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E-BUSA Bulletin

OCT/NOV 2012

WE HOST THE CHAIRPERSON OF THE AFRICAN UNION COMMISSION DR NKOSAZANA DLAMINI-ZUMA

Chairperson of the African Union Commission Dr Nkosazana Zuma, speaking at a BUSA event at Gallagher Estate on Saturday 27 October.

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Captains of industry who were seated at the main table with Dr Nkosazana Dlamini-Zuma

Geoff Rothschild (JSE), Stanley Subramoney (PWC) and Lynette Chen (Nepad Business Foundation with the AU Chairperson

Ambassador Kaya Moyo of Zimbabwe, Dr Nkosazana Dlamini Zuma, James Makamba Snr and son

Dr Nkosazana Zuma, Bongumusa Makhathini of SAB and BUSA Chairperson Adv Brenda Madumise

James Makamba, BUSA members and BUSA CEO Nomaxabiso Majokweni

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BUSA VP Dean Mogale with Dr Nkosazana Dlamini Zuma

BUSA members with Dr Nkosazana Dlamini Zuma

Dr Nkosazana Dlamini-Zuma with Ambassador Nozipho January-Bardill

Johannesburg Mayor Parks Tau with Dr Nkosazana Dlamini-Zuma

General Solly Shoke with Dr Nkosazana Dlamini Zuma Agostinho Zacarias UN Resident Coordinator

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TRADE &INVESTMENTS AND SPECIAL PROGRAMMES

HIGHLIGHTS: SOUTH AFRICA-FRANCE ECONOMIC FORUM

With over 160 South African and French companies and organizations in attendance, BUSA and Medef

International (French apex business association) convened a successful South Africa – France Economic Forum on

the 16th

– 17th

October. The forum, structured to further advance South African – French economic ties, was held

at the Sandton Convention Centre.

Gerald Wolf, Chairman of the French Business Council for Southern Africa, MEDEF International and Martin Kingston Chairman of the South African Business Council for Southern Africa

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During the opening ceremony, the Deputy Chairman of Standard Bank Group, Mr Saki Macozoma, emphasized the

need for both business communities to deepen their understanding of the other’s respective cultures and business

practices to further enhance business engagement. Prior to those remarks, French Ambassador to South Africa

H.E. Jacques Lapouge, informed participants that French companies sought to diversify their investments in South

Africa, which was evidenced through the composition of the 35 strong visiting French businesses delegation. The

ambassador also identified the SA-France Forum as an excellent opportunity to diffuse current global economic

challenges facing both economies.

The two-day forum was overseen by the co-chairs of the South Africa – France Economic Forum, Martin Kingston

of Rothschild SA and Gerard World of Medef International. The programme included six plenaries, business-to-

business meetings, a reception and site visits for the French delegation. Economic cooperation discussions mainly

focused on investment opportunities for infrastructure; information communications – broadband; renewable

energy; and the legislative environment in South Africa. Guest speakers included companies and organizations

such as; Standard Bank, Rothschild SA, Group Five, Transnet, Altech Management, I3 Africa, Thales SA, Eskom,

Department of Energy, Absa, KPMG, The dti, University of Witwatersrand, the National African Federated Building

Industry and Business Unity South Africa and many more.

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The BUSA - Medef International co-organized event was made possible through the support of the following

companies and organizations: Black Business Council, Eskom, National Empowerment Fund, French -South Africa

Chamber of Commerce, EDF, Total, Ponticelli, KPMG, and the France – South Africa Seasons 2012/2013.

ELECTRICITY

Eskom Application for Electricity Price Increase

On Friday, 19 October 2012, Eskom made an application to the National Energy Regulator (NERSA) for another phase of tariff

increases (MYPD3). The application is presently under consideration by NERSA, with the process of consultations envisaged to

culminate in public hearings in January 2013. The application relates to the revenue requirements of Eskom. It concurrently

translates this into a tariff. The substantive elements of the application are as follows:

Eskom has requested an average tariff increase of 16%, over a 5-year period;

In monetary terms, the requested increased tariff would translate into an increase from the current 61c/KWh, to a

level of 128c/KWh in 2017 (nominal);

According to the application, the tariff has been worked out as the sum of Eskom’s own needs over five years (which has been

worked out at 13%ave), and those relating to capacity from independent power producers (which has been worked out at

3%ave). The intention is for the new tariff to come into effect:

for direct customers, on 01 April, 2013; and

for indirect customers, on 01 July, 2013.

The application, and related annexures (with detailed breakdowns of the various components of the process for arriving at the

quantum and phase-in period), are available at: http://www.financialresults.co.za/2012/eskom_ar2012/integrated-

report/electricity-tariff-report.php . A high level summary of the salient issues relating to the application has been circulated to

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members. Members are encouraged to submit comments on and input relating to the application. The timelines for the

consultation process are as follows:

- NERSA public hearings will take place in January, 2013.

