Ramaphosa has promised to speed up the transfer of land to black people, but has stressed the need to preserve food security.
JOHANNESBURG, South Africa, March 28, 2018 – South Africa’s new president Cyril Ramaphosa will need to call on all his dealmaking skills to overhaul ailing state-owned firms and tackle land reform if he wants to capitalise on Moody’s decision not to downgrade the country’s debt to junk.
Moody’s said its decision to keep South Africa’s rating at investment grade reflected its view the country’s institutions would regain strength under more transparent and predictable policies – though the new government had to stay on track.
Since replacing Jacob Zuma in February, Ramaphosa has reappointed the finance minister his predecessor fired in 2015, sacked some ministers allied to Zuma, put another respected former finance minister in charge of struggling state-owned firms and suspended the head of the revenue service.
“It’s a big deal,” political analyst Ralph Mathekga said about Moody’s decision. “What he has been able to achieve in two months is to reverse some of Zuma’s influence in key sectors. The message he sent is: ‘I can do more’.”
After his whirlwind start, Ramaphosa’s challenges now include keeping the unions on side as the government overhauls cash-strapped national carrier South African Airways (SAA) and heavily indebted state power utility Eskom.
Perhaps his stiffest test will be to push through land expropriation, as promised, to address racial disparities in ownership – while keeping the left wing of the ruling African National Congress (ANC) on board and not scaring off investors.
Parliament passed a motion last month seeking to change the constitution to allow land expropriation without compensation. Ramaphosa has promised to speed up the transfer of land to black people, but has stressed the need to preserve food security.
“A big deliverable is to initiate the land debate under his leadership to control the narrative and discourse. Should he fail to do this, he runs the risk of undoing the good work already done,” said Daniel Silke, director of Political Futures Consultancy.
Ramaphosa’s negotiating skills have been respected for decades, ever since Nelson Mandela turned to the former trade union boss to lead the successful negotiations to end white minority rule.
More recently, Ramaphosa had to strike a fine balance between applying pressure on Zuma to go, while still affording him a dignified exit. Now, same analysts say land reform is Ramaphosa’s litmus test.
“Are we over-estimating Ramaphosa’s ability to deal with this land issue? It is undoubtedly one of his biggest challenges. Investors are worried about this and watching him very closely,” said independent political analyst Nic Borain.
When it comes to South Africa’s struggling state-run companies, Ramaphosa will need to perform a similar balancing act and he has already named respected former finance minister Pravin Gordhan as minister of public enterprises.
Eskom and SAA are both weighed down by massive wage bills but the country’s powerful unions are likely to dig in their heels at any attempt to cut jobs, especially with elections looming in 2019.
Influential labour leaders, sections of the ANC and the opposition Economic Freedom Fighters are also likely to balk at any moves to partially privatise the companies, which is one strategy backed by the Treasury.
South African Airways runs one of Africa’s biggest fleets but years of operational losses have left it on the brink of bankruptcy. It needed a bailout in July to repay debt and 20 billion rand ($2 billion) in state guarantees to keep it afloat.
Eskom received a 5-billion rand loan in February from the state’s Public Investment Corporation (PIC), which holds a large amount of government bonds and ranks as Africa’s biggest investment fund, or it would have defaulted on its debts.
“There is going to be some tension when these job cuts are announced. It is a delicate balance because it could impact the support base of the party ahead of next year’s elections,” said Borain.
Still, Ramaphosa has already taken the politically risky step of raising value-added tax (VAT) for the first time since apartheid to try to reduce the budget deficit and analysts say he is unlikely to back down on reforms.
“He did not give in to populism on the VAT; this was a good example of him having to do something unpopular but necessary,” Borain said. “He is known to be a good negotiator.”
Finance minister Nhlanhla Nene expressed hope on Monday that S&P Global Ratings and Fitch might also look favourably on South Africa during upcoming reviews, saying investors he had met at a roadshow in London before Moody’s decision were upbeat.
S&P downgraded South African local currency debt to “junk” in November citing a deterioration in the economic outlook and public finances. Fitch cut its rating in April to sub-investment grade after Zuma fired Gordhan as finance minister. S&P will publish its review on May 25. Fitch has not given a date.
“I want to call this a honeymoon phase – and it is for that reason that we cannot be complacent about it,” Nene told Talk Radio 702.
“You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” – Abraham Lincoln
I don’t know if Minister of Home Affairs Malusi Gigaba is stupid, but unwise he is in the matter of naturalization of the Citizenship of the Gupta Family and residence as the Inquiry into the State Capture takes into effect. President Cyril Ramaphosa, should consider to appoint someone else. Unless, he likes to have someone as a punchline in his cabinet?
Honorable Gigaba answered yesterday in disregard to his own verdicts, which counters his own paper-trail. That is why he is foolish to state things like this: “Home Affairs Minister Malusi Gigaba has confirmed that Gupta brothers, Ajay and Atul are not South African citizens” (…) “Gigaba says, “There has been an argument that there was a decision to favour this family by expediting their application, their appeal, but maliciously granting them SA citizenship. We need to clarify that their application was done in 2013, it was rejected in 2014, they appealed and based on the documents submitted the decision was overturned.” (…) “They were asked to renounce the citizenship of the country of origin, and Ajay declined. Therefore he is not an SA citizen. He is a permanent residence permit holder which he received in 2008,” adds Gigaba” (SABC – ‘Ajay and Atul Gupta are not South African citizens: Gigaba’ 06.03.2018).
