Trade and Industry South Africa

Lottery opponents in staff squabble

2007-01-26T23:35:00.001-08:00

26 January 2007
IN THE fight over SA’s national lottery, newcomer Gidani has taken a jab at incumbent operator Uthingo, claiming to have received job applications from “scores of Uthingo employees”.

The applications allegedly include those of senior executives, who want to join Gidani when it takes over Lotto operations from Uthingo. Uthingo hit back, saying Gidani’s statement implied that it employed the best staff.

Gidani said this week it was considering job applications from Uthingo staff “very seriously as part of the lottery human resources pool that has been created”. “It is expected of us not to waste the scarce human capital developed by our nation’s economic and developmental initiatives. We are mindful, though, that some of the people applying may have restrictions imposed by their present employer.”

Uthingo is waging a legal battle against the appointment of Gidani as new lottery operator, questioning the decision process, and has filed papers in the Pretoria High Court.

Gidani said it would defend the action brought by Uthingo, and contended that it had won the licence fair and square in a “thorough, scrupulous and well-managed” contest.

But Uthingo CE Oupa Monamodi said: “I am very positive about what Uthingo had achieved over the past seven years. Our credentials speak for themselves. We rank among the top in the world.” he said. It was common practice to include provisions for confidentiality restrictions and trade restraints.

Uthingo employs about 280 staff whose contracts expire on March 31. All employees had signed confidentiality agreements, it said.

The National Lotteries Board confirmed this week that legal papers had been served on the board by two bidders that lost out to controversial consortium Gidani, which last October won the tender to manage the lottery. The board and Trade and Industry Minister Mandisi Mpahlwa are first and second respondents in the case. Board spokesman Sershan Naidoo said Uthingo had lodged papers in terms of the judicial review, while Igwija, a consortium headed by prominent businesswoman Danisa Baloyi, which did not make the short-list in the bidding process, had lodged papers in terms of the Access to Information Act.

Gidani is set to take over from Uthingo at the beginning of April, but the looming court battle has raised concerns about the continued smooth operations of the lottery. However, the board moved this week to allay fears, saying the lottery operations were not likely to be affected by the court action.

Former estate agency board top dog arrested

2007-01-20T07:42:00.000-08:00

January 19, 2007
Valencia Nontobeko Mazibuko, the former vice-chairman of the Estate Agency Affairs Board (EAAB), the statutory consumer protection body of the real estate industry, has been arrested and charged with fraud.

Investigations of other former board members were continuing, but none had been charged at this stage, Gauteng police spokesperson Lungelo Dlamini said yesterday.

Former EAAB chairman Linda Joseph Nyembe, who resigned from his position in the organisation in August 2005, is believed to be among the former board members under investigation.

Dlamini said Mazibuko was arrested at her home in East London on January 6 and subsequently appeared on charges of fraud in the Johannesburg commercial crimes court. He said Mazibuko was granted R10 000 bail and the case was postponed to allow her to obtain an attorney.

At the time of her appointment to the EAAB, Mazibuko was an estate agent for Continental Homes and a member of the Eastern Cape consumer tribunal, a body involved in the protection of consumers against unfair business practices.

Attempts to obtain comment from Mazibuko yesterday were unsuccessful.

The charging of Mazibuko and the investigation into other former EAAB board members follows an investigation launched last April by the commercial crime unit into specific charges against former EAAB board members.

This is in accordance with the findings of a forensic investigation into the affairs of the EAAB conducted by auditors KPMG.

Dti's textile programme questionable

2007-01-12T12:08:00.000-08:00

There was still no sign of the Department of Trade and Industry's customised sector programme for the textile industry, the official opposition Democratic Alliance trade and industry spokesperson Pierre Rabie said on Tuesday.

Rabie, a Member of Parliament, said in a statement on Tuesday that while South Africans stared clothing price hikes of up to 20 percent in the face and the local industry appeared to be deriving no clear benefit — following restrictions on imports of Chinese goods — the Trade and Industry Minister Mandisi Mpahlwa "continues to muddy the waters around the Chinese trade restrictions".

Rabie said he had submitted a series of parliamentary questions in response to cries from the local industry over government's unilateral formulation and implementation of the trade restrictions.

Consultation with retailers?

The minister had responded to one question stating that "representatives of labour, retail and manufacturing actively engaged in the drafting of the customised sector programme which aims to map out the sector's developmental strategy. Trade restrictions are amongst the initiatives identified in the sector programme".

However, Rabie questioned the accuracy of the statement saying that when the trade restrictions were gazetted on 1 September last year "there was no provision for any consultation with clothing retailers".

"In fact," said Rabie: "Not until the dti's ignorance of clothing affordability and local supply capacity issues spilled into the media, did government grudgingly lift a finger for consultation with retailers."

Restrictions questionable

Only after the restrictions were imposed — supposedly to facilitate the recovery of the local clothing manufacturing industry — and had come under fire from the opposition did government make any mention of a customised sector programme, said Rabie. There was still no sign of the sector programme's 1 January implementation date.

Rabie said when parliament reconvened next month, he would question Mpahlwa on the accuracy of "this seemingly grossly misleading answer".

"There exists no rational basis on which to assume that the trade restrictions on their own will benefit local clothing and textile manufacturers or that they will create jobs and the consumer will definitely not benefit."

"The wisdom of the trade restrictions therefore deserve to be questioned. For that to happen, the minister needs to come clean with South Africa and apply his mind properly to the situation," said Rabie.

Days of BEE fronting numbered

2006-12-23T12:50:00.000-08:00

Government on Thursday released the final draft of its black economic empowerment standards.

The standards, entitled Codes of Good Practice for Broad-based Black Economic Empowerment (BBEE), outline what companies need to do to fulfil government's BEE policy requirements.

They were released by Trade and Industry Minister Mandisi Mpahlwa in Johannesburg.

"The focus of the codes is to ensure that BEE is well understood by business as well as all South Africans."

They would ensure that empowerment was broadened to include a broader section of the population, he said

The codes, that outline what companies need to do in order to achieve BEE status in terms of, among other things, ownership, employment equity and management control, will become effective in months.

The absence of an official document explaining clearly what the companies' obligations were in terms of BEE had been cited as one of the reasons contributing to the dearth of foreign investment in the country.

Trade and Industry Director General Tshediso Matona hailed the launch of the codes as a qualitative leap towards higher economic growth.

According to the codes, companies' BEE compliance will be rated on seven core elements: ownership, management control, employment equity, skills development, preferential procurement, enterprise
development and socio-economic development.

To score the highest points a company has to demonstrate how its policies empower among others, women, rural people, the disabled and black people in general.

"The codes lay conditions for a sustained and inclusive economic growth," said Mpahlwa.

Approved by cabinet earlier this month, the codes are silent on the wide-spread problem of fronting that defeats the objectives of the policy.

"This is not an easy area - how do you catch those guilty of fronting and if you finally do, what action do you take against them?" said Mpahlwa.

However, Mpahlwa said the issue could be covered in future legislation.

Online Gambling Legal in South Africa

2006-12-23T12:49:00.000-08:00

The local media in South Africa reported that a draft amendment bill, appointed by the Cabinet, will finally be passed into law. It looks like the South African government is following the same route as the UK government for online gambling.

This past week has been a positive struggle for the South African government as they have been trying to draft regulations to legalize internet gaming.

Business Day said in statement that provincial governments have been losing out on an additional source of tax revenue as well.

Director for Trade and Industry, Astrid Ludin, spoke with the newspaper, stating that the draft bill proposes and licensing system for both online gaming websites and its players, however, the taxation strategy, is still yet to be determined.

The South African online gambling industry has been outlawed by the National Gambling Act of 2004, under the premise that more in-depth research was needed into the regulatory frameworks of the UK, US, and Australian markets.

Minister of Trade and Industry, Mandisi Mpahlwa, received two years to draw up regulations to govern internet gambling, which will be regulated in terms of the proposed Gambling Amendment Bill.

Greek court cleared Lotto firm — minister

2006-12-23T12:48:00.000-08:00

Greek courts had thrown out the “serious allegations” against the international partner in the Gidani consortium, which recently won the licence to operate the national lottery, Trade and Industry Minister Mandisi Mpahlwa said yesterday.

It was not clear, however, whether the Greek court’s decision in favour of Intralot came before or after Gidani’s success in winning the lucrative, seven-year lottery licence in October.

Gidani takes over from incumbent operator Uthingo in April next year.

The allegations faced by Intralot, which is listed on the Athens stock exchange, included espionage, fraud, prize-rigging and money-laundering. Intralot operates the Greek national lottery and is also active in about 34 other countries.

Gidani’s successful bid for the lottery licence despite the allegations of shady dealings by Intralot was slammed by critics at the time, but National Lotteries Board chairman Joe Forster was adamant that the National Intelligence Agency (NIA) had performed a background check on Gidani and its partners.

Forster was reported to have said that Intralot’s “references and background” were checked by the NIA, which declared it to be all above board. He said yesterday that there were “lots and lots” of cases faced by Intralot, details of which had been included in the bid documents. He could not say which ones had been thrown out by the courts.

Mpahlwa confirmed this in a written reply to a parliamentary question by Democratic Alliance MP Les Labuschagne yesterday, saying the allegations faced by Intralot were taken into account when the licence was awarded to the Gidani consortium.

“The courts in Greece were investigating a range of allegations pertaining to this matter. However, the NIA has informed the trade and industry department that the serious allegations have been thrown out of court. The investigations that remain are not of a serious nature,” he said.

Intralot has been dogged by allegations that it contravened its lottery obligations in Russia. Its chairman and 23% shareholder Socrates Kokkalis has also been called upon to answer charges ranging from money-laundering to espionage.

