining companies follow the conventional board-and-pillar system in underground operations, leaving large quantities of coal as a support structure to stop the roof collapsing. The informal miners scavenge on these pillars of coal. The Vukuzenzela have dug five parallel open-cast tunnels, called “rat holes” by the locals. They also have one underground shaft.
William Phiri, a greying member of the Vukuzenzela, wobbles up in a donkey cart with Yokohama four-by-four tyres. He whistles for the animals to stop and clambers down, chortling at his “ABS brakes”. He points to a row of gravestones where three colleagues who died in a rockfall in 2001 are buried. “The risk is big but we have no choice. Everybody has to live and feed their families,” he says.
Below us, seven Vukuzenzela miners dig in heat that has reached 30°C. Every few minutes they straighten up to scrape the dust from their faces.
Formal opencast mines use a giant “walking dragline”, which has large buckets, slung beneath crane-like arms, that scrape away the earth over the coal seams. These are then blasted to break the coal into manageable chunks, which are carried away by heavy-duty trucks and graded.
In the underworld of the Vukuzenzela, the miners use pickaxes, spades and hammers ulcerated with rust. Mining from 6am till noon every weekday, it takes them two months to do what a dragline would do in a day. The coal is transported from the pit in a wheelbarrow, which one man pushes and another pulls with a rope. It is offloaded into donkey carts, nicknamed “Little Work Ones”, which trundle kilometres of miserable road to deliver up to 250kg every afternoon.
I accompany Phiri on his delivery. As we bob up and down in tandem to the trotting donkeys — Story, Fatty, Stamp and Remove — I am struck by the haunting dignity of the poverty here. There is still no running water at Verdriet and permanent wafts of sewage from the saturated long drops. But the interiors of the mud homes have a new-pin neatness, with the dirt floors swept spotlessly and clothes folded in plastic.
Vukuzenzela customers can choose between a 50kg bag that costs R25, or an 80kg bag for R30 — “no credit” is Phiri’s watchword. “We run our business like a stokvel,” he says. “Today I take all the profit; tomorrow it will be someone else’s turn. It’s ubuntu.”
Back at the mine a group of Vukuzenzela members are negotiating who should kill a rinkhals sunning itself at the entrance of the underground shaft. “It makes a good braai, like boerewors, and the skin makes a good belt,” says Stanley Ndela.
A few metres away three other miners are sharing a “zol” which they suck on so hard that deep shadows form in the hollows of their cheeks. More forgetting.
It is a truism that service delivery is a government mantra; but it is equally obvious that for most South Africans it remains a pipedream.
“Abantu abahluphekile basavela eziudabe ni? [Do poor people still make news?]” Dlamini had asked me the day before. It expressed his sense that the residents of Verdriet, like hundreds of other communities, have been forgotten.
Vicki Robinson
04 January 2005 08:59
A barefoot man with a pickaxe ignores the “Prohibited” sign — entry to the disused colliery could mean injury or death. At 7am a hot Berg wind is already blowing across the flyblown northern KwaZulu-Natal valley.
A nastier form of self-employment — scouring abandoned mines for coal to sell — is hard to think of, yet 45 retrenched miners and their families in Verdriet, south of Dundee, depend on it. They are a microcosm of the country’s burgeoning bootleg coal-mining industry.
Since 1980, 114 000 coalminers have been retrenched countrywide. Abandoned “people’s mines”, as local communities know them, contain almost 3% low grade ore, and have become a lifeline.
The Department of Minerals and Energy has classified the practice as illegal because of the dangers. But in Verdriet they call their resource “black gold”, while the miners are known by the ironically cheerful name “Vukuzenzela” (Get up and go).
The man with the pickaxe, Peter Dlamini, extends a calloused hand, his breath smelling of stale alcohol. “Fish Eagle,” he says. “It’s what we drink when we want to forget.”
Dlamini was retrenched from Durban Navigation Collieries three years ago. But rather than give up in this valley of broken mud huts and upended cars, he took a pickaxe, a spade and a wheelbarrow and colonised the deserted mine behind his two-roomed home. Since then 44 other miners have joined him.
“The government says we are stealing the coal, but this is an honest business. We wouldn’t risk our lives if we had another job. I’m ready to leave, but let the government give us another job,” Dlamini says.
Each miner earns R200 a month, or a dollar a day — the universal poverty measure.
Informal coal mining is new in South Africa but common elsewhere in the developing world. In India researchers estimate that 500 000 people depend on it. In China similar numbers are cited. “Technology is changing the way that coal is mined, which accounts for the large numbers of people losing their jobs and turning to illegal mining,” said Xavier Prevost, the department’s chief mineral economist.
Thabo Dube, the head of the regional department in Dundee, says the growth in informal mining has paralleled the decline of KwaZulu-Natal’s coal industry. Because informal mining is a new phenomenon, there are no official figures for this informal workforce.
“Legislation requires mining companies to sand-stow underground hollows and rehabilitate open-cast mines when they close their operations, but some ignore this. This has empowered illicit mining,” Dube says.
Mining companies follow the conventional board-and-pillar system in underground operations, leaving large quantities of coal as a support structure to stop the roof collapsing. The informal miners scavenge on these pillars of coal. The Vukuzenzela have dug five parallel open-cast tunnels, called “rat holes” by the locals. They also have one underground shaft.
William Phiri, a greying member of the Vukuzenzela, wobbles up in a donkey cart with Yokohama four-by-four tyres. He whistles for the animals to stop and clambers down, chortling at his “ABS brakes”. He points to a row of gravestones where three colleagues who died in a rockfall in 2001 are buried. “The risk is big but we have no choice. Everybody has to live and feed their families,” he says.
Below us, seven Vukuzenzela miners dig in heat that has reached 30°C. Every few minutes they straighten up to scrape the dust from their faces.
Formal opencast mines use a giant “walking dragline”, which has large buckets, slung beneath crane-like arms, that scrape away the earth over the coal seams. These are then blasted to break the coal into manageable chunks, which are carried away by heavy-duty trucks and graded.
In the underworld of the Vukuzenzela, the miners use pickaxes, spades and hammers ulcerated with rust. Mining from 6am till noon every weekday, it takes them two months to do what a dragline would do in a day. The coal is transported from the pit in a wheelbarrow, which one man pushes and another pulls with a rope. It is offloaded into donkey carts, nicknamed “Little Work Ones”, which trundle kilometres of miserable road to deliver up to 250kg every afternoon.
I accompany Phiri on his delivery. As we bob up and down in tandem to the trotting donkeys — Story, Fatty, Stamp and Remove — I am struck by the haunting dignity of the poverty here. There is still no running water at Verdriet and permanent wafts of sewage from the saturated long drops. But the interiors of the mud homes have a new-pin neatness, with the dirt floors swept spotlessly and clothes folded in plastic.
Vukuzenzela customers can choose between a 50kg bag that costs R25, or an 80kg bag for R30 — “no credit” is Phiri’s watchword. “We run our business like a stokvel,” he says. “Today I take all the profit; tomorrow it will be someone else’s turn. It’s ubuntu.”
Back at the mine a group of Vukuzenzela members are negotiating who should kill a rinkhals sunning itself at the entrance of the underground shaft. “It makes a good braai, like boerewors, and the skin makes a good belt,” says Stanley Ndela.
A few metres away three other miners are sharing a “zol” which they suck on so hard that deep shadows form in the hollows of their cheeks. More forgetting.
It is a truism that service delivery is a government mantra; but it is equally obvious that for most South Africans it remains a pipedream.
“Abantu abahluphekile basavela eziudabe ni? [Do poor people still make news?]” Dlamini had asked me the day before. It expressed his sense that the residents of Verdriet, like hundreds of other communities, have been forgotten.
Rigging the price of care
Rigging the price of care
Vicki Robinson
07 March 2005 11:13
The Competition Tribunal last week approved the merger between Afrox Healthcare (Ahealth) and Bidco. This will shift a quarter of the private hospital market share into the hands of an empowerment consortium, led by Tokyo Sexwale’s Mvelaphanda Holdings and Jakes Gerwel’s Brimstone.
It is likely to have minimal benefits for the 6,9-million consumers who are members of medical aids that are paying out increasingly exorbitant medical fees — partly because of a cartel between the three major private hospital groups, Netcare, MediClinic and Afrox Healthcare, say industry experts.
The merger hearing shed new light on the lack of competition in the industry, which has seen costs soar. The industry says it competes on quality, not price, but the Council for Medical Schemes (CMS), a statutory body established to oversee the management of medical schemes, has started industry-wide research into the cost of private health care. Said registrar Pat Masobe: “Something needs to be done to bring rationality into the pricing of hospital care.”
The merger was approved by the Competition Tribunal on Wednesday, 15 months after it was first filed with the Competition Commission.
The deal will change the complexion of the private health-care industry, not its anatomy. Eighty percent of the industry is dominated by the three major groups: Ahealth, Netcare, MediClinic and independent hospitals.
Most of their income comes from medical schemes, and they receive more than one-third of the almost R50-billion that flows annually through the schemes. The private hospital group’s cash cow is the membership of these schemes, a largely stagnant group which the hospitals are wringing harder every year for extra money.
Over the past six years consumers have experienced a 94% increase in theatre fees, a 45% increase in ward costs (6,4% above inflation). Medical benefits have increased by 84%, compared with non-hospital medical expenditure, which grew by 29,3%, according to the CMS.
Rand Merchant Bank (RMB), which has provided some of the funding for the empowerment deal and will have a 10,1% holding in Bidco, admitted in a report to the Competition Commission last month that South Africa’s three private hospital groups “have operated as a cartel over the past three years rather than aggressively winning market share through price wars and aggressive advertising campaigns”. The RMB report analysed the risk factors associated with funding the deal, finding them to be minimal.
“The strategic behaviour of these groups has historically been characterised by conscious avoidance of price competition — the possibility of one of the primary service providers breaking ranks and initiating a price war is in our view unlikely,” the report said.
Heidi Kruger, head of corporate communications at the Board of Health Funders of Southern Africa, which represents medical schemes, admitted that prices in the private health-care sector are excessive. “At present we have above average increases in hospital fees and do not have a proper framework on which to base prices,” she said.
But Kurt Worrall-Clare, an advocate and spokesperson for the Hospital Association of South Africa (Hasa), said the criticism that the three hospital groups are anti-competitive and collude in setting prices is “simplistic”.
Hasa represents about 95% of the hospitals in the private sector. In 2003 the Competition Commission forced Hasa, the South African Medical Association and the Board of Health Funders to scrap a list of benchmark tariffs for private and psychiatric hospitals that they published on an annual basis, which essentially fixed medical costs through deals between the hospital groups and their industry bodies.
Worrall-Clare said the competition between the groups has increased markedly since then.
“In the last three years we have seen medical schemes enter into specific relationships with specific hospital groups. Common business sense tells you that the moment you have preferential relationships between a provider and a funder, there must be competition,” he said.
Stephen Harrison, senior specialist of policy and special projects at the CMS, disagreed. “Our feedback from medical schemes is that they have limited opportunity for negotiating preferential, differential agreements with private hospital groups.”
He said the three hospital groups are generally concentrated geographically, particularly in smaller and outlying towns. This meant that medical schemes are restricted to a monopolistic market in these areas.
“If the medical scheme is unwilling to accept the price that the hospital puts forward, the members will very often have to make a down payment when they visit a hospital in that area. It is difficult for a medical scheme not to accept the terms on which hospital services are provided or to pay less then what is suggested,” said Harrison.
