In 2018, 1.4 billion people crossed an international border to take a holiday, and this number is set to rise with an estimated 5 billion people travelling internationally by 2050. SA tourism must work to capitalise on the social megatrends that are influencing how and why people travel, and what they look for when they do.
In his State of the Nation Address in June this year, President Ramaphosa outlined a bold aim to increase South Africa’s economic growth through tourism, stating “we will make good on our ambition to more than double international tourist arrivals to 21 million by 2030.”
Globally, tourism is on the rise and peak tourism demand has not yet been reached, driven by a growing global middle class. According to the World Travel and Tourism Council, 1.4 billion people travelled internationally for a holiday in 2018. This number is expected to increase to an estimated 1.8 billion travellers in 2030 and a staggering 5 billion by 2050.
But despite these appealing numbers, achieving Ramaphosa’s lofty ambitions for tourism in the country will not be easy. South Africa will need to compete with other major tourist destinations around the world to carve out its share of this growing market. And to make sure it is well positioned to do so, it is crucial that those working in the sector understand the social megatrends – the global, long term, macroeconomic forces that are shaping business, society and culture and shifting how we engage with the world.
Three key social megatrends are shaping how and why today’s tourists – and those of the future – travel, and what they look for when choosing an international destination.
Globally, there is an increasing shift from spending money on possessions to spending it on having experiences. McKinsey reports that in the US alone, spending on experience-related services – such as attending spectator events, visiting amusement parks, eating at restaurants, and traveling – between 2014 and 2016 grew 1.5 times faster than overall personal consumption and nearly four times faster than spending on goods.
Total global annual expenditure on experiences is currently higher than that on material goods and is expected to continue to rise at an increasing pace. Oxford Economics forecasts that total global expenditure on experiences will reach approximately €1.7 trillion by 2025.
The rise of the experience economy has massive implications for tourism, as travellers are prioritising ‘bucket list’ experiences. They seek out these experiences – they want to have them, tick them off their list and share them on social media to document the collection of the experience. There is also a perceived status and social capital attached to being able to show the experiences they have collected. The World Tourism Organisation recently labelled this consumer travel trend as ‘travel to show’, which is built on a desire for instagrammable moments, experiences and destinations.
South African visitor attractions need to help tourists to stop, look, engage with the experience and provide them with tools to document and share it. Successful examples of this are the two yellow frames in Cape Town that provide a perfect selfie backdrop of Table Mountain and the Map of Africa installation at Cape Agulhas.
2.People are seeking meaning and purpose through travel
The rise of the experience economy is augmented by the rise of the transformation economy. Many tourists now see travel as an important component of building their identity and as a medium for self-transformation. Consumers are not only seeking experiences, they are seeking travel that transformsthrough life-changing experiences such as meaningful connection and personal enrichment. These experiences are deemed transformative when they result in a personal improvement in physical, psychological or emotional well-being.
Transformational travel is valued for having a positive personal impact on the traveller that continues once they return home from the experience. It is seen as something which changes perspectives and behaviour for the better and an aid for personal growth. This trend, labelled by the World Tourism Organisation as ‘travel to change’, includes a desire for transformation, for authenticity and to ‘live like a local’.
Two tourism trends speak to this – ‘voluntourism’ and holidays that incorporate learning. Travellers can volunteer to clean up beaches, be part of the shark conservancy project or help plant trees as part of an environmental internship with Greenpop. South Africa has a wealth of learning experiences to offer, for example completing an introductory ranger training course, which has become a popular immersive tourism experience.
3. People value authenticity
The desire for authentic experiences can be a deciding factor in choosing one destination, attraction or experience over another. Authenticity may be judged in a number of ways and is based largely on perception rather than truth. Travellers perceive an experience as authentic when it is not trying to imitate something else, it is original or the first of its kind. It could also be an experience that is not altered from its natural state, or unnecessarily improved upon. And authenticity is also judged by the uniqueness of an experience that cannot be replicated anywhere else.
For example, hyperlocal experiences are those that are rooted in their context and are unique to a certain place or culture. Hyperlocal travel is seen to celebrate diversity and inclusion and meets the need for transformation though authentic experience. Few travellers want to be identified as tourists, and they have a desire for immersive local experiences – a chance to meet the locals and to ‘do what the locals do’.
The tiny restaurant, Wolfgat, in Paternoster was recently voted the Restaurant of the Year in the 2019 World Restaurant Awards. Wolfgat describes itself a ‘Strandveldt eatery’ show-casing local produce sourced from the West Coast. South Africa can leverage off this trend with local padstals and restaurants sharing hyperlocal delicacies such as rooibos tea, fynbos-infused gin and West Coast bokkoms.
In an increasingly globalised world, with more access to travel than ever before, the future of tourism will be shaped by what travellers are looking for – and the reasons why they are looking for it – when they leave home. South Africa, with its rich offering of social, cultural and nature-related experiences, is well placed to capitalise on these three trends if the industry responds appropriately.
