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Zuma's SONA: Foggy stats or facts?

Mar 01 2017 10:18
Fin24 team

Cape Town - President Jacob Zuma delivered his 10th State of the Nation Address (SONA) and the team at Fin24 delved a little deeper to verify some of the statements he presented.  

This is ever more critical at a time when fake news and disinformation campaigns fiercely compete with mainstream media.

1) "In an effort to curb the high water losses which in some municipalities far exceed the national average which is currently at 37%, about ten thousand unemployed youth are being trained as plumbers, artisans and water agents. More will be recruited this year to reach the total of fifteen thousand." - Correct

Zuma launched government’s War on Leaks programme in a bid to curb water losses, which it believed to cost the country R7bn a year.

The programme is designed to recruit and train a total of 15 000 artisans, plumbers and water agents. The project is set out in three phases that will be carried out over a period of five years (2015 – 2020).

Rand Water is the implementing agent on behalf of the Department of Water and Sanitation. In its 2015/16 annual report it indicated:

"As implementing agent for the government’s five-year War on Leaks project, we oversaw the intake of 7 000 young people during the year to either be trained and employed to advocate responsible water use in their communities or to become plumbers. This follows an intake of 3 000 in the previous year, with an additional 5 000 scheduled to join the programme in the new financial year."

These figures were confirmed to Fin24 by the department’s spokesperson.  

"The recruitment and selection of 2 772 trainees from various communities in all nine provinces across the country was concluded between June and September 2015," said Sputnik Ratau.

"7 309 trainees were recruited for the second phase across various priority municipalities nationally between May and July 2016."

2) "The successful execution of Eskom’s build and maintenance programmes helped (bold our emphasis) ensure stability and an end to load-shedding."  - Correct

Although industry analysts have questioned whether Eskom can take credit for ending load-shedding, arguing that demand for electricity from mines, which are Eskom’s third-biggest customer group, fundamentally collapsed due to a rout in metal prices, Zuma used the word "helped" indicating that the power utility contributed to bringing an end to load-shedding.

When contacted for figures, Eskom referred Fin24 to a media statement issued in January. Due to rigorous plant maintenance the power system remained stable, it said, adding that there was a surplus of 5 600 MW of power supply available at peak which could be used to meet any increase in demand until 2021.

"Since the build programme started in 2005, Eskom has added 8 030 MW to the national grid and over the next six years a further 9 103 MW capacity will be added from the Ingula pumped storage scheme which will be fully commissioned later this year, Medupi which will be fully commissioned in 2020, and Kusile in 2022."

Dr Grové Steyn, an independent analyst and regulatory economist, told Fin24 that in his view the primary reason for the end to load-shedding is that electricity demand growth has been much lower than anticipated

He said electricity demand currently is back at levels last seen in 2007. Steyn added that Eskom's build programme has been subject to excessive delays and large budget over-runs.

"These delays and cost over-runs are the main reason for the large increase in Eskom's tariffs in recent years, which ironically is probably a significant cause of the lower electricity demand that has now saved Eskom's bacon."

Fin24 also checked in with the Energy Intensive User Group of Southern Africa (EIUG), which represents the bulk of technical expertise relating to energy issues in South Africa.

The group agreed that electricity demand is low, pointing out that Eskom’s interim financial results from November 2016 show that energy demand in the industrial sector, which is the second largest contributor to its sales, contracted by 6.2%.

It further noted reports showing that Eskom improved its energy availability factor and its unplanned capacity loss factor, or plant breakdowns, trend lower than they did during the period of load-shedding.

"It is fair to say that both Eskom’s improvements in its maintenance and build programmes, and the stagnant economy and low electricity demand, have contributed to the current excess of capacity," the EUIG said.

3) "To date nearly 7 million households have been connected to the grid and now have electricity." - Correct

According to the Department of Energy's 2015/16 annual report, more than 6.7 million households have access to electricity.

