THE state is continuing to seek ways of ameliorating possible future job losses which may or may not result from Walmart’s investment in Massmart.
It would like the R100m set aside for this purpose increased to R300m. This newspaper has in the past questioned the wisdom of the state taking its own regulatory authority to court because this will make South Africa even less of a global destination for real investment.
But there is a secondary effect which this tinkering will cause — the distortion of the business environment for retail.
Just last month Pick n Pay — a direct competitor of Walmart’s — announced it was cutting 3000 jobs without a murmur of dissent from government.
There was no demand for the creation of a fund to ameliorate the results of this decision. Apparently job shedding by wholesome South African companies is not frowned on by the anti-imperialist lobby.
What this in effect means is that Walmart is paying a penalty for a possible future transgression while actual job-shedding goes unpunished.
No company should make a decision to shed jobs lightly and the state is entitled to ask serious questions when thousands are to lose their jobs.
But legislating against this or imposing fines in anticipation of it happening is not the way forward. All this does is make South Africa’s labour market less competitive, causing us to lose out on the jobs that further foreign investment would bring.
Distorting the market with piecemeal interventions smacks of ignorance and arrogance.
*This is a draft leader for the Sunday Times
LAST week this newspaper reported that the ANC’s treasurer general, Mathews Phosa, had seen the light and wanted his party’s investment arm, Chancellor House, to sell it’s stake in Hitachi Power Africa.
It seemed as if reason had finally prevailed following weeks of criticism because of Hitachi’s contract to build boilers for the Medupi power station,
Phosa’s words were:
“We are planning to exit within the next six weeks – but no one must hold us to six weeks because you don’t know what will happen in a commercial transaction.”
And he made it clear that the investment company had agreed to withdraw, saying:
“The chairman of the [Chancellor House] trust, Popo Molefe, has been briefed about the planned sale and there is consensus between us and him.”
But Phosa appeared to have spoken too soon. The ink had barely dried when ANC’s secretary general, Gwede Mantashe backtracked, saying:
“The debate whether we are going to sell the stake will continue for some time . I don’t think it’s an issue that must be taken at Luthuli House, because you have a company that has a board.”
On the face of it, this was yet more proof that the ANC’s left hand didn’t know what the right hand was doing.
Could Phosa and Mantashe not have consulted one another before going public? After all, they have offices a stone’s throw from one another in the party’s Luthuli House’s headquarters.
But there is more to this prevarication than a mere comedic mix-up.
In the days between Phosa’s statement and Mantashe’s contradiction of it, something very significant happened.
The World Bank, which was heavily lobbied not to grant a loan to Eskom because of, among other things, the link to Chancellor House, finally agreed to write a cheque for US$3 billion.
It is not a stretch to see it this way: Phosa’s commitment to withdrawing the investment helped seal the deal and once that was done, Mantashe’s riposte was aimed at holding onto the millions, perhaps billions, which the party stands to make.
By Thursday, the ruling party was taking yet another tack, this time in the person of Public Enterprises Minsiter, Barbara Hogan, who said:
“I don’t understand what the conflict of interest is, when there is no political party involvement, where there is no beneficiary.”
And, for good measure:
“The World Bank loan does not cover the Hitachi contract. It is completely separate from the boiler. So the World Bank is not involved in funding the boiler programme that Hitachi has contracted for.”
All of this misses the point which is that it is entirely inappropriate for the ruling party to hold a stake in a business which is a major beneficiary of a state contract.
Whether or not the World Bank funds the making of the boilers does not change the fact that decisions about public spending should not be influenced by the commercial gains those making the decision stand to make. Full stop.
Ahem. This falls in the shameless self-promotion department …
SUNDAY TIMES EDITOR MONDLI MAKHANYA PROMOTED TO EDITOR-IN-CHIEF OF AVUSA MEDIA NEWSPAPERS
Thursday, 25 March 2010
Sunday Times editor Mondli Makhanya has been promoted to editor-in-chief of Avusa Media newspapers it was announced today.
Announcing the promotion Avusa CEO Prakash Desai said that in his new position Makhanya would be charged with setting up and running centres of excellence that will produce unique, original and compelling content for all of the group’s newspapers and websites. In this new role, he would also represent the interests of editors on the Avusa Media management committee.
The editor of The Times, Ray Hartley, will assume the editorship of the Sunday Times and the editor of Business Times, Phylicia Oppelt, will become the editor of The Times. They will both report to Makhanya as will all other editors of Avusa Media newspapers. Read More…
THE biggest danger facing the South African state is corruption and its sidekick cronyism. News that the communications minister, Siphiwe Nyanda is part owner of a company that has been awarded a R67.8 m tender by the Gauteng roads and transport department represents another setback.
There are several problems with this tender. The first is that, if the DA’s Jack Bloom is to be believed, the tender did not follow the correct procedure.
But that pales in comparison to the problem of cronyism. A cabinet minister should not be involved in companies that are awarded government tenders for obvious reasons.
There are any number of reasons why this represents a conflict of interests. For one thing, currying favour with a senior party member might open doors for an ambitious bureaucrat.
For another, it suggests that South Africa is not a country where businesses can compete on a level playing field for government business, a serious disincentive to investors.
Bloom points out: “This contract also appears to have grown in value, and was not reviewed to see if another company could do it more cost-effectively.”
All the above are compounded by the fact that Transnet on Wednesday dismissed two senior managers for manipulating a tender process involving GNS.
President Jacob Zuma made a promising start when he pledged to fight corruption. He did so amidst whispers of disbelief because of the long shadow cast by the conviction of his financial advisor Schabir Shaik on charges of corruption and fraud.
He needs to move quickly to regain public confidence. Cabinet ministers should follow the example of Tokyo Sexwale who placed his business interests at arms length on re-entering politics.