- The aim is for the process, and final approval, to be complete by February 2013, for tabling in March, 2013.

NERSA Hearings on MYPD Methodology

In a parallel process, the National Energy Regulator has been consulting stakeholders on its methodology for considering

Eskom tariff applications. The multi-year price determination (MYPD) methodology runs concurrently with Eskom’s financial

year, and the one that is presently in place (MYPD2) runs until April 2013. NERSA has been considering written submissions,

hosted public hearings on the 1st

of November, 2012, and is expected to reach a final decision on the 29th

of November, 2012.

At the hearings, a number of the presenters raised concern regarding the high-level character of the regulator’s present

methodology, and the discretionary nature of components of the process. Several references were made, in various

presentations, to the present tariff application. NERSA will publish the methodology on its website on 03 December, 2012.

Renewable Energy IPP Procurement Programme

In his medium-term budget policy statement speech, Minister Pravin Gordhan announced the finalisation of financial

concurrence on the 28 renewable energy projects that were announced in December 2011. On the 29th

of October, 2012,

Minister Dipuo Peters affirmed the conclusion of the process for finalising the contracts relating the 28 successful bidders. The

28 represent round one of the first three phases of the renewable energy procurement programme. The 28 independent

power producers (IPPs) were announced in December 2011 to have a combined 1400MW capacity. They represent a reported

investment potential of R47 million. The IPPs will sign power purchase agreements (PPAs) with Eskom on the 5th

of November,

2012.

ECONOMIC POLICY

MEDIUM TERM BUDGET POLICY STATEMENT (MTBPS)

On 25th

October BUSA commented on the MTBPS: Business Unity South Africa

(BUSA) acknowledges the overall approach of the MTBPS as a balanced and

realistic assessment of the challenges faced by South Africa in tough external and

internal economic circumstances. Although accepting that this was only the “mini-

budget”, BUSA would nonetheless have preferred a stronger economic message. It

would have been helpful if more detail had been available about the fiscal road

map ahead. The degree to which investor confidence will be reassured by the

Raymond Parsons BUSA Special Policy Advisor

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MTBPS will depend on the commitments in key fiscal variables and targets being successfully implemented in the

period ahead and more policy certainty being revealed in the main budget in February 2013.

Given the magnitude of the task facing Minister Pravin Gordhan in his mini-budget speech today, BUSA welcomes

the extent to which budgetary decisions are being increasing aligned within the framework of the National

Development Plan (NDP). This puts South Africa in a better position to take coherent and coordinated short term

and long term decisions to deal with the stresses and strains in the current economic outlook.

BUSA believes that deteriorating prospects for the world economy, with a sharply declining domestic growth

trajectory, a limited tax base and ongoing spending pressure, South Africa’s fiscal space is shrinking and there are

no reasons for complacency. Although BUSA supports a broadly conservative approach to state spending, it

remains concerned at the frequent references in the MTBPS to the rising public sector wage bill. It is essential

that, even with the intention of keeping public expenditure levels within the 2012 budget, the emphasis on

infrastructural spending must continue to strengthen the nation’s balance sheet.

As part of the commitment to ensure that tax payers money is spent wisely and receives the best value for money,

BUSA welcomes the use of tax compliance as a determinant of good standing when deciding to award a

government tender, a practice which also is developing in the private sector as a check on business integrity and

financial soundness. This can form an important part in building and strengthening a non-corruption environment,

together with the other measures announced in this regard.

BUSA hopes that the National Treasury will reinforce the message of the Presidential High Level Dialogue Package

last week to cooperate with the private sector to fast track the agreed infrastructure bill programs and underspent

funds will be re-allocated to projects which are shovel-ready. Effective infrastructural development is

indispensable if South Africa is to successfully tackle the triple challenges of unemployment, inequality and

poverty.

BUSA fully supports the need to seek solutions to the socio-economic challenges facing South Africa on the basis of

strong collaboration and collective action between key stakeholders.

E-TOLL DEBATE STILL ON-GOING

On 26th

October BUSA issued this statement: While BUSA appreciates

the consultative process undertaken by the Inter Ministerial Committee

under the chairmanship of Deputy President Kgalema Motlanthe to

soften the impact of the Gauteng e-tolling on business and consumers, it

believes that there are still some difficulties to be ironed out before the

project can be implemented. There remains widespread criticism of the

impact which e-tolling will have on the regional and national economy

and it is important to use the time available to ensure that confidence is

built in the final decisions before they are implemented. BUSA therefore

welcomes the fact that there will be a 30 day period for further

consultation with stakeholders before the final tariffs are announced.

BUSA believes that further opportunities to interrogate the decision

making process will also lie in the high court hearing on 26 November 2012 and the public hearings to be held by

the parliamentary portfolio committee on transport on the draft legislation to empower the Cross-Border Road

Transport Agency to collect tolls on behalf of SANRAL. BUSA proposes to participate in the parliamentary hearings.

