Latest news with #R800
The Citizen
14 hours ago
- Politics
- The Citizen
Ghost workers drain billions from public funds
Ghost employees are being paid with taxpayer money, costing South Africa billions. This corruption must be rooted out with national audits and criminal prosecutions. The biggest problem facing public administration in South Africa – and the biggest opportunity for looters – is the lack of financial controls and even basic information on the government workforce. That is why it appears to have been a lucrative scam to create 'ghost workers' and then divert their salaries into the thieves' wallets. With a government salary bill of nearly R800 billion in this financial year – and a further R85 billion which is earmarked for employees in state-owned enterprises – the civil service is one fat cow waiting to be milked by the unscrupulous. Estimates are that there are probably tens of thousands of these bogus workers being paid like clockwork with taxpayer money… and that money, which probably runs into the billions, is what should be used for good works, development or even just to keep people from starving. The scale of the actual and possible looting is eyewatering. ALSO READ: How many ghost workers are there in government? The elimination of ghost workers at the Passenger Rail Agency of SA (Prasa) alone saved it R200 million. The Association of Certified Fraud Examiners estimates that ghost employees account for 8% of occupational fraud cases worldwide and experts believe this percentage could be even higher in South Africa, especially in government ranks, because of the lack of control and accountability. Other than Prasa, multiple cases of ghost workers have been revealed in sectors ranging from municipalities to government departments at provincial and national level. It is to be welcomed that President Cyril Ramaphosa has ordered the Special Investigating Unit to probe the ghost worker problem at Prasa… but it must go much further than that. Government directors-general must be told to audit their areas and if discrepancies are found, they must be dealt with. ALSO READ: More than R140 million in salaries paid to suspended government employees Anyone involved in these scams must be prosecuted and locked up because this is economic terrorism, plain and simple.
The Citizen
3 days ago
- Business
- The Citizen
This is where we would be if SA sustained an economic growth rate of 4.5%
It is enough to make you weep when you read how much better off South Africa could have been with economic growth of 4.5%. If South Africa had sustained an economic growth rate of 4.5% per year, in line with its emerging market peers, its GDP would have been just under R12 trillion in 2024 instead of the actual R7.5 trillion. Government revenue could also have been around R800 billion higher than it is. Investment strategist at Investec Wealth and Investment International, Osagyefo Mazwai, notes that although South Africa has grown over the last 15 years, averaging economic growth around 1% a year, the population has grown at a higher rate of around 1.3%. He points out that there has been a structural break in South Africa's economic performance compared to the rest of the world, with a stark dislocation in gross domestic product (GDP) per capita. 'In essence, people are worse off than they were in 2010, suggesting that economic policy has been ineffectual in addressing poverty, unemployment and inequality. 'On a per capita basis, the rest of the world is 50% richer than the average South African. Growth of 1% will not lead to the envisaged goals of lifting people out of poverty and meaningfully addressing the problems of unemployment and inequality.' This chart compares nominal GDP over the period with what it would have been if the South African economy grew at 4.5% a year to illustrate the point on the opportunity cost of foregone growth in policy formation and execution: ALSO READ: Experts say no way SA can achieve economic growth of 3% this year How does economic growth of R12 trillion sound? Mazwai says if the economy grew at 4.5%, South Africa's nominal GDP would have been just below R12 trillion in 2024, a significant number, especially considering the benefits that could have been derived from a vastly larger GDP. He points out that South Africa's economic growth rates similarly had an effect on government revenue. 'Government revenue in 2024 alone could have been around R800 billion higher, while just a few weeks ago, South Africa faced a budget impasse due to a shortfall in funding, needing to raise R75 billion in the medium term to cover the shortfall. 'That shortfall is insignificant considering how much more could have been raised had the economy grown more in line with emerging market peers. 'The cumulative figure of revenue foregone is scary, at around R5 trillion over the last 15 years. 'That is material, considering the fiscal constraints facing South Africa and demonstrates the need to ensure economic growth to boost the fiscal war chest and further enable the capacity of the state to deliver services.' ALSO READ: IMF's bad news about economic growth for SA, thanks to Trump tariffs What economic growth of 4.5% could have meant Mazwai says these statistics put this into perspective: The R5 trillion lost would be enough to clear almost 90% of South Africa's gross national debt and bring the debt-to-GDP ratio down to just below 10%, compared to the currently expected 77% ratio this year. Eskom needs R390 billion over the next decade for transmission lines, a fundamental pillar of creating greater capacity in the energy sector. Electricity is the backbone of any structural improvement, especially considering the government's goals to build domestic manufacturing capacity and create meaningful employment opportunities. The R390 billion would be a drop in the ocean had growth been 4.5% over the last 15 years. Transnet needs R160 billion to upgrade rail and port infrastructure. Our logistics networks are key in connecting the economy across its internal nodes, but also key in building additional capacity to meet the demands of external markets. Again, R160 billion would have been a drop in the ocean had growth been in line with our peers. Eskom has debt of R400 billion. With economic growth at 4.5%, the government could have bailed Eskom out 12 times. Transnet has a debt of R140 billion, and the government could have bailed out Transnet many times, too. Social grants will cost the fiscus around R266 billion this year. With economic growth of 4.5%, these would have been more than affordable and potentially materially higher than what marginalised citizens receive now, also considering that many more people would have been absorbed into the labour market. ALSO READ: Fourth quarter GDP improved but economists say its still not great – here's why With higher economic growth, South Africa would have functioned better Mazwai says these statistics are significant because they show how South Africa could have been in a better position to address the prevailing needs of the state. 