November newsletter – An update from the Executive Director’s Desk

Government Interaction

As per our email to members on 28 September, the final Forestry Sector Masterplan was approved on 17 September by the Executive Oversight Committee, which is chaired by the Deputy Minister of DEFF.

FSA worked extremely hard, since our participation in the selection of the PSP in December 2019, to ensure the Masterplan was not misused to try to renege on or renegotiate commitments, which had already been agreed to in the Public Private Growth Initiative (PPGI). We had to have last-minute negotiations with organised Labour on some of the content, as they entered the process extremely late and threatened to halt the finalisation of the Masterplan. Through FSA’s consistent attention to the process, we were able to ensure that the Masterplan has at its core, the same commitments (of both the public and private sectors) as those contained in the PPGI.

The PSP, Strategy Execution Advisors (SEA) ran an extremely professional process and despite the challenges which Covid 19 placed on the process, they managed to produce the plan on time and on budget. Crucially they also produced detailed Implementation and Monitoring and Evaluation plans and Governance structures.

Members are encouraged to familiarise themselves with the content of these documents and to disseminate them within your organisations, so that everyone in the Sector is aware of both the Sector’s and State’s commitments, the associated timeframes and the structures for unblocking challenges to implementation.

It was most encouraging to hear the State President refer to the Forestry Sector Masterplan during his address to the Joint Sitting of Parliament on South Africa’s Economic Recovery Plan on 15 October, and again in the 3rd South African Investment Conference. We believe that the Masterplan will continue to achieve better outcomes for the Forestry Industry than previous plans because of its close links with the PPGI and the associated Presidential-level oversight that provides.


FSA updated the Sector’s PPGI progress report in preparation for our third meeting with President Ramaphosa, which is scheduled to take place before the end of the year. The PPGI structure continues to be a valuable tool for unblocking challenges, as was seen recently with the DEFF MoU.

Great news was the announcement by PG BISON of an additional investment of R2bn during the 3rd South African Investment Conference held on 17-18 November. FSA has already captured this in an updated version of the PPGI document and it will be added to the Masterplan in due course.

FSA’s Executive Director tweeted about this and the other R34bn in investments on the Presidency’s Twitter page during the Conference and he emphasised that the State isn’t crowding in the private sector for the recapitalisation of State plantations, as the President has repeatedly stated will happen. It was encouraging to also see that the President referred, during the Conference, to the investments already made by the Forestry Sector. The Forestry Sector contributed a massive 4.7% of the investment commitments which have been made over the last two years.

Department of Human Settlements Water and Sanitation

Members are aware of the ongoing litigation between FSA and the Department of Human Settlement, Water and Sanitation. FSA filed our replying affidavit to the State’s response to our founding affidavit on Existing Lawful Water Use and our supplementary affidavit on Genus Exchange.

The State has again caused major delays in the Court process, after the matter had to be postponed previously, from May to October. Two days before the matter was to be heard on 23 October, FSA’s legal team petitioned the acting Judge on the matter, to intervene as the State Attorney had still not filed their Heads of Argument. The acting Judge did so but the Heads eventually filed by the State, contained 80 pages of points in limine (technical), most of which we had already addressed in our responding affidavit. This meant that it was unlikely that the Court would get to hear the main matters of our case pertaining to ELU and GE. To make matters worse, on the first day (27 October) scheduled for the hearing, the State applied for a postponement on three weak grounds. FSA’s legal team argued strongly against this and while the Judge was sympathetic, he indicated that the matter is very complex and so he was leaning towards granting the postponement.

FSA indicated that we would only agree to the postponement under the following conditions and for the following reasons:

  • That the State files a formal submission on the issues it has raised as grounds for postponement, so that we can address these (along with their 80 pages of points in limine well before the new date for the main matters and so that the Court’s time can be used to hear the main matters themselves.
  • That the new dates should be set down to hear the matter to conclusion (as opposed to the three days we were allocated previously). This will prevent the State from introducing new points in limine as a stalling tactic, as such matters will then be dealt with during the hearing, after which the main matters will have to be heard.
  • The fact that the Judge has already read our affidavits and is available in the new semester (February 2021) to hear the matters, is very positive, as opposed to being allocated a new Judge who will have to read the voluminous material afresh.
  • That it is not advisable to start leading arguments on the second last or last day allocated and then have the Judge have to recall these when the matter continues in February.