Replying to a question by a vocal critic of the bid, Independent Democrats leader Patricia de Lille, Mpahlwa said the directors of the Gidani consortium were chairman Bongani Khumalo, Lindiwe Mthimunye, Colin Matjilla, Salukazi Dakile-Hlongwane, Thembi Tulwana, Ethan Gilbert Dube, Christos Moumouris and Constantinos G Antonopoulos.

Questioned as to how the 20% share that government received in the transaction with the consortium would be spent, Mpahlwa said no decision had been taken over which entities would hold the stake.

“Government does not receive anything other than the dividends declared annually. In the current licence the Post Office received an average of R15m a year and the National Empowerment Fund R5m a year,” the minister said.

Gidani’s empowerment partners include women’s group Nozala Investments, the Congress of South African Trade Union’s investment arm Kopano Ke Matla Investments, the South African National NGO Coalition, Women’s Development Foundation and the National Organisation for the Blind in SA.

Vunani Capital Investments, Partnership Investments and Gravitas Investment are also members of the consortium.

Businessmen and African National Congress national executive committee members Max Sisulu, Cyril Ramaphosa and Chris Nissen are involved.

Mpahlwa said his department planned to introduce a new package of incentives for small enterprise development.

Another Erwin bolt?

2006-12-23T12:47:00.000-08:00

Taxpayers are to foot a massive bill for the government-mandated inquiry into controversial investment house Corpcapital after inspectors exonerated the company on every major charge levelled against it by former director Nic Frangos.

That is because the Companies Act has no provision to compel people who bring spurious complaints to the minister of trade and industry to pay for any investigation he may order.

Frangos had alleged that the other directors had, among other things, fraudulently inflated the value of Cytech, an online casino company, to produce glowing financial results, and earn large bonuses. He quit the company in a blaze of publicity, suggesting his lone crusade for governance standards could no longer be sustained from inside Corpcapital. The company ultimately ceased operations, saying it was unable to continue under a cloud of scandal.

But the report of the inspectors appointed in 2003 by then minister Alec Erwin clears the company on all of Frangos’s allegations, and hints that it would have recommended that he be compelled to pay for the inquiry if this option were catered for: “The Companies Act should be amended to give the minister a discretion to direct an applicant to pay or contribute to the costs of an investigation … Corpcapital should not contribute to the costs of the investigation,” it says.

Erwin’s successor, Mandisi Mpahlwa, has for two-and-a-half years refused to release the report, and has this week handed it to Corcapital only after being compelled to do so by a court order.

This reluctance has never been explained, but the recommendation on costs, and the fact that Frangos is given short shrift by the report, are potentially embarrassing to the ministry.

Erwin heard representations from Frangos, but not from Corpcapital, and used his powers in terms of section 258 of the Companies Act to appoint Advocate John Myburgh -- best known for his role in investigating the collapse of the rand -- and accounting professor Keith Prinsloo as inspectors.

“This was an ill-conceived process,” says Neil Lazarus, a non-executive director at new Corpcapital. “The minister’s office has wasted a huge amount of money because the initial application was heard ex parte.”

Lazarus argues that had Erwin been prepared to listen to Corpcapital before ordering the inquiry he might have acted differently, not least because Nigel Payne, a corporate governance expert appointed by the company to investigate the claims, had already cleared the company. Frangos described Payne’s report as a whitewash, and hired his own experts, who disagreed with Payne.

“The minister and his officials backed the Frangos horse … It is a huge embarrasment,” Lazarus told the Mail & Guardian.

“Taxpayers have ended up paying millions to fund Frangos’s ego.”

Lazarus puts Corpcapital’s costs for lawyers and expert testimony at between R7-million and R8-million. The total cost of the inquiry and the failed court bid to keep its findings confidential is likely to be much higher.

Mpahlwa, who took over as minister from Erwin just as the report was completed, has, since 2004, been fighting off calls to release the report, and the Department of Trade and Industry continues to refuse to make the document available to the media. Mphalwa is now appealing the court order on principle in an attempt to ensure that he has the final say on the release of similar reports in future.

In a statement following the judgement, Mpahlwa said he had reservations about the way the inquiry had been conducted, and suggested it had exceeded its mandate. He also echoed Frangos’s claims of procedural unfairness, saying Frangos had not had a chance to respond to some of the expert testimony provided by Corpcapital.

The inspectors do have some criticisms of Corpcapital, notably that it may have violated exchange-control regulations when it set up its offshore businesses, and that its corporate governance structure was not always compliant with requirements of the King commission. But the damage to Frangos looks much worse.

He breached his fiduciary duties by giving confidential, price sensitive information to a select group of institutional investors, the report says.“[He] was advancing his own cause, and not that of the company, Corpcapital.”

The report also finds that in his attempt to find evidence that Corpcapital and Lazarus had ordered a private investigation firm to spy on him, he not only invaded the privacy of Lazarus and his family, but“acted badly, contrary to the portrayal of himself as an ethical, righteous upholder of sound corporate governance”.

What is more, Frangos had no basis to believe that the Payne report was a whitewash, or that he had not been given an adequate hearing, the inspectors found. Mpahlwa’s office had not responded to a request for comment when the M&G went to press.

BEE deal makers get a lot for relatively little commitment

2006-12-23T12:39:00.000-08:00

There is one major problem with the broad-based black economic empowerment (BEE) codes of good practice that were published yesterday by the department of trade and industry: the codes do not hold black people accountable for the outcomes of the BEE process.

Take the once empowered, always empowered principle. In terms of this principle, a company will be allowed to claim ownership points after the black investors have sold their shares in the company.

This is subject to some criteria, including that black shareholders must have owned the shares for at least three years; black investors must have made a profit on the deal; and the company must have achieved a certain level of transformation (in terms of the other six scorecard points) by the time the black shareholder sells the shares.

These criteria arise out of the BEE experiences of the late 1990s, when many black investors were left with very little to show for their BEE ventures after share prices went south in reaction to the Asian crisis and the dotcom bomb.

Black investors have since blamed onerous financing structures, which resulted in the shares being handed back to the financiers.

The codes effectively mean that the companies that undertake BEE deals will have to ensure that black investors make a profit from these deals. The codes are silent, however, on what black investors must do to ensure that they make money on these deals.

Also, the codes say nothing on what obligations the BEE investors have to ensure that the company they have bought into achieves certain transformation targets, such as more than 40 percent of management being black or buying more than 70 percent of goods and services from BEE suppliers.

These two points are important because the basis of broad-based BEE is that black investors are expected to use their equity ownership and their board seats to ensure that the other 80 percent of the transformation scorecard is achieved. But as the codes stand, it would appear that the government is giving much to the BEE deal makers but expects very little of them in return

SAA executives in illegal share deal

2006-11-16T02:20:00.000-08:00

South African Airways (SAA) may have contravened a number of statutes during the tenure of former CEO André Viljoen, over and above failing to follow proper procedures in the sale of the company’s shares to its executive directors, a report co-authored by corporate governance doyen Mervin King says.

The report followed an investigation instituted by Trade and Industry Minister Mandisi Mpahlwa on the “affairs of SAA since its incorporation as a company in December 1997”.

At the centre of the report was the investigation of the incentive shares that were sold to the airline’s top management and to pilots.

According to the report, 13 former SAA executives illegally benefited from the sale of 27-million shares that were held under the SAA Employee Share Trust. The trust was established in October 1999 to administer and control the parastatal’s three employee share schemes — the Employee Share Ownership Programme, the Flight Deck Crew Scheme and the Incentive Scheme.

The report found that Viljoen and his management team assumed the duties of the trustees, acting contrary to the provisions of the Trust Properties Control Act. Management took control of the trust because the first three official trustees — Bheki Sibiya, Sango Ntasluba and Gloria Serobe — were found to be “inactive and never met”.

In terms of the Trust Property Control Act, trustees must appoint an independent valuer on an annual basis to determine the value of the shares, and the shares must be sold at the current market price.

However, Viljoen and his management team sold their shares in 2001 at the previous year’s healthy price of R2,87 a share.

“It is open to argument that management, who were also directors, acted wittingly by directing the valuations and effectively being both seller and purchaser,” King and his co-author, Brian Abrahams, said in the 101-page report.

Although management at the time had directed Wiphold to determine the value of the shares, the report contended that the sale was null and void because management was not duly authorised to act on behalf of the trust.

Cipro’s crippling problems

2006-11-10T14:45:00.000-08:00

IT BEGGARS belief that well over a year after the alarm was officially raised over the huge backlogs and administrative problems dogging the Companies and Intellectual Property Office (Cipro), no action has been taken.

Not only did auditor-general Shauket Fakie issue a disclaimer in his 2004-05 audit report because of serious financial problems within the organisation, but Cipro’s own chairman, Rob Angel, expressed concern in the annual report the same year about the body’s substandard performance. There is quite obviously a major problem at Cipro, and it is up to the responsible ministry — trade and industry — to take action.

That has not happened. The problems have been going on for years. Companies’ complaints about Cipro’s poor performance, like that of many other trade and industry institutions, have fallen on deaf ears. Once again this week Parliament’s standing committee on public accounts called for heads to roll in the department for the financial mismanagement at Cipro.

The issue is now critical. Registering companies, close corporations and their directors is vital to the functioning of business. In addition, Cipro handles the registration of trademarks, patents, copyrights and designs.

Complaints range from slow turnaround times in processing applications to losing documents. Indeed, Angel noted that Cipro had been criticised for its “unbearable” turnaround times in processing applications, for losing documents and for various mistaken amendments to corporate data. It takes Cipro five days to register a new company and, at the end of March last year, the process of registering a trademark took 19 months.

