In the space of few days, just before South Africa’s Finance Minister, Pravin Gordhan, was to appear in court on charges of fraud, the reputations of President Jacob Zuma and the country’s National Director of Public Prosecutions, Shaun Abrahams, were dealt damaging blows.
In an impromptu press conference on October 31, a day of Halloween that might haunt Abrahams for years to come, the National Director of Public Prosecutions announced that he was withdrawing the charges against Gordhan, along with those against two former employees of South African Revenue Services (SARS), Ivan Pillay and Oupa Magashula. From the word go, many suspected the charges were trumped up and politically motivated.
In a long-winded speech at the NPA’s headquarters in Pretoria, Abrahams was nervous as he fielded scathing questions from the media. It was a far cry from the man who seemed self-assured as he announced the charges less than a month before. While Abrahams was confident then, his actions sent shivers down the spines of investors. The markets plunged and the rand fell more than 3% in few minutes. It was just two weeks before Gordhan delivered his mid-term budget speech.
It raised questions about the leadership of Abrahams, who is in charge of National Prosecuting Authority (NPA), and Zuma, who appointed him.
“When you are in a situation like we are in at the moment, you need leadership in government. At the same time, get the timing right. Leadership, in this particular instance, is needed to inspire confidence. Confidence in your country, confidence in a future and confidence in yourself, that you can influence the present to change the future. That is what is missing at the moment. Some of us are trying, some of us are close. I think we can do it,” said Gordhan during an interview with CNBC Africa a week before the trial was to begin.
On November 2, the day Gordhan, Magashula and Pillay were meant to appear in court, the High Court in Pretoria ordered the Public Protector to release the report on state capture, despite attempts to interdict its release by Zuma, Cooperative Governance and Traditional Affairs Minister David van Rooyen, and Mineral Resources Minister Mosebenzi Zwane. All three are implicated in the report which raises questions over the influence of the Gupta family on the president, ministers and state-owned enterprises.
Members of the Economic Freedom Fighters (EFF) marched in Pretoria demanding Zuma and Abrahams resign.
In Pretoria, shops closed their doors for fear of looting. The only people making money were those selling food and EFF merchandise in the streets.
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An EFF branded truck entertained the supporters with music as a group danced and sang revolutionary songs at Church Square. Later, while addressing thousands of his supporters, EFF President, Julius Malema, lashed out at Zuma‚ saying that he’s “the country’s number one thief who sold it to the controversial and well-connected Gupta family.”
“We are putting a very strong argument that Zuma must pay the cost personally. We want to teach Zuma’s Mickey Mouses a lesson because these ministers are doing as they wish and they take matters to the court knowing that they won’t be affected,” says Malema.
“All those who captured the state of our institution must go. The CEO of [national power supplier] Eskom must go because he doesn’t have a place in our institution and that includes everyone else in government-owned companies who are controlled by the Guptas, if you can’t resign from the Guptas now; you’re going to be history. The Guptas must leave South Africa.”
The marchers dispersed while chanting: “Zuma the thief must voetsek (go)” and “Defend the democratic state”. Chaos erupted as they blocked traffic around the central business district. Police attempted to control the crowd after they burned a water tank.
The crowd ran amok and damaged property and looted shops. They assaulted the security who was trying to protect shops. The police used stun grenades, rubber bullets and water cannons to disperse the supporters after they reportedly tried to force their way onto the lawns of the Union Buildings.
In these few days, where chaos erupted in parliament, court and the street, South Africans were assured that the law will always trump political shenanigans. As Gordhan was able to hold his head high, Zuma and his cronies had to take cover and plot their way out of the mess they suddenly find themselves in.

