Defy Appliances proudly took part in a historic event, as His Excellency, President Ramaphosa, presided over the launch ceremony for the start of preferential trade under the African Continental Free Trade Area (AfCFTA) for South African companies. The significant occasion unfolded at the Port of Durban, symbolising a pivotal moment in Defy Appliances’ commitment to growing the export market on the African continent.   The AfCFTA trade agreement launch aligns seamlessly with Defy’s vision of expanding its presence and market share in the Sub-Saharan region. This milestone represents a crucial step towards the progressive elimination of tariffs and non-tariff barriers to trade in goods, fostering cooperation on all trade-related fronts.    The ceremony, attended by cabinet ministers of the Republic of South Africa and trade ministers from various countries, including Angola, Botswana, Burundi, Egypt, eSwatini, Ethiopia, Kenya, Libya, Mauritius, Namibia, Nigeria, Rwanda, Senegal, Tanzania, and Tunisia emphasised the collaborative spirit of this groundbreaking initiative.   Defy Appliances sees the AfCFTA as a gateway to expanding export opportunities into Central Africa, East Africa, and West Africa. During the ceremony, the company had the privilege of showcasing its flagship product, the chest freezer, proudly manufactured in the Ladysmith refrigeration factory. These high-quality appliances have been successfully exported to Kenya and other key markets across the continent.   Commenting on this historic achievement, Mustafa Soylu, chief executive officer at Defy Appliances, stated, “This is a critical milestone for our company, and we are truly proud of this moment. The launch of preferential trade under the AfCFTA opens up new horizons for Defy, allowing us to contribute to economic growth and strengthen partnerships across Africa.”   Defy Appliances looks forward to leveraging the opportunities presented by the AfCFTA to build lasting connections, promote economic development, and continue delivering innovative home solutions to consumers throughout the African continent.   W: www.defy.co.za

A quick guide for accountable institutions As is generally the case with new legislation, most businesses will only take it seriously once an inspector comes knocking. This should not be the case. Although the FIC Act (FICA) was created to prevent financial crime, following the guidelines set out in the Act will also help businesses protect their reputation and enhance client onboarding, while reducing their risk and ultimately attracting a more desirable clientele. With this in mind, compliance should be viewed by accountable institutions as an opportunity and be approached proactively, says Sameer Kumandan, managing director of SearchWorks, an innovative data platform that allows businesses to conduct accurate, in-depth Know Your Client (KYC) checks online.   Why is the FIC Act so important? The FIC Act holds immense significance for South Africa’s financial system and national security on multiple fronts. Primarily, it acts as a powerful weapon in the fight against financial crime, addressing issues like money laundering, terrorist financing, and corruption. By disrupting the financial networks of criminals and terrorist organisations, the Act contributes to the stability and integrity of South Africa’s financial system, safeguarding its reputation to attract foreign investment.   From a consumer perspective, the legislation acts as a shield by preventing financial scams and identity theft, to foster greater trust in the financial sector. In terms of national security, the Act plays a critical role in reducing the risk of terrorist attacks and impeding organised crime.   Additionally, by aligning with international standards, the FIC Act promotes global cooperation, strengthening the collective effort against illegal financing. In essence, this legislation is indispensable in ensuring a resilient, secure, and inclusive financial environment for South Africa.   What are the key elements of the FIC Act? The FIC Act is aimed at preventing financial crime in South Africa by addressing Money Laundering (ML), Terrorist Financing (TF), and the financing of the Proliferation of Weapons of Mass Destruction (WMD). At its core, the legislation establishes the Financial Intelligence Centre (FIC), an independent agency responsible for receiving, analysing, and disseminating financial intelligence reports. The FIC is authorised to collaborate with law enforcement agencies to guide accountable institutions and support investigations and prosecutions that are related to financial crime.   To this end, accountable institutions are required to adhere to Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) obligations, which include customer identity verification, transaction monitoring, risk mitigation measures, and staff training for compliance. The Act also puts in place clear reporting thresholds and triggers for suspicious transactions and financial indicators.   What does compliance with the FIC Act entail? Adhering to compliance expectations under the FIC Act involves implementing an internal Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) programme, which includes the establishment of robust policies, procedures, and controls for managing Money Laundering (ML) and Terrorist Financing (TF) risks.   A critical aspect of compliance in this regard requires accountable institutions to conduct a thorough risk assessment to identify and evaluate ML/TF risks specific to the business and its clientele. Customer due diligence (CDD) practices will determine the verification of customer identities based on assessed risk levels, while the Know Your Customer (KYC) process will require a more in-depth understanding of customer backgrounds, business activities, and the sources of funds.   To play their part, accountable institutions are responsible for the timely reporting of suspicious transactions and activities to the FIC through Suspicious Activity Reports (SARs). Such institutions will also need to implement meticulous record-keeping of transactions and customer information for a specified period (a minimum of five years) while conducting employee training on AML/CFT procedures and the recognition of suspicious activities.   