Backlogs in updating information have meant that businesses have been forced to wait for many months to lodge new information with the organisation. The logjam recently resulted in a highly embarrassing situation when Fakie fingered several ministers and senior officials for not fully disclosing business interests. It turned out that his report was based on outdated information from Cipro, and most of these ministers were subsequently cleared.

Given the trade and industry ministry’s casual attitude to Cipro’s crippling problems, we should not hold our breath for action any time soon. This is an area where the private sector would not only do a far better job, but would probably jump at the chance. It should be given the opportunity to do so.

Strategy for small business out soon

2006-11-09T02:54:00.000-08:00

GOVERNMENT would release its small-enterprise strategy in the next two months at the latest, said trade and industry department chief director for enterprise development Mandisa Manjezi.

The strategy is regarded as the basis for government’s approach to supporting small, medium and micro-enterprises. Its objectives include creating an enabling regulatory environment and enhancing their access to finance.

The strategy was initially completed and submitted to cabinet last year but “cabinet felt that there were certain areas that needed to be strengthened”, Manjezi said.

“Some of the pertinent issues that cabinet wanted to be looked at again included access to finance, public procurement and issues of rural industries.”

With regard to the so-called rural industries, cabinet wanted the strategy to spell out opportunities other than agriculture that could be exploited, Manjezi said.

“All these issues have been addressed in the revised strategy.”

Issues concerning the strategy are likely to come under discussion at the annual small business summit.

The department said Labour Minister Mandisi Mpahlwa would host the summit and “share his perspective on achievements and how the department and its partners have been responding to small business development challenges”.

Mpahlwa is expected to inaug-urate the newly appointed small business advisory council at the summit. Mpahlwa announced in August this year that the council was to represent and promote the interests of small business.

The council will advise Mpahlwa on strategies to address so-called market failures affecting small businesses and the influence of current and new legislation on small businesses and skills development.

Manjezi said mechanisms to address small businesses’ struggle to access finance would come up at the summit.

“We realise as government that we do not have all the resources to address financial needs across the board. We need the private sector,” she said.

Credit blacklisting is evil

2006-10-26T08:41:00.000-07:00

A stand-off is looming between political groups such as the African National Congress (ANC) Youth League, and government and lenders as the deadline nears for comments on a form of "amnesty" for people blacklisted by credit bureaus.

The ANC Youth League marched to hand a petition to the National Credit Regulator, the arm of government tasked with implementing the new National Credit Act, as tensions escalated over a possible amnesty for the 3-million people said to be blacklisted by credit bureaus.

The regulator reports to the trade and industry department.

The act is a far-reaching attempt to level access to credit, but at issue are draft regulations to the act released last month which effectively set the platform for a "limited amnesty" for people blacklisted.

But while limited amnesty is seen as government's response to political pressure, it seems neither side is particularly pleased with it, with certain groups concerned about the impact that it will have on banks' ability to assess risk properly when lending to a consumer.

In a strongly worded statement, the South African Communist Party referred to the wide-scale blacklisting of people by credit bureaus as "evil" and reiterated its call for a once-off blanket amnesty for all people listed by bureaus - an action that goes much further than limited amnesty.

The ANC Youth League marched to the regulator yesterday to hand in a memorandum. Doctor Tshwale, a member of the youth league's national executive, said the body "demands that credit institutions should grant amnesty in order to ease the process for them (youth) to have access to credit and loans".

The regulator's head of regulation, Nomsa Motshegare, welcomed the league's involvement, but urged it to submit comments on the regulation to government before tomorrow's deadline.

"There is no doubt that the issues you are raising are important. However, they are also complex, and need the co-operation of other stakeholders," she said.

There have been numerous problems with the way bureaus operate, with people either blacklisted for very small debts, or blacklisted incorrectly. In addition, consumers are never told that they are being blacklisted by a credit provider.

Regulator CEO Gabriel Davel said the regulations on amnesty were necessary because "consumers need a second chance".

As part of a limited amnesty, Davel said there would be a "once-off clean-up" of credit bureau information - to be finally concluded by November next year.

By June next year, a bureau must remove all "adverse information" - essentially a blacklisting - where it relates to any debt of less than R500.

A bureau must also remove any information about dormant accounts, where there has been no payment from consumers for a year.

A bureau must also then have two audits, to assess the accuracy of its systems and verify that the information has been removed.

The regulator said the point about the regulations was to ensure a balance between "removing information that has an (unreasonably) negative impact on the consumer ... without undermining the integrity of the financial system".

However, the concern is whether a bureau will be forced to remove so much information that it will become harder to assess the creditworthiness of a consumer, which would increase the credit risk to banks, retailers and other lenders.

Blame it on the weather

2006-10-26T08:22:00.000-07:00

The $50 congestion surcharge being considered by shipping lines docking at Durban could cost South African importers more than R500m a year, Democratic Alliance trade and industry spokesman Martin Stephen said.

Shipping lines are considering reintroducing a surcharge on every container moving through the port because vessels have been waiting 50-70 hours to berth at the Durban Container Terminal. Shippers want a delay of less than 16 hours.

Transnet has blamed windy weather, which has affected crane operations since August.

The port completed an expansion last year which increased its capacity to handle 1,9-million 20-foot equivalent units a year, compared with 1,2-million such units previously.

Transnet said yesterday that it was confident of reducing the congestion soon as a plan was being discussed with shipping lines.

“This includes moving vessels to discharge cargo at the Point Multi Purpose Terminal, increasing staff at Durban Container Terminal and releasing new straddle carriers to increase capacity and resources. We are investigating a number of options to create additional space including increasing stacks to three high and using external container depots.”

Talks were under way to divert cargo destined for Gauteng to Port Elizabeth and Cape Town.

ANCYL protest blacklisting

2006-10-25T07:34:00.000-07:00

Members of the ANC Youth League gathered outside the Johannesburg public library to protest on Wednesday against the blacklisting of youth by credit bureaux.

"We demand that credit institutions should grant amnesty in order to ease the process for them (youth) to have access to credit and loans," said Doctor Tshwale, a member of the ANC Youth League's national executive.

The protesters will proceed with their memorandum of demands to the national credit regulator in Parktown.

"It is part of our job youth campaign to highlight the plight of the unemployed youth and raise the discussion on youth development in the country," said Tshwale.

He said the majority of the young people blacklisted are unemployed and much of the debt was accumulated through study loans.

Millions overspent in irregular tenders

2006-10-22T13:08:00.000-07:00

Trade and Industry Minister Mandisi Mpahlwa has ordered a high-level investigation into tender irregularities within the State Information Technology Agency (Sita).

Sita management has asked Mpahlwa to intervene after the auditor-general and internal forensic investigations uncovered widespread financial irregularities amounting to more than R120-million.

The agency, funded largely from public funds, has also brought disciplinary action against implicated staff members, resulting in the axing and resignations of at least four senior officials.

The inspectors will probe how Sita overspent by R50-million on government’s flagship online project, Gateway.

The project, initially budgeted for only R28-million, is intended to create an online system through which the public can have easy access to government departments.

A consortium led by T-Systems won the contract. Major players in the consortium at the time included prominent black businesswoman Danisa Baloyi, and Johannesburg businessman Jurgen Kogl.

Mavuso Msimang, Sita chief executive, said that an audit of Gateway found suppliers were hired without following proper procedures and IT equipment was bought in surplus to demand.

Mpahlwa used section 257 to 262 of the Companies Act, which allows the minister to appoint inspectors to investigate books of companies where fraud is suspected. The Act empowers inspectors to investigate any company’s subsidiary or holding companies.

Msimang said the inspectors would “inspect all the books of Sita and the companies that benefited from Gateway”.

“They will look at everything. They will have to find what the money was spent on.”

The inspectors will also look at the R21-million recorded as wasteful expenditure.

In its attempts to recover irregularly spent funds, Sita has also instituted legal action against several former employees and external service providers.

Sita is demanding R5-million from Tedaka Business Consulting, another company linked to Baloyi, as overpayments in respect of the establishment of the Office of the Ombudsman. The office was set up to deal with allegations of fraud and corruption within Sita.

In court papers filed at the Pretoria High Court, Sita claims that Tedaka was paid money but did not deliver.

However, Tedaka managing director Teddy Daka argues that payments received were legitimate and were for consultancy work on the project.

Daka acknowledges that his company did not tender for the contract but was approached by the then Sita board chairman Zodwa Manase to assist in the establishment of the Office of the Ombudsman.

Sita also irregularly spent R43-million more than what was budgeted for in the CabEnet project.

The project is aimed at creating a system for the Presidency and provincial premiers to monitor service delivery.

In the report, Sita said it had obtained legal opinion on the matter, which recommended that disciplinary and criminal action be taken against responsible officials and Sita former employees.

“We have submitted the reports [on this project] to the Director of Public Prosecutions for consideration. Disciplinary action against officials still in the employ of the company is still in progress,” the report stated.

Gateway, CabEnet and the Ombudsman’s office projects happened before Msimang took over the reins in October 2003. But under his nose, officials overspent by R15-million on the firm’s turnaround strategy.

Sita has been dogged by scandal since its formation in 1999, and the turnaround strategy was meant to rid the agency of fraud and corruption, especially in the procurement process.

Msimang conceded this week Sita overspent because there were no monitoring systems to “warn us on how much we were spending on the project”.

“One of the officials [tasked to monitor the project] failed to raise the red flags as and when we were spending.

“The service was satisfactory and we required their [consultancy] services more and more — but we failed to check how much we were spending,” Msimang said.

