How businesses contribute to SA

A report by Quantec Research, a leading South African economic consultancy, on Monday revealed the significant contribution made by South African business to the wealth of the country. The report notes, amongst other things, the significant contribution of business to the South African economy.

The study was commissioned earlier this year by Business Leadership South Africa (BLSA) to better understand the national footprint of its membership. Quantec Research was asked to conduct empirical research on the scope and magnitude of BLSA’s members’ activities and their contribution to the economy.

The study revealed several striking findings over the role of business in society; business is the most significant direct contributor to the South African economy. The direct output created by BLSA members was R1.9 trillion in 2016; 1.2 times the value of total budgeted expenditure by government in 2016.

Nearly R1 trillion in expenditure was paid to suppliers, enabling them to employ people, pay taxes, purchase supplies and make investments. BLSA collectively received 34.4 points out of 40 for black enterprise development as prescribed by BEE Codes.

Business employs 6.9 times the number of public sector employees. BLSA members themselves employ 1.29 million people, with another 1.97 million jobs supported in the supply chain. 596,719 people are dependent on BLSA employees. The 57 member companies in the study contribute 23.5% of total private sector employment, and pay full-time and part-time employees just under R2 trillion.

Business contributes to the public sector and supports the most important institutions of state through taxation. Taxation to government from BLSA members alone amounted to over R431 billion in 2016, 35.9% of total taxes collected. That’s the equivalent of more than one million teacher’s salaries, or almost two million police officers, or almost 1.5 million low-cost housing units.

Bonang Mohale, Chief Executive of BLSA, commenting on the findings of the report said: “This report confirms that business is a vibrant part of South African economy and society and a significant national asset. The footprint of BLSA’s members alone is notable – often bigger than that of Government itself. It’s a reminder that business touches every part of South African life and has a positive role and voice to play in the success of the nation.”

Source: IOL 

Crisis in trust revives faith in ink and paper

South Africa truly is the land of Chicken Licken – the fluffy little bird in the children’s story, not the purveyor of fiery wings at the local drive-thru.

Like the chick, South Africans are prone to jump to the worst conclusion in a crisis, of which there are plenty, and assume that this time the sky is indeed falling on our heads.

The notion of crisis, though, has some remarkably positive spin-offs.

A friend WhatsApped me the moment the lights went out during the packed official launch of Jacques Pauw’s The
President’s Keepers at Johannesburg’s Hyde Park shopping centre on Wednesday night: “Got to bit about State Security Agency. Electricity suddenly cut out so we could not hear Jacques. V suspicious.”

She and most in the audience assumed this was another ham-fisted censorship attempt. That’s what happens when there is a breakdown of trust in society. Nobody believes anyone anymore.

For now, though, heightened levels of cynicism are useful tools as South Africa looks for a more certain future at the ANC elective conference next month.

Horror writer Stephen King wrote recently: “It is the trust of the innocent that is the liar’s most useful tool.” He may have been referring to Donald Trump, but the sentiment fits here too.

South Africans have finally begun to lose their innocence courtesy of the flood of information on the criminal networks operating in the country. Those networks are haemorrhaging information. Whatever their motivation, whether to divert attention from their own activities or sow discord, South Africans can no longer claim to be ignorant of the issues.

Ironically, state capture is breathing life into an industry long feared on its knees. The nonfiction book trade, contrary to expectations when Amazon brought the Kindle to market, is booming. In an age of social media misinformation and the trust deficit that has produced globally, people are going back to reliable sources of information. The social media revolution, which 10 years ago was expected to enhance the quality of and access to information, has proved liable to being hijacked by agenda-laden vigilantes.

The saying “There is no honour among thieves” holds true. More and more, information is leaked by those fed up with how entrenched the rot has become or those hedging their bets in anticipation of the tide turning. The result is a breakdown in trust and reversion to print.

The written word somehow brings hope to a jaded public. Exclusive Books CEO Benjamin Trisk took delight this week in paying tribute to the SSA, which tried to force the withdrawal of the Pauw book with the subtlety of an amorous rhino.