“The very size and concentration of the hospital groups means that some [anti-competitive] dynamics are in play without collusion between the hospitals.”
Rick Hogben, the chief executive of Ahealth, said in the Competition Tribunal hearings last month that “the basis of competition between private hospitals is about several elements, of which price is not really one”. The basis of competition is in the calibre of “the doctors, the facility and the quality of care” at the different hospitals, he said. “All of these are driven by or lead to the initial referring doctor.”
Hogben said price is an insignificant competition indicator because of the nature of the risk associated with quoting individual patients competitive prices for services.
Hogben said the hospital groups have moved away from the traditional “fee-for-service” structures towards fixed fees for procedures and per diem hospital rates, which increases risk-sharing between the funders and the private hospitals.
Harrison said the argument that competition between hospitals and hospital groups lies in the aptitude of staff and the standard of the facilities is questionable. Over the next eight months, the CMS will be researching the “suggestion that there are links between specialists and specific hospitals that determines which hospital a patient goes to. It’s not really a competition for members, it’s a competition for specialist allegiance.” This cuts the consumer out of the benefit loop and allows for even greater profiteering.
Worrall-Clare said that medical inflation, which is on average four percentage points higher than the CPIX, has been driven by, among other things, input costs, such as drugs, surgical materials and technology. These have “risen higher than inflation over the past few years — this falls outside the control of private hospitals”, he said. Drugs and surgical products, which comprise 45% of the average hospital account, are largely imported. “Despite the fact that the exchange rate has improved [since 2001], price reductions commensurate with the improvement in the exchange rate have not been forthcoming,” he said.
He also attributed rising hospital fees to an ageing medical scheme membership.
The CMS is developing a national price reference list for hospitals, which will make price benchmarking between hospital groups and funders more transparent for consumers.
The private hospital groups have been given four months to submit individual reports, through independent consultants, about their costs — overheads, labour and material. The use of the list is voluntary, but it will tighten the largely unregulated private hospital market.
‘It’s worth it’
The angry scar down Lesley-Anne Burton’s navel is a result of a R100 000 operation in a private hospital. The same operation — with the same doctors and level of treatment — would cost less than half that amount in a public hospital.
The proctocolectomy, an operation to remove Burton’s colon, was carried out in the public hospital because at the time she was unemployed. Two further operations to reconstruct her colon from her small intestine were completed in a private hospital by the same doctor.
Burton (25) first fell ill last July. Her colon had become inflamed because of severe ulcers that caused diarrhoea, weight loss, bleeding and dehydration. Left untreated, the condition could have become fatal.
Burton’s invoices for the public hospital procedure — including theatre and ward fees for 10 days, drugs and doctor’s fees — show costs of about R13 000. Her medical aid statements for the private hospital procedure, including a week-long stay in a semi-private ward and fees for the same doctor, amounted to about R70 000.
Although her premiums are in the region of R1 500, she says they are worth it because the surgery would have put her in debt for years.
For Burton, the quality of treatment between the two sectors differed only in how the staff managed patients, the fact that facilities in the private sector were superior and the food was more edible.
Her medical aid claim forms, when compared to the public health invoices, indicate that private hospital fees are almost double those of public facilities. The private hospital also charged for all extras — from medical equipment to cotton balls and oxygen.
However, she believes introducing competitive pricing in the private health-care sector may lead to a drop in the quality of care. — Nawaal Deane
Vicki Robinson
07 March 2005 11:13
The Competition Tribunal last week approved the merger between Afrox Healthcare (Ahealth) and Bidco. This will shift a quarter of the private hospital market share into the hands of an empowerment consortium, led by Tokyo Sexwale’s Mvelaphanda Holdings and Jakes Gerwel’s Brimstone.
It is likely to have minimal benefits for the 6,9-million consumers who are members of medical aids that are paying out increasingly exorbitant medical fees — partly because of a cartel between the three major private hospital groups, Netcare, MediClinic and Afrox Healthcare, say industry experts.
The merger hearing shed new light on the lack of competition in the industry, which has seen costs soar. The industry says it competes on quality, not price, but the Council for Medical Schemes (CMS), a statutory body established to oversee the management of medical schemes, has started industry-wide research into the cost of private health care. Said registrar Pat Masobe: “Something needs to be done to bring rationality into the pricing of hospital care.”
The merger was approved by the Competition Tribunal on Wednesday, 15 months after it was first filed with the Competition Commission.
The deal will change the complexion of the private health-care industry, not its anatomy. Eighty percent of the industry is dominated by the three major groups: Ahealth, Netcare, MediClinic and independent hospitals.
Most of their income comes from medical schemes, and they receive more than one-third of the almost R50-billion that flows annually through the schemes. The private hospital group’s cash cow is the membership of these schemes, a largely stagnant group which the hospitals are wringing harder every year for extra money.
Over the past six years consumers have experienced a 94% increase in theatre fees, a 45% increase in ward costs (6,4% above inflation). Medical benefits have increased by 84%, compared with non-hospital medical expenditure, which grew by 29,3%, according to the CMS.
Rand Merchant Bank (RMB), which has provided some of the funding for the empowerment deal and will have a 10,1% holding in Bidco, admitted in a report to the Competition Commission last month that South Africa’s three private hospital groups “have operated as a cartel over the past three years rather than aggressively winning market share through price wars and aggressive advertising campaigns”. The RMB report analysed the risk factors associated with funding the deal, finding them to be minimal.
“The strategic behaviour of these groups has historically been characterised by conscious avoidance of price competition — the possibility of one of the primary service providers breaking ranks and initiating a price war is in our view unlikely,” the report said.
Heidi Kruger, head of corporate communications at the Board of Health Funders of Southern Africa, which represents medical schemes, admitted that prices in the private health-care sector are excessive. “At present we have above average increases in hospital fees and do not have a proper framework on which to base prices,” she said.
But Kurt Worrall-Clare, an advocate and spokesperson for the Hospital Association of South Africa (Hasa), said the criticism that the three hospital groups are anti-competitive and collude in setting prices is “simplistic”.
Hasa represents about 95% of the hospitals in the private sector. In 2003 the Competition Commission forced Hasa, the South African Medical Association and the Board of Health Funders to scrap a list of benchmark tariffs for private and psychiatric hospitals that they published on an annual basis, which essentially fixed medical costs through deals between the hospital groups and their industry bodies.
Worrall-Clare said the competition between the groups has increased markedly since then.
“In the last three years we have seen medical schemes enter into specific relationships with specific hospital groups. Common business sense tells you that the moment you have preferential relationships between a provider and a funder, there must be competition,” he said.
Stephen Harrison, senior specialist of policy and special projects at the CMS, disagreed. “Our feedback from medical schemes is that they have limited opportunity for negotiating preferential, differential agreements with private hospital groups.”
He said the three hospital groups are generally concentrated geographically, particularly in smaller and outlying towns. This meant that medical schemes are restricted to a monopolistic market in these areas.
“If the medical scheme is unwilling to accept the price that the hospital puts forward, the members will very often have to make a down payment when they visit a hospital in that area. It is difficult for a medical scheme not to accept the terms on which hospital services are provided or to pay less then what is suggested,” said Harrison.
“The very size and concentration of the hospital groups means that some [anti-competitive] dynamics are in play without collusion between the hospitals.”
Rick Hogben, the chief executive of Ahealth, said in the Competition Tribunal hearings last month that “the basis of competition between private hospitals is about several elements, of which price is not really one”. The basis of competition is in the calibre of “the doctors, the facility and the quality of care” at the different hospitals, he said. “All of these are driven by or lead to the initial referring doctor.”
Hogben said price is an insignificant competition indicator because of the nature of the risk associated with quoting individual patients competitive prices for services.
Hogben said the hospital groups have moved away from the traditional “fee-for-service” structures towards fixed fees for procedures and per diem hospital rates, which increases risk-sharing between the funders and the private hospitals.
Harrison said the argument that competition between hospitals and hospital groups lies in the aptitude of staff and the standard of the facilities is questionable. Over the next eight months, the CMS will be researching the “suggestion that there are links between specialists and specific hospitals that determines which hospital a patient goes to. It’s not really a competition for members, it’s a competition for specialist allegiance.” This cuts the consumer out of the benefit loop and allows for even greater profiteering.
Worrall-Clare said that medical inflation, which is on average four percentage points higher than the CPIX, has been driven by, among other things, input costs, such as drugs, surgical materials and technology. These have “risen higher than inflation over the past few years — this falls outside the control of private hospitals”, he said. Drugs and surgical products, which comprise 45% of the average hospital account, are largely imported. “Despite the fact that the exchange rate has improved [since 2001], price reductions commensurate with the improvement in the exchange rate have not been forthcoming,” he said.
He also attributed rising hospital fees to an ageing medical scheme membership.
The CMS is developing a national price reference list for hospitals, which will make price benchmarking between hospital groups and funders more transparent for consumers.
The private hospital groups have been given four months to submit individual reports, through independent consultants, about their costs — overheads, labour and material. The use of the list is voluntary, but it will tighten the largely unregulated private hospital market.
‘It’s worth it’
The angry scar down Lesley-Anne Burton’s navel is a result of a R100 000 operation in a private hospital. The same operation — with the same doctors and level of treatment — would cost less than half that amount in a public hospital.
The proctocolectomy, an operation to remove Burton’s colon, was carried out in the public hospital because at the time she was unemployed. Two further operations to reconstruct her colon from her small intestine were completed in a private hospital by the same doctor.
Burton (25) first fell ill last July. Her colon had become inflamed because of severe ulcers that caused diarrhoea, weight loss, bleeding and dehydration. Left untreated, the condition could have become fatal.
Burton’s invoices for the public hospital procedure — including theatre and ward fees for 10 days, drugs and doctor’s fees — show costs of about R13 000. Her medical aid statements for the private hospital procedure, including a week-long stay in a semi-private ward and fees for the same doctor, amounted to about R70 000.
Although her premiums are in the region of R1 500, she says they are worth it because the surgery would have put her in debt for years.
For Burton, the quality of treatment between the two sectors differed only in how the staff managed patients, the fact that facilities in the private sector were superior and the food was more edible.
Her medical aid claim forms, when compared to the public health invoices, indicate that private hospital fees are almost double those of public facilities. The private hospital also charged for all extras — from medical equipment to cotton balls and oxygen.
However, she believes introducing competitive pricing in the private health-care sector may lead to a drop in the quality of care. — Nawaal Deane
Spending key to growth plan
Spending key to growth plan
Vicki Robinson and Nic Dawes
04 November 2005 11:23
The government's new growth strategy envisages massive public sector investment, such as electricity and housing projects, as the panacea to unemployment.
Massively increased levels of public investment lie at the heart of Deputy President Phumzile Mlambo-Ngcuka’s plans for accelerated and shared economic growth. But its ambitious 6% target for economic growth has been scaled back to 4,5%, at least for the next five years.
The Mail & Guardian has seen a confidential powerpoint presentation of Mlambo-Ngcuka’s strategy, which was approved by the Cabinet two weeks ago. However, it is still in draft form and under review by business and labour, who must endorse it before it is finalised.
President Thabo Mbeki appointed a task team in August, comprising ministers in the Cabinet economics cluster and headed by Mlambo-Ngcuka, to devise a plan to achieve a growth rate of 6%. But the task team has backpedalled to a rate of 4,5%, roughly the current rate of economic growth, and the intention now is to focus on the ratio of job creation to economic growth.