An audit was conducted on the project and three officials were found to have failed in their duties. Two were given final written warnings while a third was dismissed when he contested the charges.

Msimang said Sita and the service provider had agreed to share the costs of the irregular spending because “the service provider had a duty to inform us that we were over the contract budget on the project”.

Huge procurement fraud exposed

2006-10-18T07:12:00.000-07:00

The Auditor-General (AG) has tabled a report identifying irregularities amounting to millions of rands in procurement processes at the state-owned Companies and Intellectual Property Registration Office (CIPRO).

The purpose of the report is to make known the findings of an independent investigation conducted by the AG at the request of CIPRO following concerns raised in the AG's 2004-05 regularity audit management letter.

CIPRO, a trading entity within the department of trade and industry, exists to register businesses and intellectual property rights, maintain related registries and develop information for disclosure to stakeholders.

It was formed in March 2002 from the merger of the South African Companies Registration and the South African Patents and Trademark offices.

The investigation focused on the process followed by CIPRO in the procurement of goods and services from 24 different service providers.

The investigation found that:

In six procurements totalling R11 486 680, role-players did not consider and approve the procurement of goods and services as required;

For the procurement of goods and services of more than R1 000 three quotations were not always invited. In three cases totalling R381 293 no quotations were considered.

In 36 cases totalling R15 405 704 only one quotation was considered and in two cases totalling R808 830 only two quotations were considered;

During the review of the procurement documentation for a service provider, a risk of collusive quoting was identified as quotations from three service providers showed similarities.

Furthermore, no departmental service provider database existed for the period under review and the filing system at CIPRO revealed a lack of internal controls as some of the requested procurement and payment documentation could not be provided;

In 18 cases the Procurement Operational Committee (PROCOM) evaluated and approved requests that did not comply with value-added tax (VAT) requirements;

In eight cases totalling R10 587 943 IT-related goods and services were procured without consulting or approval from State Information Technology Agency (SITA). Furthermore, a quotation was requested and received from a service provider for the rental or purchase of two servers.

The purchase price quoted was R5 986 908 (including VAT) or a rental amount of R181 749 (including VAT) per month for three years totalling R6 542 992. No tender process through SITA was followed;

In six cases totalling R11 486 680 procurement requirements amounted to more than R500 000, the basic quotation process was followed instead of public tender invitations.

Furthermore, tenders for the outsourcing of the filing system of CIPRO were only invited from three service providers thereby following a closed tender process. The tender was awarded to a service provider for the total ceiling escalated value of R21 877 740 including VAT for 5 years;

The procurement documentation for a service provider indicated that the special project in the corporate information unit was extended seven times. The total amount for the seven extensions accumulated to R2 335 548, which required the tender process to be followed.

Furthermore, the procurement documentation for another service provider was split into two phases. If the services were not split in two phases the tender process should have been followed and not the quotation process;

In the procurement documentation it was noted that service providers charged VAT without supplying VAT details on invoices. Further, in one case the VAT details supplied by a service provider were invalid;

Two members of the CIPRO management board had interest in two service providers with which CIPRO contracted for services, which were not declared in declaration of interest forms. Officials at management level did not provide declaration of interest forms required by the PSA for the 2004-05 financial year;

In contradiction of Treasury regulation, CIPRO sponsored a yacht for participation in the VASCO race for R233 746; and a supply chain management and preferential point system was not developed and implemented for the period under review.

The contradictions of Black Empowerment

2006-10-16T08:19:00.000-07:00

The biggest criticisms to be levelled at South Africa's attempts to transfer ownership of the economy into black hands have been those of cronyism and the fostering of a get-rich-quick culture and a new wealthy black elite.

In the years following the end of apartheid, traditional South African companies rushed to find themselves black investors - so they could qualify as Black Economically Empowered - or BEE - companies.

The public saw many of their leaders, ANC stalwarts, being offered and getting lucrative positions on the country's most powerful boardrooms.

For many that was not surprising - the brightest and the best who fought against apartheid could well be expected to turn their minds to industry once the struggle was over.

More disheartening though was the sight of black investors who simply sold out as soon as they could to make a tidy profit. Real black ownership of the economy seemed as remote as ever.

Other companies are giving their new shareholders extra incentives to stay involved.

Old Mutual, the Anglo-South African financial services group lent the Brimstone group the money to buy a stake in Old Mutual.
Chief executive Jim Sutcliffe said: "The rate of interest on that loan depends on the contribution they make to our business.

"What we sought to do was not to have a faceless or artificial arrangement with somebody, but rather enter into a partnership with some people who will help us grow our business."

But some financiers are claiming that the BEE deals are storing up problems for the future.

Black investors are getting deeper into debt as they buy up more and more of white corporate South Africa. For the moment they can pay off the loans using dividends they earn from their new shares.

But what happens when the company hits a bad patch and can't afford to make these dividend payments. Where does the cash come from then? If the economic growth rate in South Africa were to go down companies will not be able to pay the dividends that the debts are being serviced with.

This is perhaps the most worrying aspect of the new black ownership deals that are being forged in South Africa. They do seem to have a level of commitment not seen a decade ago, but they depend upon continued growth.

Just like someone with a big mortgage depends on being in work to pay off the debt on their house, so South Africa's new black shareholders depend on their companies and their country to keep on working.

BEE is a mockery of Mandela's dream

2006-10-11T05:06:00.000-07:00

When a black man tells the world that white people are not doing enough to make him rich, what message is he sending to future generations of black South Africans? Is it that black people today are not capable of making money for themselves?

This sort of attitude reflects the current black economic empowerment (BEE) state of mind, which is the attitude of some black people who opt for the easy way to wealth: buy small portions of companies owned or run by white people, sit back and voila! In a few years' time you become a millionaire.

But this makes a mockery of the words of Nelson Mandela who, during his inauguration as the first president of post-apartheid South Africa in 1994, said: "The task at hand will not be easy. But you have mandated us to change South Africa from a country in which the majority lived with little hope, to one in which they can live and work with dignity, with a sense of self-esteem and confidence in the future."

Where's the dignity and sense of self-esteem in becoming rich through the efforts of others? What insights into business does a black man who becomes rich through the efforts of white people share with his children around the dinner table?

There is a lot of knowledge about business and how it is practised that parents can transfer to their children by sharing their "day at work" experiences with them.

The reason the current BEE state of mind is disappointing is that there was a hope, mostly implied, that the BEE forerunners would become role models for young black children, showing them that given the opportunity, black people are as capable as any another group of making it in business.

This hope was based on the idea that there are two major inhibitors to black people becoming owners or managers of companies. It was, or is still believed, that black people are inhibited by a lack of capital (money), or access to it, which they can use to start their own business. A lack of managerial experience was another stumbling block to black people creating wealth.

The debate doesn't seem to be about these impediments anymore. Instead, it's about slicing up the economic cake equitably, and not about growing it.

Take the presidential black business working group. Twice this year, black business representatives have urged the government to bring the stick against white companies because they are not implementing BEE as fast as black business would like.

Ts the programme of selling portions of companies run or owned by white people to black investors the most effective way to promote economic transformation?

And why should the government tell the poor that there is no dignity in living off government hand-outs (social grants) when well-educated, intelligent and able-bodied black men and women become rich off what is effectively a government hand-out?

The problem with the obsession with what percentage of the market value of companies listed on the JSE is in black hands, is that it sidetracks the government from focusing on the issues that prevent black people from sowing business acorns that will grow into the oaks of tomorrow.

Even if black people fail in growing those acorns into business oaks, they will, at least, have accumulated knowledge that they can share with their children about how business is, or is not, practised. The highs and the lows, the successes and the failures. There's something real about that.

As things stand today, most BEE players have nothing more than golf course tips to share with their children. How sad!

Bungling Mpahlwa's biggest mistake yet

2006-10-10T10:44:00.000-07:00

THERE were many who thought Health Minister Manto Tshabalala- Msimang was too far ahead of the pack to be challenged for the title of "worst cabinet minister of 2006" but an elegant second-half hat trick by Trade Minister Mandisi Mpa-hlwa has kept the contest alive.

Until now, Mpahlwa was something of an outsider for the title, coming more from the Bafana Bafana school of ineffectiveness, rather than the overtly destructive sort you might find within the health ministry.

Yet, in recent months, Mphalwa has imposed anticompetitive clothing quotas on retailers to protect industry from cheap Chinese imports, delayed the release of the Corpcapital report by appealing a court order, and then iced this cake with the unexplained appointment of politically well-connected Gidani to run the next national lottery. Of all the blunders, Gidani could prove his worst.

Already one of the losing consortiums, Igwija Gaming, is preparing to hit the courts for an order asking Mpahlwa's department to explain its decision.

Igwija chairwoman Danisa Baloyi says her group "is in the process of approaching the court to compel the department to provide us with information on this process".

Baloyi says Igwija asked the National Lotteries Board (NLB) on August 8, as it was invited to do, for information on why its bid was deficient. However, the NLB refused to reveal any information because this was "private" and bidders were "not entitled" to know.

"We won't accept this," says Baloyi, citing the right to administrative justice.

Mpahlwa ought to elaborate. Igwija clearly thought it stood a chance, given that its foreign partner was the Scientific Games Corporation -- the leading global provider of lottery systems and tickets, and listed on the US Nasdaq stock exchange.

By contrast, Gidani's foreign partner Intralot has been dogged by allegations that it flouted its lottery responsibilities in Russia, while its chairman and 23% shareholder, Socrates Kokkalis, faced charges ranging from money-laundering to espionage.