'Granted, if the economy was growing at 4.5% the assumption is that Transnet and Eskom and some of the other structural enablers of the economy would have been functioning properly. 'The numbers indicate the potential for vastly greater capacity to invest in the productive elements of the South African economy, such as in infrastructure, education, healthcare and the salaries of teachers, nurses and doctors.' He also notes that business confidence has been unusually correlated with the performance of state-owned enterprises (SOEs) in the post-pandemic environment, and therefore, SOE reform momentum must be sustained or increased. 'Business confidence is the key leading indicator of economic growth and employment creation. The unemployment rate would be closer to around 20% compared to the current 32.9% had the economy been growing at 4.5%. 'In other words, a third of those presently unemployed, according to the narrow definition of unemployment, would have jobs.' ALSO READ: Absa foresees economic growth of 2.1%, but Trump and budget can disrupt it But there have been some victories so far for the economy However, Mazwai says none of this should detract from some of the victories seen of late, such as: The formation of the government of national unity (GNU) and subsequent political stability and increased policy certainty, although the recent budget impasse showed that these are nonetheless fragile. The increased momentum of Operation Vulindlela in addressing the various structural impediments in the economy. The next steps are critical for addressing water infrastructure and local government inefficiencies. Improvements in the electricity supply and logistics network. Mazwai says there has been some stagnation in the recovery of SOEs, which may be cause for concern, although the worst of SOE performance appears to be behind us. However, he says a reacceleration in trend improvement is important for business confidence to grow. ALSO READ: Economic activity still moving sideways but optimism increases Recovery in PMI could mean higher economic growth 'We recently saw a modest recovery in the S&P Global Purchasing Managers Index (PMI), to a neutral level of 50. There must be a trend improvement in PMIs, which are typically linked to economic outcomes. 'Should PMIs continue to improve, the economy should continue on its path of recovery. This will likely be driven by the continued success of Operation Vulindlela.' Looking at GDP projections, Mazwai says data released so far suggest that while growth was likely weak in the first quarter, a persistent upward trend in PMIs can result in a marked acceleration in growth outcomes. 'PMI improvement will largely be a function of continued improvement in SOE performance. At present, the economy, by our estimates, is tracking at 1.3% for the year, which is well above the 0.6% seen in 2024 and 0.8% in 2023. 'This can then lead to more meaningful employment creation and a trend reversal in GDP per capita from the pattern of decline since 2011.' ALSO READ: World Bank has simple answer to improve South Africa's economic growth What SA can do to keep momentum going to grow He suggests that South Africa follow these steps to keep the momentum going and put South Africa on a firmer growth trajectory:
IOL News
27-05-2025
- Business
- IOL News
Constitutional Court to decide on CPS's profits from unlawful social grants contract
The lucrative R10 billion social grants tender is still subject to litigation between the government, non-governmental organisations, and the company contracted to pay social grants. Image: File The long-running legal battle over the payment of social grants by Cash Paymaster Services (CPS) is set to be settled by the Constitutional Court over the company's profits from the lucrative deal. Lobby group Freedom Under Law (FUL) has approached the apex court in a bid to force CPS to produce documents proving the company earned from the unlawful social grants contract. The organisation wants CPS's profit from the contract to be calculated properly and repaid to the SA Social Security Agency (Sassa) with documents showing how much the profits were. On Tuesday, the Concourt heard that CPS only declared R252 million and that the profit could be understated by as much as R800 million, according to papers filed by the parties. 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 ✕ 'We now know, as the court did not know when it ordered the profit accounting, that CPS has significantly benefited from the unlawful social grants contract. Its independent audits filed with this court show the profits were R252m. 'That is the floor of its unlawful benefit. RAiN investigations and reports, while inconclusive, suggest that the amount may be over R1 billion,' FUL argued. RAiN is the company of chartered accountants asked to investigate the profits received by CPS after the Concourt ruled that its contract was unlawful but allowed it to continue paying social grants. The court heard that the Lesaka Group, previously CPS' parent company Net1, advised the market that its loss of the Sassa social grants contract had led to a reduction of its profit by approximately R5bn. 