South Africa's National Development Plan can be resuscitated: here's how

South Africa’s Deputy President, Cyril Ramaphosa and former finance minister Trevor Manuel were instrumental to the making of the country’s National Development Plan.
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Something is surely wrong when many influential people endorse or reject a document none of them have read. The document is South Africa’s National Development Plan, which was adopted by Parliament five years ago and is the product of a National Planning Commission which was led by former finance minister Trevor Manuel and current deputy president Cyril Ramaphosa.

The National Development Plan has become almost an article of faith for business leaders and business friendly commentators. In what has become a knee jerk reaction, they routinely demand that the government “implement it”. In an equally knee jerk reaction, unionists, activists and commentators on the left denounce the plan as a programme to appease business by sacrificing workers and the poor to the market.

But the plan’s praise singers in the market place and its opponents in unions and citizens’ organisations have something important in common: neither has ever read the document which runs to almost 500 pages. If they had, they would know that the label they pin on it does not fit. The plan is not a clear step-by-step programme for change. It is a broad, sometimes internally contradictory, document which is a basis for negotiation far more than a road map.

Those who see the National Development Plan as a coherent document seem to have forgotten the political battle which was triggered when it was initiated by President Thabo Mbeki’s administration shortly before Mbeki was removed from office.

The ANC’s alliance partners, the Congress of South African Trade Unions and the South African Communist Party, blamed Mbeki and Manuel for appeasing business. As Cosatu noted in a document released in late 2009, they believed that Manuel would use the National Planning Commission to impose a business friendly approach on government and the alliance.

They suspected, probably correctly, that the Mbeki government had wanted the commission to become the centre of government planning. After Mbeki was replaced by Jacob Zuma, they mobilised successfully against this and the result was an agreement that the commission would simply provide support to government and that the NDP would be not a detailed plan but a broad vision for where the country would want to be in 2030. So the National Development Plan is not a firm plan because it was never meant to be one.

A mixed bag

Those who see the plan as a route map tend also to forget that the men and women sitting on the commission represented a range of interests and that it was, therefore, a compromise between them. This partly explains why it offers something to everyone – a point which is clear to anyone who takes the trouble to read it.

One who did is former South African Communist Party deputy general secretary Jeremy Cronin. In a reply to left-wing unions who saw the plan as the work of the devil, Cronin argued that it was impossible to endorse or reject the entire document because both the opponents and friends of the market could find support for their positions in it.

Cronin rejected the chapter on the economy, which he saw as too friendly to markets, but endorsed the chapter which saw a key role for the state in changing the shape of the cities and sections which suggested a strong government role in development. If Cronin worked for the Chamber of Business, he would no doubt have endorsed the economic chapter and rejected the passages on the state’s role. The key point in his analysis, however, was that, whichever side of the economic debate you were on, you would find passages in the plan to endorse and others to oppose.

The point was illustrated some years ago when organised agriculture denounced a government proposal for regional land redistribution committees. This, it turned out, came not from the left of the union movement or the friends of state capture but from the ‘business friendly’ National Development Plan.

Why do both sides endorse or reject the National Development Plan without bothering to read it? The answer may well lie in the personalised nature of South African politics.

Business and its supporters trust Manuel and Ramaphosa and so they assume that they must have produced a strongly market friendly document. The left distrust them and so they assume the same thing. This might be amusing if it did not prompt a sterile debate which does nothing to focus minds on what needs to change if the economy is to grow and include many more people.

Useful bits and pieces

Even if the National Development Plan was a clear map, it contains so many ideas for change that not even the most efficient government in the world could implement it in less than a decade or two. Given this, when parliament – and the government – promised to implement the plan they could not possibly have been committing to implementing all of it. If they were serious about implementing its economic and social proposals, they would have needed to signal clearly which ones they favoured. And, since this would inevitably have affected the interests of key economic interest groups, they would have needed to negotiate the changes with them.

The government has not done this and so it seems likely that what it does mean is that it will seek to implement those sections of the plan which affect it directly.

The plan might offer something to everyone on social and economic issues but it does also have a clear way to improve how government functions.
By endorsing the document, the government was surely agreeing to take the steps the plan recommended when it discussed how to build a “capable state”.So it makes sense to hold the government to account for the degree to which it has – or has not – implemented the plan’s recommendations on fixing itself.

For the rest, it would make more sense to insist that the government signal clearly which other sections of the document it plans to implement than to insist that it implement (or reject) all of it.