Last week, NLB chairman Joe Forster told the SABC that Gidani and Intralot's "references and background" were checked by the National Intelligence Agency (NIA), which declared all above board. So did the NIA believe the Greek prosecutors erred in charging Kokkalis? Certainly, if you read Intralot's threatening responses to the prosecution of Kokkalis, you would believe he was only a victim of a gaggle of a slanderous conspiracy.

In one press release, Intralot "demands the publication of all the evidence regarding the ... prosecution of (Kokkalis) on serious charges including the preposterous espionage charge, (and) we demand the publication of the lists of the professional witnesses who have been slandering (Kokkalis) for a decade".

Add the unsettled involvement of African National Congress stalwarts to the Gidani mix and the absolute least Mpahlwa ought to do is explain how his decision was made.

BEE will bankrupt us

2006-10-09T12:50:00.000-07:00

The difficulty and the costs of compliance with the black economic empowerment codes of good practice could put many local companies out of business, the Steel and Engineering Industries Federation of SA (Seifsa) has warned.

Several of SA’s industries have been awaiting the finalisation of the trade and industry department’s broad-based black economic empowerment codes of good practice.

Seifsa president Michael Pimstein said: “While Seifsa fully supports the principles and overall objectives of these codes, there is a very real danger that the difficult and potentially high costs of compliance could have a serious effect on economic growth and put many companies, especially smaller firms, out of business.”

Seifsa has expressed “a major concern” that the broad-based black economic empowerment policy could undermine local manufacturing “and, with it, job creation and retention if government fails to adequately recognise local procurement in the scorecard”.

Pimstein said the federation was also concerned about delays in finalising the broad-based BEE codes of good practice.

In a wide-ranging address to the federation’s members, Pimstein said the weakening of the rand in recent months had allowed some companies in the metal industry to return to exporting, after they were driven out of exporting when the rand hit R6 to the dollar.

Pimstein said imports from China, India “and elsewhere” still posed a danger to local manu-facturers and contributed to SA’s growing current account deficit.

In order to address skills shortages, Seifsa had launched an employer-driven skilled worker initiative”, he said.

“With an apprentice intake of only 3200 apprentices in the metal chamber of the Merseta (the manufacturing Seta), the aim of this project is to incentivise larger companies with high levels of training expertise to ramp up their apprentice intake by an additional 500 apprentices.

“In other words, these companies will train beyond their own immediate needs to provide a pool of skilled, work-ready artisans who are able to enter the industry in key, scarce-skills areas,” he said.

Seifsa skills development manager Janet Lopes said the average age of artisans in SA was 54.

Pimstein said the national labour department had turned down the federation’s request for funding.

He said the body was seeking funding from the Gauteng provincial government.

“It would be a great pity if the project had to be postponed or cancelled as a result of a lack of funding,” he said.

Vigorous and filled with integrity

2006-10-07T04:58:00.000-07:00

GIDANI, South Africa’s new lottery operator from next April, is already mired in controversy. Its technical partner, Intralot, appears to be involved in several allegations of fraudulent activities that include espionage, money laundering and bribery, in at least three countries.

The fact that the allegations are so widespread – and that the rumours of serious impropriety had emerged before the winning bid had been announced – raises serious questions about the purported vigour with which the four bidders had been scrutinised.

Surely, outsiders have begun asking, an integral partner to the bid with such a dubious past should have flagged potential problems and should have been thoroughly investigated before the announcement was made.

Another controversial aspect to Gidani lies closer to home with the revelation that several powerful and politically well-connected businesspeople will be the main beneficiaries of the lucrative contract.

Chris Nissen, a former church minister and a one-time ANC candidate for premier of the Western Cape, this week unabashedly confirmed that he was part of the local consortium.

“It’s not just the bigwigs, it’s broad-based and brings in ordinary people.”

But the ordinary people pale in comparison to the “bigwigs” which include ANC National Executive Committee member Max Sisulu, Independent Electoral Commission chairperson Brigalia Bam etc.

The opposition Democratic Alliance has described the announcement as “re-empowerment of the already empowered”.

In this, we must concur. The perpetual cycle of the empowerment of a select few has become a sickening feature of our economic landscape.

The fact that a few “ordinary people” have been roped in to make the deal a little more palatable cannot negate the reality that those who have political affiliations to the ruling party appear to have the best chance of getting to the lucrative contracts and empowerment deals.

It makes a mockery of the ANC’s much-vaunted announcements that the party intended formulating a policy that would seek to keep the “re-empowered empowered” from the feeding trough.

Furthermore, it sends alarming signals that, when senior ANC officials criticise the post-apartheid fat-cats in our midst, no one is actually listening. Clearly, they are too busy checking out the next big deal.

It is therefore difficult to take seriously the words of Trade and Industry Minister, Mandisi Mpahlwa who insisted that the process has been “vigorous” and filled with integrity.

Tata ma chance

2006-10-07T04:49:00.000-07:00

NEW national lottery operator Gidani has found itself swamped by controversy as revelations emerged yesterday implicating its technical partner, Intralot, in shady operations in countries around the world. The revelations came only a day after Trade and Industry Minister Mandisi Mpahlwa announced that Gidani had won the bid to operate the national lottery from April 1 next year.

Gidani takes over Lotto from Uthingo which has held the contract since the Lotto was launched in March 2000.

Athens-based Intralot is under a cloud in at least three countries including its home country, Greece.

At the centre of the storm is one of the most powerful businessmen in Greece, Socrates Kokkalis, chairman and major shareholder of Intralot, who was facing charges ranging from espionage to money laundering, fraud, embezzlement and bribery.

Kokkalis, 60, is the father of scratch-and-win tickets and one of the world’s 500 richest men.

A background check on him reveals that:

In 2002 Intralot was removed as Greece’s national lottery operator after Kokkalis was charged with espionage, money laundering, embezzlement, fraud and felonious bribery. One charge related to alleged rigging of the Greek national lottery so that a small cabal of minor celebrities, football club officials and their families and friends won tens of millions of euros in “unusually lucky streaks”.

He is also accused of defrauding investors of €483 million (R4,8 billion), bribing government officials and of committing espionage against his own country through links with the now defunct East German secret police, the Stazi.

Kokkalis is wanted in Russia for his role in an illicit lottery game that siphoned off R117 million of government money into Swiss banks.

Two years ago, Bulgaria cancelled its tender for a contract to manage its state lottery after Intralot, the only bidder, was found to have submitted a non-compliant bid. Moves were afoot to have Kokkalis’ German and Swiss bank accounts scrutinised.

Gidani’s chairperson, businessman Bongani Khumalo, defended the credentials of their international partner. Khumalo said Mpahlwa had outlined the evaluation process when he announced the winning bid.

“There were stringent processes of evaluation including assessment of both our local and international partners,” said Khumalo.

“There is no controversy about how we won this tender. Whether you call our partners Intralot Greece or whatever, but as Gidani, we are comfortable that our international partner has the necessary skills, credibility and experience we need to give the best service for the lottery.

“Ethical conduct and accountability are the hallmarks of how I do business, and that’s how I expect Gidani to conduct itself when running this business,” said Khumalo.

Gidani’s high-profile shareholders include Independent Electoral Commission chairperson Brigalia Bam who hails from the Eastern Cape, ANC national executive committee members Max Sisulu and Chris Nissen, and former IEC commissioner and businesswoman Dawn Mokhobo.

Independent Democrats leader Patricia de Lille yesterday entered the fray, submitting parliamentary questions asking whether the Department of Trade and Industry had considered the controversial history of Gidani’s Greek partner.

“I want answers on whether the DTI did the necessary research on this Greek company which has been under investigation for so many things in other parts of the world,” she said.

“The onus is on the government to look not only at the financial implications, but also the track record of the international partners that come on board.”

De Lille also lashed out at the ANC for allowing a few political bigwigs to benefit in major government tenders.

“The ANC has moved away from what the Freedom Charter says: The people shall share the country’s wealth. The only thing that people share is poverty. It’s high time the ANC intervene and controls this monopoly,” she said.

Lotto being taken over by crooks

2006-10-06T10:06:00.000-07:00

Independent Democrats (ID) leader Patricia de Lille met Uthingo employees on Thursday who fear they will lose their jobs when the new national lottery provider Gidani takes over.

Gidani — announced by Trade and Industry Minister Mandisi Mpahlwa on Wednesday as the winner of the licence — is scheduled to take over from Uthingo next April.

De Lille's visit to Uthingo employees follows her call to Mpahlwa "to immediately suspend the deal" pending a comprehensive investigation into its Greek partner, Intralot, which was removed as operator of the Greek national lottery two years ago. Intralot is owned by billionaire Socrates Kokkalis.

The ID leader said: "Equally important are the written complaints I have received from workers at the national lottery who have been told they will lose their jobs. I have submitted parliamentary questions to the Minister and I want him to answer them."

De Lille accused the ruling African National Congress of "once again throwing the Freedom Charter, which says that all shall share in our nation's wealth, out the window. The only thing all of our people are sharing is poverty, while a few individuals are making millions and millions of rand at their expense."

"The fact that Intralot is under investigation in Greece for allegedly rigging the lotto results means the sooner we suspend the deal the better for everyone.

"To add insult to injury, the company is apparently being sued by the Russian government for allegedly making off with a $15-million advance payment to run their national lottery, which they never even pulled off,' said De Lille.

"South Africans, millions of whom put substantial amounts of their hard earned money into the lotto in the hope of striking the jackpot, deserve better than this.

"Mphahlwa must explain why the department is gambling with our good faith by jumping into bed with a company to which we just cannot afford to give the benefit of the doubt.

"Whether or not ANC bigwigs have shares in the consortium is beside the point — the minister must suspend the deal with immediate effect, pending a comprehensive investigation into how and why Intralot and the local consortium landed the deal, which will make them R40-million richer each year," De Lille said.