'The no-profit, no-loss equilibrium allowed the court to permit an unlawful contract to continue for five years, and then even ordered it extended (beyond its original tendered and contracted term) for a further year and a half to protect the many millions of beneficiaries whose constitutional rights would be violated if the payment of social grants (however unlawful the means) ceased,' the court heard. CPS is currently under liquidation, and its liquidators insist that they have handed all the documents in their possession to the auditors looking for the money paid to the company for its contract. 'We respectfully submit that this court should order a just and equitable remedy to ensure the determination of CPS's profits in line with the proposals and considerations,' the company told the Constitutional Court. FUL continued: 'When the court held that the no-profit principle, which means not allowing profit from unlawfulness, and prevented the perpetuation of unlawfulness, it was clear that any such profits were received not as a private party but as an organ of state discharging constitutional obligations to ensure that beneficiaries' rights were not violated by any disruption in the payment of social grants.'
IOL News
20-05-2025
- Business
- IOL News
eThekwini Municipality's plumbing contracts: A R800 million annual expenditure
The eThekwini Municipality is reviewing its policy on plumbers after spending approximately R800 million per annum on contractors. Image: File The eThekwini Municipality is reviewing its policy on plumbers after spending approximately R800 million per annum on hiring contractors. The eThekwini Water and Sanitation Unit (EWS) presented its status of water supply report for May 2025 to the eThekwini Executive Committee (Exco) on Tuesday. The municipality's insourcing of plumbers' roadmap statistics reveals that out of the 110 plumbing vacancies, 70 are filled, and 40 are vacant. From the 40 vacant plumbing posts, four will be employed by June 30, 2025, and 12 by January 31, 2026. The municipality is creating a separate management entity for the EWS with the Water Turnaround Strategy (WTA) to resolve the water supply problems and revenue loss the city is experiencing. Among the issues raised by residents and councillors were incompetent plumbers, recurring pipe leaks, delays in repair time, and unsurfaced roads. 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 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. Next Stay Close ✕ Sibusiso Vilane, the acting HOD for EWS, said the budget for the remaining 24 posts will be sourced from savings, together with resources attached to the posts. Vilane stated that the current policy has been in place for over 20 years and that consultation is key to the success of the reform to open tender. He said that once consulted, the managing contract will be advertised within the first quarter of the 2025/26 financial year. According to Vilane, a mixed breed of in-house plumber employment and limited outsourced plumbing services could be in place by June 30, 2026. 'There have been many complaints about the quality of work rendered by plumbers. Many have to undergo training, and they must meet specific standards before we can recruit them. There is a roadmap to achieve this,' he said. The municipality was ranked 'very poor' when it came to the Infrastructure Leakage Index (ILI) interpretation in the category of unavoidable annual real losses (UARL) and current annual real losses (CARL). To deal with non-revenue water, the EWS will ensure pressure management, restrictor installation, pipe replacement, pipe repairs, leak detection and repairs, reservoir and metering, and smart metering. As of May 14, 154 bursts were on the system, with 52 received that morning. Opening leaks in the system 7 213, with 417 leaks reported within 24 hours. To date, 63 pressure regulator valves (PRV) have been installed and 132 maintained, with the target set for 116 installations. The project was delayed due to the cancellation of orders for fitting components, generators, and pumps as a result of non-compliance with Supply Chain Management requirements. The municipality intends to install 88,972 restrictors; however, only 21,198 have been installed due to an outstanding budget of R15 million needed to meet the target. An estimated R48 million was assigned to pipeline replacement in central and northern regions, namely Chatsworth, Phoenix, and Redcliffe. The municipality intends to spend R70 million annually on pipe replacement. Reservoir metering for accurate water balancing is being rolled out across the city with 192 planned installations at 143 reservoir sites. Thus far, 120 meters have been installed at 95 reservoir sites. The municipality has completed the new northern aqueduct project at a value of R3 billion to augment supply in the Northern areas. The aqueduct has been commissioned for Avoca and Phoenix. The municipality has also completed a new rising main from Hazelmere to Grange. The municipality has also recommissioned the augmenting pumping main from Grange to Mt View reservoir to supplement the Verulam system, which was severely impacted by extended water outages. With regards to the Tongaat area, the city has completed and commissioned new Emona and Burbreeze reservoirs. However, with the Tongaat Supply System, all eight reservoirs supplied from the Tongaat system are still on intermittent supply due to the plant not coping with demand. Vilane said the frequent mains bursts are also contributing to the frequent disruptions. He also emphasised that there would be a centralised management approach with a single point of management and accountability. The city will declare a war on leaks from July 2025 once the budget comes through. eThekwini Mayor Cyril Xaba said the trading services of electricity, water and sanitation, and cleansing and solid waste must improve their performance and enhance revenue generation. City Manager Musa Mbhele encouraged the EWS to implement what is planned and deal with issues raised by the public decisively. Councillor Nkosenhle Madlala, ANC Exco whip, said the introduction of performance-based water management contracts will not only promote efficiency but will also help in driving accountability and measurable outcomes. 'Concerns were raised by communities during the Budget Roadshows. We reiterate our support for the insourcing of plumbers. This will not only improve service turnaround times but also enhance accountability and ensure value for money,' Madlala said.