This offers a key to the role the National Development Plan could play in moving South Africa forward. Business, labour and other interest groups are far more likely to find the plan useful if they identify those sections they would like to see implemented and then pressed the government to act on them, using the fact that they appear in the document as a lever.

They will obviously face opposition from those with differing interests but that is how democracy works. The National Development Plan would then be a catalyst for debate and negotiation on details, not a take it or leave it recipe.

Five years on, the National Development Plan could help focus attention on economic change. But only if both sides stop seeing it as a fetish rather than a way of starting a conversation.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation.

Disgracful behavior by the ANC in Tshwane VIDEO

A disgraceful display of violence. Is this what our country has become, nothing more than racist, corrupt, spoilt behavior. 

It is not democracy, it’s tribalism.

ANC Tshwane in Council
This is the ANC in Tshwane earlier this week. This is how the African National Congress reacts when things don't go their way.

Please SHARE this. Every single South African should see this.
Posted by DA For President on Saturday, September 30, 2017

What the South African KPMG saga says about shareholder activism

KPMG South Africa stands accused of advancing state capture and has come under immense pressure.
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Accounting and consulting firm, KPMG South Africa, is reeling after it was exposed to have played a part in the Gupta inspired state capture activity. The fallout has been remarkable. Some major firms have fired KPMG as an auditor and more Johannesburg Stock Exchange listed companies are expected to follow suit.

KPMG offers tax, advisory and auditing services and is one of the Big Four auditors, along with Deloitte, Ernst & Young, and PricewaterhouseCoopers (PwC).
Despite their integration into the economy, all four of these audit firms have experienced significant lapses of judgement.

The KPMG case provides a potential example of how shareholders can attack the soft underbelly of the private sector state capture enablers. Globally, the number of shareholder challenges has increased dramatically from 520 episodes in 2013 to 758 in 2016. Around two thirds of these challenges were successful, double the rate of just a decade ago.

South Africa’s shareholder activism is following international trends. This is partly function of the fact that that over 50% of the market capitalisation of the Johannesburg Stock Exchange is owned by foreigners.

Shareholder activists are using their powers as company owners to examine company financial reports, monitor executive remuneration, enforce good corporate governance, and push for increased sustainability and transparency.

KPMG has a client base of about 70 listed companies in South Africa. This means that pressure from shareholder activists is likely to pile up. Some companies have already cancelled their use of KPMG services and others have stated that they are reconsidering their relationship. But most of KPMG’s clients have either remained silent. Others said they’re waiting for the outcome of reviews by the country’s regulator, the Board for Auditors, as well as KPMG International.

The directors of companies that have chosen not to take a stand fail to realise one critical thing. In a world of shareholder activism, they may soon face serious questions from their own shareholders about their inaction and ongoing association with KPMG.

Key drivers

A key driver of shareholder activism in South Africa has been the introduction of minorities’ rights in the new Companies Act.

Minority shareholders with as little as 10% holdings can call an annual general meeting. This means that it’s become easier for shareholders to take legal action against directors and officers, including having directors removed.

The King codes of corporate governance have also played a significant role. They emphasise ethical leadership, sustainability and good corporate citizenship.

The codes have entrenched the idea that boards of directors must act in the best interests of the company and that their responsibilities extend to shareholders and other stakeholders. Companies are expected to establish sound governance structures, create “an ethical culture” and ensure that they’re “seen to be a responsible corporate citizen”.

A key factor underpinning these governance principles is the creation of more transparency. By putting more information in the hands of shareholders and the public, these measures create greater potential to hold boards to account for behaviour that fails to meet minimum standards.

KPMG’s Complicity

Alongside other names such as consultants McKinsey, the IT giant SAP, heavy machinery manufacturer Liebherr, and Shanghai Zhenhua Heavy Industries, KPMG has been implicated in alleged large-scale corruption involving the Gupta family. The firm stands accused of:

• allegedly overlooking numerous conflicts of interest while auditing 36 Gupta-linked companies until dumping the Guptas in 2016 bywithdrawing their auditing services. A local auditing firm, SizweNtsalubaGobodo, replaced KPMG but seems to have also felt the pressure and has withdrawn its services.
• allegedly providing tax advice to ensure that the public funds extracted from the South African fiscus were placed in Dubai to avoid tax payments. KPMG may have thus also become a possible enabler of illicit capital flows in the process.
• compiling a report for South African Revenue Services about an alleged rogue spy unit within the tax authority. The report was used as part of a campaign against former Finance Minister Pravin Gordhan, and other senior government officials. By its own admission, KPMG appears to have ignored both sector-wide best practice as well as its own standards of due diligence.