Beyond the sordid detail is an unappreciated fact. Even the bad guys are worried about what might happen to them in the event of progressive political change.

Expect the noise levels to rise in the next few weeks as the ANC prepares to elect a new leadership. The stakes are high, and we probably haven’t yet seen the worst of the dirty tricks. There are massive vested interests at play. Either a venal elite gets to continue its plunder or we get a chance to redeem ourselves.

How do you tell the difference between fact and fiction? Ronald Reagan was succinct on the subject: “Trust, but verify.”

By Bruce Whitfield for Business Live

 

Many of South Africa’s largest physical retailers have committed to Black Friday, which will hit South Africa on 24 November 2017.

Due to its huge success for US retailers, Black Friday has been adopted in South Africa over the past several years, with more companies taking part each year.

While initially a big sale focused mainly on online retail in South Africa, the craze seeped into brick and mortar stores in 2016 including the biggest retailers like Makro, Pick n Pay, and Checkers.

The shopping phenomenon will take place on November 24, 2017, followed by Cyber Monday on November 27, 2017, where a host of leading online retailers drop their prices.

South African retailers are already advertising major discounts in preparation for the big day on the shopping calendar, with many expected to follow suit in the coming weeks.

Shopping malls across the country are also preparing for the day, with the likes of Menlyn Mall in Pretoria, and Irene Village putting out notices and billboards advertising the Black Friday craze that will be descending on the day.

Other malls that are readying for Black Friday 2017 include Canal Walk (Cape Town); Mall@Reds (Centurion); The Glen (Joburg South); Clearwater Mall (West Rand); La Lucia Mall (Durban).

These are 10 of the country’s largest retailers who have committed to Black Friday 2017 – from groceries, to toys, homeware and building supplies, the promise of great deals awaits those who venture out of their homes and into the shops.

While the deals themselves are under wraps, these retailers have confirmed their participation.

  • Checkers
  • Mr Price
  • MR Price online
  • Clicks
  • CNA
  • Edgars
  • Makro
  • Pick ‘n Pay
  • Dischem
  • Builder’s
  • Boardmans
  • Toys R Us
  • HiFi Corp

Source: Business Tech

Edcon’s profits up despite sales decline

Unlisted retail group Edcon reported on Tuesday that its net profit improved by 3.8% to R2bn, although sales declined in the September quarter from the matching period in 2016.

Edcon said its overall retail sales suffered from “fierce price competition through ongoing promotions by competitors” and its decision to close unprofitable stores.

In its flagship Edgars clothing chain, sales declined 0.9% to R2.46bn during the three months to September 23. Sister clothing chain Jet’s retail sales declined 1% to R2.28bn.

Edcon’s “speciality” division, which houses news agency CNA and Edgars Shoe Gallery, reported a 41.5% decrease in sales to R463m because the comparative period included Legit, which was sold in January. Excluding Legit, the speciality division suffered an 11.4% decline in sales. CNA’s sales fell 12.1%.

“Our trading environment remains challenging as consumer demand is weak on the back of tight credit conditions, low growth in consumer disposable income, political uncertainty and restrictive fiscal policy,” Edcon CEO Bernie Brookes said.

“Despite this, it is pleasing that the group’s strategic transformation is delivering positive retail sales growth in certain merchandise categories, such as ladieswear in both Edgars and Jet, as well as cellular in Jet, while childrenswear, footwear, cosmetics and cellular within Edgars are also starting to show signs of change.”

By Robert Laing for Business Live

Wealth tax and VAT hike being considered

With a massive tax shortfall in South Africa, new ways of drawing in revenue for the fiscus are being considered, including a wealth tax.

However, experts warn that a wealth tax is unlikely to cover even a quarter of South Africa’s current debt shortfall of R50 billion, meaning that a VAT increase in some form is also likely.

This is according to Judge Dennis Davis, who was speaking to BusinessDay ahead of a new wealth tax report set to be released by the Davis committee at the end of November.

Early signs indicate that a wealth tax could raise as little as R6-billion, meaning that it will have to be used in conjunction with other tax hikes.