Who/what are accountable institutions? While the full list of ‘accountable institutions’ can be found in Section 1 of the Act, generally speaking, an institution is considered accountable if it is an entity susceptible to being used for ML/TF. This includes banks, credit providers, securities firms, and insurance companies as well as dealers in cash, precious metals, and gemstones, along with attorneys, accountants, and auditors. The list also includes casinos and other gambling businesses, money or value transfer services, and real estate agents and property developers.   How can SearchWorks help? SearchWorks can assist accountable institutions ensure they carry out their due diligence in terms of accurate KYC and KYB (know your business) checks, accurately and without hassle. Our data aggregation platform provides comprehensive information on individuals, businesses, trusts, and properties in South Africa, offering various search types suitable for purposes like KYC, AML/CFT, and due diligence.   With a commitment to full compliance with the FIC Act, SearchWorks encourages organisations to leverage this requirement to create additional business value. By reducing fraud, safeguarding reputation and capital, and streamlining reporting and compliance duties, organisations can effectively navigate and benefit from regulatory pressures.   T: +27 (0)86 034 0000 E: info@searchworks.co.za

In what may be his last State of the Nation Address (SoNA) depending on the outcomes of the imminent National Elections, President Cyril Ramaphosa’s speech appears to be an early celebration of anti-corruption reforms, downplaying the effect of state capture on youth development, education and empowerment in South Africa (SA), a leading youth development organisation says. During his address, Ramaphosa told the hypothetical success story of Tinswalo, a young girl who overcame generational inequality and poverty thanks to the services and opportunities provided by the government throughout her life.   “The reality in the communities we serve, is that for every Tinswalo, there are millions of children and young people still let down by the systems in which they are told to place their hope. Corruption, state capture and ethical erosion in private and public institutions have hindered what would otherwise be sound youth development policies,” says Onyi Nwaneri, Deputy CEO of Afrika Tikkun Group.   “While progress has been made, so much more needs to be done. SA is nowhere near resolving the ceaseless triple challenges of poverty, inequality, and unemployment,” says Nwaneri.   In his speech, Ramaphosa lauded the success of initiatives such as the youth Employment Tax Incentive (ETI), the Skills Development Levy (SDL), the National Skills Fund (NSF), the Youth Employment Service (YES) and the National Youth Services Programme, but this is against the devastating backdrop of 4,6 million unemployed youth (43,4%) in the country.   Private-Public partnerships “We applaud the efforts of private-public partnerships and initiatives that have ensured that young people gain access to skills and employment opportunities, but there is scope to broaden these initiatives,” Nwaneri says. Afrika Tikkun proposes mandating that final year students transition to a one-year youth service immediately after graduating, deployed according to qualification across private, public and civil society organisations to add value, gain work experience and fight for a chance to be absorbed within the year of service in whatever organisation they are placed, earning at least minimum wage during this period. By exploring a collaborative/partnership approach with all sectors of society (private, public and civil society) enabling other actors to play a larger role in the development of policies and initiatives to end unemployment, SA can get closer to solving the skills gap challenges in the country.   Corruption, accessibility and lack of infrastructure impede youth education and employment. Funds intended for infrastructural and youth development programmes have historically disappeared through corrupt practices, negatively affecting those battling to get quality education when there is no electricity or a tender for chairs for classrooms gets misappropriated.   “In the day and age of digitisation, solvable infrastructural challenges are hampering access to quality information and affordable internet connection. Reliable infrastructure is going to be the deciding factor in how fast we can close the gaps that are allowing our youth to fall through the cracks of a broken education system” says Nwaneri.   Reliable Universal broadband, as was promised at least a decade ago, would help alleviate the need for children to walk many kilometers to school, and enable them to finish their secondary education she adds. Although this year’s matric results were positive and deserve to be celebrated, SA’s education and literacy rates are not globally competitive, and the current education system is not producing quality graduates whose skill level matches industry demand. “Our workforce is not competitive in the global arena,” highlights Nwaneri.   As a result, the country is producing wealth at a rate that is far below its potential to the detriment of millions of young people who deserve a fighting chance at becoming productive, self-sufficient members of society. “We need to change our attitudes towards education, skills development and work experience, placing a focus on potential. Skill providers need to consult more with employers in the private sector to ensure they are enabling skills that match the needs of the market, locally and globally,” Nwaneri argues. Employers needs to change mindsets, attitudes and hiring practices especially in relation to youth. Focus should be on whether the prospective hire has the requisite skills, values alignment and are likely to add value to the company. The rest will follow.   SA must collaborate and rebuild the country we call home As the country braces for a watershed election year, Afrika Tikkun urges South Africans at large to hold private and public institutions accountable, speaking out against corruption and the dereliction of the systems built to secure constitutional democracy.   “Every individual, institution, organisation, and community have a responsibility to rebuild a country we are proud of. We are all builders of a country, the collective calls home. The time is now to embrace our role and to restore our beautiful country, and its children and youth, to their rightful place in the global economy,” Nwaneri concludes.   For more information go to www.AfrikaTikkun.org

