Latest news with #Gumede
IOL News
a day ago
- Business
- IOL News
What's holding back South Africa's economy? Key insights from experts
Infrastructure failure and bottlenecks at ports, are among factors costing the economy billions of Rands. Image: eThekwini Municipality Failing infrastructure, systemic corruption, collapsed rule of law, state incapacity in public service and state-owned entities, erosion of local government, and high crime rates are among the key factors causing a decline in South Africa's economic growth, according to experts. This is despite the positive growth from the agricultural sector, where the Gross Value Added (GVA) expanded by 15.8% in the first quarter of 2025. Agriculture became the main driver of South Africa's overall GDP growth in Q1 2025, contributing 0.4 percentage points to the national GDP expansion of 0.1%. However, experts say that agriculture, although it has driven the country's economic growth, is volatile and dependent on factors such as weather, electricity supply, and transportation, among others. Professor William Gumede, from the Wits School of Governance, said the country's political culture has made corruption, incompetence, and misbehaviour acceptable if it is done by those who share a similar colour, party, and ideology, which has contributed to the economic decline. 'Property rights are vulnerable. The rule of law in many parts has collapsed, the lower courts are inefficient, and policing is ineffective. Corruption is systemic. State capacity in many parts of the public services, among state-owned entities, and local government has been eroded. Crime is out of control. The state cannot efficiently enforce laws, rules, or policies. Infrastructure has collapsed in many areas. Many sectors of the economy, such as public transport, mining, and construction, have become informalised. The country has been deindustrialising,' Gumede said. He added that state infrastructure development plans and forums, including the Reconstruction and Recovery Plan and initiatives such as Operation Vulindlela, have become virtual talk shops, and structures set up to play an oversight and coordination role, and provide governance over infrastructure, have not been able to do so. 'The breakdown of infrastructure drives up inflation, just as state, SOE, and policy failures do, as they drive up prices, the cost of living, cost of business, and erode savings and deter future investment. The Reserve Bank has warned that the breakdown in infrastructure threatens the stability of the financial system. 'Loadshedding, for example, has caused not only the loss of lives, but also of businesses, capital, skills, employment, and investment. It has contributed to South Africa's low-growth path, possibly taking away up to 3% of possible growth. South Africa needs around R150 billion per year just to replace the destroyed infrastructure, let alone build new infrastructure,' Gumede said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading He added that water provision has also plunged, with many of the water infrastructure SOEs, municipal entities, and boards having fallen into disarray. The provision of water in many of South Africa's cities and towns has deteriorated to such an extent that many citizens are without water for long periods during water outages. 'Transnet, the state-owned logistics giant responsible for South Africa's ports, rail, and pipelines, is, like Eskom, a major contributor to the country's low-growth path. Transnet has a debt burden of R136 billion. Its inefficiencies are causing bottlenecks at ports and limiting rail freight, undermining trade. It costs the economy over R1 billion per day," Gumede said. Transnet estimates it needs to invest R200 billion to restore the railways to capacity, however, Gumede said it will be a waste of money to invest in Transnet without bringing in merit-based management, cleaning up procurement by exempting the organisation from preferential procurement rules, and discarding ideological objections to having the organisation fully partner with the private sector in delivering infrastructure services. According to the Department of Public Enterprises, between 2012 and 2023, the debt levels of the largest 10 SOEs rose by R313.6 billion. The government had to bail out these SOEs with R318.1 billion during that period. In its latest Financial Stability Review, the Reserve Bank said while electricity availability appears to be gradually returning to historical trends, other critical infrastructure, such as the supply and quality of water and transport infrastructure, especially rail, port, and road networks, continues to degrade. Gumede said an external economic shock, such as a prolonged fallout with the US Donald Trump