“The problem with a wealth tax in SA is that it would be levied on an incredibly narrow base,” said Davis. “A huge amount of wealth in SA is also tied up in retirement funds, and we are busy investigating the implications of that.”

The committee is also concerned that a new wealth tax may penalise middle-class savings, and is aware that the South African Revenue Service (SARS) would need to institute a sophisticated system to administer it.

In comparison, Davis said that just a 1-percentage-point increase in the VAT rate (bringing it to 15%) would raise R20 billion.

Another option being mooted is a multi-tiered VAT system of 0%, 14% and 20%, said Davis.

This would result in a further twenty “necessities” being zero-rated, while luxury items such as smartphones could see a 20% VAT tax.

“It all comes down to the fact that we have to increase VAT,” said Davis. “Raising personal and company income tax isn’t going to get us there.”

Wealth tax

The Davis Tax Committee issued a media statement on 25 April 2017, calling for written submissions on the introduction of a possible wealth tax in South Africa.

This proposal arrived two months after an increase in the top income tax bracket for individuals by 4% to 45%, resulting in an effective capital gains tax (CGT) rate for individuals of 18%. This should be seen on the back of the increase the CGT rate by nearly 5% from 13.32% in 2014 to the current 18% in 2017.

Unlike income tax, where taxes flow from earnings (ie wages, salaries, profits, interest and rents), a wealth tax is generally understood to be a tax on the benefits derived from asset ownership.

The tax is to be paid on the market value of the assets owned year on year, whether or not such assets yield any income or differently put, it is typically a tax on unrealised income.

According to law firm ENSAfrica, while a wealth tax may undoubtedly be beneficial to address the divide between top and bottom level income earners, two main problems have been identified by some of the countries that have abolished this tax, namely the disclosure and valuation of the applicable “wealth”.

“Some of the reasons for its abolition have been cited as the disproportionately high administration and compliance costs associated with this form of tax, as well as capital flight from the country, said ENSAfrica.

“This sentiment is shared by France, where one report, established by the French Parliament, estimated that more than 500 people left the country in 2006 as a result of the impôt de solidarité sur la fortune (or ISF wealth tax). ”

“Looking at the above factors, it is difficult to see how a wealth tax will assist to improve South Africa’s weak economic growth and unemployment, in particular, if it incites a further flight of capital and a resultant decrease in economic activity,” it said.

Source: Supermarket & Retailer 

How many digital devices does you have in use in your business which could represent a risk for loss of personal information? This question is a lot tougher to answer than you might at first think and in this article we will find out why that’s the case.

The most obvious place to start is by looking at the fixed assets register where you record all of the information and communications technology (ICT) devices which you own, manage and depreciate in line with the rules issued by SARS. In times past this would capture most if not all the ICT items a company used: tech used to relatively high value, centrally procured and tightly managed.

That’s no longer the case for several reasons. First, the emergence of the “throw away” tech era. Items are now so low cost that they fall below the minimum limit to be classified as an asset for depreciation purposes and so they never make it on to the fixed assets register in the first place. Second the extensive use in business today of outsourcing or service agreements. Now we can find that the use of service providers may see our fixed assets register entries drop to zero as we no longer acquire assets in the name of our own organisation.

One of the more recent contributors to this is cloud computing, where entire layers of tech can simply disappear (think traditional server rooms) as they are replaced with a service (think offerings from Microsoft, Google, Amazon, Dropbox and other home-grown cloud service providers). Having said that, most organisations are still holding a significant inventory of desktop/tower PCs, laptops, servers and so on.

Outside of the corporate asset register the next place to look for digital devices which might represent a risk of personal information security compromises taking place covered under the POPI Act (POPIA) (see Condition 7, Security Safeguards for details) are your service agreements. This is where we need to think broadly, as so much of what we do in business today is digital without being a part of our core operations or production or accounting systems.

Examples are physical security systems such as access control – including biometric-based recognition and authorisation systems – whether used for staff or visitors or service providers. Coupled to tracking physical access through digital logging systems are digital monitoring systems, such as CCTV. Where this used to mean a network of fixed location cameras this is fast evolving as more companies start to use drone-based technology to complement their wired land-based platforms. Then there are the specialist tracking systems using a variety of technologies such as WiFi, Bluetooth and RFID to track people as they go about their work, particularly in high hazard job roles as are found in mining and other similar industries.