"The minister must put Kokkalis' wealth aside and instead focus on the six charges of felony he is allegedly facing in Greece, including espionage, fraud and money laundering.

"The fact that Gidani Consortium appears not to have run a background check on their Greek partner in anything but best business practice.

"It is unacceptable that after we on Monday called for the minister to suspend the deal, they went ahead and signed it anyway. The ID will not rest until the Uthingo employees' jobs are secured and the deal with Gidani has been suspended,' De Lille said.

Jobs for pals

2006-10-05T02:31:00.000-07:00

The licence to operate the national lottery has been awarded to Gidani, Minister of Trade and Industry Mandisi Mpahlwa announced.

Mpahlwa told journalists in Pretoria -- at a briefing beamed to Parliament in Cape Town -- that it had a significant black economic empowerment component and government was a 20% shareholder.

Gidani was announced as the preferred bidder in July this year after an evaluation process conducted by the National Lotteries Board.

Apparently responding to criticism that high profile African National Congress (ANC) members had interests in Gidani, Mpahlwa said he was satisfied that Gidani met the provision in the Lotteries Act providing that no political party or political office bearer may have "any direct financial interest in the licensee".

ANC national executive committee members Cyril Ramaphosa, Max Sisulu and Chris Nissen -- former ANC leader in the Western Cape -- are key players in Gidani.

We are still working on it

2006-10-05T02:25:00.000-07:00

Here is another very big, very importiant document in the making. Guess what? It needs a little work and is going to be late. South Africa's new industrial-policy framework, which was sent back to the Department of Trade and Industry for more work following a presentation to the July Cabinet lekgotla, will be finalised before the January Cabinet lekgotla, Trade and Industry Minister Mandisi Mpahlwa said.

Reporting back to the media on the economic, investment and employment cluster's programme of action, he said that the first meeting with the investment and employment Cabinet committee took place during the three months and that the framework would be finalised in time for the next Cabinet lekgotla. The first industrial-policy draft had been tabled and discussed at the July Cabinet Lekgotla, where it was suggested that more intergovernmental consultation should take place.

In July, Engineering News reported that President Thabo Mbeki requested more detail on the sector, particularly export-oriented manufacturing. He said that a comprehensive industrial policy would make sure that the country could generate growth and development beyond business-process outsourcing and offshoring (BPO&O) and tourism.

This gels with work done by a team of Harvard economists, which suggested that high unemployment and low growth in South Africa were linked to the shrinkage of the country's nonmineral tradeable sector since the 1990s. They suggest that the weakness in export-oriented manufacturing had “deprived” South Africa of growth opportunities enjoyed by other medium-sized economies such as Malaysia.

The main thrust of the reworked industrial-policy framework was, therefore, likely to affirm the importance of manufacturing as the cornerstone of the economy going forward, identify gaps in manufacturing, and intervene when required in the upgrading process.

You have no dog's chance in hell of becoming competitive

2006-10-04T04:35:00.000-07:00

Reserve Bank Governor Tito Mboweni was criticised by both government and trade unions on Tuesday for his recent condemnation of government's decision to restrict clothing and textile imports from China.

Mboweni told Parliament that the quotas did not make economic sense and would not save an industry that was not competitive.

"If you have not become competitive, you have no dog's chance in hell of becoming competitive in the three years or so that the quota will be imposed," he told the portfolio committee on finance.

Congress of South African Trade Unions (Cosatu) general secretary Zwelinzima Vavi said Mbeki was jokingly asked if Mboweni was the new minister of trade and industry because it was not his duty to comment on the deal.

Minister of Trade and Industry Mandisi Mpahlwa said the quotas come after months of planning and "are not some crazy action".

But he agreed with Mboweni that China was not solely to blame for the textile and clothing industry's woes.

"It's undergoing severe strain for particular reasons and those reasons are not China alone, but it is also matters that are more fundamental to the industry itself," Mpahlwa said.

He said with the plan he would soon announce the industry does have an opportunity to grow.

Keeping a report secret

2006-10-02T08:01:00.000-07:00

TRADE and Industry Minister Mandisi Mpahlwa seems to have such a bewildering commitment to keeping the report into possible shady activities at Corpcapital secret that even a court judgment ordering the release of the report won’t make him budge.

Two months ago, Pretoria High Court judge Bill Prinsloo said Corpcapital had “succeeded in proving that there has been an unreasonable delay (by Mpahlwa)”, and the report must be released “forthwith”.

Government said it would “abide by the decision of the court”. So, from a department that brought you the Chinese textile quotas, it will surprise no one that Mpahlwa has since asked for leave to appeal.

This means yet further delays — and it can only be a matter of time before people ask: what is Mpahlwa so scared of revealing?

Does the report make any findings potentially embarrassing to government? Would it, perhaps, suggest that the powers-that-were failed by not taking action against unethical (or illegal) decisions taken by then-CEO Jeff Liebesman? This seems unlikely, but why is Mpahlwa stalling with such uncommon diligence?

As it stands, few even remembers the essence of the Corpcapital dispute, a tussle seemingly forged in biblical times between former director Nic Frangos and management, whom he accused of fraudulently inflating the value of online gambling subsidiary Cytech in order to warrant the payments of huge bonuses.

Mpahlwa’s predecessor, Alec Erwin, ordered a probe into these claims in 2003, and the report was completed in May 2004.

But Frangos claimed there were so many problems with the investigation that Mpahlwa should reopen the probe. But rather than immediately address Frangos’s concerns, Mpahlwa vacillated until Corpcapital went to court to force the report into the open.

This debacle is now at a stage where the report is unlikely to see the light until four years after the probe began. By that stage, investors possibly diddled out of cash by Liebesman and his cohorts will have forgotten the entire mess.

Each new court application provides yet further fodder for the conspiracy theorists who would have you believe government has a keen stake in ensuring the report stays firmly wedged under Mpahlwa’s chair.

Hi-tech hightailing it out of SA

2006-10-02T07:57:00.000-07:00

Several innovative hi-tech companies have grown to a respectable size and then hit a barrier where the cost of going global simply cannot be funded from South Africa. Any local developer of its own intellectual property seems destined to be eaten up by a larger, richer foreigner.

The least forgivable constraint on IT developers is a lack of support from local buyers. Prism was a prime example. Its SIM cards and secure electronic transaction technologies won global contracts. Those local products contribute to SA’s economic growth and the training of black technicians. Yet buyers damage its chances in order to tick the right boxes on their empowerment scorecard, says Prism CEO Alvin Els.

Prism loses deals to importers of European technologies that contribute nothing to the country, as long as the importer is empowered — even if its investors are passive, high-profile, well-empowered blacks.

Prism was the only company in SA to develop a certain cellular technology, but buyers, including MTN, preferred the employment equity of an importer and bought a foreign alternative instead of supporting local innovation, Els says. The patriotic support of foreign companies for their local developers also plays against South Africans trying to compete abroad, as does the image of Africa. “Buyers say, ‘You can’t do technology in Africa; you don’t even know how to tie your own shoelaces’,” says Els.

Lotto not paying up

2006-10-02T07:08:00.000-07:00

More than R257-million meant for charities was still lying unspent because the Department of Trade and Industry (DTI) had delayed the appointment of the distributing agencies responsible for disbursing the funds.

In July, the DTI said the appointment of the new distributing agencies for the National Lotteries Distribution Trust Fund was a long and protracted process. The previous agencies' terms of office expired on March 31.

Despite the agencies finally being appointed in early August, many welfare organisations have not received their approved funds.

The Epilepsy Home Centre in Springs is just one of these. Their centre is in danger of running short of food, medication, toiletries and other basic requirements.

Worse is the possibility that the home, and hundreds of other charitable organisations like it, could be forced to close, leaving thousands of vulnerable children, orphans, elderly and disabled people stranded.

"We urgently need money from the lottery for food, medication, toiletries, clothes and blankets. Our laundry is very small and under-equipped," said centre manager Nerine Maree.

"It's getting worse. If we don't get funding soon, we may have to cut down on our meals," she added.

Epilepsy South Africa's president, Noeleen de Goede, said almost all their centres were battling to provide services because the R1,5-million promised had not arrived.

Blind SA president Cathy Donaldson said they were struggling to supply schools for the blind with special learning materials because their printing machines were old and not working properly.

"The only correspondence we received from the (National Lotteries) board was in July, saying our proposal was under review. That was when we expected funding," she said.

Johannesburg Child Welfare Society is waiting for R2-million.

Its fundraising manager, Deborah Hunt, expressed concern that no calls for new proposals had been made for next year.

Jacqui Michael, the director of the Johannesburg Parent and Counselling Centre, said they might be forced borrow from the access bond on their property if the R1,1-million promised did not arrive.

Now the National Council for People with Disabilities has appointed a task team to try to resolve the impasse.

"We have formulated a position paper outlining our difficulties to the board," said national director Johan Viljoen. The council was awaiting confirmation of a date for a meeting with the board.

Rajesh Latchman, co-ordinator for National Welfare Forum, said they had been inundated with complaints. But despite assurances that the money would soon be distributed, the forum said its members were desperate enough to consider legal action.

"If our members say we must take legal action, we will honour their mandate," he warned.

He reiterated the fear that even when this money arrived, hard times were ahead because no calls for new proposals for next year had yet been made.

Board spokesperson Sershan Naidoo said funds could not be distributed "in one day" and that they could "not give time-frames because they have to make sure that all procedures are met".

Asked if they would be calling for proposals for next year, Naidoo said: "We are not sure. Once we have processed all the (outstanding) applications, we will take a decision.