On a wider scale, KPMG seems to have given little consideration to the risks and damage that its activities would do to South Africa’s institutional integrity and governance frameworks.

Pressure has been gathering. Eight senior executives of the South African office, including the CEO, Trevor Hoole, have resigned. The firm has withdrawn all of its findings‚ recommendations and conclusions contained in the notorious “rogue unit” report. It has also instituted an international review of all work done for the Gupta family.

It’s unlikely that these actions will be enough to forestall litigation and possible collapse of KPMG South Africa.

Shareholder Tinderbox

Shareholder activism in South Africa has historically mostly been between institutional investors or individual activists and investee companies. But this may well begin to change. Mounting frustration at the slow pace of investigations into allegations of state capture by state institutions such as the Hawks and National Prosecuting Authority is forcing investors to become more active. Shareholders could start directing their attention to fighting corruption through the private sector.

But are South African shareholders prepared to step up to ensure good governance in the face of governance failures elsewhere in the system? There’s a great deal to lose if they don’t.

If shareholders don’t take a proactive role, South Africa is in far more danger than simply losing its top spot on the World Economic Forum’s Global Competitiveness Report for auditing and reporting standards.

Once trust is lost in both the public and private sectors’ ability to root out or prevent corruption, the country could see further capital flight, greater tax avoidance, and a more pervasive sense that the rule of law is negotiable.

As revelations of systemic failures in governance pile up, the economy may very well depend on shareholders taking up the burden of providing the necessary levels of accountability. KPMG may be teaching South Africa an important lesson. Shareholders can also be anti-corruption activists. Anyone who is connected to the South African economy, must dearly hope that shareholders are up to the task.

Sean Gossel, Senior Lecturer, UCT Graduate School of Business, University of Cape Town and Timothy London, Senior Lecturer, University of Cape Town

This article was originally published on The Conversation.

In photos: COSATU members protest in cities across the country

Minister of Sport Thulas Nxesi warns workers that pensions may be looted

By GroundUp Staff
27 September 2017

Thousands march under the banner of COSATU in Cape Town calling for an end to state capture. Photo: Ashraf Hendricks

On Wednesday, thousands of Congress of South African Trade Union (COSATU) members marched in city centres across the country in support of the federation’s call for a national strike day against state capture and corruption. The marches were supported by trade unions NEHAWU and SADTU, as well as the South African Communist Party (SACP), the South African National Civics Organisation (SANCO), and the ANC Women’s League.

The march memorandum stated: “Economic Development continues to be obstructed by the systemic capture of the state by a well-organised predatory elite”. It called for President Jacob Zuma to agree on a date to proceed with the Commission of Inquiry recommended in the Public Protector’s State of Capture report. It also called for the state to “cancel all commercial dealings with the Gupta family with immediate effect.”

Johannesburg

Besides condemning state capture, the COSATU memorandum and many of the protesters expressed concern about the quantity and quality of jobs. Photo: Ihsaan Haffejee

About 5,000 people took to the streets of Johannesburg. COSATU members were joined by members of the SACP, and even some small contingents of people wearing ANC regalia. The protest started at COSATU head office in Braamfontein and made its way to the office of Johannesburg Mayor Herman Mashaba.

A few of the protesters who had joined the march were angry at Mashaba as they had lost their jobs when he cancelled contracts that were entered into by the previous administration. Protesters accused Mashaba of xenophobia and illegally evicting people in the inner city.

Protest leaders called Mashaba a coward for not coming outside to receive the memorandum. The memorandum was signed and received by Mayoral Member for Public Safety Michael Sun. A large contingent of riot police blocked protesters from advancing towards the building housing the mayor.

Protesters then made their way into the Johannesburg city centre where they stopped and handed over memorandums at FNB head office, the office of Gauteng Premier David Makhura, and the Chamber of Mines. Protesters appeared united in their call for President Zuma to step down. Many indicated that they would like Deputy President Cyril Ramaphosa to take over as leader of the ANC.