Nigerian President Muhammadu Buhari ostensibly came to South Africa to boost business ties between the two countries. But he missed a golden opportunity to drum up business by skipping a forum with business leaders because he was worried about security.
President Cyril Ramaphosa attended the forum for several hours, addressing the business people and taking questions. Some of the business people who had been expecting Buhari were disappointed by his no-show, sources said.
He was billed to appear with Ramaphosa but his security people checked out the venue of the forum – the sprawling convention centre of Gallagher Estate in Midrand – and decided on the morning of the event that it was not secure enough for him to attend, according to diplomatic sources.
One said there were no hard feelings from the SA government side – who found Buhari warm and friendly – just a feeling that he had missed a good opportunity to boost commercial ties between the two countries.
These took a knock during the recent eruption of xenophobic violence in South Africa, some of it directed against Nigerians and their businesses. Nigerian mobs retaliated in Nigeria by attacking the premises of South African companies such as Shoprite and MTN.
Agreeing on measures to prevent a recurrence of this violence and building up the commercial relations between the two countries were the major focal points of Buhari’s state visit and the Binational Commission between the two countries which he and Ramaphosa co-chaired on Thursday.
Buhari’s anxiety about security appears to be related more to tensions within the Nigerian diaspora rather than any fear of attack by South Africans.
While he was meeting Ramaphosa at the Union Buildings on Thursday, Tshwane Metro Police reportedly used tear gas and rubber bullets to disperse a handful of Nigerians – calling themselves Biafran nationals – who were demonstrating in front of the building. Some carried placards calling Buhari an imposter and demanding that Ramaphosa send him home.
They claim the “real Buhari” died in 2017, when Buhari was very ill and spent most of the year receiving treatment in London.
Self-styled Biafrans are calling for a separate state in southern Nigeria, trying to revive the movement which lead to the secession of several states to form the Republic of Biafra in 1967 in a region mostly inhabited by Igbo people.
That prompted a long civil war in which between 500,000 and two million Biafran civilians died before Biafra surrendered to Nigeria.
Another grievance of some expatriate Nigerians is the arrest in August this year of Omoyele Sowore, a Nigerian journalist and human rights activist. He ran against Buhari in the February presidential elections and was arrested after rejecting the election as rigged and calling for a protest tagged RevolutionNow.
When Buhari addressed the Nigerian community at a Pretoria hotel on Friday, some of his compatriots refused entry to the meeting were calling for Sowore’s release.
Rather ironically, even some members of Buhari’s own ruling APC party could not gain entry, because they were considered too radical, they told journalists.
A few Nigerians who were allowed into the meeting said Buhari spoke to them for about 10 minutes.
“Let me also call on Nigerians to be law-abiding and respect constituted authorities while you live here,” Buhari said, according to remarks tweeted by his office.
“May I also enjoin the few that sometimes give us a bad name, to desist from such misdemeanours and be our good ambassadors.”
This echoed his reply at a joint press conference with Ramaphosa after their meeting on Thursday to a South African journalist who asked him if he did not think the recent xenophobic violence in South Africa against Nigerians, among other foreign Africans, was partly prompted by the perception that they were involved in so much crime.
He said Nigerians understood the maxim that, “When in Rome do as the Romans do” and therefore obeyed the laws of their host country.
At the Pretoria hotel meeting, Buhari also assured his compatriots that he and the South African government had agreed on measures to tackle the xenophobic violence to ensure it did not recur.
Ramaphosa had told a press conference after meeting Buhari that these measures included establishing an early warning mechanism to pick up any signals of imminent xenophobic violence so steps could be taken to pre-empt it. He and Buhari also said that police and intelligence agencies in both countries would cooperate with each other, share information and raise levels of alertness to forestall such violence.
According to official sources, the Nigerian government is also concerned that Nigerian citizens in South African jails are not prevented from using their cellphones. Many of them continue to mastermind criminal activities in Nigeria from their South African cells, the Nigerians complained.
The South African government promised to look into this. It is not clear if the Nigerian government was referring, among others, to Nigerian oil militant Henry Okah who is serving a 24-year jail sentence in a South African prison after the High Court convicted him in 2013 on 13 terrorism-related charges over twin car bombings in Nigeria during the country’s Independence Day celebrations in 2010.
Ironically, given Buhari’s no-show at the business forum, he and Ramaphosa “welcomed the important role of the Business Forum which took place on the margins of the State Visit,” in a joint communiqué after their Union Building meeting.
They also welcomed the decision of the two governments to establish a Joint Ministerial Advisory Council on Industry, Trade and Investment which is expected to be critical in boosting private sector participation in the economies of both countries.
Ramaphosa said business and investment relations between the two countries were already strong and Nigeria accounted for 64% of SA’s trade with West Africa. The two governments had agreed to further strengthen economic ties by deepening their reforms to ensure their economies were more open to business and encouraging more Nigerian investment in SA.