The 6% growth mark is seen as being attainable only between 2010 and 2014. The Reserve Bank has also cautioned that a 4,5% growth rate is more feasible in the short term -- roughly what the National Treasury modelling predicts.
Briefing the media in Parliament this week, Mlambo-Ngcuka was reluctant to provide details, saying her team couldn’t “operate in a fishbowl when [it] is still in the engine room”.
“We have plans, but the plans are not enough. How many jobs will this lead to? How many project managers do we have in the country, where are the artisanal skills? How fast are we moving on environmental impact assessments that tend to constrain infrastructure investment?” she said.
However, the presentation makes it clear that the government sees the cornerstone of the strategy as a major public investment plan, melding existing policies, infrastructure projects and budgetary allocations, with improved coordination between state departments. The presentation shows that Mlambo-Ngcuka’s task team originally envisaged a 55% boost to R320-billion in infrastructure expenditure over the medium term.
But the National Treasury is already ahead of her, allocating R370-billion over the next three years. This will push public sector capital investment as a percentage of gross domestic product from 5,2% last year to 6,7% annually for the next three years.
A University of Cape Town study for the Presidency pegs the current ratio of employment creation at 0,76% for every 1% of economic growth.
Mlambo-Ngcuka aims to increase this to at least 0,8% -- a goal that is seen as more achievable over the short term if some resources are directed to increasing labour intensity, rather than designing industrial strategies that reward capital intensity.
Improved coordination is the strategy’s mantra. The presentation proposes a Joint Council on Priority Skills between business, labour and government leaders, which will address, among other issues, the skills crisis at the local government level.
It also suggests a review of Cabinet’s committee system, “to take into account the major emphasis in the government’s strategy in the current phase”, notably human resources and infrastructure development.
In a move likely to be welcomed by business, Mlambo-Ngcuka’s team proposes the establishment of a Regulatory Impact Analysis System to review the effect of the country’s regulatory and governance environment on growth -- a mechanism that the Democratic Alliance and business organisations have urged for some time.
The plan details in percentage terms how state investment will be distributed. About 50% will go into bolstering capital investment in the three government spheres; 5% into public-private partnerships; 3% into development finance institutions and 40% into state-owned enterprises.
The presentation floats various other initiatives to remove constraints on growth, including a review of import parity pricing, currency stability, establishing an industry body for the call-centre industry, “unblocking the international supply of beads” to bolster the informal economy and creating a unified national forum for the craft industry.
At present, education gets short shrift. The presentation lists the well-known R1,5-billion recapitalisation of further education and training colleges and the plan to increase maths and science graduates from 24 000 in 2004 to 50 000 by 2008. Real increases in education spending, however, are marginal.
Education Director General Duncan Hindle said that his department had cautioned the Treasury that education’s share of government spending would decline in percentage terms over the Medium Term Expenditure Framework period, and would only recover to current levels by 2008.
Vicki Robinson and Nic Dawes
04 November 2005 11:23
The government's new growth strategy envisages massive public sector investment, such as electricity and housing projects, as the panacea to unemployment.
Massively increased levels of public investment lie at the heart of Deputy President Phumzile Mlambo-Ngcuka’s plans for accelerated and shared economic growth. But its ambitious 6% target for economic growth has been scaled back to 4,5%, at least for the next five years.
The Mail & Guardian has seen a confidential powerpoint presentation of Mlambo-Ngcuka’s strategy, which was approved by the Cabinet two weeks ago. However, it is still in draft form and under review by business and labour, who must endorse it before it is finalised.
President Thabo Mbeki appointed a task team in August, comprising ministers in the Cabinet economics cluster and headed by Mlambo-Ngcuka, to devise a plan to achieve a growth rate of 6%. But the task team has backpedalled to a rate of 4,5%, roughly the current rate of economic growth, and the intention now is to focus on the ratio of job creation to economic growth.
The 6% growth mark is seen as being attainable only between 2010 and 2014. The Reserve Bank has also cautioned that a 4,5% growth rate is more feasible in the short term -- roughly what the National Treasury modelling predicts.
Briefing the media in Parliament this week, Mlambo-Ngcuka was reluctant to provide details, saying her team couldn’t “operate in a fishbowl when [it] is still in the engine room”.
“We have plans, but the plans are not enough. How many jobs will this lead to? How many project managers do we have in the country, where are the artisanal skills? How fast are we moving on environmental impact assessments that tend to constrain infrastructure investment?” she said.
However, the presentation makes it clear that the government sees the cornerstone of the strategy as a major public investment plan, melding existing policies, infrastructure projects and budgetary allocations, with improved coordination between state departments. The presentation shows that Mlambo-Ngcuka’s task team originally envisaged a 55% boost to R320-billion in infrastructure expenditure over the medium term.
But the National Treasury is already ahead of her, allocating R370-billion over the next three years. This will push public sector capital investment as a percentage of gross domestic product from 5,2% last year to 6,7% annually for the next three years.
A University of Cape Town study for the Presidency pegs the current ratio of employment creation at 0,76% for every 1% of economic growth.
Mlambo-Ngcuka aims to increase this to at least 0,8% -- a goal that is seen as more achievable over the short term if some resources are directed to increasing labour intensity, rather than designing industrial strategies that reward capital intensity.
Improved coordination is the strategy’s mantra. The presentation proposes a Joint Council on Priority Skills between business, labour and government leaders, which will address, among other issues, the skills crisis at the local government level.
It also suggests a review of Cabinet’s committee system, “to take into account the major emphasis in the government’s strategy in the current phase”, notably human resources and infrastructure development.
In a move likely to be welcomed by business, Mlambo-Ngcuka’s team proposes the establishment of a Regulatory Impact Analysis System to review the effect of the country’s regulatory and governance environment on growth -- a mechanism that the Democratic Alliance and business organisations have urged for some time.
The plan details in percentage terms how state investment will be distributed. About 50% will go into bolstering capital investment in the three government spheres; 5% into public-private partnerships; 3% into development finance institutions and 40% into state-owned enterprises.
The presentation floats various other initiatives to remove constraints on growth, including a review of import parity pricing, currency stability, establishing an industry body for the call-centre industry, “unblocking the international supply of beads” to bolster the informal economy and creating a unified national forum for the craft industry.
At present, education gets short shrift. The presentation lists the well-known R1,5-billion recapitalisation of further education and training colleges and the plan to increase maths and science graduates from 24 000 in 2004 to 50 000 by 2008. Real increases in education spending, however, are marginal.
Education Director General Duncan Hindle said that his department had cautioned the Treasury that education’s share of government spending would decline in percentage terms over the Medium Term Expenditure Framework period, and would only recover to current levels by 2008.
Who are the friends of JZ?
Who are the friends of JZ?
Vicki Robinson
10 March 2006 09:32
“Does Thabo Mbeki want to be president for a third time? Does he?” shouted a furious Esther Lunga, a member of the crowd that gathered outside the Johannesburg High Court on Monday in solidarity with Jacob Zuma as his rape trial began. “Well tell him we are sick of him, tell him that! Tell him we still believe JZ will be president!”
Interviews with about 40 crowd members highlighted the close connection between support for Zuma and hatred of President Mbeki’s leadership style, which, they said, had alienated them from the African National Congress.
But the interviews also revealed that a large proportion of the 400-strong crowd — perhaps as many as two-thirds — had been bussed in from KwaZulu-Natal, an indication that Zuma’s support is increasingly confined to that region.
Kaizer Mohau, the Gauteng spokesperson for the Friends of the Jacob Zuma Trust, said the ANC Youth League had paid for the three buses, a claim that Zizi Kodwa, the league’s spokesperson, later denied, saying people had paid their own way.
Kodwa intermittently addressed the crowd during the day, encouraging them with freedom songs.
It also became apparent that the majority of Zuma supporters outside the court were unemployed. Only 13 of those interviewed had jobs, including a priest, a barman, a nurse, two beauticians, a refuse collector, a taxidermist, two ward councillors, a steelworker, a process operator at Danone/Clover, a supermarket teller and an insurance broker.
All shared the belief that the rape trial was part of a broader political conspiracy against Zuma engineered by Mbeki and his lieutenants. Some went as far as to say that if the court found Zuma guilty they would not accept the outcome.
“This man is not guilty — Mbeki and the Scorpions did not give him a chance. This is a plot against him, which will come to civil war,” said an angry Prince Seepe, from Katlehong.
“The corruption trial is debatable, but this rape trial is a plot to destroy Zuma’s political career,” said Mike Zuma, a student from KwaZulu-Natal.
“You can see this thing has been framed,” said Christoffel Khaneale from Soweto.
Jacob Allans, also from Soweto, said it was clear Mbeki was targeting Zuma. “What about that woman with the plane?” he shouted, referring to Deputy President Phumzile Mlambo-Ngcuka. “Mbeki must hit both sides.”
A new T-shirt visible in Monday’s crowd spoke volumes. Below the words “Amadoda aqatho amela amaqiniso [Real men stand up for the truth]” were the photographs of nine ANC leaders — Nelson Mandela, Oliver Tambo, Alfred Nzo, Kgalema Motlanthe, Walter Sisulu, Fikile Mbalula, Chris Hani, Albert Luthuli and Zuma. Mbeki’s picture was conspicuous by its absence.
A poster held by Bhampetshini Hzaca had Mandela telling Mbeki: “Lalela ke mfana buyisa u Zuma [Listen my boy, bring back Zuma].”
“He’s a boy, he’s a fucking boy,” Hzaca shouted, referring to Mbeki.
Yet another poster protested against Luthuli House’s growing stranglehold on the party’s provincial and regional structures: “Phansi [down with] NGC [national general council] prerogative. Phambili [forward with] NGC collective leadership.”
Some consider Zuma the only cure for their poverty. Gabriel Dichaba said he was in exile with Zuma and had been unemployed since 1997 when he left the defence force. “He’s the only person we’re relying on. He’s the only person who can understand us,” he said.
Mbekeni Mdalose from Soweto said Zuma “was always open, he understands the working class, and we believe in him”.
Others were convinced the “plot” against Zuma was underscored by ethnicity. “The ANC was established by Zulus, then the Xhosas took over and now they don’t want the Zulus back in the seat,” said Nkosinathi Zitha. “So they bought that lady [the rape complainant].”
A red mini bus taxi with “super woofer” speakers began blaring the lyrics of the latest release of the popular Izingane Zo Ma band — “The people want Zuma to lead, but in Parliament they don’t want him to” — and the crowd began bopping and jiving. The band’s controversial hit Letha Umshini Wami (Bring me my Machine Gun), which has become associated with Zuma’s struggles, was recently banned from SABC’s Zulu-medium station, Ukhozi FM.
“Our brothers are sitting in jail because of women like the [rape complainant] crying rape, rape, rape,” complained Ncamisile Maphalala waving her hand to the beat of the music. “We really want rape explained to us. We women don’t know the meaning any more because anyone can call rape.”
Vicki Robinson
10 March 2006 09:32
“Does Thabo Mbeki want to be president for a third time? Does he?” shouted a furious Esther Lunga, a member of the crowd that gathered outside the Johannesburg High Court on Monday in solidarity with Jacob Zuma as his rape trial began. “Well tell him we are sick of him, tell him that! Tell him we still believe JZ will be president!”