"INEP [the Integrated National Electrification Programme] and its implementing agencies – Eskom, municipalities and non-grid service providers – have made remarkable progress in increasing access to electricity in South Africa and have connected over 6.7 million households between 1994 to March 2016."

Statistics SA indicated in its Community Survey 2016 that about 91.1% of households countrywide were using electricity in 2016. According to the General Household Survey by Stats SA, about 14.8 million households had access to electricity in 2015.

4) "Working closely with the industry, the Department of Science and Technology is implementing a technology localization strategy. This has ensured that the two billion rand MeerKAT telescope is constructed with seventy five percent local content." - Correct

According to a 2016 fact sheet drawn up by the Square Kilometre Array (SKA) project, at least 75% of the contract value of the MeerKAT project will be spent in South Africa. This in turn is set to result in most of the MeerKAT antenna components being manufactured in South Africa, said the SKA. 

“Key local suppliers include Efficient Engineering (pedestals and yokes), Titanus Slew Rings (azimuth bearing), Tricom Structures and Namaqua Engineering (back-up structure), Westarcor Engineering and General Profiling (receiver indexer), and Stratosat (reflectors),” the SKA added.

Zuma went on to say: "This has led to job creation in the Northern Cape and diversification of the economy through the creation of artisan and maintenance jobs, and the promotion of science as a career of choice." - Vaguely correct

The MeerKAT radio telescope, which is a precursor to SKA, is being built about 90 km outside the small Northern Cape town of Carnarvon. The town on its own only has a population of just over 6 600 people, according to the 2011 census, making it unclear as to how many of this and even surrounding towns’ inhabitants could be employed directly by the MeerKAT project. However, the project in general is on track to create some jobs, according to statements made last year by Minister of Economic Development Ebrahim Patel. 

Patel was reported as saying that about 422 people are currently working as a result of SKA through initial infrastructure projects and that 54% of these are young people.

“More than 800 people have been supported by skills development over the last number of years ranging from postgrad studies to very important artisanal skills that are being developed,” he said.

However, it is unclear how many of these people have come from the Northern Cape itself.

5) "We had identified tourism as a key job driver. We are thus pleased that our tourist arrival numbers for the period January to November 2016 increased to nine million, an increase of just over one million arrivals from 2015. This represents a thirteen percent growth in tourist arrivals." - Correct

*Correction: Fin24 previously incorrectly wrote that this is 'partly correct'. Tourism figures have grown 13% as Zuma stated on not 2% as Fin24 previously wrote.

Tourism numbers for December 2016 had yet to be provided at the time of Zuma's speech. But data from Stats SA indicates that 8 011 053 tourists arrived in South Africa between January-November 2015 compared to 9 079 056 for January-November 2016. This amounts to a 13% increase.

6) "Government runs effective poverty alleviation programmes such as the Expanded Public Works Programme. In addition, social grants now reach close to 17 million people, mainly older persons and children. Many families would not be able to put food on the table if it were not for social grants." - Correct

Social grants in South Africa do currently reach about 17 million people, according to data from the South African Social Security Agency (Sassa). And even though South Africa remains among the most unequal countries in the world regarding income, social grants do plug an income gap for millions of poor South Africans, according to a recent note from Standard Bank.

"From BMR (Bureau for Market Research) data it appears that government’s fiscal policy, which redistributes wealth and income via social grants as well as an increase in public sector employment via the expanded public works and other programmes, has made some progress with respect to reducing income inequality," said Standard Bank.

"Currently, over 17 million South Africans receive social grants, and about 24% of households rely on grants as their primary source of income. We estimate that the ratio of average income in the lowest income group (R0-R20 500 p.a.) to average income in the highest income group (R2 414 001+ p.a.) declined by about 43%, from 1:8086 in 2011 to 1:4578 in 2016.