administration, will have a disproportionately debilitating impact on the South African economy. Political actors and groups who reckon South Africa can quickly pivot from the US market to alternatives, such as BRICS, have a case of wishful thinking, as a loss of the US market cannot be immediately replaced. A transition to new markets cannot be achieved overnight. Worse, SA's state trade negotiation capacity is currently possibly at its weakest, most over-ideological, least agile, and opportunity-minded, since the end of apartheid. State capacity has been eroded in state trade structures, as in other parts of the state, through cadre deployment, exclusion of minorities, and informalisation, he said. China may be South Africa's largest trading partner by volume, but it mostly takes South Africa's raw material, not manufactured products – it has trade barriers, but sends manufactured products to South Africa, which displaces local jobs. US companies manufacture in South Africa, meaning they have larger multiplier impacts, Gumede said. The International Monetary Fund ranks South Africa as the most difficult place to do business globally among 49 countries in the IMF's ease of doing business index. It argues that halving SA's restrictive business regulations relative to its emerging market peers could increase medium-run output by 9% and boost employment, Gumede said. He added that policymakers underestimate the impact of state failure, corruption, incompetence, and anti-growth policies on the economy, which reduces revenue and undermines business confidence. In the 1990s, the Johannesburg Stock Exchange had around 850 listed companies. By 2024, this had dropped to under 300, including some companies that have dual listings. He highlighted the lack of inclusive compromises on key policies, the NHI, the Expropriation Law, apparent refusal to renegotiate aspects of the Basic Education Laws Amendment (BELA) Bill to make it more inclusive, and perceived anti-American foreign policies have caused investment, capital, and skills flight as some of the factors. 'Many ANC politicians do not genuinely think growth should be at the centre of economic policy, arguing wrongly that to do so will be promoting 'neo-liberalism'. Policies that undermine growth will have to be jettisoned,' Gumede said. He said state debt levels need to be brought down, and key catalytic growth sectors will have to be prioritised. 'Manufacturing remains important; its declining trend needs to be reversed. Agriculture is critical. It is important that land reform is not populist, emotional, ideological and revenge-driven, but rather, that it focuses on securing food; fostering an agricultural, manufacturing, processing, and technology industrial hub; and fostering related artisan, technical, and research skills. This would mean partnering with the private sector to bring back artisan programmes, agricultural technical institutions – especially in the rural areas – and fostering agriculture technology,' he said. Dawie Roodt, a chief economist at the Efficient Group, said the biggest challenge in South Africa is a government that is destructive, inefficient, and is quite often corrupt. 'The government policies are broadly wrong. The Expropriation Bill, for example, is one of those policy choices that is wrong for economic growth because you must protect private property rights. There's also the inefficiency of the state. 'All good things go together in the economy. If per capita GDP goes up, then life expectancy, quality of life, and education follow suit,' Roodt said.
IOL News
6 days ago
- Business
- IOL News
BEE is at a Crossroads - But Who Benefits from Its Destruction?
BEE, as it has been implemented in too many cases, has failed to meet the aspirations of the majority, writes the author. Gumede is right to point to the recycling of beneficiaries, the political gatekeeping, and the elite capture of empowerment deals. But he is wrong, dangerously wrong, if his insight is used to argue for scrapping BEE altogether. Let me be clear: BEE, as it has been implemented in too many cases, has failed to meet the aspirations of the majority. It is a critique we cannot afford to ignore. But neither can we afford to allow this critique to be weaponised by those who have always opposed transformation, to delegitimise the very idea of economic justice in post-apartheid South Africa. The recent critique by Professor William Gumede that over R1 trillion has been 'transferred' under Black Economic Empowerment (BEE) to fewer than 100 politically connected individuals is a sobering wake-up call. It is ironic that the same voices calling BEE 'racist' rarely propose solutions to white economic over-representation. Here are the facts: 8 of the top 