Interviews with about 40 crowd members highlighted the close connection between support for Zuma and hatred of President Mbeki’s leadership style, which, they said, had alienated them from the African National Congress.
But the interviews also revealed that a large proportion of the 400-strong crowd — perhaps as many as two-thirds — had been bussed in from KwaZulu-Natal, an indication that Zuma’s support is increasingly confined to that region.
Kaizer Mohau, the Gauteng spokesperson for the Friends of the Jacob Zuma Trust, said the ANC Youth League had paid for the three buses, a claim that Zizi Kodwa, the league’s spokesperson, later denied, saying people had paid their own way.
Kodwa intermittently addressed the crowd during the day, encouraging them with freedom songs.
It also became apparent that the majority of Zuma supporters outside the court were unemployed. Only 13 of those interviewed had jobs, including a priest, a barman, a nurse, two beauticians, a refuse collector, a taxidermist, two ward councillors, a steelworker, a process operator at Danone/Clover, a supermarket teller and an insurance broker.
All shared the belief that the rape trial was part of a broader political conspiracy against Zuma engineered by Mbeki and his lieutenants. Some went as far as to say that if the court found Zuma guilty they would not accept the outcome.
“This man is not guilty — Mbeki and the Scorpions did not give him a chance. This is a plot against him, which will come to civil war,” said an angry Prince Seepe, from Katlehong.
“The corruption trial is debatable, but this rape trial is a plot to destroy Zuma’s political career,” said Mike Zuma, a student from KwaZulu-Natal.
“You can see this thing has been framed,” said Christoffel Khaneale from Soweto.
Jacob Allans, also from Soweto, said it was clear Mbeki was targeting Zuma. “What about that woman with the plane?” he shouted, referring to Deputy President Phumzile Mlambo-Ngcuka. “Mbeki must hit both sides.”
A new T-shirt visible in Monday’s crowd spoke volumes. Below the words “Amadoda aqatho amela amaqiniso [Real men stand up for the truth]” were the photographs of nine ANC leaders — Nelson Mandela, Oliver Tambo, Alfred Nzo, Kgalema Motlanthe, Walter Sisulu, Fikile Mbalula, Chris Hani, Albert Luthuli and Zuma. Mbeki’s picture was conspicuous by its absence.
A poster held by Bhampetshini Hzaca had Mandela telling Mbeki: “Lalela ke mfana buyisa u Zuma [Listen my boy, bring back Zuma].”
“He’s a boy, he’s a fucking boy,” Hzaca shouted, referring to Mbeki.
Yet another poster protested against Luthuli House’s growing stranglehold on the party’s provincial and regional structures: “Phansi [down with] NGC [national general council] prerogative. Phambili [forward with] NGC collective leadership.”
Some consider Zuma the only cure for their poverty. Gabriel Dichaba said he was in exile with Zuma and had been unemployed since 1997 when he left the defence force. “He’s the only person we’re relying on. He’s the only person who can understand us,” he said.
Mbekeni Mdalose from Soweto said Zuma “was always open, he understands the working class, and we believe in him”.
Others were convinced the “plot” against Zuma was underscored by ethnicity. “The ANC was established by Zulus, then the Xhosas took over and now they don’t want the Zulus back in the seat,” said Nkosinathi Zitha. “So they bought that lady [the rape complainant].”
A red mini bus taxi with “super woofer” speakers began blaring the lyrics of the latest release of the popular Izingane Zo Ma band — “The people want Zuma to lead, but in Parliament they don’t want him to” — and the crowd began bopping and jiving. The band’s controversial hit Letha Umshini Wami (Bring me my Machine Gun), which has become associated with Zuma’s struggles, was recently banned from SABC’s Zulu-medium station, Ukhozi FM.
“Our brothers are sitting in jail because of women like the [rape complainant] crying rape, rape, rape,” complained Ncamisile Maphalala waving her hand to the beat of the music. “We really want rape explained to us. We women don’t know the meaning any more because anyone can call rape.”
Proudly SA on the skids
Proudly SA on the skids
Vicki Robinson
05 May 2006 11:25
South Africa’s “buy South Africa campaign”, Proudly South African (PSA), is floundering. Hundreds of disillusioned members have withdrawn their annual subscription fees, key staff members have resigned and revenue from founding sponsors has run dry.
The PSA campaign, established in 2001 as a National Economic Development and Labour Council (Nedlac) initiative, flowed from the Presidential Job Summit in 1998. It was established mainly to stimulate local demand and create employment by encouraging South African consumers to buy local retail and corporate brands.
Member companies are charged an annual subscription fee of 0,1% of annual turnover, to a minimum of R500 and maximum of R500 000. Offered benefits are branding with the PSA logo, promotional exhibitions, discounted media advertising opportunities and preferential state procurement opportunities.
At the end of 2003, PSA had a membership of 2 500 companies, a figure which has since dwindled to about 1 500. A string of ex-members interviewed by the Mail & Guardian gave a lack of return on their fees as a key reason for their withdrawal.
Only 276 new members have joined in the past year -- in the first three years, an average of 60 new members joined every month. Since January this year, only 54 members have joined, generating an average income of R30 000 in total a month, according to PSA figures.
In addition, contracts with founding sponsors South African Airways, Eskom, Old Mutual, PetroSA, Barlo-world and Telkom, yielding R24-million in the first three years, lapsed in 2004.
Manana Moroka, CEO of PSA, said she was negotiating with them over “the possibility of renewing their sponsorships”, but no agreements had been reached. A tender was recently put out for a company to raise new sponsorships, she said.
It is understood that PSA’s monthly overheads -- averaging R3-million a month, according to previous reports -- now far exceed its revenue. A source familiar with Nedlac and the campaign said: “At this rate, the campaign will run out of money and collapse in less than 12 months. That the campaign has reached this low point is a very poor reflection on the board ... This needs a board that understands strategic branding and can manage management.”
Six senior staff have resigned over the past year, several citing an inability to work with Moroka. She said the resignations were due to “natural reasons ... such as career development”.
Erik Jansen, South African MD of international hotel group NH Hotels, said his company had withdrawn from PSA because it had been “let down” by the campaign.
“It became clear that none of the promised marketing efforts or potential spin-offs were happening,” said Jansen. “There were no newsletters, no networking functions and no interaction between co-members to support each other for business purposes.” The last printed PSA member newsletter was sent out in October last year.
PG Group CEO Stuart Jennings confirmed that the company had also withdrawn. “We weren’t getting bang for our buck from PSA,” he said.
Chris Barnard, a director of Boston Breweries, said that while his company had every intention of paying its membership fee, it had not received an invoice since June last year. “It is now our intention to withdraw our membership,” he said.
Susan Haywood, the owner of Chocolate Time, said the company was still paying its annual subscription in the hope of some benefit. However, “nothing has been done for us yet”.
Premier Food, SAB/Miller and Comair have also pulled out. SAB’s Michael Farr said the company did not think there was “sufficient business value” in the R500 000 annual membership fee.
Moroka, appointed CEO in November last year, took over the organisation when it was in a state of flux. Former CEO Martin Feinstein left in mid-2004. In the interim, PSA has had two acting CEs.
According to Moroka, the first three years of the organisation’s existence were aimed at “establishing the PSA brand”. “During the past six months, the organisation has been undergoing major changes ... in preparation for the challenges posed by the campaign’s second phase,” she said. “Member retention, value added tangible member benefits and changing consumer behaviour in favour of purchasing quality Proudly South African products are the primary focus area for phase two.”
“If members have started to leave the campaign, that’s sad, because it has enormous potential,” said Feinstein. “At its core, Proudly South African is a brand and, like any other brand, its reputation and its value to users are closely linked. Brands have to be carefully managed and supported by delivery on the ground. If the brand isn’t delivering, people will lose faith in it and, while that situation can be reversed, it’s a tough job.”
Vicki Robinson
05 May 2006 11:25
South Africa’s “buy South Africa campaign”, Proudly South African (PSA), is floundering. Hundreds of disillusioned members have withdrawn their annual subscription fees, key staff members have resigned and revenue from founding sponsors has run dry.
The PSA campaign, established in 2001 as a National Economic Development and Labour Council (Nedlac) initiative, flowed from the Presidential Job Summit in 1998. It was established mainly to stimulate local demand and create employment by encouraging South African consumers to buy local retail and corporate brands.
Member companies are charged an annual subscription fee of 0,1% of annual turnover, to a minimum of R500 and maximum of R500 000. Offered benefits are branding with the PSA logo, promotional exhibitions, discounted media advertising opportunities and preferential state procurement opportunities.
At the end of 2003, PSA had a membership of 2 500 companies, a figure which has since dwindled to about 1 500. A string of ex-members interviewed by the Mail & Guardian gave a lack of return on their fees as a key reason for their withdrawal.
Only 276 new members have joined in the past year -- in the first three years, an average of 60 new members joined every month. Since January this year, only 54 members have joined, generating an average income of R30 000 in total a month, according to PSA figures.
In addition, contracts with founding sponsors South African Airways, Eskom, Old Mutual, PetroSA, Barlo-world and Telkom, yielding R24-million in the first three years, lapsed in 2004.
Manana Moroka, CEO of PSA, said she was negotiating with them over “the possibility of renewing their sponsorships”, but no agreements had been reached. A tender was recently put out for a company to raise new sponsorships, she said.
It is understood that PSA’s monthly overheads -- averaging R3-million a month, according to previous reports -- now far exceed its revenue. A source familiar with Nedlac and the campaign said: “At this rate, the campaign will run out of money and collapse in less than 12 months. That the campaign has reached this low point is a very poor reflection on the board ... This needs a board that understands strategic branding and can manage management.”
Six senior staff have resigned over the past year, several citing an inability to work with Moroka. She said the resignations were due to “natural reasons ... such as career development”.
Erik Jansen, South African MD of international hotel group NH Hotels, said his company had withdrawn from PSA because it had been “let down” by the campaign.
“It became clear that none of the promised marketing efforts or potential spin-offs were happening,” said Jansen. “There were no newsletters, no networking functions and no interaction between co-members to support each other for business purposes.” The last printed PSA member newsletter was sent out in October last year.
PG Group CEO Stuart Jennings confirmed that the company had also withdrawn. “We weren’t getting bang for our buck from PSA,” he said.
Chris Barnard, a director of Boston Breweries, said that while his company had every intention of paying its membership fee, it had not received an invoice since June last year. “It is now our intention to withdraw our membership,” he said.
Susan Haywood, the owner of Chocolate Time, said the company was still paying its annual subscription in the hope of some benefit. However, “nothing has been done for us yet”.
Premier Food, SAB/Miller and Comair have also pulled out. SAB’s Michael Farr said the company did not think there was “sufficient business value” in the R500 000 annual membership fee.
Moroka, appointed CEO in November last year, took over the organisation when it was in a state of flux. Former CEO Martin Feinstein left in mid-2004. In the interim, PSA has had two acting CEs.
According to Moroka, the first three years of the organisation’s existence were aimed at “establishing the PSA brand”. “During the past six months, the organisation has been undergoing major changes ... in preparation for the challenges posed by the campaign’s second phase,” she said. “Member retention, value added tangible member benefits and changing consumer behaviour in favour of purchasing quality Proudly South African products are the primary focus area for phase two.”