‘Zuma The Thief Must Voetsek’

It had been a long hot Friday afternoon. As I drove home, towards the shacks of Zandspruit in Johannesburg, I could see black smoke. The voice on the radio warned of a service delivery protest as I drove into it. Women and men chanted and blocked the road. Words flew; then rocks, then bricks. A rock smashed into the face of one of the police officers, blood poured.
This is one of the many faces of discontent across Africa. Poor and rich alike feel short-changed in these tough economic times. The poor fight with rocks; the middle class with their bank accounts. People no longer want to pay. Their hard-earned cash, they complain, is wasted by politicians.
A tax revolt is rising. It may be in its infancy, but in South Africa, the threat is being taken seriously enough for Judge Dennis Davis to issue a warning.
In many ways, Davis is Mr Tax. He is head of the Davis Tax Committee, appointed by the Finance Minister to examine how revenue generated by the South African Revenue Service (SARS) can be used to improve the economy. He was a Technical Advisor to the Constitutional Assembly where the negotiations for South Africa’s interim and final constitutions were formulated and concluded.
“It’s a question of where government spends the money. People want to see results with their taxes. If they are not satisfied, they may choose to just stop paying. The greater the level of corruption, the less we will have tax integrity and the greater the possibility of a tax revolt,” says Davis.
Expenditure is through the roof in South Africa. According to Auditor-General Kimi Makwetu in his report for the 2014/2015 financial year, irregular expenditure amounted to R5.68 billion ($355 million). The report says 45% of this was spent by the Education, Health and Public Works departments. Irregular expenditure more than doubled from the previous year in Mpumalanga, a province in eastern South Africa, bordering Swaziland and Mozambique.
“Of the R936 million ($58.5 million) in fruitless and wasteful expenditure incurred in the year under review, R32 million ($2 million) was incurred to prevent further fruitless and irregular expenditure or losses. This normally relates to the cost of cancelling irregular contracts or contracts of non-performers,” says Makwetu in the report.
Due to overspending the budget, unauthorised expenditure amounted to R1.64 billion ($100 million). This is money emptied from the already lean pockets of people in a country where 12 million live in extreme poverty and top earners pay up to 41% in tax. On top of that, over the past decade, residents have been burdened with increases in property, electricity, toll and vehicle licencing fees; yet, potholes and power cuts persist. This is laced with accusations of corruption, an issue which has drawn the ire of veteran champion of the people Wayne Duvenage. He made his name standing up against Gauteng’s infamous e-toll tariffs. He is chairman of the Organisation Undoing Tax Abuse (OUTA), which says its aim is to challenge unfit taxation or the squandering of money.
“The public have become justifiably angry over the squandering and waste of their taxes. [A tax revolt is likely] but is however not a situation I would want or wish for our country and we should do everything possible to prevent such a situation from developing. This is why the Minister of Finance is calling for a positive and participative approach to resolving our problems. The issue, however, is that while a corrupt leadership remains prevalent and connected to the head of state, and other key positions within government and its state owned entities, very little can be done to mobilize a positive approach to addressing the key issues of corruption, cronyism and service delivery. This is what is driving the negative sentiment,” he says.
It appears many other people have also had enough. A survey by  NGO, AfriForum, says  none of the respondents say they are getting their tax money’s worth; 24% say they only pay tax because they are compelled to and 42% question why they should pay tax at all. AfriForum runs a viral #whatarewepayingfor campaign to hold government responsible for the misappropriation of money.
Monique Taute, National Campaign Coordinator at AfriForum, says the government promised to improve education, yet the national pass rate for Grade 12 students declined from 75.8% in 2014 to 70.7% in 2015. It promised to improve security, public order and safety, yet the crime rate increased by 0.09% from 2014 to 2015. It promised to decrease unemployment, yet the International Labour Organisation (ILO) announced in January 2015 that South Africa has the 8th highest unemployment rate in the world. The unemployment rate stood at 25.5% in the third quarter of 2015, an increase of 1.2% from 2014.
“It is clear that the government failed in all three objectives. Taxpayers should have the right to know what they are paying for. From what we see, in the consolidated general report on national and provincial audit outcomes as well as from 2015 statistics, it is clear that government once again failed to fulfil its responsibilities in the 2015/2016 fiscal year. Government is abusing taxpayers’ money. Even though taxes are increased, government does not fulfil its primary responsibilities,” says Taute.
CEO of the SA Institute of Tax Professionals, Keith Engel says people are at a breaking point.
“It is more about expenditure than anything else. People are saying, ‘yes we are paying tax but what are we getting for it?’” he says.
According to Engel, if entrepreneurs reach breaking point, they could play hide and seek with the revenue services.
“[You] won’t do that with the attorneys or accountants, because you will [lie] to your accountants and give them a different set of books to work from. So people can keep two sets of books. In small businesses, the employer might make a deal with you were he says ‘I am going to give you R300,000 but I will give you another R200,000 that we will not tell the revenue services about,” he says.
Alex Poole* (not his real name) who runs a tax revolt Facebook page, followed by 21,000 people, says: “Most people can sense that they’re being [robbed]… I believe all forms of mandatory income taxation are theft. The things its being spent on is so obviously not in the best interest of the country’s needs, people feel more and more ripped off. It now feels like the theft that it is. And the people are rightfully angry about it.”
Engel, however, commended Minister of Finance Pravin Gordhan for his 2016 budget.
“The budget was more about expenditure than it was tax. You can see very clearly they didn’t want to break the backs of the taxpayer. He spoke about cutting wages and a lot of government expense which made people a bit at ease,” he says.
SARS doesn’t think a tax revolt is likely. It says its compliance model is designed to foster voluntary compliance and says there is high tax integrity in the country.
“SARS has found the vast majority of taxpayers are fully tax compliant. This is testament to the patriotic and compliant culture of South Africans. In the very odd cases of intentional non-compliance, SARS recoups the taxes, as per the provisions of tax and customs legislation,” says an employee at SARS who asked to remain anonymous.
If Gordhan’s budget cuts don’t show in the numbers, South Africans may think the best form of defence is no tax.