10 richest South Africans remain white men. Over 70% of agricultural land remains under white ownership. Access to venture capital, export markets, and finance remains racially skewed. The idea that 'BEE is the biggest scam in post-apartheid SA' dangerously distracts from the real structural crisis: the continued racial and gendered concentration of wealth. Certainly not the millions of unemployed black youth in townships and rural villages. Not the historically disadvantaged communities who still lack access to capital, land, and markets. And not the African, Indian and Coloured women who remain structurally excluded from the mainstream economy. We must ask ourselves: who benefits when BEE is destroyed instead of reformed? Reset restore all settings to the default values Done Beginning of dialog window. Escape will cancel and close the window. The only ones who benefit from the collapse of BEE are those who were never in favour of transformation in the first place the economic oligarchs who would be thrilled to return to a status quo of white dominance wrapped in the language of meritocracy. Despite limitations, BEE is not a failure: Over 6 million black South Africans now hold direct or indirect ownership in companies through broad-based share schemes (e.g. MTN Zakhele, SASOL Inzalo, Phuthuma Nathi at MultiChoice). Black ownership on the JSE has grown from less than 1% in 1994 to an estimated 25–30% today (direct + indirect via funds and B-BBEE schemes). Over 50,000 black-owned SMEs have been supported via enterprise and supplier development obligations. BEE has enabled the creation of black industrialists, catalysed youth training schemes, and expanded procurement access. The BEE scorecard includes ownership, skills development, employment equity, socio-economic development, and procurement. It is a multidimensional framework, not simply elite enrichment. However now that we know better , we must do better. Acknowledge the Failures, But Don't Abandon the Mission As a former Member of Parliament and lifelong activist for social and economic justice, I have seen first-hand how some BEE deals were little more than rent-seeking schemes. Politically connected figures often acted as fronts for white capital, offering legitimacy without empowerment. These are not just moral failings they are strategic betrayals of the people. But the answer is not abandonment. It is reform, accountability, and reorientation toward true broad-based empowerment. We must ask: What models have worked? What does inclusive, community-rooted BEE look like? And how do we ensure that BEE no longer becomes a revolving door for the same elite, but instead a ladder for the many? What Broad-Based Empowerment Really Looks Like The idea of broad-based empowerment is not hypothetical. I have checked ,it actually exists though often drowned out by the noise of scandal. Let us spotlight real, replicable models that show us what is possible. 1. Sasol Inzalo Trust (2011) – R26 Billion Empowerment for the Public One of the largest and most ambitious empowerment transactions in South African history. Over 200,000 South Africans from nurses to pensioners acquired shares in Sasol via the Inzalo Trust. This was not an elite project, but a mass participation vehicle offering dividends, ownership, and dignity. Yes, the deal had flaws (especially when Sasol's share price dropped), but the intent and structure were inclusive. We must learn from and build on this. 2. Absa Employee and CSI Trust (2023) – A New Vision for BEE In 2023, Absa created a model that should become the new gold standard. It allocated 7% of its ownership to: 3% for over 35,000 employees; 4% to a Community Trust focused on healthcare, education, and township upliftment. This is real empowerment linking productivity with ownership, and profit with community reinvestment. 3. PepsiCo / SimbPioneer Foods (2020) – Worker Trust PepsiCo's merger with Pioneer Foods resulted in a R1.66 billion worker trust benefiting over 12,000 employees 90% of whom are black. It wasn't politically brokered. It was structurally designed to include workers at scale. 4. Heineken's 'Bokamoso' Trust (2021) When Heineken acquired Distell, it was required by the Competition Tribunal to create a broad-based employee share scheme. 