Weekly Political and Economic Review 26 July 2019

1. Priority Bills

1.1. Draft Tax and Rates Bills

− National Treasury has published the 2019 Draft Tax Administration

Laws Amendment Bill (TALAB), the 2019 Draft Taxation Laws

Amendment Bill (TLAB) and the 2019 Draft Rates and Monetary

Amounts and Amendment of Revenue Laws Bill (Draft Rates Bill) for

public comment;

− Submission of comments on the draft bills close on the 23rd of August

2019;

− All Draft Bills give effect to tax proposals made in the 2019 Budget

Review;

− The Draft Rates Bill contains tax announcements dealing with changes

to the rates and monetary thresholds and increases of the excise duties

on alcohol and tobacco;

− The Draft TLAB and TALAB provide for legislative amendments to

implement the more complex tax announcements made in the Budget

Review;

− National Treasury, along with the South African Reserve Bank (SARB)

will also be engaging with stakeholders through workshops after written

comments have been received;

− The Standing and Select Committees on Finance are also expected to

make a call for public comment;

− After all comments have been received, the Bills will be tabled for

consideration by Parliament.

1.2. Appropriations Bill for SOE Funding Approved

− The National Assembly approved the Appropriations Bill (2019) which

will provide funding for ailing State-Owned Enterprises (SOEs);

− The Bill will provide R26 billion to Eskom for the current financial year

and R33 billion over the next year;

− It will also provide more cash for ailing SOEs such as South African

Airways (SAA), Denel, and R3.2 billion for the South African

Broadcasting Corporation (SABC);

− Speaking at the debate on the bill, Finance Minister Tito Mboweni stated

that the Appropriations Bill should be viewed against the background of

a weak economy;

− Mboweni further highlighted the impact of the bailout on taxpayers and

the economy;

− The Democratic Alliance (DA), Economic Freedom Fighters (EFF), and

the Freedom Front Plus all objected the bill;

− The DA stated that the bill will only result in budget cuts in other areas,

such as service delivery for the poor;

− The Bill has been passed on to the National Council of Provinces for its

consideration.

2. President Ramaphosa to Seek Judicial Review after Public Protector’s

Findings

− President Cyril Ramaphosa, during a media briefing, confirmed that he will

be seeking a judicial review on the Public Protector’s report regarding the

Bosasa saga;

− This is after the Public Protector found that Ramaphosa deliberately misled

Parliament regarding a R500 000 Bosasa donation to fund his CR17 ANC

Presidential campaign;

− The President has accused Public Protector Busisiwe Mkhwebane of

overstepping her mandate and violating the Public Protectors Provisions

Act in her findings;

− He is also of the view that her findings were fundamentally and irretrievably

flawed, lacking a sound legal basis;

− In seeking the review, the President believes he will be protecting the

integrity of his office;

− He has also expressed confidence in the belief that the courts would arrive

at a different conclusion;

− Mkhwebane has stated that the investigation falls within her mandate;

− She has welcomed the President’s decision and remains confident that her

findings are factual, rooted in sound application of the law;

− The EFF has called on the President to take an urgent leave of absence

until the matter is resolved;

− DA leader Mmusi Maimane, who first bought the issue before Parliament

has sternly warned the President to fund the legal proceedings from his

own pocket;

− The DA is also calling for the National Assembly to establish an ad hoc

committee to investigate the President.

3. ConCourt Dismisses Mkhwebane’s Appeal

− The Constitutional Court, on the 22nd of July, upheld the High Court’s

decision for Public Protector Busisiwe Mkhwebane to pay for 15% of the

South African Reserve Bank’s (SARB) legal fees in the ABSA/Bankorp

matter;

− Advocate Mkhwebane in 2017 had ordered the Special Investigating Unit

(SIU) to recover over R1 billion from Absa on behalf of the SARB;

− The High Court had found that Mkhwebane had not been honest during her

investigation;

− Her report, along with its remedial action, were later reviewed and set aside

in 2018;

− The court’s majority judgement found that Mkhwebane acted in bad faith

and misled the court;

− The Office of the Public Protector has stated that they will be studying the

court’s judgement;

− Meanwhile, a group called Democracy in Action has launched a “Hands Off

the Public Protector” campaign to raise funds;

− The group has stated that all funds raised will be sent to the Office of the

Public Protector to assist her in paying her debt.

4. Gordhan and Mkhwebane Battle it Out in Court

− The battle between Public Enterprises Minister Pravin Gordhan and Public

Protector Busisiwe Mkhwebane over the SARS ‘rogue unit’ findings made

its way to the Pretoria High Court on the 23rd of July;

− Minister Gordhan bought forward an urgent court application to have the

Public Protector’s report reviewed and set aside;

− Mkhwebane had found that the establishment of the High Risk

Investigations Unit approved by Gordhan during his tenure as Finance

Minister, was unconstitutional;

− As part of her remedial action, Mkhwebane gave President Ramaphosa 30

days from the release of the report to take disciplinary action against

Gordhan;

− The President’s counsel, however, says that the process would be

impossible to implement within the deadline;

− She had also given the National Assembly Speaker Thandi Modise 14 days

to refer Gordhan to the Parliamentary Ethics Committee;

− The Court reserved its judgement for Minister Gordhan’s application;

− After hearing the various arguments brought before the court, Judge Sulet

Potterill said she need more time to formulate her judgement;

− The judgement will be delivered at a date both parties will agree on, but not

before the 4th of August which marks the end of the Public Protectors 30-

day deadline.