Nothing For Nothing

It’s been two decades since South Africa became a democratic republic and the issue of gender equality in the workplace continues to surface. We have our Constitution as the supreme law of our land – that is widely acknowledged as one of the most progressive in the world. Enshrined in Section 8 of the Constitution is the right to equality. This provision prescribes that no one can be discriminated against on grounds of race, sex, religion and sexual orientation. However, there is an unfair disparity between the salaries of females and males in South Africa.
According to statistics published by the South African Revenue Services (SARS) in 2013, the average taxable income for females was around R193,908 ($14,543) per annum, while males earned an average of R254,347 ($19,076) per annum. This effectively means that the average female earns around a third less than males. There are, however, a number of plausible reasons: firstly the job market that succeeded the Industrial Revolution was primarily designed for men, men were, and still are to a degree, seen as the providers and women as caregivers.
However, this has progressively changed over the past few decades with gender equality groups, in recent years vehemently stating their dissatisfaction for the slow rate of transformation for women in the workplace. Interestingly, South Africa has funnelled out more female graduates than males in recent times and the pay at which both parties start is often based on the educational level, skills and experience. Thus, on the surface, it appears as though males and females start on a similar pay grade.
Nonetheless, what would be interesting to investigate is why the gap widens over the years. Are males offered better opportunities for career advancement than women purely based on the fact that they are men? Or perhaps are employers wary of the disruption pregnancy might have on labor supply? If the Constitution states that we are all equal, why should the latter even be questioned? After all, women do not get pregnant by themselves. Some sociologists believe that the proverbial ‘work/life’ balance for women may be an illusion, citing that females might have to concede a thriving career for a more family-orientated lifestyle.
A recent survey that was conducted in numerous university campuses across South Africa states that most female graduates’ biggest concern is how they will take care of their families amid ambitions of conquering the corporate world.
Some may wonder why the conversations surrounding the disparity of income between males and females are pertinent. In a South African context it is simply unavoidable: the country’s social structure tells us that more houses are headed by women than men. Thus females earning potential not only impacts their immediate spending potential on the people they care for but could possibly have an adverse impact their ability to take care of themselves in their pension years.
The call from gender equality organizations for the eradication of income disparities between men and women has never been more boisterous. This call includes getting more female participation in management and senior executive positions within organizations. Ironically, the private sector can learn from the government. Our government has taken the lead and should be commended for employing women as cabinet ministers, premiers, MECs, mayors and directors and CEOs in state organizations.
Diversity can be a significant competitive advantage for organizations that implement it correctly. Women are the backbone of our society and the role they play in our family structures is indispensable. Despite the prejudices women have overcome in the ‘free world’, there are biases that are firmly rooted in the workplace and should be addressed. Going forward, our labor legislative framework should consider shared paternity and maternity leave in order to minimize the biases that women encounter for falling pregnant – what I would call the ‘career penalty’. Conversations around the disparity in income of men and women is a decent start, but whether anything will be done about this remains to be seen.