He and Buhari noted the “significant footprint” of SA companies in Nigeria in sectors such as telecommunications, mining, aviation, banking and finance, retail, property, entertainment and fast foods.
By contrast, they also welcomed Nigerian business in SA but noted that it was mostly “small, micro or medium sized – with the exception of the big investment of Dangote Sephaku Cement.
At the press conference after their meeting, Ramaphosa said he would like to see a better balance in the investment relationship and would seek to achieve this by improving the environment for big Nigerian companies to invest here.
“We want to welcome more and more Nigerian businesses to operate in our space,” Ramaphosa said.
He added growing relations between the two countries were evidenced by the 32 cooperation agreements signed between them, covering a wide field including trade and industry, science and technology, defence, agriculture, energy, transport, arts and culture and tourism.
The two governments identified key sectors to boost investment for economic growth and development, including roads, railways, mining, manufacturing and agro-processing.
Credit: Daily Maverick
South African President Cyril Ramaphosa was heckled during the recent funeral service of Zimbabwe’s erstwhile leader Robert Mugabe. It was easy to guess why. When he stood to speak, Ramaphosa apologised for weeks of violence in his country targeted at non-national Africans.
Immediately after this apology, heckling turned into cheers. His apology, a stroke of ingenuity, defused the tension. But it didn’t answer the key question that philosopher and political theorist Achille Mbembe once asked in relation to xenophobic violence in South Africa:
When we say ‘South Africa’, is ‘Africa’ an idea or simply a geographical accident?
To many, the answer appears pretty obvious: recent events that have seen people baying for the blood of “foreigners” makes the meaning of Africa in South Africa meaningless.
Importantly though, xenophobia is not a uniquely South African phenomenon. Nor is it simply a question of violence against non-national Africans. It is the consequences of the historical burden that colonialism has bequeathed the continent. This refers to colonially determined borders.
These borders separated African people into different nationalities. They were maintained after Africa’s independence. This spawned nationalisms. Xenophobia is the function of the contests of these nationalisms. As the British social scientist Michael Billig explains in his book, Banal Nationalism,
the triumph of a particular nationalism is seldom achieved without the defeat of alternative nationalisms and other ways of imagining peoplehood.
Xenophobia negates the spirit of pan-Africanism, especially its laudable ideal that Africans share a mutual bond regardless of their geographical location.
That xenophobic incidents are increasing in post-apartheid South Africa is unexpected. In its formative years as a democracy since 1994, the country had assumed the leadership of the African Renaissance cause. It was championed by former South African President of Thabo Mbeki who advocated pan-African “cohesion of economics, culture, growth and development”.
Mbeki eloquently stated that, for African countries to assert their influence in global affairs, their governments should
(forego their) “atomistic nation-state, zero sum sovereignty, and recognise their interdependence”.
Why then do impulses of aggressive patriotism exist in the post-apartheid South Africa? Shouldn’t this pan-African disposition have foregrounded the term “Africa” in “South Africa” as an idea. Shouldn’t it even have shaped the country’s nation-building and state formation project?
South Africanness and Afrophobia
Xenophobia and pan-Africanism are antinomies. They have opposite implications on state formation and nation-building.
Xenophobia is a function of insularity – lack of interest in others’ culture, outside one’s own experience. South Africa’s insularity was facilitated by the fact that it was a pariah state for many years. The apartheid system’s strong border control played a role, too. The country internalised the intolerance of difference. This explains its social disorientation, suspicious of foreigners as “unknown others”.
In many instances, non-national Africans are the primary target of this suspicion. They are, therefore, more likely to be on the receiving end of xenophobic violence.
An appropriate term for this is afrophobia. This is the dehumanising of people of African descent, and in the diaspora, because of their physiques, colour of their skins and behaviours.
The post-apartheid project of nation-building is the by-product of the contradiction of insularity agitating for “South Africanness”, and the African Renaissance as an all-embracing crystallisation of the consciousness of the whole of Africa’s people.
A system of organising society in which individual rights and freedoms are protected, and the markets are left to their own devices, spawned insular nationhood. This trumps the pursuit of a common African identity. It is because of this that, as the socio-economic grievances of the nationals increase, largely because of the economy’s poor performance, nationalism morphs into jingoism. The non-nationals become scapegoats.
Often, the consequences of this, as laid bare in the streets of Gauteng province, are pernicious.
Unfortunately, because of this, South Africa’s moral authority, which it earned after it became a democracy by playing a prominent role in Africa, is at stake. Hence its government is at pains to accept that xenophobia exists, and that it has been on the rise in the post-apartheid South Africa.
Of course, in some instances this phenomenon is opportunistically used to obscure the criminal activities of some non-national Africans in the country. But the suggestion by some in government that attacks on foreign nationals are sheer criminality rather than xenophobia is not cutting ice.