5. Commissions of Inquiry

5.1 PIC Inquiry

5.1.1 Dr Dan Matjila

− Former PIC CEO Dr Dan Matjila continued his submission before the

Commission on the 22nd of July;

− Matjila began his testimony by detailing the PIC’s investment into Erin

Energy, which he has described as regrettable;

− The US-based oil company later filed for bankruptcy, resulting in a loss of

around R4.6 billion for the PIC;

− According to him, the investment was strategic and would allow for the PIC

to own 30% of COMAC Energy and shares, a seat at the board, and

presence on the audit and risk committee;

− He also took the opportunity to bring criticism to PIC former Head of Risk

and Compliance Paul Magula;

− According to Dr Matjila, Magula was lined up to take over from his CEO

position;

− Dr Matjila believes Magula was part of a larger campaign to discredit his

authority as PIC leader and have him dismissed;

− The former CEO also affirmed that the PIC’s involvement with Independent

Media South Africa (INMSA), Sagarmatha and Ayo Technologies (AYO)

was not due to his close relationship with relationship with Sekunjalo

Investment Holdings chairman, Dr Iqbal Survé;

− Dr Matjila also defended the PIC’s R4.6 billion investment into Ayo

Technology Solutions, stating that it gave the asset manager increased

exposure in the information and communications technology sector;

− Dr Matjila stated that the Commission was focussing too much of its

attention on the minor shortcomings of the PIC;

− According to him, 98% of the portfolio is doing extremely well.

5.2 State Capture Inquiry

5.2.1 Roy Jankielsohn

− The Commission, once again, focussed its attention on the Vrede dairy

farm project on the 22nd of July;

− The project, intended to offer support to farmers in the Free State town of

Vrede came under the spotlight after Gupta-linked company Estina unduly

benefitted from the project;

− As part of the project, one hundred black emerging farmers were promises

five cows each, which they have never received;

− It was revealed last year that at least R30million was paid to the Gupta

family through the project;

− Roy Jankielsohn, a DA member of the Free State legislature, took to the

stand detailing the responses he received following his probe into the

matter;

− Jankielsohn informed the Commission that Estina did not meet the

requirements of the dairy farm project;

− It has also been revealed that the Free State government is still forking out

R20 million a year for the project, which is now being headed up by the

Free State Development Cooperation;

− The Commission also heard that beneficiaries of the project are still being

side-lined, which Jankielsohn described as ‘very strange’;

− "These beneficiaries should have been at the core of the implementation

of this project and should have benefited from it”.

3.2.1. Albertus Venter

− Deputy Director-General in the Free State premier’s office Albertus Venter

once again appeared before the Commission on the 22nd of July;

− Venter informed the Commission of an illegal contract for the project’s

beneficiaries;

− He recalled being presented with a contract between the government and

the beneficiaries by the Chief Director for District Services in 2013;

− Venter’s opinion on the drafted and signed contract was sought;

− He recalls being given the names of beneficiaries which did not appear on

the contract;

− He further stated that the contract contained certain problematic clauses;

− This included that beneficiaries would be allowed to sell their stake in the

project at any stage.

3.2.2. Vrede Dairy Farm Project Beneficiaries Testify

− Several beneficiaries of the Vrede Dairy Farm project made their

testimonies before the Commission;

− The Commission was informed that Public Protector Busisiwe Mkhwebane

did not speak to the beneficiaries in compiling her report;

− Witnesses also detailed the involvement of ANC Secretary-General Ace

Magashule and former Minister Mosebenzi Zwane in the scandal;

− At a meeting, Zwane allegedly assured farmers that they would receive 10

cows each and would be sent to India to undergo training for large-scale

dairy farming;

− In an alleged Gupta-funded trip, Zwane instead sent his church choir to

India;

− When the project was handed over to the Free State Development

Corporation (FDC), beneficiaries were informed that they would be

replaced with new beneficiaries;

− According to a witness, the existing beneficiaries disagreed with the

suggestion;

− A witness also admitted to receiving death threats over his involvement in

uncovering the truth behind the projects;

− He further expressed frustration over the inaction of law enforcement

agencies despite the matter being reported.