Sumitomo Rubber SA (SRSA), manufacturer and distributor of the iconic Dunlop tyre brand, is rolling out an AI-powered inventory management platform, with the support of software development firm Slimstock, in a move set to transform its supply chain capabilities to enhance operations, reduce waste and optimise planning. The new technology platform rollout comes soon after the announcement of a R1.7bn investment at its Ladysmith manufacturing plant that includes new plant equipment and machinery to increase passenger car tyre production capabilities, efficiencies and product offering to further support the original equipment (OE) market. Warren May, director of corporate planning at Sumitomo Rubber South Africa, says: "The tyre manufacturing industry is a dynamic and constantly evolving space, and SRSA is committed to offering the market quality, safety-tested tyres manufactured for local conditions. In order to do this, we require strategic partners to support us in our vision with expert data-led guidance. We are excited that Slimstock, an AI-powered inventory management platform company, will support us on this journey, ensuring that the multi-billion-rand investment we’ve made into our plant, is supported by a robust back-end system that helps us become resilient to market changes, and optimises our planning.” Slimstock The Netherlands-based software development company provides the virtual infrastructure to create a more efficient, resilient and sustainable supply chain. SRSA will adopt Slimstock's award-winning supply chain planning platform, Slim4, across its operations in South Africa. Slim4's advanced forecasting and multi-echelon planning capabilities will provide the SRSA planning team with the granular SKU-level demand insights required to achieve the optimal balance of inventory. Additionally, it will bring greater operational efficiency to users' day-to-day lives, and the ability to respond more quickly and effectively to supply chain disruption. "At Slimstock, we remain committed to empowering businesses to make better and faster decisions. We are thrilled to support Sumitomo Rubber SA on this transformative journey, and we look forward to forging a long-lasting partnership," says Milton Lawson, sales director at Slimstock. Supply chain volatility The new platform will help create a single source of truth for supply chain data, allowing the business to mature its sales and operations planning (S&OP) process and support more effective decision-making. “With a more sophisticated demand and supply chain planning solution, we will have the capacity to effectively navigate the increasing levels of supply chain volatility and retain our ability to offer a standard of service unparalleled within the automotive industry,” says May. Issued by  Sumitomo Dunlop - BIZCOMMUNITY

Eight operators together with their Foreman from Sumitomo Rubber South Africa's (SRSA) Dunlop Ladysmith plant have wasted no time in applying their new expertise after a six-week training programme at Sumitomo Rubber Thailand (SRT). Equipped with advanced skills to operate the Ladysmith plant's critical new 3-stage making machines, they're already leading the charge on the shop floor. This strategic initiative, part of SRSA’s commitment to developing its workforce and fostering independence within the African tyre market, saw eight tyre builders and their foreman travel to Thailand. They included: Sabelo Zwane, Sizwe Nkabinde, Sfiso Zwane, Vimbayi Mavimbela, Lindokuhle Dhladhla, Musawenkosi Khumalo, Mthokozisi Zikalala, Nqobile Dlamini and Sfundo Mthethwa. The team immersed themselves in SRT’s world-class manufacturing practices as they underwent specialised training in tyre making. The impact was fast and tangible. Within three weeks, they achieved a 36% improvement in performance, ensuring consistent quality at the highest standards. “We are very proud to be flying the flag of SRSA and South Africa high. Our team has already begun sharing their key learnings, highlighting the disciplined approach to safety, continuous improvement, and quality that we witnessed as defining Sumitomo Rubber Thailand’s operations,” said Sabelo Zwane. Lubin Ozoux, CEO of Sumitomo Rubber SA, said, “By nurturing talent and fostering collaboration within the global Sumitomo Rubber Industries network, we are not only strengthening our operations but also developing skills for South Africa to continue to stand tall in the global tyre industry,” he added. The international training programme forms part of Sumitomo Rubber SA’s new training model, established in 2017. This model identifies high-performing individuals and equips them with the skills and knowledge necessary to drive performance and transfer learnings across SRSA’s operation. Previous iterations of the programme saw 19 local operators trained at Miyazaki Factory in Japan in 2017, ahead of the establishment of SRSA’s Truck and Bus Radial (TBR) tyre manufacturing facility, as well as in 2019 to develop passenger tyre manufacturing capabilities. “Investing in our people is fundamental to our success,” said Neil Rademan, General Manager for Organisational Development at Sumitomo Rubber SA. “This international exposure enables us to have a deeper understanding of global factory shop floor operations and how we can develop and maintain globally competitive manufacturing standards locally.” Sumitomo Rubber South Africa is the manufacturer of Dunlop, Falken, and Sumitomo tyres for the African continent, operating under the umbrella of Sumitomo Rubber Industries Ltd (SRI), a leading premium manufacturer of automotive tyres and industrial rubber products headquartered in Japan. The company has earmarked a R1.7 million investment drive for the Ladysmith plant, which includes new equipment and machinery to increase passenger car tyre production capabilities in support of the Original Equipment (OE) market.?? Local skills development will be a critical enabler of this rollout.