This can also apply in specialist applications such as health care where bedside monitoring systems track some of the most personal of data relating to health and wellness. Common other examples include multi-function devices such as the print/copy/scan/fax machines or digital switchboard you have on a lease agreement.

One of the largest areas that needs attention has nothing to do with what your organisation manages or pays for, directly or indirectly. It’s what’s become known as BYOD – Bring Your Own Device. As tech has moved into the hands of the consumer and out of the narrow control of the IT/ICT community the use of personally owned and funded devices has mushroomed.

Laptops, tablets, smartphones and smart watches are just some of the devices typically deployed to support directors, management and employees as they go about their daily business. In truth this list is much longer and should include home-based desktop PCs and servers, USB memory sticks (flash drives), CD/DVD disks, digital cameras, external hard drives and digital memory cards and no doubt more that you are probably thinking of right now. Every one of these BYOD devices represents a potential carrier of and therefore potential source of loss of personal information.

Just identifying all these devices can represent a major challenge if not tackled in a formal, structured and consistent way. Remember, POPIA requires (section 19) that the responsible party (the organisation doing the processing, or services providers – called operators in POPIA) takes “reasonable measures” to “identify all reasonably foreseeable internal and external risks to personal information in its possession or under its control”.

Clearly in today’s digitally diverse world that must go beyond consulting the fixed assets register. Look at your service agreements. Run a staff survey. Be inquisitive about where the risks are and how to address them. What to do once you have found those devices will be the subject of my next article.

By Dr Peter Tobin, www.popisolutions.co.za 

EFF calls for the nationalisation of our banks

If Economic Freedom Fighters (EFF) leader Julius Malema has his way, a “Banks Ownership Act” would be passed by Parliament, ensuring the State nationalise commercial banks in South Africa without compensation.

Introducing a debate on the issue in the National Assembly on Tuesday, Malema said: “There are no banks in South Africa that have meaningful ownership by black people”.

Malema said his party’s manifesto appreciates other forms of ownership are not excluded — including ownership by private individuals, the State and pension funds.

No single investor will own more than ten percent, he said.

“Our view is that the State ownership should be prioritised but should not completely close out other forms of ownership,” the fiery EFF leader said.

“This model of combined ownership, anchored by the State, makes sure banks are democratised…”

The ruling African National Congress (ANC) rejected Malema’s proposal.

ANC Member of Parliament (MP) Adrian Williams said banks would not just surrender their money.

“They are going to force this government to pay back the money,” Williams said.

“South Africa does not exist in a vacuum. When it comes to international finance we are just a cog in the capitalist wheel.”

He cited various examples where the State took over the ownership of banks and failed.

Williams said government would also assume the liabilities and debt, which would have an impact on the fiscus, and would result in poor South Africans and not the rich suffering.

The Banking Association of South Africa (BASA) also responded, saying the National Assembly entertaining the debate was “alarming”.

“Any nationalisation of banks will have a direct impact on stability, and will seriously undermine what fragile levels of confidence remain in our economy and society,” BASA said in a statement.

“We cannot allow ourselves to be in a position where we are further undermining the competitive positions that remain because of political expedience.”

BASA called on Treasury to provide certainty about its policy position regarding banks.

By Chantall Presence for IOL 

Absa takes a beating from fake news

From the propagation of Bell Pottinger’s white monopoly capital narrative to the new public protector’s CIEX report, political mischief and fake news have been tough on all the country’s banks — but Absa has taken the hardest beating.

According to the findings of the 2017 South African Banking sentiment index, compiled by BrandsEye, consumers were mostly disgruntled by the controversy around the bank’s purchase of Bankorp, demanding that it pay back the money the Reserve Bank had used to bail out the ailing apartheid-era bank.

The analysis, based on a sample of more than 1.8 million social media posts from about 500 000 unique authors between September 2016 and August this year, showed Absa was the worst performer with a net sentiment of -24.5%.

