BLSA
Bulletin
Much has happened since we published the 12th edition of this Bulletin. After a period of uncertainty and apprehension, the elections are behind us and the formation of the Government of National Unity has given new hope to businesses, investors and ordinary citizens alike.
While cognisant of the monumental task that lies ahead, we can all be encouraged by the messages we are hearing from government, in particular the stated commitment to economic reform and the willingness to collaborate with the private sector, with Minister of DTIC Parks Tau leading the charge.
In this edition we highlight a number of positive developments. For example, since June eight bills were signed into law, some of which are crucial for reviving the economy, creating new industries, and addressing systemic corruption.
Operation Vulindlela (OV) continues to receive much deserved public recognition, with significant wins achieved during its first phase. The second phase will focus on the local government system, the delivery of basic services, digital public infrastructure, and public land for social housing, while water, electricity and logistics will also receive continued attention.
You can read more about the long list of OV reforms identified by stakeholders during a two-day conference in June, which are detailed in bulletin. As a committed supporter of this critical initiative, BLSA stands ready to assist OV on behalf of our members as it embarks on its next phase.
We also take a closer look at global trade developments such as AfCTA and AGOA. As I said in a recent opinion piece, AfCFTA presents an excellent opportunity for South African exporters and with some sectors/industries constrained by the market size in South Africa, extending the market into the African continent would be a game changer. Staying with trade, I encourage you to read the DTIC’s detailed response to the UK’s Carbon Border Adjustment Mechanism (CBAM) proposal and the potential damage it could cause to South Africa’s economy.
On the social policy front, we have noted the President’s willingness to collaborate with stakeholders to “resolve differences and clarify misunderstandings regarding the NHI Act,” sections of which have already been declared unconstitutional. As BLSA we maintain our position that in its current form the legislation is unworkable and economically damaging.
In a recent engagement with Minister Parks Tau, I reiterated BLSA members’ willingness to work with the DTIC to help grow South Africa’s economy and meet other business challenges. I want to thank all our members for your ongoing support and commitment to getting our country back on track.
Sincerely
Busisiwe Mavuso
CEO
As the new administration kicks off following the May elections, there are important government events expected to take place in the coming months.
President Ramaphosa has enacted several bills into law from the previous administration; some are crucial for reviving the economy, creating new industries and addressing systemic corruption.
Bills that have been signed into law by the president
The Department of Home Affairs finally gazetted the new visa regulations to amend the Immigration Regulations of 2014 and the Immigration Act of 2002. The reforms are:
The presidency and National Treasury held a two-day conference in June under the theme “Building Momentum on Reform: Towards the Next Phase of Operation Vulindlela”. The event brought together senior government officials, industry experts and leading academics to reflect on the impact of OV’s economic reforms in its first phase (2020-2023) and identified priorities and opportunities for the second phase. BLSA is a proud partner of OV, and stands ready to continue supporting OV’s work in phase 2.
Since its inception in 2020 (after the adoption of the Economic Reconstruction and Recovery Plan), OV has driven the implementation of economic structural reforms to change the structure and overall direction of SA’s economy; it has also ensured that related national government departments and state-owned entities – as implementers – are successful at implementing these reforms. One of the main roles of OV is to engage with the reform implementers to seek consensus on challenges and what needs to be done by whom.The following are some of the key highlights during the first phase:
In the next phase, stakeholders indicated that OV needs to find ways to do the following:
In the BUSA Energy sub-committee meeting on 26 June 2024, members were informed that the National Energy Council (NECOM) is currently undergoing restructuring to enhance its operational efficiency and capacity. There are ongoing efforts to restructure and capacitate NECOM, particularly focusing on optimising workstreams such as new generation capacity. The Energy Council is working to address capacity constraints and is expected to provide further clarity on how NECOM workstreams will be structured and capacitated to support initiatives effectively in the near term.
On 14 May 2024, the National Council of Provinces (NCOP) approved the Electricity Regulation Amendment (ERA) without modifications . On 16 May 2024, the ERA was referred to the President for assent and on 16 August the much-anticipated bill was signed into law. According to a statement by the Presidency, the bill “opens up pathways to greater competition and reduced energy costs; increases investment in new generation capacity to achieve energy security; establishes an independent transmission company as the custodian of the national grid; and imposes severe penalties for damage to and sabotage of infrastructure.