THAT President Jacob Zuma has failed to declare his financial interests is of grave concern. It sends a strong signal from the top is that transparency is no longer necessary in financial dealings.
This as the financial affairs of Julius Malema continue to attract attention.
Yesterday City Press reported that Malema had failed to file tax returns and that his companies had not been issued with tax clearance certificates which are necessary to tender for government business. Despite this the companies were awarded contracts.
Zuma’s stand on the need for impeccable financial dealings is well known. He has publicly stated that he sees nothing wrong in a politician receiving a “loan” from a friend, even one involved in a company tendering for government business.
The claim, made by Schabir Shaik in his trial that the payments to Zuma were loans was questioned by Judge Hillary Squires, who presided over his trial.
He said: “Even after Zuma became executive deputy president and leader of government business in Parliament, with an annual remuneration … of some R850 000 from his two offices, Shaik still continued to make these payments, when there can have been no possible reason to do so, whether they were regarded as loans or friendly payments to help a deserving comrade whose work was inadequately rewarded.”
Then there is the fact that one of Zuma’s wives is staying in accommodation “donated” by a businessman.
The question is: Who will stop the rot? The Scorpions have conveniently disappeared, Parliament’s public accounts committee has had its teeth pulled and any number of senior politicians, after casting an eye over their own ledgers, are prepared to publicly defend this sorry state of affairs.
Cosatu’s Zwelinzima Vavi appears to be the only person of any standing prepared to take this mess on, but does he have the clout to make a difference?
THE appointment of Tito Mboweni to the position of chairman of AngloGold Ashanti has been greeted with … well, with hatred by the ANC Youth League.
This is what they had to say:
“The ANC Youth League notes the appointment of Tito Mboweni as Chairman of Anglo Gold Ashanti, one of South Africa’s mineral exploiters. Tito Mboweni’s appointment iinto a Mining corporation is not at all surprising and reflects the reactionary, nonsensical and backward views he expressed when he was mis-Governor of the South African Reserve Bank that Mines will not be nationalised in South Africa. There is no doubt that Tito Mboweni was, like those who did in the recent past, speaking the views of white capital, which controls the South African economy, particularly the extraction, processing and trade of minerals. His latest appointment is clearly a reward for protecting the interests of male white capital.”
Electricity is the product of an industrial process of converting coal, radioactive material or moving water into energy. It is an industrial process that requires the ingenuity, planning and efficiencies of industrial production.
It is not something that the state should be doing, certainly not on its own. Would you expect government to produce canned peaches or cell phones with the same cost efficiency of a private producer? Would you expect government to distribute the peaches or cell phones efficiently.? The answer would be a resounding “no”.
Governments are not, at the best of times, geared up for efficient industrial production because such processes require the best technical expertise exposed to the cold winds of competition if they are to be performed at their most efficient.
There may have been a time when the production of electricity in Dickensian coal-fired power stations provided a state-financed sinecure for the incompetent. But those days have gone.
The world is less tolerant of inefficiency than it has ever been before. If your energy prices are too high, you lose your competitive advantage, particularly if you are an investment destination far from the markets that manufacturers are targeting.
That South Africa still has a government appointed body called the National Electricity Regulator which sets the price for energy based on political horse-trading is laughable. The chair of this regulator, one Cecilia Khuzwayo said yesterday: “It is clear that the economy is now in recession mode.” This days after the government announced that GDP growth for the fourth quarter was 3,2%.
This contempt for the facts is evidence of just how poorly placed civil servants are to set prices, never mind take decisions that will impact on growth, inflation and jobs for years to come.
The electricity price hike of 25% agreed on by this government committee feeds the beast of inefficiency. And, as usual, it is the people who will pay.
JULIUS Malema was put through the wringer by Radio 702′s Redi Direko this morning and he was not convincing.
He said he had documentary evidence that he was no longer a shareholder in companies benefitting from government tenders, but said he would not produce the documentation unless asked to do so by the ANC or the South African Revenue Services.
Redi produced documentation which showed that he was still involved in several companies. Malema said the companies register might not have been updated.
“Why is this issue not before the law enforcement agencies?”
Earlier Malema said he did not have to account for anything to journalists.
“I will never be locked up in this country because I have never done anything wrong.”
“I am not an active shareholder.”
“It’s my constitutional right … to participate in business.”
His defence leaves the door open for a second defence in the event that it is shown he is still an active shareholder. He will then claim that he has always defended his “constitutional right” to participate in business.
THE Finance Minister, Pravin Gordhan has tabled a budget which is 8.6% larger than last year’s and perilously close to the R1 trillion mark at R907 billion.
This growth in spending will have to be financed by an economy which is only just stuttering into life after a damaging recession and so the tab is likely to be picked up once more by South Africa’s stressed out tax base.
The big increases in expenditure include the servicing of state debt which is up a massive 23,9 percent to R71 billion. This is alarming as the raison d’être of government’s fiscal policy over the last ten years has been to reduce debt servicing to increase capital spending with the aim of kickstarting growth.
Gordhan’s spending plan appears to have prioritised social spending on grants which is up by 13%, education which is up around 12 percent for schools and universities and “community development” – presumably the improvement of service delivery by local government — which is up by 20%.
There is more spending on the police (up 9.8%), housing (up by 11.2% and hospitals (up by over 11%).
All of this spending appears aimed at ameliorating the effects of our economy’s failure to delivery growth and jobs on a par with other developing nations.
Gordhan pointed out in his speech that South Africa needs to compete with other economies if it is to grow, but his budget seems to prepare us for failure.
Gordhan is confident that government is putting in place an industrial policy that will take us out of this cycle of negativity, but there are no signs that President Jacob Zuma is prepared to make the tough choices needed to go forward by cutting government spending and making investment less onerous.