"After all, there is nowhere in the legislation where we are required to make calls every year."

As the delays continue. the more worried Busakye becomes: "I overheard our caregivers complaining about the shortage of food. It would really be sad because most of us don't have anywhere to go."

Jobs for pals

2006-10-02T07:01:00.000-07:00

Former Western Cape ANC leader Chris Nissen has confirmed being a key part of the consortium which, he says, will soon run South Africa's hugely profitable Lotto.

Nissen, Cyril Ramaphosa, Max Sisulu, Brigalia Bam and Dawn Mokhobo, a former IEC commissioner, are all part of a consortium, Gidani, which will take over the Lotto next year when the current seven-year contract with Uthingo comes to an end.

Nissen has confirmed that he was chairman of Vunani, which held a 14 percent stake in Gidani.

A director of the Women's Development Foundation, Anne Letsebe, who is deputy director-general in the Presidency, and Joyce Piliso-Seroke, chairperson of the commission for Gender Equity, were also connected to Gidani.

The Independent Democrats (ID) and the DA have lashed out at the ANC for allegedly awarding government tenders to ANC personalities who were already empowered.

Nissen said Gidani had been formed by financial services expert Ethan Dube, who had led a management buy-out of part of a company, African Harvest, in 2000.

Vunani had done much work for various parastatals and Nissen had been asked to join Vunani last year.

"Vunani's been responsible for putting the (Lotto) bid together (for Gidani)," said Nissen. "The two things that made the bid successful were our very good technical partner, Intralot from Greece, and our 45-strong team of highly rated professionals."

Nissen said Gidani had entered into negotiations with the National Lottery Board and a formal announcement on Gidani's new role would be made by the Department of Trade and Industry. Gidani would run its first Lotto on April 1.

ID leader Patricia de Lille said in a statement: "It is time the national executive committee of the ANC place limits the activities of the high profile leaders of the ANC.

"If it can be confirmed that the consortium won the tender, there must have been a tender process. The ANC must realise that they can't just give government tenders to ANC-aligned people," said De Lille.

DA trade and industry spokesperson Dr Pierre Rabie said the deal "appears to be yet another example of the re-empowerment of the already empowered".

"What does Gidani bring to the table, other than its list of well-connected ANC fat-cats? I will also ask for a list of other bidders as well as the reasons why they were not picked."

"The party would be well advised to put a stop to the greed of its colleagues."

Overwhelming us with his ability to say nothing

2006-09-24T10:26:00.000-07:00

Some hot air, platitudes and empty promises are all we hear from from the regime on the rescue of South Africa's clothing sector. What better place to spout all of this nonsense than the congress of the labour unions whose never-ending demands for higher wages and more benefits played a large part in this sad story. In typical fashion, the minister will release a strategy in the near future.

SHARING of information on market demands between retailers and manufacturers in the clothing and textiles industry was vital to lift the ailing sector out of its woes, Trade and Industry Minister Mandisi Mpahlwa said.

Speaking on the sidelines of the Congress of South African Trade Unions (Cosatu) congress, he said different stakeholders had reached consensus on the content of a sector-specific strategy for the industry, which was drafted by the department, and is set to be released soon.

The trade union federation adopted a set of resolutions on socioeconomic issues and industrial matters, which notably included a decision that its jobs and poverty campaign be at the top of Cosatu’s agenda over the next three years.

The campaign would have a framework to measure the achievement of government’s broader growth strategy on issues such as empowerment, job creation, poverty alleviation and implementing a decent living wage, said South African Clothing and Textile Workers’ Union (Sactwu) secretary-general Ebrahim Patel.

The issue of jobs is particularly important to Sactwu, which has witnessed the loss of 67000 jobs in that sector over the past five years. This has been due to the clothing industry’s inability to compete with Chinese imports.

Speaking at the congress, Mpahlwa noted that the imposition of quotas on Chinese imports was only a partial and temporary measure. Government’s main aim was to come up with a holistic approach to help rebuild the industry, the minister said.

Government is unlikely to heed a call, proposed by the National Education Health and Allied Workers Union, for key industries to be renationalised, “beginning with Sasol”, then mines, banks and other key economic sectors.

A big welcome from the comrades

2006-09-22T01:44:00.000-07:00

Vuvuzelas and whistles greeted Trade and Industry Minister Mandisi Mpahlwa who told the Cosatu congress that the government would continue to protect the textile industry against cheap imports.

The response was the loudest support for a government representative and second only to that given to African National Congress deputy president Jacob Zuma at the conference attended by around 3 000 people.

“My body is riddled with bullets and arrows from attacks from the retailers but we do really believe that what we are doing is correct,” he told cheering delegates at the Congress of SA Trade Unions conference at Midrand, north of Johannesburg, on Tuesday night.

He described how the government negotiated with the SA Clothing and Textile Workers’ Union (Sactwu) and the Chinese to try to save the local industry. The government recently imposed quotas on cheap Chinese imports that have cost tens of thousands of South Africans their jobs in recent years.

Cosatu affiliates, particularly Sactwu, have welcomed the quotas.

“We've had to allow for more time for implementation of this... but we are committed to doing this, to win the space to begin to address the problems of the textile sector,” said the minister.

He said now that there was a “breathing space” the next thing was to come up with a comprehensive strategy on the textile sector.

He congratulated Cosatu on its “very good resolutions” on industrial strategy, import parity pricing and trade policy.

Business as usual

2006-09-15T03:13:00.000-07:00

Black economic empowerment in South Africa is supposed to bring give the black-man-on-the-street a share in the economy. The reality is that the same names feature time after time in BEE deals. The regime is unwilling to curb the usual BEE suspects' amazing ability to enrich themselves. Instead of an answer to a simple question, here is the usual hot air - contradicting themselves while trying to evade the question. Apparently BEE will not be broad-based if anty measures against individuals are introduced.

South Africa's Department of Trade and Industry says it does not intend to "set a cap" on the number of times a company can gain black economic empowerment credits from the same entrepreneur.

In a question directed to Trade and Industry Minister Mandisi Mpahlwa but answered by director general Tshediso Mantona, Democratic Alliance MP Les Labuschagne asked with reference to a recently reported statement by the minister that "the private sector needs to involve the broader community of black economic empowerment rather than the usual suspects", he would consider curtailing the number of times a company could gain BEE credits from the same persons and institutions.

Mantona said: "This practice would be contrary to one of the critical objectives of broad based BEE, namely, to create a viable and growing black entrepreneurial class. It would also be tantamount to prescribing to the market on what constitutes sufficient empowerment of black individuals.

"It has always been stated by government that transformation is a necessary process which we expect all economic citizens to embark upon voluntarily."

However, the BEE codes of good practice articulated the principles that companies should endeavour to achieve when implementing BEE initiatives.

"This is to ensure that there is consistency and uniformity to the approach of implementing BEE initiatives in order to accelerate the pace of transforming our economy but more importantly to ensure that we reach our intended objectives in a sustainable manner."

The director general said the codes had attempted to provide "a balanced approach to the implementation of BEE transactions" as there had been a tendency to benefit only a select group of individuals.

"The code on ownership specifically provides for the inclusion of black women, new entrants (new participants in BEE transactions) as well as broad-based ownership schemes in these transactions.

"It has been our experience that despite these guidelines, there still remains a tendency to benefit a few individuals although it must be stated that ever since the initial introduction of the codes in December 2004 there has been a marked change in the mix of BEE transactions.

"We are now increasingly starting to see more BEE deals having significant percentages of black women and broad-based ownership schemes whereas it was not the case prior to the release of the codes," the director general said.

Cheap Chines clothing still available, for now

2006-09-15T02:55:00.000-07:00

After trying to equate the importation of clothes as treason, the regime backs down.

Retailers and the Department of Trade and Industry (DTI) have kissed and made up in their ten-day spat that seemed to be turning nasty.

Two weeks ago the DTI gazetted the implementation of a quota revision for the import of certain categories of clothing and textiles from China. The implementation date was set at September 28 2006. Retailers cried fowl citing too little time to change orders for the Christmas period and the inability of the local industry to take the slack. The upshot was to be higher prices for the consumer and empty shelves in December.

After a meeting today between Clotrade, Textfed, Sactwu, the retailers and the DTI, the implementation date was delayed until January 1 2007.

For the first time since the quota furore, the DTI mentioned ways of addressing issues relating to circumvention, illegal imports and under invoicing which the retailers believe are the real killers of the industry.

How to make an even bigger mess of the rag trade

2006-09-11T15:22:00.000-07:00

The minister finally steps in to save jobs that have been lost a long time ago, and wipes off $300 million of market capitilisation from the stock exchange.

As Mpahlwa rides roughshod over retailers, who knows what’s next? It can only be a matter of time before the South African Post Office, emboldened by the decision to impose quotas on Chinese clothes imports, beats a path to Trade and Industry Minister Mandisi Mpahlwa’s door to lobby for quotas to remedy the impact of e-mail on their business.

If the quixotic Mpahlwa can simply announce quotas on Chinese clothes until 2008 with zero warning or consultation, can the possibility of a ministerial team looking at case studies of retrenched — and no doubt disgruntled — postal workers over the “e-mail issue” be discounted?

Consider this: since the quotas became public last Friday, the value of the five affected JSE-listed retailers tumbled by R2,13bn. Edcon lost R840m in value, Foschini lost R589m, Woolworths fell R358m, Mr Price lost R244m and Truworths lost R101m. The worst fall came on Monday, when the JSE’s all share index climbed 2,4% — so you can see how badly retail investors were scalded.

Rough estimates suggest up to R400m of that R2bn went overseas with no guarantee of returning, as foreign investors held a chunk of that stock, from 8,9% of Woolworths to 35% of Edcon.