"That is, in 2011, on average for every R1 earned by an individual in the lowest income group, an individual in the wealthy income group earned R8 086. In 2016, we estimate this to have moderated to R4 578 for every R1," said Standard Bank.

7) "The Expanded Public Works Programme has since 2014, created more than two million work opportunities towards the attainment of the target of six million work opportunities by the end of March 2019. Of the work opportunities created, more than one million have been taken up by the youth. During 2015/2016, more than sixty one thousand work opportunities were created through the Environmental Programmes such as Working for Water, Working for Wetlands, Working on Fire and Working for Ecosystems. More than 60% of the beneficiaries were young people." - Correct

Data from the Expanded Public Works Programme shows that almost 2.5 million work opportunities were created during this period:

April 1 2016 to December 31 2016: 497 624

April 1 2015 to March 31 2016: 741 540

April 1 2014 to March 31 2015: 1 103 983

January 1 2014 to March 31 2014: 154 965

Total: 2 498 112

8) "The gap between the annual average household incomes of African-headed households and their white counterparts remains shockingly huge. White households earn at least five times more than black households, according to Statistics SA."– Correct

The Stats SA 2014/15 Living Conditions of Households Survey shows that white people earned an average income of R444 446 per annum, while black people earned R92 983 per year on average. This means white people earn on average 4.78 times more than their black counterparts.

9) "Only ten percent of the top one hundred companies on the Johannesburg Stock Exchange are owned by black South Africans, directly-achieved principally, through the black empowerment codes, according to the National Empowerment Fund."- Misleading

“As at end 2013, black South Africans hold at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange,” the JSE said in a statement on February 20 2015. “The shares held by black investors includes 10% held directly (largely through BEE schemes) and 13% through mandated investment (mostly through individuals contributing to pension funds, unit trusts and life policies). White South Africans hold about 22% of the Top 100 companies while foreign investors hold about 39%.”

That means white people hold less than black people; Zuma’s point was to show that black people had been kept out of the economy by white monopoly capital in his drive to bring about radical economic transformation.

10) "The pace of transformation in the workplace, the implementation of affirmative action policies as required by the Employment Equity Act, also remains very slow. In terms of the 2015/16 information submitted to the Employment Equity Commission, the representation of whites at top management level amounted to 72%. African representation was at 10%. The representation of Coloureds stood at 4.5% and Indians 8.7%." - Wrong 

According to the Commission for Employment Equity Annual report for 2015/16 (the most recent financial year), white representation at top management level was at 68.9%; African representation was at 14.3%. The representation of Coloureds stood at 4.7% and Indians 8.6%. 

Affirmative-Action large

11) "The State spends R500bn a year buying goods and services. Added to this the R900bn infrastructure budget ..." - Wrong 

According to National Treasury R204.6bn was spent on goods and services in the 2016/17 financial year. The infrastructure budget, according to National Treasury, is expected to amount to R865.4bn over a three-year period. In 2014/15 infrastructure expenditure was R259.7bn.

12) "Government is actively involved in the property sector, having provided more than four million houses since 1994. This sector in our country is valued at approximately seven trillion rand, with the subsidised sector being valued at one point five trillion rand. However, less than five percent of the sector is owned or managed by Black people and Africans in particular." - Partially true.

Economist Mike Schüssler of Economists.co.za told Fin24 that what is true is that government has built more than 3 million “RDP” houses and provided plots and building material for over 1 million more.

"Housing is one of the success stories of our country as we also have had over 1.1 million private sector houses built in the 20 largest cities or towns. One can add another lot of houses in traditional areas, which I think is about 600 000 to 750 000. Then we also have many other houses in smaller towns," said Schüssler.

"The IRR (Institute of Race Relations) says the government has built about double the number of RDP houses than people in informal settlements. Housing is a success story – not just from government, but from farmers to private individuals to communities have built many more houses than the country had before 1990."

Title deeds given so far to March 2015 will be about 30 000 at least. Black people own most of the houses - both RDP and of course private homes too.