Michael Jackson, Cox Yeats Attorneys The battle for the control and ownership of water rights appears to be heating up. The call for expropriation of land without compensation was a theme of the 2019 elections. Is the reallocation of water rights on racial lines going to be a theme for the 2024 elections? It is important to understand the context. The Freedom Charter, which the ANC Congress adopted in Kliptown in 1955, called for all land and natural resources to be returned to the people and redivided. When it came to negotiating the final Constitution in 1994, some 40 years later, the same call was made. Nonetheless Section 25, the property clause of the Constitution, was the most hotly debated and the last to be resolved. A compromise was reached between the call for all natural resources to be redistributed to the people and the private ownership of property and natural resources. Ownership of property, which included all natural resources such as minerals and water, was protected subject to the exception that the State was obliged to take reasonable, legislative and other measures to enable citizens to gain access to natural resources on an equitable basis. In particular, the State was obliged to adopt measures to achieve land, water and related reform to redress the results of past racial discrimination. The National Water Act (the Act), which was passed in 1998, was the first piece of legislation to do so. The Act changed our water law from a system whereby water rights were privately held to one where the State became the public trustee of the nation’s resources and the State, as a public trustee, became the responsible authority to issue water use licences. In order to overcome any argument that this new legal structure constituted an expropriation of water rights, Section 34 of the Act provided that a person who held a right to water at any time during the 2-year period immediately before the Act came into force (an existing lawful water use) could continue with the existing lawful water use until this right was replaced by a licence. In the licencing process, which would replace any existing entitlement including an existing lawful water use, the responsible authority is entitled to reduce existing allocations so as to meet, inter alia, water assigned for the reserve (environmental and basic human needs) and the water which needs to be allocated to those who need to be allocated water so as to redress the results of past racial and gender discrimination. Section 22(6) of the Act states that a person who has applied for a licence in respect of an existing lawful water use and who is granted a licence for a lesser use than the existing lawful water use, resulting in prejudice to the economic viability of an undertaking in respect of which the water was beneficially used, may claim compensation for any financial loss suffered. A discount to market value can be justified if the purpose is to address past imbalances. When the Act was passed, it was intended that the licencing process would follow shortly thereafter. It was in the licencing process that redistribution would occur and if there was any acquisition of rights so as to redress past imbalances, compensation would be paid. Some 25 years have now passed, and the progress in converting old lawful water uses into licences has not yet occurred. There has therefore been no meaningful reallocation of water rights. As an interim step, water uses have been registered with the Department and the Department has gone through a process of verifying existing lawful water uses. Recently, there have been a number of important developments which indicate that the hiatus is coming to an end. Instead of following the licencing process contemplated by the Act, the Department is seeking to introduce new measures to achieve the redistribution of water rights. A contentious issue has been whether the Act allows the trading of water entitlements. Section 25 of the Act allows a person, who holds a water use, to surrender that entitlement in favour of another private user who makes application for a licence. This was interpreted to allow the holder of a water use to sell or trade that water use to a person who needed a new water use and was applying for a licence. In 2018, the Department of Water Services issued a legal services circular that Section 25 of the Act does not allow for the trading of water entitlements. In March, the Constitutional Court handed down judgement confirming that the payment of a fee in respect of the surrender of a water use entitlement, in order to facilitate a licence application, was permissible. The Constitutional Court affirmed the right of private persons to trade and do anything which the law does not prohibit. Just after the Constitutional Court handed down its judgment, the Minister of Water and Sanitation published, for public comment, draft regulations regarding procedural requirements for water use licence applications. In new water use licence applications, the regulations stipulate that the responsible authority must give preference to applications from black people, followed by women. A table is contained in the regulations stipulating that, depending on the volume of water or the area of land to be irrigated, the percentage of the shares allocated to blacks must range from 0% to 75%. The usage covers taking water from a water resource, storing water, and the use of land for afforestation. These provisions are not practically possible to implement. Many of South Africa’s farms are owned by trusts and not by companies. Large farming operations may be conducted by a listed company and some of the listed companies are listed not only in South Africa but on foreign exchanges. It is not possible for these to be owned, in the proportions indicated, by South African blacks. In the Government Gazette of 17 November 2023, the National Water Amendment Bill was published and the public is invited to submit comment within 60 days. The trading of water rights permitted by the Constitutional Court is now to be prohibited. Section 25 is to be amended to allow the holder of a water use to apply to transfer the water use for a period not exceeding 24 months to use that water for the same or different purpose in the same vicinity or to apply for a new licence on land belonging to him or her. A new Section is to be added which expressly prohibits trading in any form. Sections 26 and 27 of the Act are to be amended clarifying the obligation to redress the results of past racial and gender discrimination. The Minister will be entitled to prescribe regulations on the criteria to be considered when redressing the results of past racial and gender discrimination and a responsible authority must now prioritise the redressing of past racial and gender discrimination when deciding on the issue of licences. Although nearly everyone accepts the importance of addressing historical imbalances, the statutory interventions introduced since 1994 have not achieved much mainly because of a lack of implementation. The Act, passed in 1998, provided all of the mechanisms required to achieve reform in the sector. Reform was not achieved because the Act was never properly implemented. The recent further attempts to intervene in the sector display a lack of understanding and most likely will simply result in a withdrawal of investment. Whilst the initiatives in the water sector may be appealing for gaining votes in the 2024 elections, they are unlikely to grow the irrigation and forestry sectors and with it, the reallocation of water rights. <. Should you require advice or assistance, please contact Michael Jackson on T: +27 (0)31 536 8512 E: mjackson@coxyeats.co.za W: www.coxyeats.co.za