'Bokamoso' gave 6% equity to workers a model where empowerment was made a regulatory condition of doing business in South Africa. These are not isolated cases. They are models for the future evidence that BEE can work, and work for the people. Why can the JSE Top 100 Listed Companies not follow this and give shares to their workers, their customers and communities they serve? B-BBEE That Serves the Nation, Not the Network For BEE to be legitimate, it must: Stop recycling elites: No individual or consortium should benefit from more than one major BEE deal. Impose sunset clauses: Empowerment credentials must expire after a certain period. Create a National BEE Beneficiary Registry: All deals and beneficiaries must be publicly disclosed and tracked. Mandate community participation: At least 30% of all future equity deals must be routed through community trusts, worker funds, and township co-operatives. Align with the District Development Model: BEE must build local economies not extract value from them. We must turn BEE into a mechanism for building black productive capacity, not just redistributing shares. That means more funding for black industrialists, township-based manufacturing, rural cooperatives, and tech-enabled youth entrepreneurship. A Call to Action: Reclaim Empowerment from the Few, for the Many To comrades, policymakers, business leaders, and community activists: we are at a crossroads. Either we allow the failures of the past to paralyse us or we reclaim the transformative promise of BEE and remake it to serve all who were historically disadvantaged: Black Africans, Coloured South Africans, Indian South Africans, women, youth, people with disabilities, and the rural poor. I call on the ANC to: Codify a new generation of community-based empowerment deals Reject individual-based enrichment without public impact Strengthen the oversight powers of the B-BBEE Commission Incentivise cooperatives, worker-ownership, and community reinvestment We must restore the moral authority of economic redress by placing THE PEOPLE not political patrons at the centre of empowerment. Conclusion: Build, Don't Burn Professor Gumede has done us a service by exposing what went wrong. But let us not allow this moment to be hijacked by reactionaries who wish to dismantle BEE altogether. Let us not abandon the house of transformation because the roof leaked. Instead, let us rebuild it, repair it, and expand it, so that it shelters all South Africans who have for too long lived on the margins. We don't need to scrap BEE. We need to liberate it from the few and make it finally work for the many. That is the real empowerment and economic justice we must fight and struggle for. This opinion piece was first published in ANC Today * Faiez Jacobs is a former MP, Public Policy Strategist and Advocate for Economic Justice ** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.
IOL News
12-06-2025
- Politics
- IOL News
eThekwini Municipality responds to sabotage claims in Zandile Gumede's fraud trial
Former eThekwini mayor Zandile Gumede and her supporters. Image: Nomonde Zondi The eThekwini Municipality has on Thursday stated that it has no intention to sabotage the R320 million Durban Solid Waste (DSW) tender trial against its former mayor Zandile Gumede. Gumede is currently on trial with 21 others at the Durban High Court for numerous charges, including money laundering, racketeering, fraud, corruption, and contravention of the Municipal Finance Management Act and the Municipal Systems Act, relating to the tender. The Head of legal and compliance in the city, Malusi Mhlongo, said eThekwini was the complainant in Gumede's case. 'It is in our interest as the city for that matter to proceed,' he said. Mhlongo said there were accusations that eThekwini's City Integrity and Investigations Unit (CIIU) terminated the agreement of Integrity Forensic Solutions CC (IFS) and the Hawks to sabotage Gumede's case. He said that is not true, explaining that the agreement was entered before the former CIIU boss resigned. The IFS is the company that investigated the DSW tender irregularities after the CIIU anonymously received a stack of documents regarding the tender. In terms of that agreement, Mhlongo said the IFS was supposed to assist the Hawks and the prosecutors, and all their expenses were supposed to be paid by the municipality. Mhlongo stated that the reason the agreement between the CIIU, the Hawks, and the IFS was terminated was that the former acting head of the CIIU questioned why the municipality had to bear the costs while it was the complainant. As a result, the former acting head of CIIU terminated the agreement. He said the IFS took the municipality to court to review that decision. 'That matter is in court and it is still to be resolved,' Mhlongo added. Additionally, he said after the city reported Gumede's matter to law enforcement authorities, it was within its rights to save further use of ratepayers' money and say it's not liable for these costs because the State is now responsible for compensating the witnesses. Meanwhile, Gumede's case faced another setback on Thursday as the ninth accused, Bagcinile Nzuza, was ill. Nzuza is the wife of former city manager, Sipho Nzuza.