Managing property is different to houses, Schüssler pointed out.

"If one looks at our pension funds which benefit more black people than white and blacks own a far larger part of pension funds and pension funds are major owners of property, then the 5% story seems not true. There is a success story in pension fund assets in SA too," he said.

"If one adds the PIC, for example, one would find it owns at least 5% if not more of commercial property in SA as it is the biggest pension fund and overwhelmingly African in people who benefit. So 5%? No, I do not believe that number."

According to Portia Tau-Sekati, CEO of the Property Sector Charter Council, the R7trn mentioned by Zuma is correct because a study by the Property Sector Charter Council confirms R5.8trn.

Tau-Sekati says the difference between R7trn and R5.8trn is because of the following:

"Under public sector:
- Metro and selected municipalities it covered have only been 11 namely COJ, Tshwane, Ekurhuleni, Ethekwini, Cape Town, Nelson Mandela, Buffalo City, Rustenburg, Mahikeng, Richards Bay and Pietermaritzburg;
- But there are a total of 259 municipalities (8 metros, 207 local municipalities, 44 district municipalities).
- So, the difference of 259 minus 11 is 248 municipality buildings/properties.

There are other provincial buildings that are not counted in the asset register of the National Department of Public Works (R102bn). Also, the NDPW revised the asset register after the results of the council's study to R112bn.

In the residential R3.9trn for us it was made up of almost 6.1 million houses registered as per the study done by DHS and there are an aditional 543 000 houses under informal settlements, but we had no value, just the volume."

Tau-Sekati is not sure about the value of the subsidised sector.

13) "Only eight million hectares of arable land have been transferred to black people, which is only 9.8 percent of the 82 million hectares of arable land in South Africa. There has also been a nineteen percent decline in households involved in agriculture from 2.9 million in 2011 to 2.3 million households in 2016. Going forward, government will continue to implement other programmes such as the Strengthening of Relatives Rights programme, also known as the 50-50 programme. In this programme, the farm workers join together into a legal entity and together with the farm owner a new company is established and the workers and the owner become joint owners. To date 13 proposals have already been approved benefiting 921 farm dweller households at a value of R631m. We applaud farmers and farm workers for this innovation. Our farmers went through a difficult period last year because of the drought. To date, an estimated amount of R2.5bn was made available for the provision of livestock feed, water infrastructure, drilling, equipping and refurbishment of boreholes, auction sales and other interventions. Furthermore, the Industrial Development Corporation and the Land Bank availed funding of about five hundred million rand to distressed farmers to manage their credit facilities and support with soft loans." - Questioned

Annelize Crosby, parliamentary liaison officer and legal and land policy adviser of AgriSA, told Fin24 that Zuma's statement that 82 million hectares of land are arable is very far removed from the truth.
"Only about 15 million hectares are arable for the whole country. A sizable proportion of this land is in black hands already, being situated in former homeland areas, or having been placed under land claims," said Crosby.

"The remaining agricultural ground should be described as 'arid', rather than 'arable'. According to the Department of Agriculture, Forestry and Fisheries, 'the Republic of South Africa covers 121.9 million hectares, and has a total population of about 46.6 million people. About 13% of SA’s surface area can be used for crop production. High-potential arable land comprises only 22% of the total arable land. Slightly more than 1.3 million hectares of land is under irrigation'."

Crosby said Zuma's statement that 82 million hectares are in the hands of whites is also incorrect.

"Deducted from this should be all land transferred through land reform since 1994, all municipal land, all road reserves, all land owned by large mining and forestry corporations - most of which are wholly or partially black owned - and all ground privately purchased by blacks since 1994," said Crosby.

She referred to a recent article in Landbouweekblad regarding the redistribution of agricultural land that has happened through the market, namely around 17%.

As for Zuma's statement regarding the relative rights pilots, Crosby said what is not mentioned, is that the land becomes state land and does not get transferred to the beneficiaries.