Coupled with calls that South Africa should be shunned, all these beget a cycle of internecine hostilities. These fracture economic, political and social relations.
Unfortunately, dissociation is not a solution. It’s a cop-out. If South Africa were to become a pariah state – again – whose interest would be served, and to what end? Wouldn’t it be those who, in the Berlin Conference of 1884-1885, negotiated the rules about the scramble for Africa?
Their borders that balkanised Africa continue to stoke interstate acrimony. The xenophobic flare-ups in South Africa should be understood as the cumulative effect of this historical burden.
What needs to happen
Ramaphosa sent special envoys to the countries whose citizens were mostly affected by xenophobic violence – Nigeria, Niger, Ghana, Senegal, Tanzania, the Democratic Republic of the Congo and Zambia – to mend relations. This is a good diplomatic gesture.
However, this shouldn’t simply be a charm offensive, but instead a deliberate pursuit to give meaning to the term “Africa” in “South Africa”, which has waned after Mbeki’s presidency. South Africa should reclaim its leading role in Africa’s renaissance.
Re-imagining the future of Africa requires true commitment to pan-Africanism, anchored in the African philosophy of ubuntu (humanism), which decrees that
I am because we are.
The pan-Africanism spirit shouldn’t be fostered only in the African leadership and diplomatic circles, and used for political expediency. It should be part of the psyche of society and become a lived daily experience.
Xenophobia is a function of attitude. It thus requires the intervention of social institutions, such as universities, to mainstream pan-Africanism as a philosophy in their curricula and teaching.
It is important to shape the characters of students, who are future leaders, to understand that human co-existence is not a function of nationality, but of humanity. This should be part of the decoloniality agenda in Africa.
It started with a scary WhatsApp message. “Somalis are kidnapping children in schools,” the message said.
Worried parents rushed to schools to save their children from what was thought to be ongoing retaliatory attacks by foreigners, The Star, a South African newspaper, reported.
But this was not true. There were no retaliatory attacks and there were no Somalis kidnapping children.
At the end of it all, four students in a primary school in Thokoza, Ekurhuleni, in Gauteng, South Africa, were nursing injuries after a stampede at their school.
This was the most recent episode of anxiety and anti-foreigner sentiments in South Africa, in the same week that seven people were confirmed dead in xenophobic attacks that are now slowly mutating into wanton looting of shops, including a car dealership outlet owned by a Nigerian that was burnt with 50 cars inside, according to media reports.
More than 189 people have been arrested, after which most of Johannesburg remains calm.
However, shops in affected areas are still closed for fear of repeat attacks.
Between 1994 and 2018, there were 529 xenophobic attacks in South Africa, resulting in 309 deaths, according to Xenowatch, a xenophobia monitoring tool developed by the University of Witwatersrand.
“These recent attacks seem to be well-organised, and not sporadic. The ones we are facing now are different from the ones in the townships, which we could attribute to high crime and high unemployment rates.
"These ones are well-organised, moving in minibuses, saying they are following the calls of some leaders that we (foreigners) are not law-abiding citizens,” Amir Sheikh of the African Diaspora Forum told journalists at Jeppestown.
South African police minister Bheki Cele visited Jeppestown following the looting of foreign-owned shops and killing of five foreigners. Speaking in isiZulu, the minister called for peace, promising another meeting with the locals today.
But for the angry Jeppestown residents, that promise just wasn’t good enough. In fact, it fuelled even more violence just after the minister left, with media reports saying sporadic looting went on into the night.
The statement – about the lack of jobs and its connection to foreigners – has been the common thread in the latest attacks that also rocked Rosettenville, Germiston, Tembisa, Turffontein, Boksburg, Malvern, Marabastad and Alexandria in Johannesburg.
South Africa, the Rainbow nation that became a democracy in 1994 after the fall of an oppressive apartheid regime, is ranked as the most unequal nation on earth, according to data from the World Bank.
More than half or in absolute numbers, 30.3 million, people live in poverty, earning less than $67.28 USD, in the current exchange rate, while a quarter of the population (13.8 million people) are experiencing food poverty.
In terms of races, the situation is even worse. While a white person in South Africa earns an average $828.40 per month, a black person goes home with three times less, an average of $229.30.
An Asian or Indian, according to the National Income Dynamics Study from 2008 to 2015, earns an average $807.10 and $327.86respectively.
The richest 10 per cent of the South African population held around 71 per cent of net wealth in 2015, while the bottom 60 per cent held just seven per cent.
With a youth unemployment rate of 54.7 per cent, and a general unemployment rate of 27 per cent, analysts say the situation for the continent’s second biggest economy, now growing at just 0.8 per cent, can only get worse.
“Xenophobia is a manifestation of South Africa’s real and enduring problems: inequality, insecurity, and institutional incapacity. Perhaps more importantly, it reveals a political class willing to adopt or endorse the language of street-level gangsters.