The posts were distributed to a proprietary crowd of vetted and trained local language speakers before being coded and verified by multiple crowd members, who assessed the sentiments of the posts.

Capitec had the highest net sentiment with 13.5%, followed by Nedbank with a score of -5.8%, Standard Bank with -6% and FNB with -7.6%.

Absa’s score had dropped from -11.3% in 2016, with 32.2% of its negative sentiment attributed to the release of public protector Busisiwe Mkhwebane’s report on the Bankorp saga.

Mkhwebane had recommended that Absa pay back R1.125-billion, but Absa maintained that it had met its duties relating to its purchase of Bankorp.

In July 2017 it launched a high court application for the review and setting aside of Mkhwebane’s findings and remedial action, but the damage to Absa’s reputation appears to have been done by then.

Jeremy Sampson, founder of Interbrand and veteran brand specialist, said Absa had fallen victim to a white monopoly capital agenda pushed by the defunct PR firm to the Gupta family, Bell Pottinger.

“The whole Bankorp thing from 20-odd years ago doesn’t seem to go away. I think Absa would argue that it was raised again [this year] by people who are being mischievous,” he said.

The Bankorp issue had been used as ammunition against the bank by people seeking to be “divisive” and “sow dissent”, Sampson said.

“Certainly there is a lot of mischievousness going on at the moment and it’s made that much easier because of social media,” he said.

Patrice Rassou, head of equities at Sanlam Investment Management, said few people properly understood the Bankorp matter but many were willing to drag Absa’s name through the mud online over it.

“For very political reasons the whole thing has been amplified on the internet and people have taken this at face value. It’s not a South African issue, it’s a global issue of fake news,” he said.

“You just have to have one tweet on something and people take it as fact when these things are firstly contentious, unproven and in a court of law [the accuser] is likely to lose.”

Rassou said corporates such as Absa were not equipped to rebut the “guerrilla warfare” seen online in which “the enemy is faceless”.

Overall the banking sentiment index did not find that banks had suffered negative sentiment driven by other matters related to the Guptas, but that consumers were more concerned with good governance than they had been in previous years.

“South Africans are holding their banks to higher standards now. If banks make a claim, and fail to match it, customers will call them out on this,” said Tania Benade, head of analytics at BrandsEye.

But Absa also received many negative complaints when it came to its services, such as the turnaround time on receiving credit cards and its R120 credit card replacement fee.

Absa had 15.6% more complaints related to branches than to online banking.

Included in the sentiment index was the net experience effect metric, which takes the net promoter scores of the banks, based on the likelihood of customers and non-customers to recommend a particular bank to others, to quantify the impact of customer experience on brand opinion. Capitec’s net experience effect exceeded those of the other banks, followed by FNB, Nedbank, Standard Bank and Absa.

Customer experience specialist and researcher Julia Ahlfeldt said that most consumers were unhappy with the basic “hygiene factors”, such as in-branch experience, app bugs and call-centre waiting periods.

“Most of the banks put time and energy into promotions and loyalty programmes but were unable to live up to their brand promise.

“Every time they do that it chips away at people’s perceptions of the brand.”

Ahlfeldt said that the average net promoter score for the industry in the US exceeded that of South Africa’s five retail banks, with the US being a highly competitive market.

But Rassou said that globally, perceptions around banks had always taken a negative slant, with banking services viewed as a grudge purchase by consumers. “Absa was seen as the leader in retail banking if you go back about 10 years ago but has lost a lot of market share to a number of other players, not just Capitec,” he said.
Barclays Africa, which owns Absa, had seen its share price drop 4.06% in the sentiment index’s review period, while Capitec’s grew by 22.78%.

“I think in the case of Absa, they’ve really suffered in terms of very low risk appetite. Absa has got the lowest market share in unsecured lending, which has been the big area of growth,” Rassou said.

Adrian Cloete, a PSG Wealth portfolio manager, said the valuations investors were prepared to pay when they traded in a company’s shares could indicate investor sentiment.