Your company’s reputation is crucial. This is particularly true in the built environment industry, where a contractor’s reputation is just as important as his track record. Contractors hesitate to enforce their contractual rights, fearing the stigma of being labelled ‘claims conscious’, but their very job is to ensure a company makes a profit and as such it is imperative. Instead, more often than not, contractors are so concerned about this label that rather than enter a ‘paper war’ or take a chance at upsetting the client, they opt to discuss claims ‘informally’ rather than officially delivering them. The reality is that claims not delivered timeously may see these ‘informal discussions’ collapse, which in turn often leads to severe financial hardship. In fact, being ‘claims conscious’ is a good thing as it ensures contractors get everything that they are rightly entitled to. That being said, it is crucial that claim situations are handled in a non-adversarial manner. Whilst delivering formal notices and claims may notionally muddy a contractor’s good rapport with the client, the entitlement to deliver such notices and claims is an intrinsic term of the contract. On the flip side, the client’s ability to impose penalties on the contractor who fails to complete work timeously is also typically part of that agreement. Despite this, employers are not labelled as ‘penalty conscious’. So why is there stigma attached to contractors who deliver contractual notices and claims in order to claim what they are contractually entitled to? The reason appears to be twofold. Firstly, the word ‘claim’ in itself captures the adversarial nature of the construction industry. Claims arise due to the very nature of construction works. Employers typically want construction projects to be completed in the shortest possible period and at the least possible cost. Contractors, in turn, aim to construct at the minimum cost, and where a project is delayed or disrupted by the employer, they then seek fair and reasonable compensation for the additional costs and time incurred. Government is typically constrained to award contracts to the bidder that delivered the lowest priced compliant bid along with the highest B-BBEE score. This is referenced as the ‘lowest bid scenario’. It cannot be denied that contractors must be ‘claims conscious’ to survive in circumstances where the winning bid is based on the lowest tendered price. Any contractor who is not claims conscious in the lowest bid scenario is a contractor who will go out of business very quickly. This is inevitable as the margins in this scenario are incredibly tight due to the extent of competition. Any delays or mistakes will result in the job running at a loss, a patently non-sustainable model. The failure to deliver reasonable claims timeously, or indeed at all, is later interpreted as inattention or negligence on the part of the contractor. Regardless, if properly drafted and considered, contractual claims can be delivered in a persuasive manner, as opposed to a confrontational or adversarial manner – and no negative inferences should be drawn. Secondly, given the lowest bid scenario discussed above, contractors may deliver spurious or opportunistic claims to make up for lost profits. The lower the offer made, the harder it will fight to make a profit. Every mistake, clash or opportunity to claim delays and seek additional compensation will be made. This can lead to a legitimately acrimonious relationship between the contractor, consultant and client. The underlying issue is in reality the procurement model used. Is the employer to blame for accepting a low or reasonable bid? Or should the contractor take the blame for deliberately delivering a low tender in the hope that they can recoup costs by issuing a constant stream of claims? Either way, delivering claims for every imaginable delay or disruption will naturally result in distrust and stigma. Being labelled as ‘claims conscious’ can also result in developers in the private sector seeking to steer clear from engaging with such contractors for fear that their budgets may be unduly exceeded. A developer is trying to maximise his return and achieve the best value for money, and generally speaking, they will not – or should not – take issue with paying for services that are properly due. In conclusion, the issue is not whether the contractor has properly documented the reasons for delays and variations (‘claims conscious’), it is the fact that low profit margin situations often result in claims that cannot always be fully substantiated by the contractor. If the claims can, however, be fully and legitimately substantiated, they should be delivered, and they should be awarded, regardless of whether or not there will be a label of ‘claims conscious’ attached to the contractor. If contractual notices and claims are not delivered timeously, the contractor forfeits those claims. It is patently better to be labelled ‘claims conscious’ than to suffer a loss. Ultimately, the decision lies with the contractor. BIO – Peter Barnard PETER BARNARD is a Partner at Cox Yeats within in the Construction, Engineering, Labour and Commercial Law Practice. He also deals extensively with procurement related issues. He typically represents contractors, subcontractors, consultants and developers in the built environment industry, and specialises and has extensive experience in disputes arising out of and in connection with the four main suites of contracts, being the Joint Building Contracts Committee (JBCC), New Engineering Contract (NEC), General Conditions of Contract for Construction Works (GCC) and International Federation of Consulting Engineers (FIDICFrench acronym). Peter is also member of the JBCC Drafting Committee. T: +27 31 536 8514 E: pbarnard@coxyeats.co.za BIO – Claudelle Pretorius CLAUDELLE PRETORIUS is an Associate at Cox Yeats within the Construction, Engineering, Labour and Commercial Law Practice. Claudelle likewise has considerable exposure and experience in disputes arising out of and in connection with the four main suites of contracts. She also has experience in various aspects of Employment Law, with emphasis on individual and collective labour law. Tel: +27 31 835 3111 E: cpretorius@coxyeats.co.za