IOL News
20-05-2025
- Business
- IOL News
Lavish Cars, Too Many Ministers: Critics demand cabinet cuts in 2025 Budget
Political analysts urge reduction of South Africa's bloated cabinet ahead of Budget 3.0 Image: Supplied As South Africa approaches the tabling of its 2025/26 budget, political analysts are intensifying their calls for a more disciplined approach to public spending as Finance Minister Godongwana prepares to deliver Budget 3.0 on Wednesday. Central to the debate is the size of the government's cabinet — a sprawling assembly seen by many as an unnecessary burden on taxpayers and an obstacle to effective governance. A Bloated Cabinet in a Costly Economy South Africa's cabinet currently comprises 32 ministers and 43 deputy ministers, which is larger than that of many advanced economies. The United States has 26 cabinet members, the United Kingdom 24, Japan 20, and Germany 17. This expansion has significantly inflated government costs. ActionSA recently revealed that the current cabinet configuration is costing taxpayers an additional R239 million annually, amounting to over R1 billion for the current term. This covers salaries, staff, perks, and luxury vehicles, which alone cost about R800,000 per ministry. Critics argue that such spending is indefensible, especially amid economic stagnation and austerity measures affecting vital sectors like health, education, and public safety. 'The cabinet's size and perks drain our economy,' said political analyst Joe Mhlanga. 'We need to cut down on deputy minister positions and streamline our government to ensure funds are allocated where they're most needed.' Calls for Reduction and Reallocation Mhlanga emphasised that the funds spent on government perks and expanding ministries could be better utilised elsewhere. 'When you look at the results of the work done by these ministers and deputies, there's little to show. The question is, why keep such a bloated cabinet that isn't delivering?' 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 ✕ He suggested that the government consider reducing the cabinet to no more than 20 ministers, abolishing deputy minister roles where possible, and redirecting savings toward critical areas such as public health and education. 'If we want to improve the lives of South Africans, we must reallocate these funds to service delivery and social upliftment,' he added. Political Realities and Challenges Despite mounting pressure, political realities and coalition agreements have kept the cabinet size large. 'There's a reluctance among politicians to reduce their influence and perks,' Mhlanga noted. He argued that President Cyril Ramaphosa, who previously promised to reduce cabinet size, has seen the number grow instead. 'When you examine the effectiveness of these ministries, it's clear that the expansion hasn't translated into better service delivery,' said Mhlanga. 'The government must face the reality that a leaner cabinet could free up resources for more impactful investments.' Broader Fiscal Concerns The focus on cabinet size is part of a broader debate on fiscal discipline. As Minister Godongwana prepares to present Budget 3.0, the Federation of Unions of South Africa (FEDUSA) has called for the government to reject austerity measures that disproportionately burden workers and people with low incomes. Instead, on Monday, FEDUSA called for a progressive, inclusive budget that includes measures like a wealth tax on high-net-worth individuals to help bridge the funding gap. 'South Africa's economy remains trapped in low growth and high unemployment,' read the FEDUSA statement. 'This budget must prioritise job creation, infrastructure investment, and social protection, rather than cutting essential services or expanding an already cumbersome cabinet.' Conclusion: A Call for Strategic Cost-Cutting As the country grapples with economic challenges, some believe that streamlining government and redirecting funds could make a tangible difference. 'Reducing the size of the cabinet isn't just about saving money; it's about making the government more effective. Our leaders need to prioritise service delivery over political perks if we are to build a better South Africa.' IOL Politics