Based on this metric, “market participants are more optimistic about Standard Bank’s and [FNB owner] FirstRand’s future prospects,” he said.

Absa declined to comment without seeing the full index.

Source: 4-Traders

Africa’s largest lender by market value plans to take on Britain’s biggest banks with the takeover of Aldermore Group as growth in its home market stutters.

FirstRand said on Monday it agreed to buy all of Aldermore after winning the backing of the U.K. lender’s board and its largest shareholder. The offer, which values Aldermore at about £1.1bn, will help the Johannesburg-based company diversify away from South Africa, which accounts for about 96% of earnings and where economic growth is slowing to near levels last seen in the 2009 recession.

“There’s plenty of opportunity for a challenger bank to go and keep giving it to the big banks,” Aldermore Chief Executive Officer Phillip Monks said by phone. The company hasn’t received competing offers and will now engage other shareholders after receiving irrevocable undertakings from funds advised by AnaCap Financial Partners, he said. AnaCap holds more than 25% of its stock.

Fast-growing Aldermore is among a group of U.K. banks seeking to challenge the dominance of the nation’s four biggest lenders, which control as much as 80% of the market, by offering faster lending decisions and more personalised customer service. FirstRand is also facing increased competition from smaller banks and financial-technology start ups at home.

FirstRand will create a new division for its UK operations that will be headed by Monks and include both Aldermore and FirstRand’s auto-finance business MotoNovo, the CEO said. It will now “need to sit down” with MotoNovo and “think about the opportunities that we can work out together,” Monks said.

Premium justified

FirstRand is offering £3.13 a share for Aldermore, 22% more than Aldermore’s closing price on October 12. Aldermore rose 2.5% to £3.10 by 14:45 in London on Monday, extending gains since its March 2015 initial public offering to 61%. FirstRand climbed 1.3% to R53.09 for a market value of R298bn.

The premium is justified because “we can accelerate our strategy, the fact that we get access to a banking license with a very well-regarded deposit franchise, the fact that we can get access to a great management team with a track record of delivery,” and the size of the transaction relative to FirstRand’s market value, FirstRand Deputy CEO Alan Pullinger said by phone.

The deal won’t impact the outlook provided when FirstRand released full-year earnings in September, he said, when the lender said it expects return on equity, a measure of profit, to be in the upper end of its 18% to 22% target. “The guidance we’ve given to the market around earnings growth, return profile and dividends will remain intact.”

Surplus capital

The acquisition comes as FirstRand seeks to build offshore funding so it doesn’t need to rely on the South African government’s credit rating. The nation’s local-currency debt is at risk of being downgraded to junk by the end of the year because of political wrangling ahead of the ruling party’s conference to elect a successor to President Jacob Zuma.

“We can fund this entire transaction with existing cash resources,” Pullinger said. “We’ve been building up a lot of surplus capital. We continue to build up excess capital and we think we’ll continue to generate surplus capital post this transaction.”

The lender isn’t allowing concerns around Britain’s decision to leave the European Union to halt its expansion strategy, he said, given that it has become accustomed to operating nine subsidiaries in riskier sub-Saharan African markets. “All of those markets have also got some pretty heavy challenges and some scary political stuff going on,” he said. “We don’t for a moment minimize the concerns around Brexit, but it is a relative issue for us.”

The purchase may limit FirstRand’s ability to make large acquisitions in the rest of Africa, Patrice Rassou, the head of equities at Sanlam Investment Management in Cape Town, said by email. Combining Aldermore and MotoNovo would create a more sustainable business as the “two are complementary,” he said.

‘Glorious’ run

FirstRand needs approval from 75% of Aldermore’s shareholders for the deal to go through, FirstRand spokeswoman Sam Moss said in a text message.

“Aldermore’s pretty glorious two-and-half years as an independently listed company appears all but over,” Ian Gordon, the head of banks research at Investec Bank Plc in London, said in a note. “We assume completion on the agreed terms within four months. We continue to anticipate little likelihood of any counter-bid or ‘sweetener’ to the existing offer.”