The Department of Mineral Resources and Energy (DMRE) received over 4,000 submissions on the Integrated Resource Plan (IRP) 2023, out of which 130 were deemed relevant to the plan. Business intends to engage further on the Draft IRP 2023 through the National Economic Development and Labour Council (NEDLAC) process. Following the NEDLAC process, the DMRE will finalise the plan by addressing the comments received and expediting Bid Window 7, which was issued in December 2023.
On 19 April 2024, NECOM and Eskom initiated industry-wide consultations regarding the market model and the draft South African Wholesale Electricity Market Code. The Market Code rules will establish an open market platform for competitive electricity trading, as mandated by the Electricity Regulation Act. The Market Code comprises approximately ten components, and workshops will be conducted on each of these in the coming months. The objective is to finalise the Market Code no later than November 2024. The National Transmission Company of South Africa (NTCSA) is expected to commence trading by August 2025, and until then an interim market space will be created to determine qualifying customers based on their technical capabilities for the five-year transitional period defined by Section 35C (1) of the ERA Bill.
On 14 June 2024 BUSA made a submission to NERSA on its consultation paper relating to Eskom’s application for grid capacity reservation and/or preservation for Section 34 Independent Power Producers . The submission covered the following points:
After receiving public comments on the Gas Amendment Bill, the Department of Mineral Resources and Energy (DMRE) held a stakeholder engagement session with BUSA and the Energy Council of South Africa on 9 May 2024. The discussion primarily focused on gas regulation, the potential overlaps in powers between the Minister and the National Energy Regulator of South Africa (NERSA) as outlined in the Act and Regulation, and the distinction between Liquified Natural Gas (LNG) and Liquified Petroleum Gas (LPG). The next step in the promulgation of the bill includes its submission to the National Economic Development and Labour Council (NEDLAC) for further discussion.
The Department of Trade, Industry, and Competition (DTIC) organised a stakeholder engagement session on 27 March 2024. The meeting was attended by several organisations, including the Industrial Gas Users Association – Southern Africa (IGUA-SA), the DMRE, Transnet Pipelines, the NERSA, Eskom, the Industrial Development Corporation (IDC), Sasol, and the Central Energy Fund (CEF). This meeting served as a follow-up to the engagement held in December 2023. The discussions, seen as positive and constructive, focused on the following:
The DTIC will host a further round of engagements to discuss proposed solutions.
BUSA has been urging the Department of Forestry, Fisheries, and the Environment to promptly release the report on carbon budget and mitigation plans, following a carbon budget workshop held in October 2023 and early February 2024. The carbon budgets have been strategically developed to help the country achieve its targets as outlined in the updated Nationally Determined Contributions (NDCs). These budgets will be allocated to specific activities undertaken by selected companies. The draft carbon budget regulations will be issued once the Climate Change Bill is enacted into law.
The Department of Mineral Resources and Energy (DMRE) is undertaking an internal review of carbon offset regulations. Once this process is completed, the regulations will be subjected to the Minister’s approval. Additionally, work is still underway to develop a local carbon offset standard framework by the DMRE.
The Sectoral Emission Targets (SET) report was issued for public comment, and BLSA members’ comments were included in the submission made by BUSA on 25 June 2024. These targets have been developed to ensure that the country meets the specific greenhouse gas emission levels outlined in the Nationally Determined Contributions (NDC). The SETs encompass a wide range of sectors, including agriculture, industry, energy, mining, human settlements, transport, and environment. The points raised by BUSA in the submission are as follows:
Business calls for a transparent, evidence-based approach in allocating sectoral emissions targets (SETs), focusing on sectors with significant short-to-medium term change potential while recognising the strategic importance and affordability constraints of others.
Following the implementation of the EU Carbon Border Adjustment Mechanism (CBAM) in October 2023, the UK government has formulated its own CBAM, scheduled to be enforced on 1 January 2027. BUSA engaged in talks with both the UK High Commission in South Africa and the UK government to discuss the potential impact of the UK CBAM and identify areas for enhancement.
Furthermore, the Department of Trade, Industry and Competition (DTIC) actively worked with industry stakeholders to formulate a comprehensive response to the UK’s CBAM proposal, ensuring their concerns were effectively communicated by the 13 June 2024 deadline. The key points made in the DTIC’s response to the UK CBAM include the following:
The BUSA Subcommittee on Trade, Transport, and Logistics secured a meeting with the Deputy Director-General (DDG) in charge of Trade at the Department of Trade, Industry and Competition (DTIC) on 11 June 2024. The main objective of the meeting was to discuss the outcomes of the recent Ministerial Conference (MC13) of the World Trade Organization and to plan for MC14. A particular area of interest was the DTIC’s trade agenda, with a focus on the expected discussions regarding the Carbon Border Adjustment Mechanism (CBAM), AfCFTA, SACU developments, and AGOA. This meeting provided an opportunity to analyse the implications of these global trade developments for South Africa and explore potential collaborative actions.