"It shows that our two main parties, ANC and DA, are out of ideas and seeking to deflect blame rather than deliver,” Prof Loren Landau of the African Centre for Migration and Society at the University of the Witwatersrand told the Daily Maverick.
The Africa National Congress (ANC) is the ruling party, led by President Cyril Ramaphosa, while the Democratic Alliance (DA) is the main opposition party, with 230 and 84 MPs, respectively.
Xenophobia in South Africa, since the first wave in 2008, has turned to be a layered, multifaceted phenomenon, with no clear trigger; but with politicians making increasingly nationalistic statements and the rising inequality coupled with the unemployment being said to be the biggest contributing factors.
The number of foreigners in South Africa has been on a steady increase from 958,188 in 1996, 1.03 million in 2001 to 2.2 million in 2011, according to the censuses taken during those periods.
According to the Stats SA, there are four million foreigners living in South Africa now.
Between 2011 and 2016, South Africa has deported 400,000 foreigners, with nationals from Mozambique, Zimbabwe and Lesotho making up 88 per cent of the deportations.
“With blood, we will defend our business. We will defend our property. We will defend our dignity and integrity. We are not here courtesy of South Africans. When South Africa needed assistance of Africa (during apartheid), they were all assisted,” Mr Sheikh, a Kenyan, told foreigners in Jeppestown after the attacks on Tuesday.
While not all foreigners are documented and hence not part of the statistics, politicians and public officials in South Africa have been accused of tinkering with this number for their selfish gains, making a bad situation even worse.
Last year, for example, national police commissioner Khehla Sitole said that there were 11 million immigrants in the country, a claim that was disputed heavily by fact-checkers and statisticians.
And it is not just the number of foreigners that has been the victim of exaggeration.
In 2017, in a clip that has resurfaced this week online, former police deputy minister Bongani Mkongi made the oft-quoted false statement that Hillbrow, in downtown Johannesburg, had 80 per cent of its population as foreigners.
Even President Cyril Ramaphosa has also been accused of making nationalistic statements.
“Everybody just arrives in our townships and rural areas and sets up business without licences and permits. We are going to bring this to an end. And those who are operating illegally, wherever they come from, must now know,” President Ramaphosa said during the May 2019 election campaigns.
In the same campaigns, Democratic Alliance made immigration a main agenda, promising to “keep illegal immigrants out of the country”; including deploying the military to the borders.
“Governance in South Africa, particularly at the local and community level, facilitates the occurrence of xenophobic violence by providing instigators with an opportunity structure to act. This facilitation happens by direct involvement of local leaders, or by lowering the perpetrators’ costs for their violent actions,” Dr Jean Pierre Misago of the African Centre for Migration and Society at the University of the Witwatersrand wrote in the Daily Maverick.
According to Prof Landau, while South Africa has a plan to address prejudices, including xenophobia, it does not get to the crux of the matter, including references to discrimination against foreigners in terms of access to education, housing and medical services.
“The action plan (against prejudices in South Africa) similarly fails to condemn the local, provincial, and national politicians who regularly blame foreigners for their own failures to deliver services as well as economic and physical security,” Prof Landau said.
Credit: Daily Nation Kenya
When Cyril Ramaphosa succeeded Jacob Zuma as South Africa’s president, he promised a “new dawn” after nine years of misrule that hobbled the economy.
Eighteen months later, hopes have dissipated that the former labor union leader can orchestrate a turnaround. The economy shrank the most in a decade in the first quarter of this year; 38% of the workforce can’t find jobs or have given up looking; and massive bailouts for the debt-stricken state power utility are draining the country’s coffers, putting South Africa at risk of losing its sole investment-grade credit rating.
Ramaphosa himself, a respected 66-year-old lawyer who led the negotiations that brought an end to white-minority rule in 1994, is stuck in a political quagmire. While he won control of the ruling African National Congress by a razor-thin margin in late 2017, members of an ANC faction loosely allied to Zuma remain entrenched in senior positions in the party and the state, undermining Ramaphosa’s authority and limiting his scope to tackle rampant graft and nepotism.
The president has axed several cabinet ministers with tainted reputations, replaced the chief prosecutor and head of the national tax agency, and revamped the boards and management of troubled state companies. His efforts to sweep the government clean helped steer the ANC to its sixth consecutive win in May elections. But his detractors in the party have continued to push back against his anticorruption crusade, which has eroded investor confidence. They’ve demanded changes to the central bank’s inflation-targeting mandate and advocated land seizures to address racially skewed ownership patterns dating to apartheid and colonial rule, when members of the black majority were largely deprived of the right to own property.
“A more forceful leader could have adopted a blitzkrieg strategy straight after the election victory and probably been victorious. But Cyril Ramaphosa is not such a leader,” says Robert Schrire, a politics professor at the University of Cape Town. By moving cautiously, the president may have ensured the stability of his government, but at the expense of his ability to effect change, Schrire says. “The opportunity has passed.”