A protester with a hat that reads “Not captured” joined thousands of other COSATU members as they made their way to various points in the Johannesburg city centre to protest against state capture and corruption. Photo: Ihsaan Haffejee

Cape Town

Thousands marched in Cape Town (the City estimated about 2,500 people, but some reporters thought this to be an underestimate). The city centre was quiet and many businesses were closed. Protesters marched from Keizersgracht Street through the city centre, making three stops: the central train station, the Western Cape Provincial Legislature and Parliament.

Demonstrators in red regalia were in a jovial mood. Placards read: “Labour broker slavery”, “Zuma must fall” and “Unemployment is a violation of human rights”. Slogans also denounced the Gupta family.

Tony Ehrenreich, Western Cape Provincial Secretary of COSATU, found no representative to accept the memorandum on behalf Premier Hellen Zille, so it was shoved under the door.

At Parliament the memorandum was received by Mabatho Zungu on behalf of the government and a business representative, Sid Peimer, Executive Director of the Cape Chamber of Commerce.

Ehrenreich said, “We will not replace an apartheid white devil with a black devil. We want a living wage which ensures [that we can] pay bills and take good care of our families. We would like both black and white to benefit from the economy.”

COSATU regional secretary for the Western Cape, Tony Ehrenreich, addresses the crowd outside the provincial legislature. Photo: Ashraf Hendricks

Cape Town’s marchers also called for improved service from Metrorail and MyCiTi buses on the Cape flats. Ehrenreich stressed the poor service and safety of the city’s public transport system. He also called on workers to play their part by reporting and discouraging vandalism of public transport infrastructure.

PRASA regional manager Richard Walker accepted the memorandum. Later he told GroundUp that if criminality in and around stations as well as attacks on the train infrastructure are not dealt with, bringing new trains to the Western Cape will be a “futile exercise”.

Durban

COSATU supporters marched from King Dinuzulu Park to Durban’s City Hall. Photo: Nomfundo Xolo 

In Durban thousands marched from King Dinuzulu Park. The crowd gained momentum as more and more people arrived in buses with placards and banners. Many of the placards raised demands to sack labour brokers, comparing labour broking to human trafficking and slavery. Placards also called for decent jobs and the prosecution of those involved in state capture.

Marchers stopped regularly to chant and dance. At one point people sang, “We are ready for Ramaphosa” and “Guptas are dogs”. After almost three hours, the marchers arrived at the City Hall where COSATU President S’dumo Dlamini addressed the crowd.

Port Elizabeth

COSATU supporters march along Strand Street on their way to Vuyisile Mini Square in Port Elizabeth. Photo: Joseph Chirume 

About 300 people marched in Port Elizabeth. Protesters called for President Zuma to step down. They accused him of wrecking the economy.

Minister of Sport and Recreation Thulas Nxesi addressed the crowd. He said, “All labour organisations should know who is managing your retirement funds.” This was a reference to the Public Investment Corporation (PIC), which is responsible for the pensions of civil servants. A key concern of workers is that corrupt people in government intend to find ways to raid the PIC, instead of investing its funds wisely. “You should know who decides your pension investments because the only investment a worker has is his retirement fund. The looting of workers resources is taking away our lives,” said Nxesi.

“Billions of rands are needed to bail out the South African Airways. SAA is in crisis. It has been financially mismanaged. Looting of Eskom has pushed up the price of electricity. We grew up knowing that Eskom, Prasa and other state owned companies were good employers, but now thousands of innocent workers are threatened with losing their jobs,” Nxesi said. “All these companies are the footprint of the Gupta corruption. Some officials have forgotten why they are in office. We say to the Hawks: do your job. Look for the people who are doing the wrong things and arrest them.”

East London

Protesters gather outside City Hall in East London. Photo: Thembela Ntongana

More than 300 people marched in East London from North End Stadium to the city hall.

Many, like Bonana Magayi, a nurse from Pedi, travelled from the rural areas of the Eastern Cape to take part in the march. “The time to be silent is over. We as the working class should stand up. We are affected by every corruption that happens. It is time for us to fight not only for us but our children and the future generation of this country,” said Magayi.

A memorandum was received by Joseph Sotshana from the office of the premier. He apologised for the absence of the premier and promised that a response would be forthcoming within 14 days.

Egyptian Geese wandered through the Cape Town protest. Photo: Ashraf Hendricks

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Published originally on GroundUp .

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Whose keeping an eye on South Africa's spies? Nobody, and that's the problem

South Africa’s intelligence services continue to have more in common with their apartheid-era counterparts 23 years into democracy.
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Once again South Africa’s intelligence services are embroiled in controversy, apparently involved in dirty tricks and criminal activity.