The USA introduced a bill in Congress to undertake a full review of the SA/US relationship. That bill was passed earlier this month by the House of Representatives, though it must still get through the Senate to become law. From 24 – 26 July the DTIC minister Parks Tau led a delegation to the US for the African Growth and Opportunity Act (AGOA) summit in Washington DC. The new Minister and his delegation made a positive impression on their US counterparts and the discussions with US lawmakers arguing for South Africa to remain a beneficiary under AGOA seem to have gone well.
Significant strides have been made in the implementation of the African Continental Free Trade Area (AfCFTA), particularly in trade liberalisation and rules establishment. Currently, 48 member states, including four customs unions (EAC, CEMAC, SACU, ECOWAS), have submitted their tariff offers, with 45 of these offers being technically verified by the AfCFTA Secretariat. This verification process ensures compliance with agreed modalities, paving the way for provisional implementation through the Ministerial Directive issued in October 2021. Notably, South Africa initiated preferential trading under AfCFTA by gazetting the SACU Provisional Schedule of Tariff Concessions on 26 January 2024, and commencing trade on 31 January 2024, at the Port of Durban.
BLSA, along with several other organizations and stakeholders, has been invited by His Excellency Wamkele Mene, Secretary General of the AfCFTA Secretariat, to a high-level meeting in Johannesburg on August 26, 2024.
We are eager to participate in this engagement, which will address the current status of AfCFTA, business needs, and upcoming AfCFTA events. We anticipate that this meeting will generate positive momentum and provide the necessary impetus for the full implementation of AfCFTA.
Fourteen countries have also joined South Africa in gazetting their Provisional Schedules of Tariff Concessions and have begun trading preferentially under AfCFTA. These countries include Algeria, Botswana, Cameroon, Egypt, Ghana, Kenya, Mauritius, Morocco, Rwanda, Tanzania, Tunisia, Eswatini, and Lesotho. Furthermore, the AfCFTA Secretariat has launched a Private Sector Portal aimed at supporting State Parties in facilitating national-level private sector engagements, including business-to-business matchmaking, to foster partnerships and investments aligned with mutual business objectives.
In the realm of trade in goods, progress has been made in establishing Rules of Origin (RoO), with agreements reached on 92.4% of tariff lines. However, challenges remain in textiles and clothing and automotives. Negotiations are actively ongoing to finalise RoO in these sectors before the upcoming Summit in February 2025.
Regarding trade in services, negotiations have centred on five priority sectors: finance, tourism, transport, communication, and business services. Of the 48 offers tabled, 22 draft Schedules of Specific Commitments have been adopted for provisional implementation following the Extraordinary Summit on AfCFTA in November 2022. Notably, five East African Community (EAC) State Parties—Burundi, Kenya, Rwanda, Uganda, and Tanzania—have gazetted their adopted Schedules of Specific Commitments across these priority sectors.
Looking ahead, the focus remains on concluding offers and negotiations on the remaining 10% of tariff lines and finalising outstanding Rules of Origin, particularly in critical sectors such as automotive and textiles and clothing. The harmonisation of rules within the Southern African Customs Union (SACU) is identified as pivotal, as divergent positions among SACU member states could impact the realisation of preferential trade agreements. Clear and unified positions are essential to ensure cohesive implementation across the region and continent.
On 31 May 2024, BUSA made a written submission to the Department of Trade, Industry, and Competition (DTIC) regarding the AfCFTA – Digital Trade Protocol Annexes. The submission primarily addressed the following topics:
The virtual AfCFTA Private Sector Awareness Raising and Information Sharing Workshop was held on 17-18 April 2024. Aimed at enhancing private sector engagement and commitment to the implementation of the African Continental Free Trade Area (AfCFTA), the workshop provided a platform for stakeholders to exchange ideas, share best practices, and develop strategies for the effective and inclusive implementation of the agreement. There was a focus on identifying priority actions that governments, the private sector, and development partners can take to expedite the establishment of the African single market. The importance of private sector involvement in the negotiation and implementation of the AfCFTA as a key stakeholder and beneficiary of the agreement was emphasised.