IOL News
11-06-2025
- IOL News
Zandile Gumede's R320 million fraud case adjourned as State seeks audit reports
Former eThekwini mayor Zandile Gumede in the Durban High Court. Image: Doctor Ngcobo / Independent Newspapers The Durban High Court said it was left with no choice but to postpone the R320 million Durban Solid Waste (DSW) tender fraud case involving Zandile Gumede on Wednesday morning, due to the State not being able to access audit reports from the eThekwini Municipality. Gumede, the former mayor of eThekwini, is on trial with 21 others for numerous charges, including money laundering, racketeering, fraud, corruption, and contravention of the Municipal Finance Management Act and the Municipal Systems Act, relating to the R320 million DSW tender. The State, which is currently leading evidence from a new witness, was on Tuesday ordered to obtain the audit report regarding the household numbers that needed to be serviced in the 2016/17 financial year. This came after Gumede's counsel, advocate Jay Naidoo SC, objected while the witness, who cannot be named, was leading evidence. Naidoo stated they would like to access the reports to ensure they were consistent with the witness's oral evidence. The witness told the court earlier this week that in a report submitted to the Bid Adjudication Committee (BAC) on December 19, 2017, the number of formal and informal households that needed to be serviced was doubled, while some had been tripled. The Solid Waste Unit went to the BAC on December 14, 2017, to seek authority to invite quotations from experienced service providers for waste collection and illegal dumping services in the city. In a report, the unit had also included that this was an emergency, as there would be no one to collect waste in January 2018. On December 19, the BAC approved those quotations. The fourth accused, Robert Allan Abbu, served as the deputy head of the unit at the time. The witness, who said she was on leave during this time, said she sent an email to Abbu in February 2018. She stated that she would not be able to defend the number of households that went to the BAC, to the auditors. 'The contract value is misaligned, I am afraid I won't be able to defend this with auditors,' she read her email to the court. On Wednesday, counsel appointed by the National Prosecuting Authority, advocate Viwe Notshe SC, told the court that they had made enquiries with the municipality on Tuesday, and the box with the audit report was found. 'We are unable to get them today to be able to proceed,' he said. Notshe asked for the matter to be remanded until Thursday. 'It seems there is no choice; we have to adjourn till tomorrow (Thursday),' said Judge Sharmaine Balton. On Tuesday, the matter was also adjourned early to allow the State to obtain the audit reports. [email protected]
IOL News
06-06-2025
- Politics
- IOL News
Zandile Gumede's lawyer claims State has ignored court order in fraud investigation
Former eThekwini mayor Zandile Gumede and her spokesperson, Siphelele Jiyane, outside the Durban High Court. Image: Tumi Pakkies / Independent Newspapers It has been 10 days since the Durban High Court issued an order compelling the State to disclose evidence regarding a fraud investigation into former mayor of eThekwini, Zandile Gumede. However, her lawyer says the State has not honoured the court's order. Gumede is currently on trial with 21 others for money laundering, racketeering, fraud, corruption, and contravention of the Municipal Finance Management Act and the Municipal Systems Act, relating to the R320 million Durban Solid Waste (DSW) tender. The evidence sought by the defence is a report done by Masama Consulting, which found that the appointment of the Integrity Forensic Solutions (IFS) was unlawfully made by eThekwini's City Integrity and Investigations Unit (CIIU). According to the evidence before the court, CIIU received a stack of documents alleging irregularities in the DSW tender. The IFS was then hired to look into it. Following an investigation by the IFS, the Hawks were given the case, and arrests were made. On Friday morning, Gumede's counsel, advocate Jay Naidoo SC, told the court that the 10 days had passed and the State had not given him anything. Counsel appointed by the National Prosecuting Authority (NPA), advocate Reshma Athmaram, told the court that they were waiting for the eThekwini city manager's response. 'Two days after the order was issued, the investigating officer served it to the accounting officer (city manager), and we haven't received a response,' she said. Judge Sharmaine Balton said the municipality should comply with the court order. Balton said the State needed to give the defence, among other things, a whistle-blower report dated May 9, 2023, the forensic investigation report, together with all annexures compiled by Masama Consulting (mostly referred to as the Masama report), and the CIIU's recommendations on actions to be taken. Additionally, she said a copy of the record of the disciplinary proceedings instituted against the CIIU's top investigator by the municipality should be made available to the defence. She added that a charge sheet served on the CIIU investigator and the outcome of the disciplinary tribunal must be given to the defence. Additionally, the matter was postponed to Monday as the new witness, Zithulele Mkhize, did not take the stand. This was due to the 13th accused, Mkhize, being sick. His counsel, advocate Willie Lombard, told the court that his client was sick and handed in a medical report. He submitted a copy and an original medical report.