Forest Sector Charter Council

The 11th Status of Transformation Report (3rd under the Amended Forest Sector Code), was concluded and demonstrates that the Forestry Industry continues to make great strides in transforming the socio-economic landscape of the Sector with Medium Large Enterprises and Qualifying Small Enterprises, significantly improving their performance in all five scorecard elements, for the first time in the history of the Forest Sector Codes.

Overall, the Sector is achieving a Level 4, thus qualifying as preferred entities and we are still the only sector in the economy which reports regularly on the Status of Transformation.

A challenge experienced over the last few months, which is affecting all our members, is regarding the impact Covid-19 has had on our sectors BBBEE Scores for 2020. In May the Council raised with Department of Trade, Industry and Competition (DTIC), the major impact which Covid-19 would have on the scorecards of all reporting entities in all sectors, as the lockdown would prevent most entities from pursuing their targets. They proposed that the DTIC should Gazette an amendment which provides for changes to the Sector scorecards but the DTIC did not even respond to the appeals (including those of other sectors), let alone publish a new Gazette. The effect of this is that any entity being measured during this year, will lose major points in their BBBEE score and this will undermine both the entity and the credibility of BBBEE scorecards.

FSA raised this matter again with the Council who advise as follows. The Council will on request, issue letters to all affected companies to use in dealing with suppliers, clients and funders, indicating that the adverse scorecard is not a true reflection of the company’s BBBEE performance. They are also willing to state in the letter, what the modified score should be, using the elements against which each company was able to perform during lockdown, provided the company can provide them with their internal assessment documentation. Members are encouraged to make contact with the FSCC for assistance in this regard.

The Council will continue to pursue a Gazette from the DTIC, through their participation in the Joint Technical Committee for BBBEE, which comprises the DTIC and SANAS. FSA will also raise the matter within the PPGI to ensure that the DTIC attend to it.

Land matters

Proposed Constitutional amendment and the Expropriation Bill, 2020

FSA has continuously held the view that the proposed changes to the Constitution would be benign and that view is now shared by most other sectors, including the media and most recently by the Minister herself.

While extremely poorly run public hearings on the proposed amendment have been held in three provinces, it should be noted that the Ad Hoc Committee in Parliament, charged with leading the process of amendment, have not met since the committee was resuscitated in June. Its mandate ends in December 2020, so it is unclear how it may conclude the work of consolidating the outcomes of the public hearings and effecting an amendment to the Constitution before the end of the year.

Related to this, the Expropriation Bill, 2020 which is similarly benign in its provisions and contains all the conditions for which FSA and other sectors have fought (recourse to the courts, just and equitable compensation, no commercial land to be expropriated, expropriation as a last resort etc), was released but has not yet been tabled in Parliament. Once tabled it will again require public hearings on the content of the Bill. It is back at the Portfolio Committee for the umpteenth time and will have to go through the NCOP and HOTL. The only remaining concern in the Bill, which we are contesting is the State’s attempt to slip in a new definition of expropriation (after the NEDLAC process), which says that expropriation only occurs when the State acquires the land. This is crucial as the State could then deprive you of your rights to the land and even transfer these directly to a third party without it constituting an expropriation as they never acquired the land. Agri SA and FSA will fight this attempted deception and it will also fall down in the Constitutional Court.

It was interesting to note that the President referred very briefly to the Expropriation Bill during his opening of the Investment Conference as there were a massive number of international investors participating. In speaking about expropriation he only referred to State land, once again confirming what FSA has said since 2017, that the President doesn’t personally support the policy and has done everything he can to slow down the hype about EWC and to limit the State’s powers in the Bill.

Notwithstanding the seemingly benign nature of both the proposed Constitutional amendment and the Expropriation Bill, Agri SA have commissioned a study on the economic impact of expropriation where nil compensation is paid, which could support future litigation against the amendment of the Constitution and the Expropriation Bill. The executive summary of the report points to several challenges with the proposed amendment such as that:

  • The simple policy position announced by the ANC in 2017 had a massively negative impact on investor confidence and consumers.
  • The policy and proposed Constitutional amendment pose threats to SA’s food security.
  • The effect on GDP growth, which is already at a 100 year low, will be majorly negative.

Even though 2020 has been a challenging year, our sector can be proud of how we fared. All will agree that we are still on a positive and optimistic horizon and we can only be excited with what 2021 will offer us.

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