On 22 May 2024 the Social Policy quarterly meeting convened, and an update on the National Health Insurance (NHI) Act was provided, highlighting the imminent litigation process led by BUSA and B4SA. This legal action aimed to address concerns about the implementation and potential impacts of the NHI Act on businesses and the broader health sector. It was stated that the B4SA Comms team was actively working on tackling misinformation surrounding the Act and to inform and educate stakeholders about the implications of the NHI, ensuring that accurate information is disseminated while also preparing for the legal challenges ahead. The communication strategy includes clarifying misconceptions and providing clear, factual updates to maintain transparency and support litigation efforts.
On 9 July, a meeting was held to discuss key updates and decisions regarding the NHI Act. A Health Policy (HealthPol) meeting will be scheduled at a later date to provide members with an update on the outcomes of the NHI meeting.
In his Opening of Parliament Address on 18 July 2024, President Cyril Ramaphosa emphasised the need of collaboration between the public and private sectors to achieve equitable healthcare for all South Africans. He committed to bringing stakeholders together to resolve differences and clarify misunderstandings regarding the NHI Act. BLSA and Business Unity South Africa (BUSA) welcomed the President’s willingness to reopen these engagements.
On 24 July the High Court of Pretoria declared sections 36 to 40 of the NHI Act, unconstitutional. The sections relate to the highly contested “Certificate of Need”, which the National Department of Health wants to adopt to exert more control over where doctors and medical professionals can practice in the country.
BUSA made a submission on the Draft Regulations on the Proposed Sectoral Numerical Targets on 6 May 2024.
It was highlighted that Business believes the Department of Employment and Labour has not conducted a proper consultation process for the 2024 Draft Regulations and that comprehensive consultation is essential, considering the complexity of employment trends across various industries. The key concerns were as follows:
Unlawful and unreasonable targets – Proposed sectoral targets do not align with the Solidarity Agreement and may lead to litigation. Furthermore, targets do not consider unique sector-specific challenges like economic, social, and skills factors. Business urged the Department to reconsider targets based on stakeholders’ specific submissions.
Exclusion of over-represented groups – The exclusion of groups exceeding the Economically Active Population (EAP) in certain occupational levels conflicts with EE Act provisions, and it was emphasised that this exclusion could lead to constitutional issues and negatively impact organisations and employees.
Targets conflict with EE Amendment Act – The stipulation that employers exceeding ministerial targets should not regress, is problematic especially given staff turnover considerations and it was recommended that the “not to regress” obligation for designated employers be removed.
Challenges with EAP application – Regulations mandate the use of either national or provincial EAP for target setting, which conflicts with legal precedents requiring provincial considerations.
Embedding provincial considerations into target and affirmative action measures was suggested in this regard.
Gap analysis and target setting – The requirement for a gap analysis creates uncertainty for employers. Regulations should explicitly allow consideration of factors like recruitment opportunities, skills availability, and economic conditions.
Specificity of sectors and sub-sectors – It was stressed that the “one-size-fits-all” approach to targets is irrational and that sub-sectors within broader sectors, such as manufacturing and mining, have unique conditions that should be considered.
Movement towards EAP after achieving ministerial targets – The requirement to move towards the EAP after meeting Ministerial Targets is new and significant, adding pressure on constitutional and rational grounds. It was proposed that this provision be removed as it fails the test of rationality and practicality.
From 1 April to 25 June 2024, the BLSA website registered 6100 visitors and 5866 pageviews. There was a 36% increase in site traffic, with pageviews up 15%.
Subscriptions to BLSA’s Mailchimp, where the CEO’s Weekly Newsletter and media statements are distributed to members of the public and media, remained stable throughout the period, with approximately 2000 subscribers recorded as of 24 June 2024.
BLSA’s election-focused commentary, supported by boosted X (Twitter) content, led to a markedly improved social media performance. For example, the 23% engagement rate on X (Twitter) is way above the average across all sectors – anything above 5% is considered excellent.
The combined BLSA/Busi Mavuso X (Twitter) accounts are consistently the top-performing platforms, while BLSA’s LinkedIn performance showed a good increase across all metrics, considering it was not boosted.
The sentiment in conversations was predominantly neutral and reflected the nature of the content emanating from the organisation. BLSA’s Net sentiment (positive minus negative) saw a slight improvement during the period of review.