“If members have started to leave the campaign, that’s sad, because it has enormous potential,” said Feinstein. “At its core, Proudly South African is a brand and, like any other brand, its reputation and its value to users are closely linked. Brands have to be carefully managed and supported by delivery on the ground. If the brand isn’t delivering, people will lose faith in it and, while that situation can be reversed, it’s a tough job.”
Row over high hajj prices
Row over high hajj prices
Vicki Robinson | Johannesburg, South Africa
27 May 2006 06:00
The pilgrimage to Mecca is a R225-million-a-year industry. (Photo: AP)
A Muslim-owned travel agency is suing an Old Mutual employee after forensic investigators traced an e-mail accusing the agency of exploiting the Muslim hajj pilgrimage to her computer.
The e-mail, which accused Cape Town-based Sure Flywell Travel of amassing a net profit of R10-million on air-ticket sales alone during last year’s hajj, has shaken the Muslim community.
Earlier this year, it prompted Hajj Watch, a South African civil advocacy movement that represents the rights of hajjis, to call a mass meeting to “name and shame agents that exploit pilgrims”. Thousands of Muslims held rallies in Johannesburg, Cape Town and Durban.
The pilgrimage to Mecca is a R225-million-a-year industry. On Wednesday evening the Hajj Watch leadership met to further discuss what they describe as the “skulduggery” of certain travel agencies.
“It is easier to become a hajj vendor then it is to become a boerewors vendor in Adderley Street [in Cape Town],” said Jakes Rawad, the spokesperson for Hajj Watch.
The hajj occurs each year between the eighth and 13th days of the last month of the Muslim year, Dhu al Hijjah. It represents the culmination of a Muslim’s spiritual life and for many it is a lifelong ambition.
Under Saudi Arabian regulations, only hajj pilgrims using travel agents registered with the South African Hajj and Umrah Council (Sahuc) are permitted visas to travel for the pilgrimage. The Saudi Arabia Ministry of Hajj issues special pilgrimage visas each year to expedite the movement of the millions of pilgrims to Mecca and Medina to visit the Prophet’s tomb.
The Sahuc was established in 1996 by the Department of Foreign Affairs to assist South African pilgrims. Last year 7 500 South Africans were endorsed as pilgrims — out of a total of two million who performed the hajj.
The e-mail, with the subject “exploitation of the hujjaj”, allegedly originated from the computer of an employee in Old Mutual’s IT department on December 21 last year. She spoke to the Mail & Guardian, but cannot be named for legal reasons.
In addition to profits on air tickets, the message claimed that Sure Flywell Travel, the Association of South Africa Travel Agents, and another travel company called Wembley Travel colluded to create “an air-ticket monopoly”, charging on average R30 000 for a hajj package.
“This type of exploitation of the poor is unacceptable and must be rectified immediately. The question is: What is the ummah [Muslim community] going to do about it?” the e-mail read. “It is obvious that this type of problem cannot be left to the so-called ‘leaders’ of the ummah, as they themselves have proved that they are not capable of resolving problems or even setting direction for the ummah.
“For as long as the ummah remains ignorant and apathetic, they will always be led astray. The time has come to mobilise and educate one another of how we are being misled by prominent individuals in order to enrich themselves.”
Usman Ahmed, the chairperson of Sure Flywell Travel, commissioned the services of CyberX Forensic services to investigate the origin of the e-mail after it was released “into the world” at the end of the last year.
It was sent under the pseudonym Muhammad Al-Haq and came from a Yahoo.co.uk account, which was closed shortly after it was sent.
Ahmed this week vehemently denied the claims in the message. “My company has been in existence for 40 years. If I was exploiting in any way I wouldn’t be in business,” he said. “To send a chain e-mail of this nature to all and sundry in your address book is not fair. It smells rotten.” He said the average hajj package ranged between R25 000 and R55 000, excluding spending money.
After failing to extract an apology from the “author” of the e-mail, Ahmed has sued the Old Mutual employee in her personal capacity. The employee has opposed the action.
Stephen Bowey, Old Mutual communications manager, said the company’s forensic services had conducted an internal investigation, at the request of CyberX, into the origin of the e-mail. “Our investigation produced no evidence that an Old Mutual employee had been logged into Yahoo.co.uk via Old Mutual’s system,” he said.
Hajj Watch’s Rawad said that , for them, the controversy highlighted the fact that the hajj business had become a “tradable commodity”. He said the annual demand for visas to Saudi Arabia outweighed the quota by at least 3 000, which gave travel agencies major scope for abuse.
Rawad said the situation was “spiralling downwards” because there was no transparency on how the Sahuc regulated its member travel agencies.
The Sahuc had not responded for comment by the time of going to press.
Vicki Robinson | Johannesburg, South Africa
27 May 2006 06:00
The pilgrimage to Mecca is a R225-million-a-year industry. (Photo: AP)
A Muslim-owned travel agency is suing an Old Mutual employee after forensic investigators traced an e-mail accusing the agency of exploiting the Muslim hajj pilgrimage to her computer.
The e-mail, which accused Cape Town-based Sure Flywell Travel of amassing a net profit of R10-million on air-ticket sales alone during last year’s hajj, has shaken the Muslim community.
Earlier this year, it prompted Hajj Watch, a South African civil advocacy movement that represents the rights of hajjis, to call a mass meeting to “name and shame agents that exploit pilgrims”. Thousands of Muslims held rallies in Johannesburg, Cape Town and Durban.
The pilgrimage to Mecca is a R225-million-a-year industry. On Wednesday evening the Hajj Watch leadership met to further discuss what they describe as the “skulduggery” of certain travel agencies.
“It is easier to become a hajj vendor then it is to become a boerewors vendor in Adderley Street [in Cape Town],” said Jakes Rawad, the spokesperson for Hajj Watch.
The hajj occurs each year between the eighth and 13th days of the last month of the Muslim year, Dhu al Hijjah. It represents the culmination of a Muslim’s spiritual life and for many it is a lifelong ambition.
Under Saudi Arabian regulations, only hajj pilgrims using travel agents registered with the South African Hajj and Umrah Council (Sahuc) are permitted visas to travel for the pilgrimage. The Saudi Arabia Ministry of Hajj issues special pilgrimage visas each year to expedite the movement of the millions of pilgrims to Mecca and Medina to visit the Prophet’s tomb.
The Sahuc was established in 1996 by the Department of Foreign Affairs to assist South African pilgrims. Last year 7 500 South Africans were endorsed as pilgrims — out of a total of two million who performed the hajj.
The e-mail, with the subject “exploitation of the hujjaj”, allegedly originated from the computer of an employee in Old Mutual’s IT department on December 21 last year. She spoke to the Mail & Guardian, but cannot be named for legal reasons.
In addition to profits on air tickets, the message claimed that Sure Flywell Travel, the Association of South Africa Travel Agents, and another travel company called Wembley Travel colluded to create “an air-ticket monopoly”, charging on average R30 000 for a hajj package.
“This type of exploitation of the poor is unacceptable and must be rectified immediately. The question is: What is the ummah [Muslim community] going to do about it?” the e-mail read. “It is obvious that this type of problem cannot be left to the so-called ‘leaders’ of the ummah, as they themselves have proved that they are not capable of resolving problems or even setting direction for the ummah.
“For as long as the ummah remains ignorant and apathetic, they will always be led astray. The time has come to mobilise and educate one another of how we are being misled by prominent individuals in order to enrich themselves.”
Usman Ahmed, the chairperson of Sure Flywell Travel, commissioned the services of CyberX Forensic services to investigate the origin of the e-mail after it was released “into the world” at the end of the last year.
It was sent under the pseudonym Muhammad Al-Haq and came from a Yahoo.co.uk account, which was closed shortly after it was sent.
Ahmed this week vehemently denied the claims in the message. “My company has been in existence for 40 years. If I was exploiting in any way I wouldn’t be in business,” he said. “To send a chain e-mail of this nature to all and sundry in your address book is not fair. It smells rotten.” He said the average hajj package ranged between R25 000 and R55 000, excluding spending money.
After failing to extract an apology from the “author” of the e-mail, Ahmed has sued the Old Mutual employee in her personal capacity. The employee has opposed the action.
Stephen Bowey, Old Mutual communications manager, said the company’s forensic services had conducted an internal investigation, at the request of CyberX, into the origin of the e-mail. “Our investigation produced no evidence that an Old Mutual employee had been logged into Yahoo.co.uk via Old Mutual’s system,” he said.
Hajj Watch’s Rawad said that , for them, the controversy highlighted the fact that the hajj business had become a “tradable commodity”. He said the annual demand for visas to Saudi Arabia outweighed the quota by at least 3 000, which gave travel agencies major scope for abuse.
Rawad said the situation was “spiralling downwards” because there was no transparency on how the Sahuc regulated its member travel agencies.
The Sahuc had not responded for comment by the time of going to press.
African poverty has doubled in 20 years
African poverty has doubled in 20 years
Vicki Robinson
17 May 2005 08:41
The World Bank has set the poverty line at $1 a day. Most poor people in sub-Saharan Africa earn 20% of this amount
An new report has revealed that poverty in sub-Saharan Africa has doubled over the past 20 years, while in East Asia it has fallen by half.
Poverty, Inequality and Labour Markets in Africa: A Descriptive Overview was released this week by the University of Cape Town’s Development Policy Research Unit.
The report focuses on the two decades since 1981.
Development economist Haroon Bhorat, author of the report, says poverty in the sub-Saharan region has worsened to such an extent that it needs to be defined in terms of the “ultra-poor” -- people living on less than half of the World Bank’s $1-a-day poverty line.
He writes: “The high incidence of poverty according to the $1-a-day line is now well known for sub--Saharan Africa. [The report suggests] this needs to be overlayed with a key feature of the continent’s welfare challenge: the presence of the ultra-poor in sub-Saharan Africa distinguishes it very starkly from the poor in the rest of the developing world.”
In the past 20 years the number of poor people living in sub--Saharan Africa has almost doubled, from 164-million to 316-million, the report notes.
In comparison, South Asia -- including Thailand, Cambodia and Vietnam -- has reduced its poverty levels at an annualised rate of 2% to 3%. East Asia, including China, has halved its poverty in the past decade. “Even with China excluded, the performance has been exceptional,” says Bhorat.
On average, the poor in sub--Saharan Africa earn a fifth of the $1-a-day that would keep them above the poverty line, according to the research. Forty-six percent of the region’s people survive on $1 a day, 21% on $0,50 a day and 6% on $0,25 a day. Only 17% earn above the -poverty line.
Most worrying, however, is Bhorat’s analysis that “both the level and nature of economic growth in sub-Saharan Africa are not conducive to poverty reduction. The region’s growth path is clearly not as pro-poor as that found, for example, in East Asia and the Pacific.”
Bhorat’s report, which he has bolstered with his own research, is the most comprehensive on indigence in the region and “cuts to the nub of the numbers”, he says.
“Over a 20-year period, largely through the 1990s, sub-Saharan Africa has been unable to significantly alter the proportion of individuals in the region who are living and earning below $1,03 per day, which lies in stark contrast to many other regions of the developing world,” says the report.
Apart from inadequate growth rates in sub-Saharan Africa, the governments in the region are not effectively translating this growth into poverty alleviation, says Bhorat. While a 1% increase in economic growth resulted in a 1,47% reduction in poverty in 1981, this measure slipped to 1,28% in 2001.
The research also shows that in the 20-year period since 1980 the region’s labour force has been the third-fastest growing in the world, at 2,6% per year. This is above the world average of 1,8%. The Middle East and North Africa recorded the highest labour growth at 3%. Latin America and the Caribbean were second, with 2,7%.