Are Women Really As Equal As Men?

Philanthropy is entering what some economists and academics believe is another golden age. Previously, there were booms in giving in Renaissance Europe, 18th-century Britain, the Victorian era, and during the age of industrialization in the 19th-century.
It is hardly surprising, considering how the number of millionaires has increased across the world. But inequality remains widespread. Besides the fact that giving makes one feel good for various reasons, it also makes business sense.
“Philanthropy in Africa, strateg-ically pursued, will contribute to broad-based growth, which creates markets, which in turn enables commerce. How could it not make good business sense?” says Jane Wales, who is the CEO of the Global Philanthropy Forum (GPF).
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Besides opening up markets, many philanthropists are able to provide risk capital for social innovation where governments and businesses are averse to go. John D. Rockefeller, who was one of the first philanthropists in the United States (US), was key to helping eradicate yellow fever and hookworm.
A contemporary example is Eli Broad, whose Broad Foundation is sponsoring medical research in human genomics to revolutionize clinical medicine and make that knowledge freely available across the globe.
“Philanthropy is not and should not be about sure bets. It should include a very healthy dose of risk taking. In fact, in an era of 24-hour news cycles, snap judgments, and the tyranny of quarterly reports, one could argue that the philanthropic sector is the only societal actor that can take risks, withstand short-term setbacks and make long-term investments in the social good,” says Wales.
In the US, philanthropy and charities are encouraged through massive tax breaks. This is very different in Africa, where there is little legal framework for philanthropy. However, there is a push by philanthropic organizations, such as the Kenya Community Development Foundation, for governments to adopt policies that are favorable for philanthropy.
But what is philanthropy? The most common definition is that it is a humane act aimed at creating a better life. So how do we value human life?
Acclaimed philosopher Peter Singer believes that if we were forced to put a price tag on human life, we would say it is in the millions.
He then goes onto to argue that we are all created equal, “at least to the extent of denying that differences of sex, ethnicity, nationality and place of residence change the value of a human life”.
This is especially true for many Africans, who continue to live in abject poverty and survive on handouts.
But its not all doom and gloom. This picture is changing, albeit it painfully slowly in some areas. Philanthropy is gaining momentum in Africa, and it is not only international do-gooders who are helping communities uplift themselves in a sustainable way.
Africans are increasingly becoming involved in philanthropic projects, with the belief that we should be driving the broad-based growth on the continent.
In South Africa, the tax regime is slightly more beneficial. Currently, donations to public benefit organizations are deductible up to 10% of an individual’s taxable income in the year the donation is made.
But the South African Revenue Service (Sars) has noted that large donations are discouraged, because donations in excess of the limit cannot be carried over. It is now looking at allowing donations in excess of 10% of taxable income in any given year to be rolled over as allowable deductions in subsequent years.
According to Nedbank’s Giving Report II, which surveys the giving practices of high-net worth individuals in South Africa, respondents highlighted insufficient tax benefits as a reason for not being philanthropic.
“In 2012 a total of 29% of donors (104) said they would give more if there were more tax perks for giving. This is almost double the 15% of respondents in 2010 who said that changes to the tax regime would influence their giving behavior.”
The Private Philanthropy Circle (PPC), an independent forum of individual philanthropists, is in the process of preparing a formal submission to Sars and the National Treasury on amending the tax regime.
“We believe that tax legislation that promotes philanthropy through benefits or relief for the establishment and growth of philanthropic foundations (institutionalized giving) will ultimately encourage and ensure the sustained strategic support of civil society. Likewise, the non-profit sector would benefit from a more enabling environment for their donors a well,” says PPC member Amanda Bloch. The forum wants a number of changes, including an increase in the upper limit of 10%, the lengthy turnaround times at the Tax Exemption Unit to be addressed, and a clarification from Sars on gifts in kind and services donated, such as time, skill and effort.
Many types of philanthropy are practiced around the world and they all have varying benefits.
“Impact investing”, which aims to achieve financial and social environmental gain at the same time, is becoming more popular. Bill Gates, the founder of Microsoft and one of the greatest philanthropists of our time, is an advocate for program-related investments (PRIs).