The Expropriation Bill was finally passed by the National Assembly on Wednesday, 28 September 2022. The first version of the Bill was withdrawn in 2008 when the Parliamentary legal advisors concluded that it was unconstitutional for its exclusion of recourse to courts. The next version of the Bill was tabled in 2015 and passed in 2016 by Parliament. It then returned to the National Legislature in 2017, by then President Jacob Zuma, over concerns about inadequate public participation. At the 2017 ANC NASREC conference, a resolution was passed to adopt expropriation without compensation. In August 2018, the ANC withdrew the existing expropriation law from Parliament to make way for a new legislative proposal which would incorporate an amendment to Section 25 of the Constitution. In order to achieve an amendment to the Constitution, the co-operation of the EFF was required. In December 2021, a fall out between the ANC and the EFF about the issue of state ownership of land occurred and the constitutional amendment failed. The Bill, without an amendment to the Constitution, was finally passed by Parliament at the end of September 2022. What does this mean to property rights and is the issue of expropriation without compensation finally determined? In 1996, Section 25 of our Constitution was the section most hotly debated. President Ramaphosa chaired the ANC delegation which was tasked to consider this. It was understandable that this would be a difficult issue to resolve. The 1955 Freedom Charter placed land at the centre of liberty. It stated that “All the land must be divided amongst those who work for it to banish famine and land hunger” and that “all shall have the right to occupy land wherever they choose”. Section 25 of the Constitution was a compromise between the call for all land to be returned to the people and the protection of private property rights. It protected the right to property but then stated that property may be expropriated for public interest. It expanded on what was meant by public interest by stating that it included the nation’s commitment to land reform and to bring about equitable access to all South Africa’s natural resources. Thus, the Constitution contemplated that expropriation could occur to achieve the objective of bringing about equitable access to land and natural resources. Historically expropriation was used to acquire land for the purposes of roads, schools, hospitals and the like. The expropriation power was extended to include the need to acquire land to achieve land reform and equitable access to resources. In most democratic jurisdictions, compensation on expropriation is equal to market value. Section 25(3) introduced a new test and stated: “The amount of compensation and time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including: a)the current use of the property; b) the history of the acquisition and use of the property; c) the market value of the property; d) the extent of direct state investment and subsidy in acquisition and beneficial capital improvement of the property; and e)the purpose of the expropriation.” On expropriation without compensation, there are two schools of thought. The first is that Section 25 of the Constitution is sufficiently broad to be interpreted to allow expropriation to occur at no compensation or very limited compensation. The second, is that the Constitution needs to be expressly amended so as to permit expropriation without compensation. In other words, that Section 25 needs to be amended. The first school of thought is the one favoured by most lawyers. Section 12(3) of the new Expropriation Act states that it may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to: where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value; where an organ of state holds land that is not being used for its core functions and is not reasonably likely to require the land for its future activities; where an owner has abandoned the land by failing to exercise control over it; where the market value of the land is equivalent to the direct state investment or subsidy in the acquisition of capital improvements of the land; and where the nature or condition of the property poses a health, safety or physical risk to persons or other property. It is felt that the identification of these specific instances is incorrect and possibly unconstitutional. The equivalence principle applies to all expropriations and requires that where one or more individuals have to bear a sacrifice in the form of the loss of property for the common good, their individual and excessive burdens should be compensated by the community. In other words, that burden should not partially or wholly be imposed on the expropriated landowners. If the equivalence principle is not followed, the expropriation process is probably unconstitutional. The provision in Section 25(3) that the amount of compensation must be just and equitable, encompasses the equivalence principle. It is very difficult, if not impossible, to correctly circumscribe the circumstances where it would be just and equitable to pay nil compensation because the practical circumstances of each owner whose property is expropriated cannot be foreseen by a legislature. The best one can do would be to make such instances strictly subject to the qualification of justice and equity and to put the burden of proof in each instance on the expropriating authority. Section 36 to the Constitution states that the rights in the Bill of Rights may be limited only in terms of a law of general application and to the extent that the limitation is reasonable and justifiable in an open and democratic society. Section 232 of the Constitution states that customary international law forms part of the law of the Republic, unless it is inconsistent with the Constitution or an act of Parliament. The question is thus whether an act of Parliament can be adopted to provide for expropriation without compensation, while still conforming with the Constitution, and international law. Customary international law does not countenance expropriation without compensation. The traditional measure of compensation which was accepted as customary international law until about 1974, was adequate or effective compensation which was equated to full compensation or at least market value of the expropriated property. Full compensation means an amount that, insofar as money can do so, will restore the person whose property is to be expropriated to the same financial position in which he/she was before the expropriation. However, since the acceptance of the Charter of Economic Rights and Duties of States by the General Assembly, a resolution of the United Nations of December 1974, there has been a marked deviation from this measure of compensation. The measure of compensation was watered down in the Charter to “appropriate compensation” taking into account the particular State’s relevant laws and regulations, and also contentions that the State considers pertinent. Appropriate compensation has no fixed meaning on its own and depends upon the circumstances of each case. Various countries have deviated from the traditional