“In a continent where the growth in mean incomes has been at best tepid, the likelihood of significant reductions in absolute and relative poverty remains an even harder objective,” says Bhorat.
Vicki Robinson
17 May 2005 08:41
The World Bank has set the poverty line at $1 a day. Most poor people in sub-Saharan Africa earn 20% of this amount
An new report has revealed that poverty in sub-Saharan Africa has doubled over the past 20 years, while in East Asia it has fallen by half.
Poverty, Inequality and Labour Markets in Africa: A Descriptive Overview was released this week by the University of Cape Town’s Development Policy Research Unit.
The report focuses on the two decades since 1981.
Development economist Haroon Bhorat, author of the report, says poverty in the sub-Saharan region has worsened to such an extent that it needs to be defined in terms of the “ultra-poor” -- people living on less than half of the World Bank’s $1-a-day poverty line.
He writes: “The high incidence of poverty according to the $1-a-day line is now well known for sub--Saharan Africa. [The report suggests] this needs to be overlayed with a key feature of the continent’s welfare challenge: the presence of the ultra-poor in sub-Saharan Africa distinguishes it very starkly from the poor in the rest of the developing world.”
In the past 20 years the number of poor people living in sub--Saharan Africa has almost doubled, from 164-million to 316-million, the report notes.
In comparison, South Asia -- including Thailand, Cambodia and Vietnam -- has reduced its poverty levels at an annualised rate of 2% to 3%. East Asia, including China, has halved its poverty in the past decade. “Even with China excluded, the performance has been exceptional,” says Bhorat.
On average, the poor in sub--Saharan Africa earn a fifth of the $1-a-day that would keep them above the poverty line, according to the research. Forty-six percent of the region’s people survive on $1 a day, 21% on $0,50 a day and 6% on $0,25 a day. Only 17% earn above the -poverty line.
Most worrying, however, is Bhorat’s analysis that “both the level and nature of economic growth in sub-Saharan Africa are not conducive to poverty reduction. The region’s growth path is clearly not as pro-poor as that found, for example, in East Asia and the Pacific.”
Bhorat’s report, which he has bolstered with his own research, is the most comprehensive on indigence in the region and “cuts to the nub of the numbers”, he says.
“Over a 20-year period, largely through the 1990s, sub-Saharan Africa has been unable to significantly alter the proportion of individuals in the region who are living and earning below $1,03 per day, which lies in stark contrast to many other regions of the developing world,” says the report.
Apart from inadequate growth rates in sub-Saharan Africa, the governments in the region are not effectively translating this growth into poverty alleviation, says Bhorat. While a 1% increase in economic growth resulted in a 1,47% reduction in poverty in 1981, this measure slipped to 1,28% in 2001.
The research also shows that in the 20-year period since 1980 the region’s labour force has been the third-fastest growing in the world, at 2,6% per year. This is above the world average of 1,8%. The Middle East and North Africa recorded the highest labour growth at 3%. Latin America and the Caribbean were second, with 2,7%.
“In a continent where the growth in mean incomes has been at best tepid, the likelihood of significant reductions in absolute and relative poverty remains an even harder objective,” says Bhorat.
Redesigning to rule
Redesigning to rule
Vicki Robinson | Johannesburg, South Africa
24 June 2005 08:33
A more streamlined, technocratic ANC, with unruly regions and branches brought firmly under the control of Luthuli House, is at the centre of plans to align party structures with those of the government.
A discussion document titled Organisational Design of the ANC: A Case for Internal Renewal, distributed ahead of the party’s National General Council next weekend, contains proposals that clearly mirror President Thabo Mbeki’s restructuring of government.
But the plan is likely to face stiff resistance; some provincial leaders told the Mail & Guardian they have already resolved to contest it.
According to Sankie Mthembi-Mahanyele, the party’s deputy secretary general, the proposals will amount to “a more effective and efficient ANC” where the “management and administration” of the party is “more cohesive and systematic” in the provinces and head office, limiting the scope for patronage and factionalism.
The document suggests that the branches — traditionally the party’s most important structure — have lost touch with the ANC’s policies and are no longer advancing the principles of the “national democratic revolution” through party mobilisation and organisational work.
In addition, it notes that the “selection and election processes, as presently practised within the organisation, are contributing to poor levels of cohesion within the ranks and factional agenda[s], [which do] not necessarily promote the values of the ANC, such as putting the collective first.”
The document suggests that the transition of the ANC from an extra-parliamentary movement to a ruling political party with electoral structures has resulted in members using their positions in the ANC to achieve personal political ends. To resolve this, the document recommends that branches be aligned more closely with state structures.
“Among the design principles that the [restructuring of the party] must achieve is the delayering of the organisation to reduce its control span ... most significantly the organisation must phase out leadership organs that do not correspond with any equivalent government authority. In this respect, zones must be phased out and sub-regions as party equivalents of municipalities must be established in all municipalities.”
Mthembi-Mahanyele said: “We want to move away from people who look at all these responsibilities and say, ‘I want to be this [leader] and that [leader].’ In short we are saying that we want a more efficient ANC with better management skills ... and political capacity to implement policy on the ground.”
She agreed that this strategy falls in line with Mbeki’s programme of action, which moves to address the delivery backlogs by giving national government, in particular the presidency, greater decision-making powers over provinces and local government.
The report proposes that “provinces must focus on managing all centres of power ... In this regard, the structure of provincial ANC offices must mirror the structural reorganisation that will be effected at head office.”
The organisational review envisages that the party, from the branches to head office, will be structured along the following centres of power: state, the economy, civil society, terrain of ideas and the international arena.
“We need a new kind of branch that relates to government policy,” said Mthembi-Mahanyele. “Currently we’re unable to do that because we haven’t emphasised these sectoral issues ... the branches consist simply of an executive.”
If the proposals contained in the discussion document are accepted at the national general council they won’t require changes to the party’s constitution, but Luthuli House will have a much stronger hold over the party, and will assume a more managerialist and “comprehensive character” to enhance the party’s “strategy and tactics”, said Mthembi-Mahanyele.
“If the organisational review passes through the national general council it will mean that when we at headquarters sit we will be able to send out a form where we say to the provincial leadership, ‘Can you give us a report on what your branches have done around the five sectors?’,” she said.
The document also proposes the introduction of a permanent electoral commission for the party.
The commission “would take charge of the election process” during provincial and national conferences at which the party’s leadership is elected to clamp down on the pursuit of “personal agendas”.
“This matter is so vital that it can determine the future fortunes of the organisation,” says the document.
Vicki Robinson | Johannesburg, South Africa
24 June 2005 08:33
A more streamlined, technocratic ANC, with unruly regions and branches brought firmly under the control of Luthuli House, is at the centre of plans to align party structures with those of the government.
A discussion document titled Organisational Design of the ANC: A Case for Internal Renewal, distributed ahead of the party’s National General Council next weekend, contains proposals that clearly mirror President Thabo Mbeki’s restructuring of government.
But the plan is likely to face stiff resistance; some provincial leaders told the Mail & Guardian they have already resolved to contest it.
According to Sankie Mthembi-Mahanyele, the party’s deputy secretary general, the proposals will amount to “a more effective and efficient ANC” where the “management and administration” of the party is “more cohesive and systematic” in the provinces and head office, limiting the scope for patronage and factionalism.
The document suggests that the branches — traditionally the party’s most important structure — have lost touch with the ANC’s policies and are no longer advancing the principles of the “national democratic revolution” through party mobilisation and organisational work.
In addition, it notes that the “selection and election processes, as presently practised within the organisation, are contributing to poor levels of cohesion within the ranks and factional agenda[s], [which do] not necessarily promote the values of the ANC, such as putting the collective first.”
The document suggests that the transition of the ANC from an extra-parliamentary movement to a ruling political party with electoral structures has resulted in members using their positions in the ANC to achieve personal political ends. To resolve this, the document recommends that branches be aligned more closely with state structures.
“Among the design principles that the [restructuring of the party] must achieve is the delayering of the organisation to reduce its control span ... most significantly the organisation must phase out leadership organs that do not correspond with any equivalent government authority. In this respect, zones must be phased out and sub-regions as party equivalents of municipalities must be established in all municipalities.”
Mthembi-Mahanyele said: “We want to move away from people who look at all these responsibilities and say, ‘I want to be this [leader] and that [leader].’ In short we are saying that we want a more efficient ANC with better management skills ... and political capacity to implement policy on the ground.”
She agreed that this strategy falls in line with Mbeki’s programme of action, which moves to address the delivery backlogs by giving national government, in particular the presidency, greater decision-making powers over provinces and local government.
The report proposes that “provinces must focus on managing all centres of power ... In this regard, the structure of provincial ANC offices must mirror the structural reorganisation that will be effected at head office.”
The organisational review envisages that the party, from the branches to head office, will be structured along the following centres of power: state, the economy, civil society, terrain of ideas and the international arena.
“We need a new kind of branch that relates to government policy,” said Mthembi-Mahanyele. “Currently we’re unable to do that because we haven’t emphasised these sectoral issues ... the branches consist simply of an executive.”
If the proposals contained in the discussion document are accepted at the national general council they won’t require changes to the party’s constitution, but Luthuli House will have a much stronger hold over the party, and will assume a more managerialist and “comprehensive character” to enhance the party’s “strategy and tactics”, said Mthembi-Mahanyele.
“If the organisational review passes through the national general council it will mean that when we at headquarters sit we will be able to send out a form where we say to the provincial leadership, ‘Can you give us a report on what your branches have done around the five sectors?’,” she said.
The document also proposes the introduction of a permanent electoral commission for the party.
The commission “would take charge of the election process” during provincial and national conferences at which the party’s leadership is elected to clamp down on the pursuit of “personal agendas”.
“This matter is so vital that it can determine the future fortunes of the organisation,” says the document.
Monday, November 27, 2006
ANC pledges 'appropriate' exchange rate
ANC pledges 'appropriate' exchange rate
Vicki Robinson and Matuma Letsoalo
28 April 2005 11:59
Trade unionists have warned that the unified front presented by the tripartite alliance partners at their summit last weekend will fracture unless the African National Congress-led government moves to implement the resolutions adopted at the meeting.
The resolutions, which include an unprecedented commitment by the ANC to promote a competitive value for the rand, suggest greater concord between the alliance partners on economic policy than has existed for a decade. The alliance’s core message was that the South African Reserve Bank would be challenged to widen the inflation target parameters.
This goes against the grain of government monetary policy of low inflation targeting to achieve price and wage stability.
The summit resolution states that: “The rand should be valued competitively.
“We need an appropriate and more competitive exchange rate that will assist South Africa to create and save jobs, and build and expand local industry.”
The summit also resolved that retailers should agree with the unions to procure 75% of their products locally, and that business should treat retrenchments as a last option.
But Congress of South African Trade Unions (Cosatu) secretary general Zwelinzima Vavi sounded a note of caution.
“I saw an ANC commitment to implement the resolutions, but I’ll be very disappointed if the government doesn’t move on that basis. It will completely kill confidence in the alliance process and put a nail in the alliance coffin,” he said.
Vavi’s concerns echo those of other Cosatu leaders.
“One of the problems with the summit declaration is that there is no concrete next step,” said Cosatu economist Neva Makgetla. “How to develop the resolutions, particularly those requiring government action, is up in the air.”