Much ado about a million

2006-09-09T15:27:00.000-07:00

The ousted CEO of the National Empowerment Fund (NEF) claims he put money into a private bank account because he did not want to commit to working with Deutsche Bank. Watch this space, it's not quite clear who had their fingers in the till yet.

THE theft and fraud trial of former National Empowerment Fund (NEF) CEO Sydney Maree this week has provided more questions than answers. The confusion was the result of conflicting testimonies given by state witnesses in explaining how Deutsche Bank was awarded a contract by the NEF without bidding for it.

It remains unclear whether Alec Erwin, who was trade and industry minister at the time, and the department’s former director-general Alister Ruiters played any role in persuading the NEF to award a contract to Deutsche Bank. It is also not clear whether both men knew about the contract and its terms and conditions.

The contract was for the drafting of the revised business plan for the NEF, a job that Deutsche Bank told the Specialised Commercial Crime Court it performed for free. Martin Kingston, Deutsche Bank’s former head of operations in SA, testified that the investment bank had agreed to write the business plan — after being requested by Maree — although that task was not in fact its core competence.

It was for this reason, according to Kingston, that the bank decided not to charge the NEF for the work it had done. He testified that the contract had a clause in it whereby the parties agreed that the bank would “charge no fees as a gesture of goodwill to government in the hope that if there were any follow-on work we would have the first right of refusal”.

Maree’s legal counsel, Bert Bam, argued that it was unusual for state-owned enterprises to enter into contracts with private companies without following open tendering procedures, and suggested that Kingston’s close ties with both Erwin and Ruiters may have led to the bank’s being favoured over competitors.

Bam asked Kingston what his relationship to Erwin was, to which he answered: “The minister is a friend of mine.” He said he also knew Erwin professionally, after having met him on numerous occasions where Deutsche Bank was acting as an adviser to parastatals such as Eskom, Telkom and the Industrial Development Corporation.

Kingston denied, however, that his personal friendship with Erwin had led to Deutsche Bank’s being awarded the contract. He did not know why only Deutsche Bank was invited to tender for the contract, but that it was common practice for government departments to award tenders without advertising them.

Ruiters had told the court in May this year that he did not know about the contract. He said he was alerted to the existence of such a document and a forged Deutsche Bank invoice by the NEF’s auditors.

The forged invoice was used by Maree to make it look as though the R1m he had earlier withdrawn from the NEF’s bank account was paid to the bank. Maree will argue in his defence that he was “instructed” by Ruiters, who was then also chairman of the NEF, to sign the contract with Deutsche Bank.

Maree said he felt uneasy about committing the NEF to future contracts with Deutsche Bank, and as a result decided to transfer R1m into his own bank account so that he could pay Deutsche Bank at a later stage.

Maree has pleaded not guilty to charges of theft, fraud and forgery. He said the frequent postponement of the case was beginning to have a huge “drain” on him both financially and emotionally. He could not find a job as the charges were like dark clouds hanging over him.

The price of cheap clothes

2006-09-09T11:24:00.000-07:00

The South African consumer loves the cheap Chinese T-shirts on the shelves of retailers, but explain that to the thousands of workers who are now unemployed.

The government’s contradictory policies have plunged South Africa’s textiles, clothing and footwear industries into a precarious situation.

The government has implemented a trade liberalisation programme far more ambitious and rapid than the World Trade Organisation requires. At the same time, it has incongruously forced firms to resist the downward pressure on wages that a more competitive market exerts, and has implemented ultra-protectionist and unnecessarily complex labour laws. These pose a direct threat to the viability of textile firms in the global market and have compelled them to reduce their labour force or fold.

Thousands of jobs have been lost over the past ten years, and 35 500 were lost in 2004 alone. Twenty-four firms have closed since July 2002 and several others, such as the old and established factory, Rex Trueform, are currently threatened with closure. In the face of surging Chinese imports, production has stagnated and the output value of textile products has fallen.

In addition, government policies have caused South Africa to lose several of its largest and most important firms to countries where labour costs are lower and incentives to investors are more attractive, such as Botswana and Lesotho. One such firm was Africa’s largest blanket manufacturer, Waverly Blankets.

Too little, too late

2006-09-08T08:26:00.000-07:00

Imposing quotas on Chines imports will make no difference, as the door to Vietnam and Bangladesh is still open.

The proposed trade restrictions on clothing and textiles from China "must be an attempt" by the ruling faction within the African National Congress (ANC) alliance to score some points with its more left-leaning counterparts, says the official opposition.

The Democratic Alliance's (DA) Pierre Rabie said on Friday it is clear that the action is not sincere. "If it were sincere, then [the] government would not have waited until the situation escalated to where the local clothing and textiles industry is shedding jobs at the estimated rate of 1 000 per month. If it were sincere, it would also certainly not have taken such a populist form, or have been implemented in such a draconian way."

Rabie said if the government had used any of a number of the more positive World Trade Organisation-sanctioned measures available to it ages ago, "then the current crisis would have been avoided".

He said he does not believe the trade restrictions will be beneficial to the local clothing and textile industry. It will certainly not benefit job creation in general, and consumers will also not benefit, he charged.

The problem with the trade restrictions on 200 imported Chinese clothing items is that they are "tight quotas" introduced when the local industry cannot compete with any of a number of clothing- and textile-producing markets. The result will be that retailers will turn to Vietnam and Bangladesh for supplies.

"The trade restrictions by themselves will have the effect of a false economy. Even if local clothing and textile manufacturers become more competitive in the local market in the two-year period in which the restrictions will be in place, the state of competitiveness will also be false and will fall away again as soon as the period of the restrictions comes to an end.

"Government has made no mention of any adjustment measures to assist the clothing and textile industry to make itself more competitive. Two years is far too short a period for a whole industry to reinvent itself."

It is also disingenuous for Department of Trade and Industry acting deputy director general Iqbal Sharma to be so resentful towards the media for the outcry over the trade restrictions, "when they are so clearly out of sync with the rest of the government's economic policies".

I lost my job and all I got was this lousy T-shirt

2006-09-08T08:19:00.000-07:00

When the Chinese flooded the South African market with cheap stuff clothing, consumers couldn't get enough. South African factories closed and jobs were lost by the tens of thousands. Now the regime wants to undo the damage, while retailers are concerned about their profits.

Government says its plans to introduce quotas on Chinese clothing imports by the end of the month will not have a negative effect on clothing retailers and importers, but instead "contribute to the regeneration of manufacturing in the sector".

This comes after department of trade and industry officials met with retailers, manufacturers and labour unions in Cape Town over the controversial measures, which retailers say will lead to a 25% hike in clothing prices and empty shelves and hangers in stores.

The DTI issued a statement on Thursday afternoon saying it had solicited "practical comments" on the quotas, and that these would be placed before trade and industry minister Mandisi Mpahlwa "for his early assessment on this matter".

Clothing retailers argue that they were not consulted on the regulations prior to their publication in the Government Gazette on Friday 1 September.

The DTI, however, stated that government "has been actively working with labour and industry to find sustainable solutions to the woes the sector is facing, including engaging on issues related to competitiveness, skills and technology.

"In this regard, the Customised Sector Programme for this sector has been developed with the participation of labour, manufacturers and retailers as a map for charting the sector's regeneration," it stated.

In its statement, the DTI notes: "Aggregate published profits of the top five clothing retailers have grown from R1.7bn in 2002 to R6.6bn in 2006, partly attributable to increased sourcing from markets such as China. During the same period though, our domestic manufacturers have seen substantial decline and experienced severe job losses."

It says the situation is not tenable: "It would be counter-productive for the country's development if certain segments of the sector experience record profits, whilst other segments were experiencing severe decline.

Report card for minister

2006-09-05T15:39:00.000-07:00

AWOL
Mandisi Mpahlwa
Minister of Trade and Industry
Mpahlwa kept a low profile when he was deputy finance minister, but he has been practically invisible as Minister of Trade and Industry.

The national Treasury has been quietly bumped from its position at the centre of the debate, and industrial policy has elbowed its way onto the stage, trailing footnotes to development economists like Dani Rodrick.

With Alan Hirsch, a former departmental mandarin, running the economic policy unit in the presidency, perhaps it is not surprising that the things Mpahlwa's department is supposed to manage - such as industrial support schemes and efforts to keep the prices of key input low - are now being touted as the answer to higher growth rates.

So why isn't Mpahlwa evident in the vanguard?

Phumzile Mlambo-Ngcuka has been given custodianship of the Accelerated and Shared Growth Initiative (Asgi, perhaps the most infelicitous acronym in the government's alphabet soup) for what seem largely to be political reasons.

And one of Mpahlwa's two deputies, Rob Davies, is charged with leading the industrial policy side of the plan. He also seems to be doing most of the talking on trade issues.

Has that freed up Mpahlwa to focus on development finance institutions - an area where he has real expertise? Apparently not. While the Industrial Development Corporation ticks along, the National Empowerment Fund, Apex Fund and Khula seem stuck in a period of reorganisation and consolidation.

Has he instead focused on trade negotiations? If so, it isn't clear. This is an area in which South Africa, under that canniest of negotiators, Alec Erwin, had real prestige. As the faltering Doha development round stumbled on in Hong Kong, developing-world leadership came from India, Brazil and China.

Mpahlwa's profile suffers in part because he has one of the least effective communications departments in the Cabinet, but also because his department is under-resourced and not fully recovered from the legacy of its former director general, Alistair Ruiters. Perhaps he has spent the year getting his ducks in a row. We hope so, because next year a good deal more will be expected of him.

Source