full compensation model, and now require in their constitutions just or fair compensation. Fair compensation is an amount that would redress the imbalance caused by the expropriation between the public’s interest and the interests of the expropriated landowner. Fair compensation can be equal to full compensation, but it may also be less. Given the South African circumstances and the imperative for land reform, this can give rise to an internationally acceptable formulation of measures of compensation in individual specified cases. The measure of compensation in Section 25(3) of the Constitution is a very flexible instrument which may in some circumstances, give rise to full compensation, and if just and equitable, to less than full compensation and even very little or none in very exceptional cases. It is premised on a just and equitable balance of interests. Justice and equity may under very restricted circumstances have the result that very little or no compensation will be payable, for example where the expropriated property has been abandoned prior to expropriation. If no compensation is payable under these circumstances, the person whose property is expropriated is not the victim of a confiscation, because he is entitled to just and equitable compensation which may conceivable be none. The person also will not bear the burden on behalf of society at large. It follows that Section 12(3) of the new Act may well be unconstitutional, but in all instances, the expropriation will have to be tested against the provisions of Section 25(3) of the Constitution and be “fair and equitable”. Given the factors referred to compensation at less than market value is certainly feasible. Should you require advice or assistance, please contact Michael Jackson on 031 – 536 8512, email: mjackson@coxyeats.co.za , or Jason Goodison on 031 - 536 8517, email: jgoodison@coxyeats.co.za , or Wade Ogilvie on 031 - 536 8527, email: wogilvie@coxyeats.co.za , or Benjamin Meadows on 031 - 835 3109, email: bmeadows@coxyeats.co.za , or Kaitlin Morris on 031 – 536 8598, email: mail: sbuys@coxyeats.co.za or Courtney Kantor on 031 – 536 8567, email: ckantor@coxyeats.co.za Visit us at: www.coxyeats.co.za DURBAN OFFICE: Tel: 031 536 8500 | Fax: 031 536 8088 | Address: 8th Floor, Ncondo Chambers, 45 Vuna Close, Umhlanga Ridge, Durban, 4320 JOHANNESBURG OFFICE: Tel: 010 0155 800 | Address: 4 Sandown Valley Crescent, Sandton, 2196 CAPE TOWN OFFICE: Tel: 021 8792 516 | Address: Unit 16, Pepper Street Chambers, Cape Town, 8000

The 7 July 2022 marked the culmination of a fruitful four-year partnership between the C40 Finance Facility (CFF) and eThekwini Municipality. The CFF has been actively supporting the Municipality to develop the Transformative River Management Programme (TRMP) that will mitigate the impacts of climate change as witnessed in the April floods. The TRMP is an adaptation programme that builds on a range of river management projects in eThekwini, including the Sihlanzimvelo Community Stream Cleaning Programme. This programme involves utilising community co-operatives for stream management and in so doing builds enterprises and creates jobs. This programme currently has 80 co-operatives with approximately 600 people employed who manage 525km of rivers and water ways by removing invasive alien plants, litter, and debris. They are also trained in business management. The TRMP aims to transform more than 7000 km of the City’s rivers and streams over a period of ten years as part of building a climate resilient and safe city. It has the potential to employ thousands more people as part of the green economy. The intention is to expand this programme and others to a broad range of river conditions, ecological infrastructures, land ownership and land use conditions to anchor the green economy, develop the social and economic capital of the City and build partnerships. The programme will provide a scalable and replicable model for how cities across the world can manage and maintain their waterways while maximising socio-economic benefits. EThekwini Mayor Mxolisi Kaunda said, “Well managed ecosystems provide over R4 billion worth of services to our City and its residents annually. These waterways are not only responsible for providing water, but they also help regulate the impact of heavy rains and floods if well managed. Therefore, putting necessary resources in rivers and catchments must be central to the City’s climate adaptation response.” Email: Msawakhe.mayisela@durban.gov.za

The Global Business Services (GBS) sector has emerged as a key driver of export revenue generation and youth employment creation. The sector has grown within the local market, attracting foreign direct investment to South Africa, with Durban becoming an established powerhouse in GBS. This was the view of Russell Curtis, Head of Invest Durban, speaking about The South Africa GBS Investor Conference and Awards which took place in Umhlanga from 8 to 10 November. This is the second time the city has hosted the conference, the last time being in 2019 when more than 50 international investors visited Durban to attend the conference. “The GBS sector growth trends have reflected a 24% compound annual growth rate during the past five years,” commented Curtis. “This has contributed appreciably to stimulating our country’s economic growth and strengthening South Africa’s profile in the global market. In line with this, the national job creation target for the sector is 500 000 new employment opportunities by 2030.” The GBS sector includes business process outsourcing (BPO), business process management, business process services, and shared service and contact centres. “The GBS sector is regarded as key for targeting foreign direct investment, and priority support is fully in line with eThekwini Municipality’s Integrated Development Plan. This is designed to stimulate the economic wealth of our region and our Economic Development Strategy, which is geared around an accelerated and inclusive growth path,” Curtis added. “Building on South Africa’s already well-established global profile and recognition in both 2021 and 2022 as the Most Favoured Global Offshore Customer Experience Delivery Location, this conference afforded us an exceptional opportunity to showcase our city and country’s capabilities to the sector’s analysts and thought leaders. This further enhances our preferred destination status and provides an ideal prospect for attracting new investors to our shores,” Curtis stressed. The primary objective of the Global Business Services Investment Conference and Awards was to market South Africa to an international audience as a scalable delivery destination capable of offering real value across the GBS value chain, while also promoting the sector to domestic stakeholders. He added: “Hosting an international conference of this calibre enabled us to position Durban as a truly global business destination for tourism, conferencing and business. Crucially, the three-day duration of the conference and awards enabled