Cosatu president Willie Madisha remarked: “The [blanket] agreement on resolutions has never happened in the past. There seems to be acknowledgement that we face a job crisis. We can only hope all agreements will be implemented.”
Although Cosatu and the South African Communist Party have consistently called for a weaker rand — Cosatu is mobilising members to strike over job cuts and the currency — the ANC has, until now, been silent on the exchange rate.
Politicians have been sensitive to perceptions of interference with central bank independence.
“For the first time the alliance is signalling that you can’t have complete independence of the Reserve Bank. It has to act in the national interest,” said Tony Ehrenreich, Cosatu’s Western Cape secretary.
Deputy Minister of Finance Jabu Moleketi, who attended the summit, said that devaluing the rand isn’t the only solution, but conceded that it is necessary.
“We need a package of measures to ensure the retention of jobs and ensure economic growth. On its own the rand cannot solve the problem. Companies also need to improve efficiencies.”
Kgalema Motlanthe, the secretary general of the ANC, told Business Day this week that “we need an appropriate and more competitive exchange rate that will assist South Africa to create and save jobs, and build and expand local industry”.
A senior alliance leader said there was concern that “the hotshots from the ANC weren’t at the summit. There is doubt about how much buy-in there is to the resolutions.”
ANC chairperson Mosiuoa Lekota, Motlanthe, Minister of Provincial and Local Government Sydney Mufamadi and Moleketi, among other ANC members, attended the summit.
“We got stronger statements because the guys [who argue against a weaker rand] weren’t there to say that you can’t afford to rock the boat,” said one alliance leader. “Whether the ANC national executive committee accepts the resolution on the rand is another thing.”
Vicki Robinson and Matuma Letsoalo
28 April 2005 11:59
Trade unionists have warned that the unified front presented by the tripartite alliance partners at their summit last weekend will fracture unless the African National Congress-led government moves to implement the resolutions adopted at the meeting.
The resolutions, which include an unprecedented commitment by the ANC to promote a competitive value for the rand, suggest greater concord between the alliance partners on economic policy than has existed for a decade. The alliance’s core message was that the South African Reserve Bank would be challenged to widen the inflation target parameters.
This goes against the grain of government monetary policy of low inflation targeting to achieve price and wage stability.
The summit resolution states that: “The rand should be valued competitively.
“We need an appropriate and more competitive exchange rate that will assist South Africa to create and save jobs, and build and expand local industry.”
The summit also resolved that retailers should agree with the unions to procure 75% of their products locally, and that business should treat retrenchments as a last option.
But Congress of South African Trade Unions (Cosatu) secretary general Zwelinzima Vavi sounded a note of caution.
“I saw an ANC commitment to implement the resolutions, but I’ll be very disappointed if the government doesn’t move on that basis. It will completely kill confidence in the alliance process and put a nail in the alliance coffin,” he said.
Vavi’s concerns echo those of other Cosatu leaders.
“One of the problems with the summit declaration is that there is no concrete next step,” said Cosatu economist Neva Makgetla. “How to develop the resolutions, particularly those requiring government action, is up in the air.”
Cosatu president Willie Madisha remarked: “The [blanket] agreement on resolutions has never happened in the past. There seems to be acknowledgement that we face a job crisis. We can only hope all agreements will be implemented.”
Although Cosatu and the South African Communist Party have consistently called for a weaker rand — Cosatu is mobilising members to strike over job cuts and the currency — the ANC has, until now, been silent on the exchange rate.
Politicians have been sensitive to perceptions of interference with central bank independence.
“For the first time the alliance is signalling that you can’t have complete independence of the Reserve Bank. It has to act in the national interest,” said Tony Ehrenreich, Cosatu’s Western Cape secretary.
Deputy Minister of Finance Jabu Moleketi, who attended the summit, said that devaluing the rand isn’t the only solution, but conceded that it is necessary.
“We need a package of measures to ensure the retention of jobs and ensure economic growth. On its own the rand cannot solve the problem. Companies also need to improve efficiencies.”
Kgalema Motlanthe, the secretary general of the ANC, told Business Day this week that “we need an appropriate and more competitive exchange rate that will assist South Africa to create and save jobs, and build and expand local industry”.
A senior alliance leader said there was concern that “the hotshots from the ANC weren’t at the summit. There is doubt about how much buy-in there is to the resolutions.”
ANC chairperson Mosiuoa Lekota, Motlanthe, Minister of Provincial and Local Government Sydney Mufamadi and Moleketi, among other ANC members, attended the summit.
“We got stronger statements because the guys [who argue against a weaker rand] weren’t there to say that you can’t afford to rock the boat,” said one alliance leader. “Whether the ANC national executive committee accepts the resolution on the rand is another thing.”
Absa cuts R500m lifeline to farmers
Absa cuts R500m lifeline to farmers
Vicki Robinson
02 May 2005 11:59
Absa Bank is withdrawing its annual funding of R500-million from Verus Farm Group, a risk management company that provides input profits for South Africa’s grain farmers.
This decision comes amid a crisis in the agricultural sector as a three million ton oversupply of maize from last year, a bumper crop this year and cheap grain imports from South America have slashed South Africa’s maize price from R1 200 a ton last year to about R540 a ton this year. Production costs per ton of maize are about R562. Maize accounts for more than 50% of grain farmers’ income.
Johan Geldenhuys, the group executive for credit at Absa, confirmed that the bank had withdrawn their support for the “summer contract-growing scheme” and is currently in discussion with Verus to support the winter contract-growing scheme “for the last time”.
He said that owing to the volatility of the maize market, the bank lost “between 15% and 25% of the money [we] lent to Verus”. He said the bank has “fully provided for the loss”.
Seaweed Mcfarlane, the operations manager at Verus, confirmed that Verus stands to lose about R900-million. The Mail & Guardian understands that Barclays Bank also provides a proportion of the input profit funding to Verus.
Mcfarlane said he could not comment on the effect that the withdrawal of the money will have on the company or farmers because “Absa will only formalise their decision on Tuesday”.
Absa provides capital to Verus, which, in turn, lends money to grain farmers in the form of input capital to cushion the risk of an over-supplied market and low yields as a result of bad weather. Verus supports about 700 grain farmers, which constitutes 8% of the country’s industry.
The company operates on a contract basis with the farmers, which includes financing, risk sharing, and price fixing, through hedging on the South African Futures Exchange.
“The construction of the contract entails that Verus becomes the owner of the harvest and therefore also the risk taker. On the other hand, the farmer is insured of a minimum rand per hectare for his production despite his yield,” says the Verus website.
The programme is strengthened by linking a value per ton before planting season for the production and setting a break-even point for the farmer to aim at. The contract includes an incentive whereby the farmer receives a bonus if he produces more than the break-even.
South Africa’s ailing grain industry could push struggling farmers to bankruptcy if they cannot service their debts, which are about R30,9-billion.
The grain industry suffered another blow this week as agricultural supplier Afgri warned that it expected a 45% drop in profits for the year to February. The company is the largest JSE Securities Exchange SA-listed agricultural company.
Meanwhile, writes Lloyd Gedye, the proposed Barclays purchase of a majority share in Absa will go ahead at the current valuation even as minority shareholders may be holding out for a higher price, a banking analyst told the M&G.
“I think this deal is cast in stone, it is not going to change. Big share-holders like Sanlam will have already agreed to sell at R79 a share,” said Wayne McCurrie at Momentum Multimanagers.
Sanlam finance director Flip Rademeyer has been reported as saying that the company would only support the bid once it was recommended by Absa’s board as a fair offer.
“It is the minority shareholders right and obligation to get a higher price ... I can assure you Barclays did not come up with this price without negotiating with the big shareholders. Barclays will have the majority of the 60% signed, sealed and delivered,” said McCurrie.
The offer by Barclays consists of a total price of R31,4-billion, or R79 a share, for a 60% share of Absa and a dividend of R1,80 a share.
McCurrie believes the deal is a fair offer albeit a relatively cheap one because of the current performance of the market. He said the deal’s financing was an interesting aspect. He believes the majority of the deal will have to be financed in the local market otherwise the inflow of money into the country will create a stronger rand.
Vicki Robinson
02 May 2005 11:59
Absa Bank is withdrawing its annual funding of R500-million from Verus Farm Group, a risk management company that provides input profits for South Africa’s grain farmers.
This decision comes amid a crisis in the agricultural sector as a three million ton oversupply of maize from last year, a bumper crop this year and cheap grain imports from South America have slashed South Africa’s maize price from R1 200 a ton last year to about R540 a ton this year. Production costs per ton of maize are about R562. Maize accounts for more than 50% of grain farmers’ income.
Johan Geldenhuys, the group executive for credit at Absa, confirmed that the bank had withdrawn their support for the “summer contract-growing scheme” and is currently in discussion with Verus to support the winter contract-growing scheme “for the last time”.
He said that owing to the volatility of the maize market, the bank lost “between 15% and 25% of the money [we] lent to Verus”. He said the bank has “fully provided for the loss”.
Seaweed Mcfarlane, the operations manager at Verus, confirmed that Verus stands to lose about R900-million. The Mail & Guardian understands that Barclays Bank also provides a proportion of the input profit funding to Verus.
Mcfarlane said he could not comment on the effect that the withdrawal of the money will have on the company or farmers because “Absa will only formalise their decision on Tuesday”.
Absa provides capital to Verus, which, in turn, lends money to grain farmers in the form of input capital to cushion the risk of an over-supplied market and low yields as a result of bad weather. Verus supports about 700 grain farmers, which constitutes 8% of the country’s industry.
The company operates on a contract basis with the farmers, which includes financing, risk sharing, and price fixing, through hedging on the South African Futures Exchange.
“The construction of the contract entails that Verus becomes the owner of the harvest and therefore also the risk taker. On the other hand, the farmer is insured of a minimum rand per hectare for his production despite his yield,” says the Verus website.
The programme is strengthened by linking a value per ton before planting season for the production and setting a break-even point for the farmer to aim at. The contract includes an incentive whereby the farmer receives a bonus if he produces more than the break-even.
South Africa’s ailing grain industry could push struggling farmers to bankruptcy if they cannot service their debts, which are about R30,9-billion.
The grain industry suffered another blow this week as agricultural supplier Afgri warned that it expected a 45% drop in profits for the year to February. The company is the largest JSE Securities Exchange SA-listed agricultural company.
Meanwhile, writes Lloyd Gedye, the proposed Barclays purchase of a majority share in Absa will go ahead at the current valuation even as minority shareholders may be holding out for a higher price, a banking analyst told the M&G.
“I think this deal is cast in stone, it is not going to change. Big share-holders like Sanlam will have already agreed to sell at R79 a share,” said Wayne McCurrie at Momentum Multimanagers.
Sanlam finance director Flip Rademeyer has been reported as saying that the company would only support the bid once it was recommended by Absa’s board as a fair offer.
“It is the minority shareholders right and obligation to get a higher price ... I can assure you Barclays did not come up with this price without negotiating with the big shareholders. Barclays will have the majority of the 60% signed, sealed and delivered,” said McCurrie.
The offer by Barclays consists of a total price of R31,4-billion, or R79 a share, for a 60% share of Absa and a dividend of R1,80 a share.
McCurrie believes the deal is a fair offer albeit a relatively cheap one because of the current performance of the market. He said the deal’s financing was an interesting aspect. He believes the majority of the deal will have to be financed in the local market otherwise the inflow of money into the country will create a stronger rand.