The president’s political challenges extend beyond the ANC. Powerful labor unions that played a key role in bringing Ramaphosa to power appear intent on derailing efforts to turn around state-owned power utility Eskom Holdings SOC Ltd. They’ve rejected cuts to its bloated workforce and plans to break it into three operating units that would be easier to manage. The president has also been locked in legal battles with the nation’s antigraft ombudsman, who accuses him of failing to disclose a campaign donation.
Despondency over the stalemate is evident in the financial markets. The rand, which jumped to a three-year high after the ANC forced Zuma to quit and replaced him with Ramaphosa, has reversed all of its gains. Meanwhile, government bond yields have spiked over the past month as the cost of a three-year bailout for Eskom ballooned by $4 billion, to $8.6 billion. “The additional support to ease the company’s financial pressures would be credit negative for South Africa because it would be an additional drain on fiscal resources,” Moody’s Investors Service, the only major rating company that doesn’t classify the nation’s debt as junk, wrote in a July 24 report. “The lack of a strategy to return Eskom to a more stable financial situation that would reduce the need for government support exacerbates the problem.”
Morgan Stanley analyst Andrea Masia sees the budget deficit widening, to about 6.4% of gross domestic product in the current fiscal year and 6.6% in 2020-21, from 4.2% in the year ended March 2019, mainly because of the extra money being poured into the utility. Eskom lost a record $1.4 billion in the 12 months through March. The February budget projected a gap of 4.5% and 4.3% for the two years, respectively, though the country’s growth prospects have deteriorated since then.
The government has made mistakes and failed to implement coherent policies, Ramaphosa concedes, while unchecked graft has impaired its ability to fix the country’s problems. Zuma is standing trial for allegedly taking bribes from arms dealers almost two decades ago, but no other high-profile individuals have been indicted—despite a judicial panel having unearthed evidence that staggering amounts of money were looted from the state during Zuma’s administration.
Ramaphosa’s plans to boost the annual economic growth rate to 5% and halve the unemployment rate include luring $100 billion in investment and getting private companies to partner with the government to build infrastructure. He’s targeting a top 50 position in the World Bank’s ease of doing business ranking within three years by reducing red tape and other hindrances to commerce. South Africa currently ranks 82nd out of 190 nations.
Adversaries in the ANC, including the party’s secretary-general, Ace Magashule, appear bent on scuppering Ramaphosa’s initiatives. They insist that priority should be given to securing the black majority a bigger share of the nation’s wealth by redistributing land and changing the central bank’s mandate so it plays a more proactive role in fostering growth and creating jobs. This they call “radical economic transformation”—a mantra popularized by Zuma. —With Nkululeko Ncana
BOTTOM LINE - Ramaphosa’s tenuous hold on the ruling party is making it difficult for him to eliminate graft and turn around the flagging South African economy.
South African President Cyril Ramaphosa is standing his ground in a deepening campaign funding scandal that threatens to scar his reputation and undermine his drive to tackle rampant graft, insisting that he has done nothing wrong.
Busisiwe Mkhwebane, the nation’s anti-graft ombudsman, said Ramaphosa misled lawmakers about a donation to his 2017 campaign to win control of the ruling party and instructed parliament to censure him for violating the constitution and the executive ethics code. While Ramaphosa said he was kept at arm’s length from his campaign fund-raising, Cape Town-based website News24 reported that it obtained verified copies of leaked emails from his camp disproving his assertion.
“This is smoke and mirrors,” Khusela Diko, Ramaphosa’s spokeswoman, said in an interview with Johannesburg-based broadcaster eNCA on Monday. “The president hasn’t committed any crime. None of those donations are coming from anybody whom, from the best of our knowledge, would have obtained that money illegally.”
Mkhwebane initiated an investigation into the president at the request of the main opposition party, the Democratic Alliance, which questioned whether a 500,000 rand ($33,500) payment his campaign received from Gavin Watson, the chief executive officer of services company Bosasa, was above board. Testimony given to a judicial panel has implicated the company in paying bribes to senior government officials to win contracts.
Ramaphosa said he inadvertently failed to disclose the payment to lawmakers and rectified his mistake as soon as possible. He’s challenging Mkhwebane’s findings that he intentionally misled parliament and filed an urgent interdict to postpone any censure until the case is heard. A date for both hearings has yet to be set.
More than 120 people donated money to Ramaphosa’s campaign on the understanding that they should expect nothing in return, according to Diko.
“We stand by our statements that the president was not privy to the day-to-day running of the campaign,” and didn’t know about Watson’s donation, she said. “Yes, there were times where guidance may have been sought from him.”