Aldermore released an earnings update on Monday that showed an improvement in its tangible net asset value to £1.76 from £1.525 at the end of 2016. That values FirstRand’s offer at 1.78 times, “which we see as reasonable, but hardly over-generous”, Investec’s Gordon said.

By Donal Griffin and Renee Bonorchis for Fin24

Zuma expected to announce shock ‘free education’ plan

President Jacob Zuma is planning to make a shock announcement‚ introducing free education across the board through a controversial funding plan that flies in the face of the findings of the Heher Commission‚ government insiders say.

The plan‚ apparently devised by Zuma’s future son-in-law‚ Morris Masutha‚ would also defy official ANC policy. It could see the cutting back of departmental budgets across government to make R40bn available for the 2018 academic year.

Zuma has been withholding the 748-page commission report‚ in which retired judge Jonathan Heher reportedly found that universal free tertiary education was not feasible.

The announcement is thought to be imminent but the presidency on Monday night said there were no plans by the president for any announcement on Tuesday.

Masutha‚ who is engaged to be married to Thuthukile Zuma‚ the president’s youngest daughter from his marriage to Nkosazana Dlamini-Zuma‚ referred questions to the National Treasury.

“I think you might want to get input from those respective departments [the Presidency‚ Higher Education and National Treasury).… And not me personally‚” he said.

The Department of Higher Education was not immediately available for comment.

Masutha‚ who has apparently acted as Zuma’s “point man” on the fees issue‚ has made presentations to ANC officials and an inter-ministerial Cabinet committee on his self-devised funding plan‚ which essentially revises the National Treasury’s entire budget.

It is understood that following Zuma’s sudden Cabinet reshuffle last month‚ Masutha was introduced to Higher Education and Training Minister Hlengiwe Mkhize and Deputy Minister Buti Manamela‚ as the president’s “adviser”.

Zuma has apparently assigned Minister in the Presidency Jeff Radebe and his director-general Mpumi Mpofu the task of implementing the plan‚ which requires cutbacks in departmental budgets to make funding available. Mpofu‚ who was appointed in July‚ is said to have been working with a team from the Treasury to “find the money for Zuma”.

A government insider said the matter was dealt with directly by the director-general outside of the ordinary work of the department.

If the plan proceeds‚ it is likely to cause chaos throughout the state system as budgets are allocated according to programmes.

It also undermines Finance Minister Malusi Gigaba’s statements when he presented the medium-term budget policy statement last month. He said a funding shortfall of more than R61bn over the next three years would be created if government were to finance the full cost of study for 40% of undergraduates.

He said further announcements on higher education funding would be made in the February budget.

If Masutha’s plan is adopted‚ it could be an instant trigger for a credit downgrade to junk status by ratings agencies.

But sources say Zuma has disregarded the National Treasury and the Heher Commission’s findings‚ and believes that his future son-in-law has found a solution to the higher education crisis.

Masutha is the founder of the Thusanani Foundation‚ an education nongovernmental organisation (NGO) working on addressing disparities in rural schools.

At his graduation ceremony at the University of Johannesburg‚ where he was receiving his master’s degree in local economic development‚ Masutha held up an ANC T-shirt with Zuma’s face‚ apparently as a statement against white academic staff.

Earlier this year‚ Masutha opined that free university education would come with an estimated cost to the state of between R6.5bn and R7.5bn.

He proposed that the government should foot the bill for tuition fees‚ accommodation‚ meals‚ transport and all study material. “No poor and working class student must be partially funded‚” he wrote at the time.

Masutha wrote that the final report of the presidential commission on higher education funding should come up with an “inclusive and comprehensive higher education funding model for all undergraduate students”. He added that these recommendations should be ready to implement in 2018.

ANC spokesman Zizi Kodwa said he did not know of any plans by Zuma to announce free tertiary education.

ANC insiders said they had heard of Masutha’s proposals but did not know whether it would be feasible at all.

By Ranjeni Munusamy, Qaanitah Hunter and Sabelo Skiti for Business Live

Follow us on social media: 

               

View our magazine archives: 

                       


My Office News Ⓒ 2017 - Designed by A Collective


SUBSCRIBE TO OUR NEWSLETTER
Top