Jacob Zuma talks to us
Jacob Zuma talks to us
Johannesburg
06 May 2005 08:11
“This is what the French money has paid for!” jokes Deputy President Jacob Zuma, waving his hand over Oliver Tambo House, his official residence. In a rare interview Zuma spoke to Mail & Guardian reporter Vicki Robinson about a range of issues -- but refused to be drawn on the Schabir Shaik trial.
President Thabo Mbeki recently designated you watchdog over the “second economy”. The government has been widely criticised for failing to deliver to poor people — how do you plan to make a difference?
I’m not certain whether there is a new role. There was serious discussion at a Cabinet lekgotla last year, where we acknowledged that the government needs a clearer strategy to deal with the second economy that extends beyond, for example, the Expanded Public Works Programme and black economic empowerment. It is important to stress that this is not something that has happened suddenly — it a responsibility I was asked to assume last year. My role is really to coordinate government departments, particularly the economic departments responsible for meshing the first and second economies. Once we have formulated a strategy, we will identify what we need in terms of resources. The problem is that when people read about such things in the media, they believe I am going to be a philosopher, a theoretician, a philanthropist.
Do you think you have been a good steward of the South African National Aids Council? It has, for example, been criticised for only meeting four times last year.
I think that we have done our best. The establishment of the council was an advanced step that the government took to elucidate its policies and synergise the various sectors involved in HIV/Aids work in the country. I think we have succeeded in harmonising the approach to HIV/Aids in the country and there is more than 90% to 95% awareness in the country about the disease now.
Do you believe that figure?
Absolutely. What we now need to do is change people’s behaviour.
What is the purpose of the moral regeneration programme? Everybody talks about it but few people understand it. Is it about corruption? Are we talking about morality in public ethics, about allowing religion back into government, about sex, abstinence, homosexuality?
I don’t think it’s about sex; sex is as old as man [laughs]. The programme was built on the premise that the apartheid system undermined the values and morals of nation-building. We want to create a society where the value that underpinned my upbringing — that anybody’s child is my child — is regenerated. Today the attitude exists where if it is not my child, I don’t care. The moral regeneration programme allows each and every sector to give its own interpretation and act in their own way. For example, the churches will look at it from their spiritual point of view, the traditional leaders will look at it from their traditional point of view. It must have a national character that is all-encompassing.
Won’t a campaign involving so many disparate sectors become unwieldy?
Not at all. I am the patron of the programme and coordinate it at the national level, while the initiative for regenerative activities happens at the local level.
When is the election likely to be held in Burundi, and do you think peace is likely to hold in such a conflict-ridden region?
About August 19. There is a will to sustain the peace and the region has taken the decision to monitor it. But I think more than that, you have a movement on the continent that is anti-violent, anti-unconstitutional government, which will no longer allow a violent system to thrive. There is a growing collective understanding that any problem in another country on the continent affects us all.
Do you want to be president of South Africa?
[Laughs.] In the ANC culture we do not put our names forward, we do not tout ourselves. It is the ANC that decides who should lead the party. Once ANC members reach an agreement, they then approach you and say they want to nominate you. It is at that point you can either accept or decline. You don’t go around saying, “I want to be the president.”
If you are approached, will you say yes?
[Laughs.] If the ANC approaches me, it will mean that they have confidence in me and they think I can do the job — the matter is discussed at that point. We do not discuss it until that approach is made. I could say “yes”, but it is the ANC that makes the moves.
What is your opinion of the view put forward by KwaZulu-Natal Premier S’bu Ndebele that President Thabo Mbeki should serve a third term as president of the ANC? Some people are wary of this, saying it would create two centres of power.
People have expressed their opinion on this — but on such matters
we debate them in the right forum and the ANC takes a decision. I can’t stand here and voice a view anyhow — that would be reckless and irresponsible leadership.
Let’s look at your future beyond the Schabir Shaik trial — if you become South Africa’s president what will your plan be? Will you move away from a Gear strategy and adopt the kind of state-driven programme Cosatu wants?
[Laughs.] I am deputy president at the moment and what is being done in terms of policy is done with my support. I can see the Mail & Guardian wants a pro-labour president!
How is your relationship with President Mbeki?
He is more than a comrade, he is my brother. We have been together and we share views — we are much closer than people think.
Schabir Shaik said this week that some ANC members and members of big business oppose your presidential candidacy. Who was he referring to?
I hope you’ve asked Schabir [laughs]. Are there people that are against me in the ANC? I don’t think this is an issue because I have not marketed myself in the party as a potential presidential candidate. It is you guys in the media who keep asking the ANC people what they think. [Laughs.]
You have the support of Cosatu, the Communist Party and a groundswell of support among the masses. To them, you represent an alternative to the current economic policy, while Mbeki has a strong relationship with business. Is this a fair characterisation?
I have a touch with business as well! [Laughs.] People support the ANC and at times express that support through specific ANC leaders. But these are people’s perceptions. For example, if I had heeded people’s perceptions about me in the media over the past few years, I should be locked in a maximum prison. We don’t individualise in the ANC.
But politics is a competitive business, isn’t it?
You have opposition to political parties — that is where the competition is, not in the ANC.
Why have you chosen to remain silent throughout the Shaik trial rather than clear your name?
After the trial I will have an opportunity to say something, but it’s a strange call. I was investigated; the investigators said they had no case to take me to court and now people say I must go to court and answer the case. Which case? But when the [Shaik] case is over, I will talk about it.
Are you concerned that the Shaik case has hurt your political credibility, and do you worry that even if he isn’t convicted questions about your integrity will stick?
I would be in court now if there was any question about my integrity. Why then should I worry about people’s perceptions and views — why should I feel guilty and feel that something should stick? There is nothing to stick. It’s a funny thing that people don’t understand this."
Johannesburg
06 May 2005 08:11
“This is what the French money has paid for!” jokes Deputy President Jacob Zuma, waving his hand over Oliver Tambo House, his official residence. In a rare interview Zuma spoke to Mail & Guardian reporter Vicki Robinson about a range of issues -- but refused to be drawn on the Schabir Shaik trial.
President Thabo Mbeki recently designated you watchdog over the “second economy”. The government has been widely criticised for failing to deliver to poor people — how do you plan to make a difference?
I’m not certain whether there is a new role. There was serious discussion at a Cabinet lekgotla last year, where we acknowledged that the government needs a clearer strategy to deal with the second economy that extends beyond, for example, the Expanded Public Works Programme and black economic empowerment. It is important to stress that this is not something that has happened suddenly — it a responsibility I was asked to assume last year. My role is really to coordinate government departments, particularly the economic departments responsible for meshing the first and second economies. Once we have formulated a strategy, we will identify what we need in terms of resources. The problem is that when people read about such things in the media, they believe I am going to be a philosopher, a theoretician, a philanthropist.
Do you think you have been a good steward of the South African National Aids Council? It has, for example, been criticised for only meeting four times last year.
I think that we have done our best. The establishment of the council was an advanced step that the government took to elucidate its policies and synergise the various sectors involved in HIV/Aids work in the country. I think we have succeeded in harmonising the approach to HIV/Aids in the country and there is more than 90% to 95% awareness in the country about the disease now.
Do you believe that figure?
Absolutely. What we now need to do is change people’s behaviour.
What is the purpose of the moral regeneration programme? Everybody talks about it but few people understand it. Is it about corruption? Are we talking about morality in public ethics, about allowing religion back into government, about sex, abstinence, homosexuality?
I don’t think it’s about sex; sex is as old as man [laughs]. The programme was built on the premise that the apartheid system undermined the values and morals of nation-building. We want to create a society where the value that underpinned my upbringing — that anybody’s child is my child — is regenerated. Today the attitude exists where if it is not my child, I don’t care. The moral regeneration programme allows each and every sector to give its own interpretation and act in their own way. For example, the churches will look at it from their spiritual point of view, the traditional leaders will look at it from their traditional point of view. It must have a national character that is all-encompassing.
Won’t a campaign involving so many disparate sectors become unwieldy?
Not at all. I am the patron of the programme and coordinate it at the national level, while the initiative for regenerative activities happens at the local level.
When is the election likely to be held in Burundi, and do you think peace is likely to hold in such a conflict-ridden region?
About August 19. There is a will to sustain the peace and the region has taken the decision to monitor it. But I think more than that, you have a movement on the continent that is anti-violent, anti-unconstitutional government, which will no longer allow a violent system to thrive. There is a growing collective understanding that any problem in another country on the continent affects us all.
Do you want to be president of South Africa?
[Laughs.] In the ANC culture we do not put our names forward, we do not tout ourselves. It is the ANC that decides who should lead the party. Once ANC members reach an agreement, they then approach you and say they want to nominate you. It is at that point you can either accept or decline. You don’t go around saying, “I want to be the president.”
If you are approached, will you say yes?
[Laughs.] If the ANC approaches me, it will mean that they have confidence in me and they think I can do the job — the matter is discussed at that point. We do not discuss it until that approach is made. I could say “yes”, but it is the ANC that makes the moves.
What is your opinion of the view put forward by KwaZulu-Natal Premier S’bu Ndebele that President Thabo Mbeki should serve a third term as president of the ANC? Some people are wary of this, saying it would create two centres of power.
People have expressed their opinion on this — but on such matters
we debate them in the right forum and the ANC takes a decision. I can’t stand here and voice a view anyhow — that would be reckless and irresponsible leadership.
Let’s look at your future beyond the Schabir Shaik trial — if you become South Africa’s president what will your plan be? Will you move away from a Gear strategy and adopt the kind of state-driven programme Cosatu wants?
[Laughs.] I am deputy president at the moment and what is being done in terms of policy is done with my support. I can see the Mail & Guardian wants a pro-labour president!
How is your relationship with President Mbeki?
He is more than a comrade, he is my brother. We have been together and we share views — we are much closer than people think.
Schabir Shaik said this week that some ANC members and members of big business oppose your presidential candidacy. Who was he referring to?
I hope you’ve asked Schabir [laughs]. Are there people that are against me in the ANC? I don’t think this is an issue because I have not marketed myself in the party as a potential presidential candidate. It is you guys in the media who keep asking the ANC people what they think. [Laughs.]
You have the support of Cosatu, the Communist Party and a groundswell of support among the masses. To them, you represent an alternative to the current economic policy, while Mbeki has a strong relationship with business. Is this a fair characterisation?
I have a touch with business as well! [Laughs.] People support the ANC and at times express that support through specific ANC leaders. But these are people’s perceptions. For example, if I had heeded people’s perceptions about me in the media over the past few years, I should be locked in a maximum prison. We don’t individualise in the ANC.
But politics is a competitive business, isn’t it?
You have opposition to political parties — that is where the competition is, not in the ANC.
Why have you chosen to remain silent throughout the Shaik trial rather than clear your name?
After the trial I will have an opportunity to say something, but it’s a strange call. I was investigated; the investigators said they had no case to take me to court and now people say I must go to court and answer the case. Which case? But when the [Shaik] case is over, I will talk about it.
Are you concerned that the Shaik case has hurt your political credibility, and do you worry that even if he isn’t convicted questions about your integrity will stick?
I would be in court now if there was any question about my integrity. Why then should I worry about people’s perceptions and views — why should I feel guilty and feel that something should stick? There is nothing to stick. It’s a funny thing that people don’t understand this."
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