Instead of giving money away through grants, PRIs allow philanthropic foundations to make investments as loans or equity stakes, hoping to regain them at a later stage, plus a reasonable rate of return.
The Bill &amp; Melinda Gates Foundation’s $400 million investment program encourages employees to weigh up the social and financial returns involved in proposed projects.
In 2009, non-profit social investment fund Root Capital was chosen as the foundation’s first PRI. The organiz-ation is expanding opportunities for 500,000 rural households in Africa with an investment of $10 million and a $4 million grant. It is being used to extend access to credit, financial management training, and global market opportunities for small and growing rural businesses.
As privatization and the scramble for Africa’s mineral wealth continues, some philanthropic organizations and academics believe there are new opportunities to harness these resources for the public good.
Lester Salamon, a director at the Institute for Policy Studies at John Hopkins University in the US, argues for what he calls “Philanthropication thru Privatization (PtP)”. Basically, it is the phenomenon of capturing, in charitable endowments, at least some of the proceeds of the sales of state-owned enterprises or common-use resources underway around the world.
In one study, Salamon says that more than 500 endowed, independent charitable foundations have been created or enriched during the privatizations, and together they control assets of $128 billion.
The African Grantmakers Network believes PtP will help to prevent the continent’s civil society from relying solely on external funding. An example cited is the Newmont Ahafo Dev-elopment Foundation in Ghana. It was formed in 2008 when Newmont Ghana Gold Limited and the Ahafo Social Responsibility Forum pledged to support community development programs near the mine.
The company contributes $1 per ounce of gold produced and 1% of net profits from the mine to the foundation. In turn, the foundation supports economic empowerment, infrastructure development and sports and social amenities.
Becoming financially self-sufficient and not over reliant on aid and donors is not to be scoffed at. But just how many good deeds can be done when the overwhelming leitmotif of the initiative is driven by profit? Surely a case can be made that profit would, in most instances, trump philanthropy?
Whatever the method of benevolence, Africans are stressing that it needs to be sustainable. Earlier this year, GPF launched its most recent regional affiliate, the African Philanthropy Forum (APF).
Its aim is to contribute to the expansion of strategic philanthropy by Africans in Africa by seeking to address the underlying causes of a given problem. Put differently, don’t give a handout; give a hand up.
“But it would be a mistake to assume that strategic philanthropists ignore such inputs as instinct and intuition. It would also be a mistake to assume that deep in their hearts they are not in search of a ‘silver bullet’ that will solve all. It’s human nature to be impatient in one’s search for a better world. And that’s a good thing,” says Wales. APF’s members define philanthropy broadly to encompass all private means of financing the social good – from grants and microfinance to investments in enterprises that provide goods, services and income-generating opportunities for the poor. Some put their companies to the service of social goals, pursuing what is known as a ‘shared value’ or ‘inclusive business’ strategy.
APF believes the next wave of philanthropic innovation will come from the continent. The forum’s impressive membership includes Nigerians Tony Elumelu and Hakeem Belo-Osagie. Elumelu wants to rewrite Africa’s story by leveraging markets in a strategy he refers to as ‘Africacapitalism’, while Belo-Osagie supports a number of higher-education institutions and philanthropic funds to advance education and build leadership skills among young Africans.
Other members are South Africans Hylton and Wendy Appelbaum, who support a variety of causes, and Benin’s Angelique Kidjo, who promotes the empowerment of women and girls.
One of Africa’s most well-known couples involved in philanthropy is mining magnate Patrice Motsepe and his wife, Precious Moloi-Motsepe, who is a key player in Africa’s fashion industry. They made headlines earlier this year when they announced that they would donate half of their wealth to their foundation, which is involved in a number of initiatives to uplift communities.
The Motsepes join the likes of Gates and US business magnate Warren Buffet, who started the Giving Pledge, which encourages the super-rich to donate at least half of their wealth to charities.
Although the super-rich are often criticized that their philanthropic efforts are in part motivated by self-interest, their impact on making changes for good cannot be scoffed at.
As Albert Einstein so aptly put it: “It is every man’s obligation to put back into the world at least the equivalent of what he takes out of it.”

Tag: SARS

FORBES AFRICA SOCIAL MEDIA

‘Zuma The Thief Must Voetsek’

Nothing For Nothing

Are Women Really As Equal As Men?

The value of philanthropy