6. PIC Interim Board Chair Announced

− Dr Reuel Khoza has been appointed interim Chairperson of the PIC Board;

− The decision was made at the interim board’s first meeting on the 25th of

July since being appointed earlier this month;

− Sindi Mabaso-Koyana was elected Deputy Chairperson;

− Dr Khoza is the current Chairman of Dzana Investments and AKA Capital;

− He is also former Chairperson of Nedbank and energy company Globelq;

− Finance Minister Tito Mboweni inducted the new interim board at its

headquarters in Pretoria;

− Mboweni has encouraged the board to focus on its work and pay no

attention to political battles;

− He also wished the board well in executing its mandate and emphasised

Cabinet’s full confidence in their appointment;

− According to Dr Khoza, the first order of business for the new board is to

appoint a permanent Chief Executive and it is hoped that the position will

be filled within 3 to 6 months.

7. Head of IPP Office Asked to Step Down

− The head of the Independent Power Producers Office (IPPO) Karen

Breytenbach has been asked to step down from her position;

− She is widely known for her efforts to diversify the country’s energy mix

and leading the renewable energy programme;

− The Joint Implementation Committee (JIC), compromised of the

Department of Energy (DOE), National Treasury and the Development

Bank of South Africa, announced its decision to dismiss Breytenbach

following issues of operational instability;

− Breytenbach has however stated that no reason was given for the

termination of her contract, which was set to end in April 2020;

− She has expressed confidence in the IPPO team and the work of the office

continuing without her;

− The SA Independent Power Producers’ Association has stated that her

axing will have a negative effect on investment in the renewable energy

industry;

− The DA, on the other hand, maintains that her dismissal is irregular and

shrouded in suspicion.

8. 25 Years of Democracy Conference

− President Cyril Ramaphosa, on the 23rd of July, opened the 25 Years of

Democracy Conference held at the University of Johannesburg;

− Under the theme “Democracy in South Africa: The Next twenty-five years”,

the main aim of the Conference was to offer an analysis of the country’s

progress since the fall of Apartheid and pave a path for the future;

− The Conference was centred on discussions concerning Governance and

Leadership; Socio Economic Transformation and Citizenship and Identity;

− Present at the event were participants from cross academia, organised

business and civil society;

− The President used the platform to admit to the challenges faced by the

government and the need for long-term planning and coordination;

− He also admitted that not enough has been by the government in

addressing economic structural faults;

− The President highlighted the need to urgently decrease the

unemployment rate and close the inequality gap;

− To this effect, he has promised a ‘skills revolution’ to effectively deal with

unemployment;

− President Ramaphosa stated that improving the country should be a

collective effort;

− To drive the country forward, the President highlighted that difficult

decisions have to be made.

9. Presidential Health Compact

− President Cyril Ramaphosa presided over the signing of the Presidential

Health Compact on the 25th of July in Ga-Rankuwa;

− The compact, developed with the assistance of the World Health

Organisation, is aimed at eradicating the problems facing the public

healthcare system and providing universal healthcare;

− President Ramaphosa stated that the compact was a significant step in

achieving the outcomes of the Presidential Health Summit held last year;

− President Ramaphosa stated that the move is proof of the government’s

commitment to improving the sector;

− He has also called for greater collaboration in improving the public

healthcare sector.

AFRICA WATCH

1. Kenya

1.1. Finance Minister Arrested

− Kenya’s Finance Minister Henry Rotich earlier this week handed himself over to the police

following the Chief Prosecutor’s order for his arrest over corruption allegations;

− Rotich is accused of contravening procurement procedures in the awarding of a contract;

− The $450 million deal was for the construction of two dams to Italian company CMC de

Ravenna;

− Over $200 million has reportedly been spent on the projects, yet the dams do not exist;

− Rotich has pleaded not guilty to the charges;

− A total of 15 other accused officials also pleaded not guilty;

− In the meantime, Kenya’s Labour Minister was appointed interim Finance Minister.

1.2. Parliament Votes in Favour of Kenya Airways Nationalisation

− Kenya’s lawmakers have voted in favour of the nationalisation of the country airline, Kenya

Airways;

− The decision was made to rescue the airline from its mounting debt;

− Kenya Airways chair Michael Joseph has stated that the move is a positive one, and

highlighted the necessity of nationalisation to ensure profitability;

− The government will now be tasked with the responsibility of drawing up an implementation

plan.

2. DRC

Health Minister Resigns

− Health Minister if the Democratic Republic of Congo (DRC) Oly Ilunga resigned his position

on the 22nd of July;

− This is in protest of the Presidency’s announcement to strip the department’s control over

the Ebola crisis;

− Ilunga had been overseen the country’s response to the outbreak since it erupted;

− President Felix Tshisekedi has handed over responsibility to a multi-disciplinary team which

will report to him;

− The team will be headed by Jean Jacques Muyembe Tamfum, Director-General of the

DRC’s National Institute if Biomedical Research.

3. Nigeria

Ministerial Nominees Announced

− President Muhammadu Buhari submitted his list of cabinet nominees to the Senate on the

23rd of July;

− This comes two months after the start of his second term;

− The list contains 43 names, with no mention of which positions they would hold in cabinet;

− The screening of the nominees by the Senate is now underway;

− In accordance to President Buhari’s promise to increase the number of Cabinet members,

the number has increased by 7 members compared to his 2015 list;

− There is also increased female representation, with increase from 6 in 2015 to 7 in 2019.