So there are something weird in the statements from the minister, that he mentions other times than when he suddenly sent a letter to the Gupta family on the 30th May 2015, which stated: “I have decided by the virtue of the powers vested in me under section 5(9) of the South African Citizenship Amendment Act 2010 (Act no 17 of 2010) to waive the residential requirements in regards to your application for naturalisation and grant you early naturalisation” (Gigaba Letter to Mr. A K Gupta and Family – ‘Application for Early Naturalisation: Yourself” 30.05.2015). So on the 30th May of 2015, he used his powers as minister to give the Gupta Family early citizenship. This because he could. Therefore, he has been lying now, because the chips is down and he wont be someone who executed parts of the State Capture. He is trying to clean his hands of the dirt. But when you have been in public and used the “powers vested in me”, you either stupid or your were pocketing funds from them.
That that monies helped his judgment as even the same problem came back, as the Ministry of Finance has to offer their consideration of the matter on the 13th June of 2017, where they stated: “The granting of naturalisation certificates of this nature is not unusual. Similar courtesies have been extended to prominent businessmen, including executives of multi-nationals, and sports people. There is no impropriety on the part of the Minister in relation to how the application in question has been handled” (Ministry of Finance – ‘Minister Malusi Gigaba Handled Gupta Naturalisation Application in a Lawful Manner’ 13.07.2017).
So the Ministry of Finance knew of the citizenship, they knew the process and defended it last year. As the documents show that the Minister gave it to them in 2015. When he defends himself he mentions the years of 2015 and not that exact time. Because he knows he used the powers vested in him. This didn’t take much research either and is all public records. The documents stated isn’t some confidential pieces of paper and internal memos, where Gigaba wrote that he loved his wife. No, this is public letters and known ones, which state the facts. He cannot run away from it. However, he is trying and failing bad at it.
Clearly, Gigaba is lying and needs to stop, he is bad at it. Please, just stop, you gave the rich wealthy friends of Zuma a free pass and gave them citizenship. They were kingmakers and fortune-tellers too, you wanted some quick bucks. This was your way in. Peace.
This week we have seen the price of the fall of President Jacob Zuma, the cleaning of the State Owned Enterprises has hopefully started. That can be said because of the actions of the Gupta Family owned corporations as so many of them has suddenly applied for “Business Rescue”, you can wonder what that means, therefore, I went to law-firm who can explain what the Business Rescue means.
Werkmans Attorneys said this: “The aim of business rescue is to restructure the affairs of a company in such a way that either maximises the likelihood of the company continuing in existence on a solvent basis or results in a better return for the creditors of the company than would ordinarily result from the liquidation of the company (section 128(1)(b)(iii))”. So the initial idea behind it is to make adjustments to either secure the companies or secure the creditors, when coming from Gupta businesses meaning the changes of government contracts and litigation’s following the change of President.
Sudden Optimum Coal Terminal Limited, Optimum Coal Mine Limited, Tegeta Exploration and Resource Limited, VR Laser Service Limited, Koornfontein Mines Limited, Confident Concept Limited, Shiva Uranium Limited and Islandsite Investment One Hundred Eighty Limited. We should anticipate in the coming days and weeks, that Oakbay Investment and Oakbay Resources will run insolvent too. As these companies has dried the funds of Eskom and other state owned businesses with shady deals made under the Zuma administration.
We can just imagine the state suffering from this, as the Business Rescue tools buys the companies and investors time, while they have already moved away the funds and needs new liquidation to save it. Smart move by the foreign investors, who used their relationship with Zuma to bleed the nations out of money. They started the companies in the years before Zuma took power in 2006 and 2007. The Shiva Uranium is the oldest company, but the others are very new and made for the age of Zuma.
This will hurt many of the current leaders within African National Congress (ANC) who has also been regarded and parts of the deals, this being Molefe and Gigaba. Des Royeen should also struggling at night and wonder why he was part of it. That ANN7 and Transnet should also worry, all things connected with the Gupta’s should be shaking, Sahara Computers and what else of companies they deliberately made to gain fortunes and spin their stories. It should be hurt and within time, they will ask for rescue too. As the funds and contracts with the state stops.
We can just wonder how many more Estina deals there been in the different states of South Africa. As long as the creditors, the banks and the HAWKS continue to pursuit the lost cash. Now that the Zuma cannot stop their investigations, hopefully more whistle-blowers and more covers will be showed in public. So that the State can get their funds back and also prosecute the ones who has stolen money from the public.
All of this will hit hard towards the finances of South Africa, the service delivery of the state owned corporations, as they was dealing with them directly to secure coal or other services. We can just wonder, how the effect will be in the long run. How the ANC will manage and who has to go because of it. Who will be implicated and who has to answer for the shady deals done in secret so the Indian businessmen could earn fortunes on rigged arrangements. Peace.