prospective investors attending to fully experience Durban and to witness first-hand the attractiveness of doing business in our region.” He said there is no question that Durban has emerged as a powerhouse for the GBS sector, earning international recognition for its active development. “Durban has become widely recognised as a major frontline in customer experience-centric sales and lifecycle management hub, offering exceptional business[1]to-consumer and business-to[1]business frontline BPO sales talent, servicing local and global markets,” said Curtis. “In addition, our region’s focused partnership between the private sector and government has the effect of further boosting investor confidence, allowing for a serious dent to be made in terms of youth unemployment in our region.” Additional good news for the already buoyant local component of the GBS sector was a recent announcement that Umhlanga Ridge-based Rewardsco, a leading provider of outsourced sales and distribution services, had significantly expanded its Durban operation. The organisation opened its third building at the beginning of November, paving the way for the employment of several hundred new members of staff. “This is great news for Durban and is truly indicative of the GBO sector’s growth potential here, given the powerful platform for business and investment we have created,” said Curtis. Special thanks are extended to regional host partners, Durban, KwaZulu-Natal (KZN) with our regional host partners the KZN Department of Economic Development, Tourism and Environmental Affairs (KZN EDTEA), Trade and Investment KZN (TIKZN), Invest Durban and the eThekwini Municipality, event sponsors GGDA, WNS, Outworx, Synergy, Blake Group, TransUnion and RewardsCo. W: www.invest.durban

Durban Direct is pleased to welcome the resumption of air services between Lusaka, Zambia and Durban, South Africa. The flights started on 6 April 2023 and will operate on Thursdays and Sundays. The launch of these air services will provide a significant boost to the volume of travellers between Zambia and South Africa. In 2021 and 2022 travel between the two destinations experienced a 38% growth, while over the same period, South Africa’s exports to Zambia grew by R 1,6 billion making Zambia amongst South Africa’s key trading partners within southern Africa. “As the government of KwaZulu-Natal, we are pleased to welcome these air services flown by ProFlight Zambia. This new air service will undoubtedly play a role in strengthening the business links between the two destinations, especially considering that there are already many companies operating in both Zambia and South Africa. The improved air connectivity will make it easier for businesses to travel between the two countries, facilitating even greater trade and investment,” said Mr Siboniso Duma the MEC for Economic Development, Tourism and Environmental Affairs and the leader of Government Business in KwaZulu-Natal. The new route will also provide a much-needed boost to the tourism industry, with Zambia and South Africa both being popular tourist destinations. Zambia is known for its wildlife, natural beauty, and adventure activities, while KwaZulu-Natal is famous for its beaches, arts and entertainment. The mayor of eThekwini, Cllr. Mxolisi Kaunda expressed his excitement for Proflight’s return. “We are thrilled to have ProFlight flying back to Durban. As the tourism industry is gradually recovering, the resumption of these air services facilitates greater leisure and business travel into Durban. Growing intra-Africa travel is also a key component of our broader strategy to ensure competitiveness, which is further enabled by the addition of this air connectivity.” He continued “We’re committed to growing our involvement in Durban Direct, through which we were able to acquire these new flights, in order to grow our programme of attracting new air services into the city. The launch of this new air service is also expected to create job opportunities in both Zambia and South Africa. As more tourists and business travellers visit the two destinations, there will be increased demand for hospitality and service industry jobs. Nkosinathi Myataza, regional general manager of the Airports Company South Africa, concluded “We’re pleased to reintroduce direct flights from Lusaka to Durban, it supports our collective efforts to restoring air connectivity into KwaZulu-Natal. The resumption of the air service is a positive development for both Zambia and South Africa, with the potential to boost trade, tourism, and business links between the two destinations.” www.invest.durban

Ithala SOC Limited continues to tick the right boxes when it comes to community development and recognising those who play an important role in the betterment of ordinary citizens. Ithala reaffirmed its support for the 2nd annual Bhekizizwe Joseph Shabalala festival to be held at Ladysmith, Settlers Park on the 4th of February.   The marathon is part of the 7-day festival that started on the 29th of January. The aim of this festival is to commemorate and honour the legacy of the late Bab’ Joseph Shabalala, who is the founder of the 5x Grammy award winning Iscathamiya group, Ladysmith Black Mambazo. The event aligns well with Ithala's commitment to revamping rural economies through various activities across the province.    “We are proud to announce this partnership that will create well over 100 temporary jobs, assist small businesses understand and be able to grow their businesses through the workshop; help our youth preserve culture through Iscathamiya high schools’ competition; music concert and encourage physical health through the marathon’ said Dr. Thulani Vilakazi.   Ithala’s support includes the ‘local citizen price’ that will go to local citizens who cross the line 1st for all the categories. Ithala will also do payments to all the winners of the Marathon. “Our involvement in such a prestigious event is a privilege to us as a financial institution. We believe that our impact will go a long way in assisting the creation of employment which contributes massively to the economic growth of the province. This year alone, we expect to create a lasting impact in the community of Ladysmith and the surrounds,” Dr Vilakazi said.    Ladysmith Black Mambazo will also be performing on the Music Extravaganza that will be hosted in Settlers Park. They will be sharing the stage with the likes of Black Diamond, Sjava, Mthandeni and Inkabi nation, just to mention a few.     A pioneer in banking the unbanked in KZN, Ithala SOC Limited is the first financial services institution to provide banking services to townships and rural areas of KZN and providing a range of savings and investments products, insurance services and personal and home loan products to communities throughout the province.   A distribution network of 36 Ithala branches in KZN provides convenient transacting facilities. For more information, visit www.myithala.co.za , call 031 366 2500 or follow #MoveToIthala #RedefiningWealth #StateBank #MyIthala