Credit - Bloomberg
South African President Cyril Ramaphosa on Sunday said he will seek an urgent judicial review of what he described as an irretrievably flawed report in which the country’s graft watchdog said he misled parliament over a campaign donation.
Public Protector Busisiwe Mkhwebane’s report followed an investigation by the watchdog into a 500,000 rand ($35,878.56) donation to Ramaphosa’s 2017 campaign for the leadership of the ruling African National Congress (ANC) from the CEO of services company Bosasa.
Ramaphosa said the report’s findings were not rational, based in fact or arrived at through a fair and impartial process - assertions Mkhwebane refutes - and that he would seek a judicial review of the report, its conclusions and the remedial action it recommended.
“After careful study, I have concluded that the report is fundamentally and irretrievably flawed,” Ramaphosa told a media briefing, adding that it was therefore appropriate the courts make a final and impartial judgment on the matter.
A statement issued on Mkhwebane’s behalf said she welcomes the president’s decision but stands by the report and will seek to assist the courts in arriving at the “correct conclusion”.
“She has no doubt that she exercised her powers and performed her functions without fear, favor or prejudice, as is required by the constitution,” the statement said.
Mkhwebane, who began the investigation after a complaint from South Africa’s opposition, on Friday said that she found the president had “deliberately misled” parliament and violated the executive ethics code in regards to the donation.
The saga has proven a headache for Ramaphosa, who has staked his reputation on cleaning up deep-rooted corruption and reviving Africa’s most developed economy, providing ammunition for enemies including an ANC faction loyal to his predecessor Jacob Zuma.
Ramaphosa initially told parliament that the money received by his son Andile was obtained for services he had provided, but he later corrected this by saying the payment was actually a donation towards his campaign.
The remedial actions Mkhwebane recommended included the speaker of the national assembly to demand publication, within 30 days of receiving the report, of all donations received by Ramaphosa.
She also instructed the chief prosecutor to investigate whether Ramaphosa’s campaign had laundered money in its handling of donations.
Ramaphosa’s supporters accuse her of acting as a proxy for Zuma’s faction, which she has denied.
Public Protector Busisiwe Mkhwebane has said that President Cyril Ramaphosa deliberately deceived Parliament with regard to a R500,000 donation from Bosasa to fund his African National Congress election campaign, Eyewitness News reports.
Mkhwebane said that Ramaphosa breached the Executive Ethics Code by failing to disclose financial interest accrued to him as a result of the donations received for the CR17 campaign, writes News24.
Mkhwebane also found that the means through which the R500,000 donation were funneled - transferred through several accounts before being paid into the president's campaign account - raised suspicion of money laundering, saying: "The allegation that there is an improper relationship between President Ramaphosa and his family on the one side, and the company African Global Operations (AGO/Bosasa) on the other side, due to the nature of the R500,000 payment passing through several intermediaries, instead of a straight donation towards the CR17 campaign, this raising suspicion of money laundering, has merit."
Mkhwebane referred the allegations of money laundering to authorities to investigate. Previously, Bejani Chauke, former CR17 Campaign Manager, said in a statement that there was "no basis whatsoever for even a suspicion of money laundering". Chauke's statement posted on The Mail & Guardian elaborated: "The CR17 campaign was funded by a broad range of individuals from across South Africa who supported the objectives of the campaign. These funds were paid into accounts established for this purpose and were used to cover the costs of the campaign such as stipends, travelling, communications and promotional material, meeting venues and accommodation. In the process, all legal and regulatory requirements were met."
Mkhwebane's statements come after Ramaphosa said that he was "willing and able" to appear before the Zondo Commission into state capture.
South Africa’s four major telecommunications companies have asked President Cyril Ramaphosa to support Huawei in South Africa, reports the Sunday Times.
In a letter dated 7 June, the CEOs of Cell C, MTN, Vodacom and Telkom wrote to the president to ask for help in dealing with the repercussions of an executive order signed by US President Donald Trump against Huawei.
In May, the Trump administration issued an order that could restrict Huawei from selling equipment in the US. Washington also put the company on a blacklist, threatening its supply of American components – from semiconductors, to the Google apps that run on its smartphones.
The CEOs said that blacklisting Huawei in South Africa would hinder the rollout of a new 5G network, as well as impact the country’s existing 3G and 4G networks.
Ramaphosa’s spokesperson Khusela Diko said that the president would align with his Chinese counterpart, president Xi Jinping, and back Huawei in its fight against Trump.
“Huawei provides a strong backbone to our telecommunication sector and is the frontrunner in 5G network,” said Diko. “The advancements made in that sector are largely because of the investment Huawei made in South Africa.
“The president expressed his concern at any efforts to curtail the efforts of Huawei to deliver a comprehensive, and what we believe to be an advanced solution in the telecommunication space.”
Huawei has previously pledged to invest heavily in companies that welcome it with open arms.