"Huge sums of money are being spent, with few people benefiting and the National Empowerment Fund takes up a 5% stake in these farming enterprises," said Crosby.

"And as for statements regarding the money spent on the drought, AgriSA would love to see a detailed breakdown of how this money was spent."

John Purchase, CEO of the agricultural business chamber Agbiz, told Fin24 that saying “only eight million hectares of arable land have been transferred to black people, which is only 9.8% of the 82 million hectares of arable land in South Africa”, is technically not correct.

SA's surface is about 122 million hectares of which about 25 million hectares is in the hands of the state. It includes national parks, army land, communal land and parastatals like Eskom.

"The 82 million hectares referred to is actually the so-called commercial agricultural land on which mainly white farmers have title deeds - the Department of Agriculture, Forestry and Fisheries has an official figure of 86 million hectares. It is here where about 8 million hectares have been transferred to blacks by means of a so-called redistribution programme," said Purchase.

"However, it is wrong to call this 'arable land', because only about 16.7 million hectares of this has the potential to be arable. The rest is grazing areas - for instance in the Kalahari and Karoo - which make up the largest part of the 82 million hectares."

As for Zuma's statement that “to date, an estimated amount of R2.5bn was made available for the provision of livestock feed, water infrastructure, drilling, equipping and refurbishment of boreholes, auction sales and other interventions,” according to Agbiz, government may have spent R2.5bn on agriculture but practically all, if not all, was directed at especially smallholder and also developing black farmers, and very little at commercial agriculture. The way it was stated in the SONA was, therefore, misleading.

14) Government has provided funds to ensure that no student whose combined family income is up to six hundred thousand rand per annum will face fee increases at universities and TVET colleges for 2017. All students who qualify for NSFAS and who have been accepted by universities and TVET colleges will be funded. The university debt of NSFAS qualifying students for 2013, 2014 and 2015 academic years has been addressed. In total, government has reprioritised thirty two billion rand within government baselines to support higher education. - Correct

According to the mini budget speech delivered by Finance Minister Pravin Gordhan in October 2016, government reprioritised over R32bn.

In addition to the R16bn allocated to higher education in the February budget, a further R9bn would be allocated to the National Student Financial Aid Scheme (NSFAS) with funds being raised by over 18% annually. Over R8bn would be allocated to meet the cost of fee increases for students from households with incomes up to R600 000.

Previously in 2015, R5.6bn was added to university subsidies to fund the zero percent fee increase for the 2016 academic year and NSFAS received additional funding of R10.6bn for 2016’s medium term expenditure framework.

15) "The fight against corruption continues. Within the National Prosecuting Authority, the Asset Forfeiture Unit completed three hundred and eighty nine forfeiture cases to the value of three hundred and forty nine million rand. They obtained three hundred and twenty six freezing orders to the value of seven hundred and seventy nine million rand. A total of 13 million rand was recovered in cases where government officials were involved in corruption and other related offences in the past year." - Partly correct

According to the National prosecuting Authority’s annual report of 2015/16, these figures were confirmed:

During the year under review, the Asset Forfeiture Unit completed 389 forfeiture cases. The AFU obtained forfeiture and confiscation orders to the value of R349.5m against a target of R210m.

The AFU continued to implement its corrective measures to increase productivity and resolve inhibiting factors with its partners. As a result, 326 freezing orders were obtained, exceeding the set target of 321 orders.

However, during the year under review freezing orders to the value of R238.6m were obtained, which was below the target of R800m. This decline is attributed to fewer cases of large value being finalised.

Recoveries or R13m relating to government officials convicted of corruption and related offences were made. This excellent performance was due to several big recoveries of more than R500 000 in cases being finalised, which relate to 11 cases and 12 government officials convicted of corruption.

Read Fin24's top stories trending on Twitter:

jacob zuma  |  land  |  employment  |  sa economy  |  sona 2017


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