President and PPGI meeting members

Industry holds second fruitful meeting with President Cyril Ramaphosa

The Forestry Industry had an excellent (five-hour) meeting with the President on the 17 March 2020 to discuss progress on the Public Private Growth Initiative (PPGI). Due to the recent developments pertaining to COVID-19, the meeting and its focus had been expanded. Although the number of attendees had been greatly reduced on account of the State of Disaster announced on Monday night, FSA’s Executive Director (as PPGI Co-ordinator for the Forestry Value Chain) represented the Forestry Industry. The agenda was also changed to include private and public sector actions to prevent the spread and mitigate the impacts of the COVID-19 virus and the State of Disaster requirements.

We would like to thank our members who provided us with the comprehensive interventions which they have put in place, to prevent and control the spread of the Covid 19 virus. This went a long way to securing some of the concessions for business which the President made in the meeting and which are outlined below.

Business and Government both had small teams, which contributed to the progress we made on issues in the PPGI. The President’s team included the Minister of the Department of Trade, Industry and Competition (DTIC), and the two senior officials in the Presidency (Mr Rudi Dicks and Dr Kgosientso Ramokgopa), both of whom have been of great support to the Forestry Industry.

Michael Peter and President

Public Private Growth Initiative progress reports

Forestry was one of just four sectors (there are 14 in the PPGI) invited to report on progress on their PPGI commitments. Most other sectors have regrettably not experienced as much progress in overcoming their key inhibiting factors. The President was extremely pleased with the progress made in our Sector, Automotive, Tourism (although they are obviously being hit hardest by the State of Disaster interventions) and the Global Business Services (GBS) Sector. He described the progress as ”heart-warming” and “touching” as it demonstrated how the private and public sectors were starting to function as part of the same country.

Some of the progress by the Forestry Sector reported in the meeting included:

  • Investing R8.6bn in new investments in the last year.
  • One mega-project alone has already met 82% of its 5-year investment target in the first year.
  • Created employment for and trained 2730 people.

From the public sector we have also seen major progress in several areas:

  • Renewable energy policy and regulatory framework – a key growth area for our Industry in both creating new investment and employment and it will assist in addressing our national energy crisis.
  • The prioritisation of economic crimes – intervention which Dr Ramakgopa’s office has made in the Barberton area’s criminal and violent protests that affected our sector is testament of this.
  • Increased volumes of timber on both main and branch railway lines, following the capacity which has developed in Transnet.
  • A major breakthrough meeting with Director-General Tshangasa from the Department of Water and Sanitation (DWS), who managed in a single meeting, to resolve the six-year long water-use licence crisis in our sector. The impact of the interventions by Messrs Dicks and Tshangasa in this regard, cannot be overstated.
  • There are still a number of critical challenges, especially in DEFF and some within the remit of Minister Patel. These were listed in our document pack to the President.

The report on serious blockages in other sectors prompted the President to make further commitments to addressing those sectors’ constraints. As reported previously, many of the key inhibitors are transversal, so it is in the interest of all sectors and the country at large, to support the clearing of these obstacles. It is for this reason that we have collaborated with Business Unity South Africa (BUSA), in the water-use licence successes which we have achieved and we, in turn, have received support from other sectors on issues like ports, rail, renewable energy and economic crimes. The full PPGI report is available here.

Covid 19 reports

All sectors were asked to report on their interventions, impacts and what the State could do to mitigate these. Our Industry’s efforts included:

  • Cancellation of all domestic and international flights for staff, customers and suppliers.
  • Establishment of Covid 19 task teams.
  • Major investments in preventative measures like awareness raising and hygiene campaigns, increased provision of hygiene and sanitation products like hand sanitisers, masks and gloves, limiting the use of breathalysers and biometric scanners and providing counselling for affected staff.
  • Limiting the number of face to face engagements.
  • Increased capacity at Industry-funded clinics.
  • Investments in detection and control measures like body temperature scanners at major sites and quarantine protocols and facilities for infected people.
  • Remote work for those whose jobs allow for it.

The industry proposed the Government urgently consider a raft of State-led interventions, in both fiscal and monetary easing and stimulus to protect businesses and jobs. The interventions proposed were:

  • Wage subsidies through the UIF fund for affected staff.
  • Corporate, PAYE and VAT tax relief.
  • Dramatic Reserve Bank intervention in the repo rate, so that financial institutions in turn, can provide debt relief to corporate and retail clients.

We furthermore also expressed our concern that the State keep key infrastructure like major sea-ports and rail open for both exports and imports as more than 50% of the revenue from our largest sub-sector was from export earnings. This spills over into other export sectors like fresh produce, who are a key market for some of our packaging products.

The meeting also acknowledged a number of positive changes which could result from the disaster interventions, like rapidly increasing the development of the e-visas platform, adoption of digital technology in other sectors, increasing South Africa’s share of the GBS market, improvement in the public health services sector, reducing the infrastructure and maintenance backlogs in some areas and increasing patriotism and a sense of ‘uBunthu’ in the country.
While we discussed the following options, please note that there should be no deviation from the current interventions, until the President announces any or all of these.

  • Where reducing gatherings of 100 people or more is impossible and will cause major harm to businesses, exceptions could be made, provided those businesses had all the interventions we listed in place, to prevent, detect and control the spread of infection.
  • Application for exceptions to the visa ban to be considered, where businesses can prove that visitors or returning employees, were willing to subject themselves to both testing and quarantine.
  • There were opportunities to both re-structure and effect savings in the fiscus and to redirect these to special measures for intervention in the management of the pandemic and to provide support to businesses and citizens in distress. The use of the Unemployment Insurance Fund (UIF) in particular, was mentioned as a mechanism for employees who are quarantined, cannot perform their jobs remotely and who have no income protection, to be supported.
  • The Minister of Finance will be consulted around possible urgent taxation relief.
  • The State could release additional bandwidth to support the remote work which isolation and quarantine will demand. We also pointed out that this will be at least as important for the Education sector (who are not part the PPGI), as there are thousands of institutions and learners, who are now trying to upload and download terabytes of educational content.
  • A conversation will be held with the Governor of the Reserve Bank to see whether the Bank is willing to drop interest rates for a short period of time, to provide relief to businesses and households.  We argued that any concerns around possible disinvestment from a major drop in interest rates was offset by two factors. Firstly the length of time needed for the drop in rates, especially if it is announced that it is for a fixed term, will help to dissuade investors from withdrawing their investments, as the transaction costs for doing so will be prohibitive over such a short period. Secondly, the investment attractiveness of the rest of the world isn’t going to be much better than South Africa during this pandemic. This was accepted in principle and Dr Roelf Meyer, from the PPGI leadership team, supported this with the example of the European Union which currently has negative investment returns.
  • The President agreed that closure of major ports for exports and imports would be extremely damaging and would only be considered as a last resort.

In conclusion

The work that has been achieved through the PPGI team and both the Presidency and key Ministries, was widely praised by both business and Government. The President in particular, repeated his sentiments of a year ago, when he said that the PPGI is just what he was hoping and praying for in South Africa and it had come at a crucial time. He has furthermore requested that we increase our direct engagement with him to twice per year, which in itself demonstrates the value which he sees in the PPGI and sectors like ours, which are fortunate enough to be part of the process.

FSA will continue to update members via our website, Telegram (please encourage your employees to join the Forestry South Africa Telegram Channel) and by email, on any changes to the Covid 19 interventions and options, as and when we receive these from the Presidency or the PPGI management team.

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