“Huawei will invest heavily in those countries where we are welcome,” said global vice president of marketing insights Andrew Williamson
“Restricting competition in 5G infrastructure will have huge costs. Governments and companies around the world will have to address those costs against the supposed risks of national security” .
Williamson added that rolling out 5G technology around the world will be a challenge if the US goes ahead with its sanctions.
Trump eases restrictions on Huawei
After a meeting with Chinese President Xi Jinping, Trump told reporters on Saturday that he would delay restrictions against Huawei, letting US companies resume sales to China’s largest telecommunications equipment maker.
Trump later tweeted that his meeting with Xi was “far better than expected.” He said Chinese President Xi Jinping had promised to buy “tremendous” amounts of US agricultural products in exchange.
After Trump and Xi met at the G-20 on Saturday, the two countries plan to restart trade talks that broke down last month.
Trump told reporters he wouldn’t put additional tariffs on China for the “time being,” and that he would allow US companies to supply Huawei.
“US companies can sell their equipment to Huawei,” Trump said. “We’re talking about equipment where there’s no great national security problem with it.”
Source: Business Tech South Africa
President Cyril Ramaphosa's mission to fix two of South Africa's most troubled state companies, power firm Eskom and South African Airways (SAA), could take longer than planned after their chief executives quit within a week of each other.
Investors say the CEOs' resignations could slow the implementation of turnaround plans seen as critical to shoring up confidence in Africa's most industrialized economy, which has for years struggled to grow and whose last investment-grade credit rating is hanging by a thread.
Since becoming president in February 2018, Ramaphosa has pledged to woo investment, create jobs and tackle deep-rooted corruption.
The roles at Eskom and SAA are some of the most challenging in corporate South Africa, with fierce disagreements over how the companies should operate, meaning it will be difficult to find replacement leaders quickly.
Both have received government bailouts in recent years but executives say that financial support was insufficient.
Eskom is choking under 440 billion rand ($30.3 billion) of debt -- equivalent to around 9 percent of South Africa's 2018 gross domestic product -- and this year implemented some of the worst power cuts in several years. It said last month that CEO Phakamani Hadebe would step down in July for health reasons.
But two sources close to Hadebe told Reuters that another reason for his departure was that he felt frustrated at being excluded from important decisions affecting the utility.
Ramaphosa has appointed a raft of advisors to come up with solutions to Eskom's woes and has preferred to listen to their views rather than consult Hadebe, the sources said.
"The government needs to understand that if it wants these companies to be run properly, then it needs to create an environment where the new CEOs can function," said Pavel Mamai, partner at fund manager ProMeritum.
"The CEO changes make the task of fixing Eskom and SAA more urgent."
SAA CEO Vuyani Jarana wrote in his resignation letter last week that his plans to revive the loss-making airline were being undermined by a lack of state funding and too much bureaucracy.
Jarana, who will leave SAA at the end of August, told Reuters in a May 2018 interview that government funding was critical to fixing the airline.
Hadebe and Jarana had both been in their roles for less than two years when they resigned -- a common trend at South African state firms.
"The revolving-door policy at key state-owned enterprises does little to instil investor confidence," said analyst Shaun Murison at IG Markets.
Hadebe's phone was switched off when a Reuters reporter called on Monday. An SAA spokesman said Jarana was not available for comment.
The search for replacements for Hadebe and Jarana has only just got under way.
But the new Eskom and SAA executives will face monumental challenges, which include navigating the competing interests of different sections of government and society.
Eskom and SAA report to South African Public Enterprises Minister Pravin Gordhan, a close Ramaphosa ally respected by investors for running a tight ship while finance minister but whose management style opponents call interventionist.
Gordhan's aides told Reuters on Monday that the financial and operational crises at Eskom and SAA necessitated close attention from the minister.
They said the scale of the problems facing Eskom, which range from liquidity issues to coal quality, meant it was unrealistic to expect the CEO alone to solve them. Fiscal constraints meant the government had to opt for a "phased recapitalization" rather than giving SAA all the money it wanted in one go, they added.
The new executives will also have to establish a close working relationship with Finance Minister Tito Mboweni, who this year likened giving state funds to Eskom to pouring water into a sieve and last year said SAA should be closed down. The airline has not made a profit since 2011.
A further complication comes from labor unions and sections of Ramaphosa's governing African National Congress party that vehemently oppose efforts to trim the two firms' bloated workforces.
Analysts say job cuts should be a key component of the companies' recovery plans and that the stakes are high if those plans fail. Eskom employs roughly 48,000 people, after hiring about 12,000 additional employees in the past decade. A World Bank research report published in 2016 said it was significantly overstaffed.
"If Ramaphosa does not come up with a solution to this crisis soon, there is a good chance Moody's will remove South Africa's last investment-grade credit rating," said Nigel Rendell, a director at Medley Global Advisors.
"Eskom is the biggest issue hanging over financial markets, and there won't be a happy ending unless there is a significant capital injection from somewhere."