Deputy President Kgalema Motlanthe who chairs the Inter Ministerial Committee on the GFIP

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BUSA WELCOMES NATIONAL CENSUS AS VITAL INSTRUMENT FOR PLANNING

On 31st

October BUSA issued this statement: welcomes the latest national census as an important statistical

milestone. BUSA believes that the national census provides an essential profile of demographic trends in SA and

their socio-economic implications. While the census identifies the progress made to date in socio-economic

upliftment, it also confirms the significant challenges that still remain in addressing unemployment, poverty and

inequality. It is a yardstick for both past and future achievements. BUSA therefore sees the outcome of the

national census as a vital instrument for better planning and decision-making by both the public and private

sectors. While the census may have confirmed certain socio-economic trends that have been apparent for some

time, it more importantly provides a reliable base for proper planning and targeted development. In particular,

SA’s young population emphasises the significance of education and youth employment schemes as policy

priorities. The census results put SA in a stronger position to move towards a shared vision for 2030, as outlined in

the National Development Plan, based on the practicalities that need to be embedded in future decision-making by

government and business alike. The census confirms why it is necessary to expedite the actions and processes that

are necessary to concretise the vision that SA must now have for 2030 - and business remains committed to that

outcome.

NEW MEMBERSHIP

Adrian Gore, Group Chief Executive Officer, Discovery

Adrian Gore is the founder and Chief Executive Officer of the Discovery Group, one of

South Africa’s fastest growing diversified financial services groups. Under Gore’s

leadership, Discovery has expanded its reach and business offering to the United

Kingdom, United States and China. Discovery generates total income flows in excess of R50

billion and has over 8 000 employees globally serving approximately six million

customers world-wide.

Gore is a true entrepreneur and a pioneer in business innovation. He launched the Discovery

business model in 1992 with the support of the FirstRand Group. Wanting to take the business to the next level and through his

desire for growth and constant improvement, Gore championed Discovery’s listing on the Johannesburg Stock Exchange in

1999 and its unbundling from FirstRand in 2007. Since then, Gore has transformed Discovery into a company that is a master at

business reinvention with the company consistently entering new and diverse markets. In 2007 Discovery entered the savings

and investment market with the establishment of its Discovery Invest business, South Africa’s fastest growing investment

business, which achieved the milestone of managing over R25 billion in assets in just four years. In 2011, Discovery launched its

entry into the short-term insurance market with Discovery Insure, an innovative insurance company that also encourages

better driving with Vitalitydrive.

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TRADE POLICY

Regional Economic Partnership Agreement (EPA) Seminars

On the 16th

and 17th

of October, the European Union (EU)

delegation to South Africa, in collaboration with the EU DG

Trade, hosted a seminar on agricultural trade. The

seminar, which was held in Stellenbosch, represented a

stakeholder engagement that was dedicated to the

agricultural components of EU – SADC EPA Group trade

relations. The seminar was attended by private sector

representatives from Angola, Botswana, Lesotho,

Mozambique, Namibia, South Africa, and Swaziland. It

was also attended by representatives of the South African

Departments of Trade and Industry, and Agriculture,

Forestry and Fisheries.

The seminar was opened by Ambassador van de Geer, and

DDG Carim. With a fair amount of cross-referencing to the

Trade Development and Cooperation Agreement (TDCA),

the early sessions of the seminar represented a

stocktaking of the Economic Partnership Agreement (EPA)

negotiations.

Subsequent sessions focussed on concrete matters

relating to trade, and issues around competiveness.

Discussions focussed on challenges and prospects for

Southern African trade with the EU in agricultural and agri-

processed products, as well as tools for assisting exporters

to the EU. Challenges that economic actors (de jure and de

facto) face when exporting to the EU were raised in

discussions, as were asymmetries in trade relations.

Matters relating to emerging, public and private, barriers

to exports from SADC and SADC EPA Group exports were

also considered.

The following topics were covered: sanitary and

phytosanitary standards; branding, and meeting

market/importer demand; intellectual property issues,

trademarks, and geographic indicators; and trade

facilitation. With most of the presenters from amongst

the SADC EPA Group stakeholders, the seminar was

participatory, and forthright.

Another seminar – a stocktaking of the overall EPA

negotiations – is scheduled to take place on the 14th

and

15th

of November 2012, in Gaborone.

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This newsletter is distributed by the BUSA in-house Communications desk. We always welcome feedback. Contact – Ms

Masego Lehihi at masego.lehihi@busa.org.za

To read more on these and other media statements disseminated to media by BUSA, kindly visit our

website www.busa.org.za - click under Press Releases.

First Floor 3 Gwen Lane, Sandton 2196P.O.Box 652807, Benmore, 2010 Tel: 011 011 784-8000