New evidence of this has come to light against the backdrop of the presidential succession race in the governing African National Congress (ANC). One of the contenders, deputy president Cyril Ramaphosa, has been smeared in an apparent covert operation. It seems that those responsible had access to intelligence resources. In another recent case the country’s minister of police Fikile Mbalula was targeted in an undercover plot.

Since 1994 the intelligence services have been embroiled in many scandals. But because they operate secretly and with minimal oversight, South Africans will probably never know exactly what they are up to.

What is known – from revelations, leaks and investigations over the past 20 years – is that the intelligence services have not been adequately transformed since South Africa’s transition to democracy. The services have more in common with their apartheid-era predecessors than with the principles of the country’s democratic constitution.

This alarming state of affairs was exposed in a report based on an inquiry into the intelligence services in 2006-2008. The inquiry, known as the Matthews Commission, was established by then intelligence minister Ronnie Kasrils after the domestic intelligence agency was caught spying illegally on senior ANC members and other politicians.

The commission produced a 300-page report that revealed the various ways in which the intelligence services were failing to comply with the constitution and legislation. The report also included numerous recommendations to ensure compliance.

The public release of the report was potentially a watershed moment. It shone a glaring spotlight on the normally dark corridors of the secret world of intelligence operations and offered a rare opportunity to clean out the rot. But the cabinet and parliament buried the report. This inflicted lasting damage on South Africa’s constitutional democracy.

What’s gone wrong

The intelligence scandals that have plagued post-apartheid South Africa are symptoms of a distressing lack of transformation, which is due to five factors.

First, the intelligence services are closely aligned to the ruling party and enmeshed in its factional politics. The constitution insists that the services must be politically non-partisan. But the executive and the ANC constantly blur the boundary between the party and the state.

This malaise is reinforced by the enduring affinity between ANC politicians and intelligence officers who were comrades during the liberation struggle.

It’s also relevant that the minister of intelligence and the heads of the services are appointed by the President. These appointments appear to be based on personal loyalty to him rather than on professional integrity and loyalty to the constitution.

The second reason for the lack of transformation is that the intelligence services have a culture of disregard for the law. The Matthews Commission was shocked to discover that the head of the National Intelligence Coordinating Committee believed that intelligence officers could legitimately “bend the rules” when confronted by serious security threats.

“Bending the rules” is a euphemism for breaking the law. Even if it is well intentioned, the problem is obvious. Disrespect for the law inevitably creates an environment in which misconduct flourishes. It also inevitably leads to intelligence officers lying to their minister and to parliament about breaking the law.

Third, the intelligence services are shrouded in excessive secrecy. They obviously need to keep certain matters secret, such as lawful investigations and the names of undercover agents. But the South African intelligence community is vastly less transparent than its counterparts in many other democratic countries.

Higher levels of secrecy lead to less public scrutiny and a greater risk of abuse of power.

Fourth, the intelligent oversight bodies lack the stomach to do their job. The Office of the Inspector-General of Intelligence is empowered by exemplary legislation. The office has all the authority and powers it needs to conduct thorough investigations into alleged misconduct by the intelligence services. Sadly, it is scared to exercise these powers.

The office’s website asserts that “confidentially is the overriding principle” governing the work of the inspector-general and her staff. This reflects a deeply flawed understanding of the role of statutory oversight bodies. The overriding principle ought to be accountability – that is, the accountability of both the inspector-general and the intelligence services to parliament and the public.

The website itself is a perfect example of non-accountability and lack of transparency. It doesn’t provide any information about any investigation conducted by the inspector-general since 2008. It merely includes a list of media reports, the most recent dated 2010.

The joint parliamentary oversight committee on intelligence also has substantial authority and powers to deal decisively with intelligence mischief. But it too resembles a bunch of sheep guarding a pack of wolves.

The only entities that have made a serious attempt to hold the intelligence services accountable are non-governmental organizations. The most notable has been the Right to Know Campaign.

Finally, the experience of South Africa confirms a general lesson from newly democratic countries: the security services will be transformed if, and to the extent that, the executive wants them to be.

If the executive is not committed to transformation, the security services will be loyal to the president and the ruling party. They will not be loyal to citizens and the constitution. And they then pose a severe threat to democracy.

Laurie Nathan, Professor, International Mediation, University of Pretoria

This article was originally published on The Conversation.